SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
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Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTER ENDED MARCH 31, 2001
COMMISSION FILE NUMBER 1-13397
CORN PRODUCTS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
22-3514823
(I.R.S. Employer Identification Number)
6500 SOUTH ARCHER AVENUE,
BEDFORD PARK, ILLINOIS 60501-1933
(Address of principal executive offices) (Zip Code)
(708) 563-2400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT APRIL 30, 2001
Common Stock, $.01 par value, 35,289,278 shares
with associated rights
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
Three Months Ended
March 31,
--------------------
2001 2000
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Net sales $ 454.6 $ 444.2
Cost of sales 379.6 366.3
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Gross profit 75.0 77.9
Operating expense 39.4 36.5
Special charges -- 20.0
Fees and income from non-consolidated affiliates (4.0) (1.4)
-------- --------
Operating income 39.6 22.8
Financing costs 15.5 10.4
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Income before income taxes and minority interest 24.1 12.4
Provision for income taxes 8.4 4.4
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15.7 8.0
Minority interest in earnings 3.0 4.4
-------- --------
Net income $ 12.7 $ 3.6
======== ========
Weighted average common shares outstanding:
Basic 35.3 35.5
Diluted 35.5 35.5
Earnings per common share:
Basic $ 0.36 $ 0.10
Diluted $ 0.36 $ 0.10
See Notes To Condensed Consolidated Financial Statements
10Q-2
PART I FINANCIAL INFORMATION
ITEM I
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share amounts) MARCH 31, DECEMBER 31,
2001 2000
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ASSETS
Current Assets
Cash and cash equivalents $ 37 $ 41
Accounts receivable - net 291 274
Inventories 212 232
Prepaid expenses 13 8
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TOTAL CURRENT ASSETS 553 555
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Property, plant and equipment - net 1,374 1,407
Goodwill and other intangible assets - net 313 313
Deferred tax asset 2 2
Investments 32 28
Other assets 36 34
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TOTAL ASSETS 2,310 2,339
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings and current portion of long-term debt 317 267
Accounts payable and accrued liabilities 199 219
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TOTAL CURRENT LIABILITIES 516 486
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Non-current liabilities 43 47
Long-term debt 487 453
Deferred taxes on income 178 185
Minority interest in subsidiaries 159 208
STOCKHOLDERS' EQUITY
Preferred stock - authorized 25,000,000 shares-
$0.01 par value - none issued -- --
Common stock - authorized 200,000,000 shares-
$0.01 par value - 37,659,887 issued on
March 31, 2001 and December 31, 2000 1 1
Additional paid in capital 1,073 1,073
Less: Treasury stock (common stock; 2,370,080 and 2,391,913 shares on (60) (60)
March 31, 2001 and December 31, 2000, respectively) at cost
Deferred compensation - restricted stock (3) (3)
Accumulated comprehensive income (loss) (225) (183)
Retained earnings 141 132
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TOTAL STOCKHOLDERS' EQUITY 927 960
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,310 $ 2,339
===============================================================================================================
See Notes To Condensed Consolidated Financial Statements
10Q-3
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions) THREE MONTHS ENDED
MARCH 31,
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2001 2000
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Net Income $ 13 $ 3
Comprehensive income/loss:
Gain (loss) on cash flow hedges:
Cumulative effect of adoption of SFAS 133,
net of tax 14 --
Current period gain (loss) on cash flow
hedges, net of tax (25) --
Currency translation adjustment (31) 3
---- ---
Comprehensive income (loss) $(29) $ 6
==== ===
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions) ADDITIONAL ACCUMULATED
COMMON PAID-IN TREASURY DEFERRED COMPREHENSIVE RETAINED
STOCK CAPITAL STOCK COMPENSATION INCOME (LOSS) EARNINGS
-----------------------------------------------------------------------------------------------
Balance, December 31, 2000 $1 $1,073 $(60) $(3) $(183) $132
Net income for the period 13
Dividends declared (4)
Cumulative effect of
adoption of SFAS 133, net
of tax 14
Current period gain (loss)
on cash flow hedges, net
of tax (25)
Translation adjustment (31)
-----------------------------------------------------------------------------------------------
Balance, March 31, 2001 $1 $1,073 $(60) $(3) $(225) $141
===============================================================================================
See Notes To Condensed Consolidated Financial Statements
10Q-4
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in millions) FOR THE THREE MONTHS ENDED MARCH 31,
2001 2000
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CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Net income $ 13 $ 3
Non-cash charges (credits) to net income:
Depreciation and amortization 33 35
Minority interest in earnings 3 4
Income from non-consolidated affiliates (4) --
Loss on disposal of fixed assets -- 3
Changes in trade working capital, net of effect of acquisitions:
Accounts receivable, and prepaid items (27) 31
Inventories 15 (22)
Accounts payable and accrued liabilities (34) (39)
Other (3) 1
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Net cash provided by (used for) operating activities (4) 16
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CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Capital expenditures, net of proceeds on disposal (13) (23)
Payments for acquisitions, net of cash acquired (75) (112)
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Net cash used for investing activities (88) (135)
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CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from borrowings 106 197
Payments on debt (14) (15)
Dividends paid (4) (4)
Common stock repurchased -- (44)
Other -- (20)
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Net cash provided by financing activities 88 114
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Decrease in cash and cash equivalents (4) (5)
Effect of foreign exchange rate changes on cash -- 2
Cash and cash equivalents, beginning of period 41 41
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Cash and cash equivalents, end of period $ 37 $ 38
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See Notes to Condensed Consolidated Financial Statements
10Q-5
CORN PRODUCTS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
References to the "Company" are to Corn Products International, Inc.
and its consolidated subsidiaries. These statements should be read in
conjunction with the consolidated financial statements and the related footnotes
to those statements contained in the Company's Annual Report to Stockholders
that were incorporated by reference in Form 10-K for the year ended December 31,
2000.
The unaudited condensed consolidated interim financial statements
included herein were prepared by management and reflect all adjustments
(consisting solely of normal recurring items) which are, in the opinion of
management, necessary to present a fair statement of results of operations for
the interim periods ended March 31, 2001 and 2000 and the financial position of
the Company as of March 31, 2001 and December 31, 2000. The results for the
three months ended March 31, 2001 are not necessarily indicative of the results
expected for the year.
Certain prior year amounts have been reclassified in the Condensed
Consolidated Statements of Cash Flow to conform with the current year
presentation.
2. ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes standards for
recognition and measurement of derivatives and hedging activities. As a result
of the adoption, the Company recorded a $14 million credit (net of income taxes
of $8 million) to other comprehensive income (loss) as a cumulative effect of a
change in accounting for derivatives that hedge variable cash flows of certain
forecasted transactions.
The Company uses derivative financial instruments to minimize the
exposure of price risk related to corn and natural gas purchases used in the
manufacturing process. The derivative financial instruments consist of open
futures contracts and options traded through regulated commodity exchanges and
are valued at fair value in the March 31, 2001 Condensed Consolidated Balance
Sheet. The contracts used to mitigate the price risk related to corn and natural
gas purchases are designated as effective cash flow hedges for a portion of the
corn and natural gas usage over the next twelve months. Unrealized gains and
losses associated with marking the contracts to market are recorded as a
component of other comprehensive income (loss) and included in the stockholders'
equity section of the balance sheet as part of accumulated comprehensive income
(loss). These gains and losses are recognized in earnings in the month in which
the related corn and natural gas is used, or in the month a hedge is determined
to be ineffective. At March 31, 2001, the Company's accumulated comprehensive
income (loss) account included $11 million of unrealized losses, net of a $6
million tax benefit, related to future transactions, which is expected to be
recognized in earnings within the next twelve months. There were no ineffective
hedges for the first quarter of 2001.
10Q-6
3. JOINT MARKETING COMPANY
On December 1, 2000, the Company and Minnesota Corn Processors, LLC
("MCP") consummated an operating agreement to form CornProductsMCP Sweeteners
LLC ("CPMCP"), a joint marketing company that, effective January 1, 2001, began
distributing throughout the United States sweeteners supplied from the Company
and MCP. CPMCP is owned equally by the Company and MCP through membership
interests providing each company with a 50 percent voting interest in CPMCP.
Additionally, CPMCP's Board of Directors is composed of an equal number of
representatives from both members. The Company accounts for its interest in
CPMCP as a non-consolidated affiliate under the equity method of accounting.
Both the Company and MCP continue to own and operate their respective
production facilities and sell all U.S. production of certain designated
sweeteners to CPMCP for exclusive distribution in the United States.
Additionally, any designated sweetener production from the Company's Canada and
Mexico operations sold into the U.S. is distributed through CPMCP. Sales to
CPMCP are made at pre-determined market related prices.
Sales to CPMCP are recognized at the time title to the goods and all
risks of ownership transfer to CPMCP. The Company eliminates 100 percent of the
profit associated with sales to CPMCP until the risk of ownership and title to
the product pass from CPMCP to its customers.
The Company records its share of CPMCP's net earnings as earnings from
a non-consolidated affiliate. The amount recorded represents our allocated
share of the net earnings of CPMCP based upon the percentage of designated
product volumes supplied to CPMCP by the Company as compared to the total
designated product volumes supplied to CPMCP by the Company and our venture
partner, MCP.
4. ACQUISITIONS
On January 5, 2001, the Company increased its ownership in Doosan Corn
Products Korea, Inc., its consolidated Korean affiliate from 50 to 75 percent
for $65 million in cash. The Company recorded $10 million of goodwill related to
the purchase. On March 2, 2001, through a multi-step transaction, the Company
acquired a controlling 60 percent interest in a tapioca starch and sweetener
company in Thailand. Cash paid for the aforementioned acquisitions and other
related obligations totaled $75 million during the quarter. Had the acquisitions
occurred at the beginning of the year, the effect on the Company's financial
statements would not have been significant.
5. INVENTORIES ARE SUMMARIZED AS FOLLOWS:
(in millions) March 31, 2001 December 31, 2000
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Finished and in process................ $108 $100
Raw materials.......................... 64 95
Manufacturing supplies................. 40 37
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Total inventories $212 $232
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10Q-7
6. SEGMENT INFORMATION
The Company operates in one business segment - Corn Refining - and is
managed on a geographic regional basis. Its North America operations include
corn-refining businesses in the United States, Canada and Mexico and its
non-consolidated equity interest in CPMCP. Also included in this group is its
North American enzyme business. Its Rest of World operations have been separated
into South America and Asia/Africa. Previously, such operations were combined
and reported as Rest of World. Prior year information is presented for
comparability purposes. Its South America operations include corn-refining
businesses in Brazil, Argentina, Colombia, Chile, Ecuador and Uruguay. Its
Asia/Africa operations include corn-refining businesses in Korea, Pakistan,
Malaysia, Thailand and Kenya.
THREE MONTHS ENDED
MARCH 31,
(in millions) 2001 2000
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NET SALES
North America $280.1 $283.2
Rest of World:
South America 117.4 98.2
Asia/Africa 57.1 62.8
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Total $454.6 $444.2
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OPERATING INCOME
North America 14.2 20.3
Rest of World:
South America 18.9 12.5
Asia/Africa 10.5 13.2
Corporate (4.0) (3.2)
Special charges - (20.0)
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Total $ 39.6 $ 22.8
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AT AT
(in millions) MARCH 31, 2001 DECEMBER 31, 2000
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TOTAL ASSETS
North America $ 1,397 $ 1,396
Rest of World:
South America 611 647
Asia/Africa 302 296
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Total $ 2,310 $ 2,339
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10Q-8
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001
COMPARED WITH THE THREE MONTHS ENDED MARCH 31, 2000
NET SALES. First quarter net sales totaled $454.6 million, up 2 percent
over 2000 sales of $444.2 million. Improved volume resulted in 10 percent sales
growth, which more than offset a 5 percent reduction pertaining to unfavorable
currency translation effects resulting from the stronger U.S. dollar and a 2
percent price/mix decline. Excluding the effects of acquisitions, net sales
declined approximately 2 percent reflecting unfavorable currency translation
effects which more than offset 4 percent sales growth from improved volume in
the base business.
North American net sales for first quarter 2001 were down 1 percent
from the prior year period. Sales growth of 4 percent from improved volume was
more than offset by a 3 percent price/mix decline primarily in the U.S. and a 2
percent decrease resulting from currency translation. Effective with the
start-up of CPMCP (see Note 3 to the Condensed Consolidated Financial
Statements), in 2001 the Company began selling certain designated sweetener
production destined for sale in the U.S. to CPMCP at predetermined market
related prices. CPMCP, a non-consolidated affiliate, sells such sweeteners as
well as those provided by MCP, our venture partner, to third parties. Since we
account for our interest in CPMCP as a non-consolidated affiliate under the
equity method of accounting, our share of the net earnings from CPMCP's
operations is reflected in our Condensed Consolidated Statement of Income as
income from non-consolidated affiliates.
South American net sales for first quarter 2001 grew 20 percent over
the prior year period. Led by the merged Argentine operations, volumes in the
region improved 36 percent from last year, which more than offset slightly
lower selling prices and a 13 percent reduction attributable to weaker foreign
currencies, particularly in Brazil.
First quarter 2001 net sales for Asia/Africa declined 9 percent from
last year principally reflecting an 11 percent reduction associated with weaker
foreign currencies, particularly in Korea. Slightly lower volume due to economic
softness in Korea also contributed to the sales decrease in the region.
COST OF SALES AND OPERATING EXPENSES. Cost of sales for the quarter was
up 4 percent from the prior year period reflecting costs associated with higher
sales volume and increased energy costs. Our gross profit margin fell to 16.5
percent of net sales from 17.5 percent a year ago, due to higher energy costs,
lower by-product selling prices and the previously mentioned equity method of
accounting treatment pertaining to our CPMCP venture. Operating expenses for the
quarter totaled $39.4 million, an 8 percent increase over first quarter 2000.
This increase primarily reflects the inclusion of operating expenses from the
Argentine operations that were acquired in late March 2000 and higher general
and administrative costs.
10Q-9
OPERATING INCOME. First quarter 2001 operating income increased 74
percent to $39.6 million from $22.8 million last year. Excluding special charges
of $20 million taken in 2000 for workforce reduction, first quarter 2001
operating income decreased 7 percent. North America operating income of $14.2
million was down from $20.3 million in the first quarter of 2000, reflecting
lower by-product prices and higher energy costs in the region. South America
operating income increased 51 percent over 2000, driven principally by the
inclusion of a full quarter of the merged Argentine businesses' results in 2001.
Asia/Africa operating income declined 20 percent from the prior year, reflecting
weaker currencies and lower demand in Korea.
FINANCING COSTS. Financing costs for the quarter were $15.5 million, 49
percent higher than last year. The increased financing costs reflect higher debt
levels associated with acquisition related financing and reduced foreign
exchange transaction gains.
PROVISION FOR INCOME TAXES. The effective tax rate was 35 percent for
first quarter 2001, unchanged from the comparable prior year period. The tax
rate is estimated based on the expected mix of domestic and foreign earnings for
the year.
MINORITY INTEREST IN EARNINGS. The decrease in minority interest
reflects the Company's increased ownership in Doosan Corn Products Korea, Inc.,
our Korean affiliate, from 50 percent to 75 percent effective January 2001.
NET INCOME. Net income for first quarter 2001 increased to $12.7
million, or $0.36 per diluted share, from $3.6 million, or $0.10 per share, for
first quarter 2000. Excluding the effects of the special charge in the first
quarter of 2000, net income for the current quarter decreased $3.9 million, or
23 percent, from the prior year period. This decrease reflects lower gross
profit margins in North America and higher financing costs, which more than
offset improved Rest of World margins and a decrease in minority interest in
earnings of consolidated subsidiaries.
COMPREHENSIVE INCOME (LOSS). The Company recorded a comprehensive loss
of $29 million for first quarter 2001 as compared with comprehensive income of
$6 million in the first quarter of 2000. This decrease resulted from the
translation of assets and liabilities denominated in local currencies into U.S.
dollars, as well as the adoption of SFAS 133. The first quarter 2001
comprehensive loss includes net losses of $11 million, net of tax, resulting
from changes in the market value of derivatives and a $31 million negative
currency translation adjustment. The unfavorable $31 million currency
translation adjustment was related primarily to the negative impact of weakened
local currencies in Brazil and Korea versus a strengthening U.S. dollar. First
quarter 2000 reflected a positive $3 million currency translation adjustment.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, the Company's total assets decreased to $2,310
million from $2,339 million at December 31, 2000. The decrease in total assets
principally reflects the impact of unfavorable currency translation adjustments
on fixed assets in foreign markets, particularly Brazil and Korea.
10Q-10
Net cash used for operating activities was $4 million for first quarter
2001, compared to $16 million of net cash provided by operating activities in
first quarter 2000. The net use of operating cash during the quarter reflects an
increase in working capital, due in part, to margin calls on corn futures of
approximately $16 million and the recording of $6 million of energy credits
relating to a co-generation facility in Stockton, California for which cash
payment has yet to be received. The Company will continue to hedge its corn
purchases through the use of corn futures contracts, and accordingly, will be
required to make or be entitled to receive cash deposits for margin calls
depending on the movement in the market price for corn. Cash used for investing
activities totaled $88 million in the first quarter of 2001, reflecting capital
expenditures and payments for acquisitions. Capital expenditures for the quarter
totaled $13 million, in line with our capital spending plans for 2001. The
Company's acquisitions and capital expenditures were funded with proceeds from
borrowings.
The Company has a $340 million 5-year revolving credit facility in the
United States through December 2002. In addition, the Company has a number of
short-term credit facilities consisting of operating lines of credit. At March
31, 2001, the Company had total debt outstanding of $804 million compared to
$720 million at December 31, 2000. The increase in debt is attributable to the
funding of acquisitions and capital expenditure spending. The debt outstanding
includes: $245 million of borrowings outstanding under the U.S. revolving credit
facility at a weighted average interest rate of 6.6 percent for the quarter;
$200 million of 8.45 percent senior notes due 2009; and various affiliate
indebtedness totaling $359 million which includes borrowings outstanding under
local country operating credit lines. The weighted average interest rate on
affiliate debt was 8.8 percent for the quarter.
The Company expects that its operating cash flows and borrowing
availability under its credit facilities will be more than sufficient to fund
its anticipated capital expenditures, dividends and other investing and/or
financing strategies.
MINORITY INTEREST IN SUBSIDIARIES. Minority interest in subsidiaries
decreased to $159 million at March 31, 2001 from $208 million at December 31,
2000. The decrease is mainly attributable to our purchase of the additional 25
percent interest in our Korean business.
10Q-11
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements concerning the Company's
financial position, business and future earnings and prospects, in addition to
other statements using words such as "anticipate," "believe," "plan,"
"estimate," "expect," "intend" and other similar expressions. These statements
contain certain inherent risks and uncertainties. Although we believe our
expectations reflected in these forward-looking statements are based on
reasonable assumptions, stockholders are cautioned that no assurance can be
given that our expectations will prove correct. Actual results and developments
may differ materially from the expectations conveyed in these statements, based
on factors such as the following: fluctuations in worldwide commodities markets
and the associated risks of hedging against such fluctuations; fluctuations in
aggregate industry supply and market demand; general economic, business, market
and weather conditions in the various geographic regions and countries in which
we manufacture and sell our products, including fluctuations in the value of
local currencies, energy costs and availability and changes in regulatory
controls regarding quotas, tariffs and biotechnology issues; and increased
competitive and/or customer pressure in the corn refining industry. Our
forward-looking statements speak only as of the date on which they are made and
we do not undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of the statement. If we do update
or correct one or more of these statements, investors and others should not
conclude that we will make additional updates or corrections. For a further
description of risk factors, see the Company's most recently filed Annual Report
on Form 10-K and subsequent reports on Forms 10-Q or 8-K.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information is set forth in the Company's Annual Report on Form
10-K for the year ended December 31, 2000, and is incorporated herein by
reference. There have been no material changes to the Company's market risk
during the three months ended March 31, 2001.
10Q-12
PART II OTHER INFORMATION
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index hereto.
b) Reports on Form 8-K.
No Reports on Form 8-K were filed by the Company during the quarter
ended March 31, 2001.
All other items hereunder are omitted because either such item is inapplicable
or the response is negative.
10Q-13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORN PRODUCTS INTERNATIONAL, INC.
DATE: December 21, 2001
By /s/ James Ripley
-------------------------------
James Ripley
Vice President - Finance,
Chief Financial Officer and
Principal Accounting Officer
10Q-14
EXHIBIT INDEX
NUMBER DESCRIPTION OF EXHIBIT
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11 Statement re: computation of earnings per share