Corn Products International, Inc. Reports Fourth Quarter and Full-Year 2002 Results
Comments On 2003 Outlook
WESTCHESTER, Ill., Jan. 28 /PRNewswire-FirstCall/ -- Corn Products International, Inc. (NYSE: CPO) today announced its fourth quarter and full- year 2002 results. For the quarter ended December 31, 2002, the Company reported diluted earnings of $0.46 per share, compared with diluted earnings per share of $0.26 in the fourth quarter of 2001. The 2002 results included net non-recurring after-tax income of $0.06 per diluted share, reflecting the impact of the previously announced dissolution of CornProductsMCP Sweeteners LLC (CPMCP). Excluding this income, diluted earnings per share for fourth quarter 2002 were $0.40. Goodwill amortization, which was discontinued for 2002, was $0.05 per diluted share in the fourth quarter of 2001.
Diluted earnings per share for the full-year 2002 were $1.77, up from $1.60 in 2001. The full-year 2002 results include net non-recurring after-tax income of $0.14 per diluted share, as compared with $0.10 in the full year 2001. In addition to the previously mentioned $0.06 per diluted share, the Company also had non-recurring earnings of $0.08 per diluted share in the first quarter 2002, consisting principally of a gain from the sale of Enzyme- Bio Systems Ltd. partially offset by a restructuring charge. Goodwill amortization was $0.21 per diluted share in 2001.
"Our business performed well in 2002 in the face of challenges," said Sam Scott, chairman, president and chief executive officer. "We generated higher profits in the United States as a result of significant operating cost reductions and price increases. Our Asian strategy also moved forward, delivering another year of solid earnings growth. The challenges we faced included a discriminatory tax in Mexico, which drastically reduced our high fructose corn syrup (HFCS) 55 sales and earnings; a major financial crisis in Argentina as that country significantly devalued its currency; and, in Brazil, we were confronted by difficult economic conditions throughout the year with improvements only appearing after the presidential elections."
Scott added, "Earnings per share grew both before and after non-recurring items. Our financial structure was significantly improved as we generated strong cash flow worldwide that was used to grow our business while paying down debt."
FOURTH QUARTER RESULTS FOR 2002
The Company's results for the fourth quarter of 2002, compared with the prior year period, were as follows:
-
Net sales were $473 million, down from $476 million
-
Operating income was $42 million, up from $37 million
-
Net income was $16 million, up from $9 million
Net income increased primarily due to significantly lower financing costs, the discontinuation of goodwill amortization and the net earnings from the CPMCP dissolution. Excluding goodwill amortization from 2001, operating income improved in North America and Asia/Africa, where we continued to show excellent growth. In South America, although operating income was down, the business made progress in recovering from weak economic conditions and the currency devaluations.
FULL-YEAR RESULTS FOR 2002
The Company's results for the year ended December 31, 2002, compared with the prior year, were as follows:
-
Net sales were $1.87 billion, down from $1.89 billion
-
Operating income was $153 million, down from $166 million
-
Net income was $63 million, up from $57 million
Net income for 2002 increased from 2001, primarily due to reduced financing costs and the discontinuation of goodwill amortization, which more than offset lower operating earnings in South America and North America. The effective tax rate for 2002 increased to 36 percent from 35 percent last year.
Cash provided by operations grew 20 percent to $206 million from $171 million last year, driven by the Company's program to significantly improve working capital. Primarily as a result of a $183 million debt reduction and lower interest rates, the Company improved its financing costs by 43 percent versus last year.
BUSINESS BREAKDOWN BY REGION
The Company's results for the year ended December 31, 2002, compared with the prior year, were as follows:
In North America
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Net sales were $1.22 billion, up slightly from $1.21 billion
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Operating income was $56 million, down from $65 million
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Volume declined 1 percent
Net sales in North America increased slightly reflecting improved price, product mix and strong volumes in the United States, Canada and Mexico, except for significantly lower Mexican HFCS sales. Despite cost reductions throughout the region, operating income declined, reflecting the effects of the Mexican HFCS tax.
In South America
-
Net sales were $401 million, down from $440 million
-
Operating income was $58 million, down from $68 million
-
Volume declined 1 percent
The decline in net sales was principally due to weaker South American currencies and slightly lower volume. Operating income was up in Argentina, despite especially challenging economic conditions, while profits fell in the balance of the region, reflecting the historical lag between currency devaluations and earnings recovery.
In Asia/Africa
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Net sales were $251 million, up from $235 million
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Operating income was $54 million, up from $45 million
-
Volume improved 4 percent
The Asia/Africa region continued to deliver sales and earnings growth, consistent with our strategy to grow this vital geographic business. Higher volume and stronger Asian currencies drove the regional sales increase and contributed to the improved operating earnings. Operating income was up 3 percent over and above the effect of the discontinuation of goodwill amortization.
OUTLOOK
The Company stated that it is optimistic about its outlook for 2003. It projects solid income improvement over its 2002 earnings performance of $1.77 per diluted share, even without resolution of the Mexican HFCS tax issue.
Scott said, "We believe that US 2003 contracting, which is mostly complete, has been successful, which is positive for our North American operations. In South America, we continue to see ongoing improvement in Brazil and Argentina. In Asia/Africa, we expect good business conditions to help that region's continued growth. On the financial side, we continue to place a high priority on strong cash generation from our operations as we pursue our strategies."
MEXICO
The Company announced today that it notified the Government of Mexico of its intention to submit a claim for compensation under the investment provisions of the North American Free Trade Agreement (NAFTA). Details can be found in another Company press release that was issued earlier today.
A real-time web cast, available on the Corn Products International web site, http://www.cornproducts.com, will follow this release today at 7:30 a.m. CST, during which the Company's senior management will present an overview of results.
About Corn Products International, Inc.
The Company is one of the world's largest corn refiners and a major supplier of high-quality food ingredients and industrial products derived from the wet milling and processing of corn and other starch-based materials. The Company is the No. 1 worldwide producer of dextrose and a leading regional producer of starch, high fructose corn syrup and glucose. In 2002, the Company recorded net sales of $1.9 billion with operations in 19 countries at 42 plants, including wholly owned businesses, affiliates and alliances. Headquartered in Westchester, Ill., it was founded in 1906. The Company is listed on the New York Stock Exchange under the symbol CPO. Additional information can be found on the World Wide Web at www.cornproducts.com.
This press release contains or may contain 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 political, 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, taxes 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.
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Statements of Income
(Unaudited)
(All figures are in millions, except per share amounts)
Three Months Ended Change Year Ended Change
December 31, % December 31, %
2002 2001 2002 2001
Net sales before
shipping and
handling costs $499.1 $508.3 -2% $1,979.0 $2,034.0 -3%
Less: Shipping and
handling costs 26.4 32.1 -18% 108.1 146.6 -26%
Net sales 472.7 476.2 -1% 1,870.9 1,887.4 -1%
Cost of sales 406.4 409.0 -1% 1,604.3 1,588.6 1%
Gross profit 66.3 67.2 -1% 266.6 298.8 -11%
Operating expense 31.2 38.1 -18% 133.4 153.9 -13%
Income from
non-consolidated
affiliates and
other income 6.5 8.0 -19% 20.3 21.1 -4%
Operating income 41.6 37.1 12% 153.5 166.0 -8%
Financing costs 10.8 18.5 -42% 36.4 63.9 -43%
Income before taxes 30.8 18.6 66% 117.1 102.1 15%
Provision for income
taxes 11.1 6.5 42.1 35.7
19.7 12.1 63% 75.0 66.4 13%
Minority stockholders'
interest 3.2 2.8 14% 11.6 9.7 20%
Net income $16.5 $9.3 77% $63.4 $56.7 12%
Weighted average common
shares outstanding:
Basic 35.7 35.4 35.6 35.3
Diluted 35.8 35.6 35.7 35.5
Earnings per common share:
Basic $0.46 $0.26 77% $1.78 $1.60 11%
Diluted $0.46 $0.26 77% $1.77 $1.60 11%
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Balance Sheets
(In millions, except share amounts)
December 31, December 31,
2002 2001
(Unaudited)
Assets
Current assets
Cash and cash equivalents $36 $65
Accounts receivable - net 244 279
Inventories 194 201
Prepaid expenses 11 10
Total current assets 485 555
Property, plant and equipment - net 1,154 1,293
Goodwill and other intangible assets - net 280 283
Deferred tax asset 33 20
Investments 26 41
Other assets 37 35
Total assets $2,015 $2,227
Liabilities and stockholders' equity
Current liabilities
Short-term borrowings and current portion
of long-term debt 84 444
Accounts payable and accrued liabilities 263 231
Total current liabilities 347 675
Non-current liabilities 95 50
Long-term debt 489 312
Deferred income tax liability 163 186
Minority interest in subsidiaries 93 147
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
at December 31, 2002 and 2001 1 1
Additional paid in capital 1,073 1,073
Less: Treasury stock (common stock;
1,956,113 and 2,253,578 shares on
December 31, 2002 and 2001) at cost (48) (56)
Deferred compensation - restricted stock (4) (3)
Accumulated other comprehensive loss (418) (333)
Retained earnings 224 175
Total stockholders' equity 828 857
Total liabilities and stockholders' equity $2,015 $2,227
CORN PRODUCTS INTERNATIONAL, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Year Ended
December 31,
(In millions) 2002 2001
Cash provided by (used for) operating activities:
Net income $63 $57
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 103 127
Gain on sale of business (8) -
Gain on dissolution of business (3) -
Decrease (increase) in trade working capital 65 (16)
Other (14) 3
Cash provided by operating activities 206 171
Cash provided by (used for) investing activities:
Capital expenditures, net of proceeds on
disposal (77) (92)
Proceeds from sale of business 35 -
Payments for acquisitions, net of cash acquired (42) (79)
Proceeds from dissolution of business 11 -
Cash used for investing activities (73) (171)
Cash provided by (used for) financing activities:
Proceeds from borrowings 263 129
Payments on debt (407) (83)
Dividends paid (19) (23)
Issuance of common stock 4 4
Cash (used for) provided by financing
activities (159) 27
Effect of foreign exchange rate changes on cash (3) (3)
Increase (decrease) in cash and cash equivalents (29) 24
Cash and cash equivalents, beginning of period 65 41
Cash and cash equivalents, end of period $36 $65
CORN PRODUCTS INTERNATIONAL, INC.
Supplemental Financial Information
(Unaudited)
(Dollars in millions, except per share amounts)
I.Geographic Information of Net Sales and Operating Income
Three Months Ended Year Ended
December 31, Change December 31, Change
2002 2001* % 2002 2001* %
Net sales
North America $302.3 $305.3 -1% $1,218.3 $1,212.6 - %
South America 106.7 113.7 -6% 401.3 440.1 -9%
Asia/Africa 63.7 57.2 11% 251.3 234.7 7%
Total $472.7 $476.2 -1% $1,870.9 $1,887.4 -1%
Operating income
North America $14.9 $13.4 11% $56.3 $65.1 -14%
South America 16.2 16.9 -4% 58.4 67.6 -14%
Asia/Africa 13.3 10.7 24% 53.5 45.5 18%
Corporate (6.1) (3.9)** 56% (22.6) (17.6)** 28%
Non-recurring items 3.3 - - 7.9 5.4 46%
Total $41.6 $37.1 12% $153.5 $166.0 -8%
-
Certain prior year amounts have been reclassified in order to conform with current year presentation.
** Includes a $3.4 million gain from the cancellation of a long-term
obligation.
II.Estimated Source of Earnings Per Share for the Three and Twelve Months
Ended December 31
The following is a list of the major items that impacted our fourth
quarter and year-end results. The amounts are calculated on a net after-
tax basis and attempt to estimate total business effects.
Earnings Per Share Earnings Per Share
Three Months Twelve Months
Earnings per share December 31, 2001 $0.26 $1.60
Non-recurring earnings, net - 2001 - (0.10)
Earnings per share December 31, 2001,
as adjusted $0.26 $1.50
Change
Volumes (0.05) (0.19)
Operating margin 0.37 0.52
Goodwill amortization 0.05 0.21
Foreign currency translation (0.35) (0.82)
Financing costs 0.14 0.50
Tax rate (0.01) (0.03)
Minority interest (0.01) (0.05)
Shares outstanding - (0.01)
Non-recurring earnings, net - 2002 0.06 0.14
Net change 0.20 0.27
Earnings per share December 31, 2002 $0.46 $1.77
III. Capital expenditures
Capital expenditures for the years ended December 31, 2002 and 2001, were
$77 million and $92 million, respectively.
SOURCE Corn Products International, Inc.-0- 01/28/2003
/CONTACT: Investor, Richard Vandervoort, +1-708-551-2595, or Media, Jennifer Woomer Dinehart, +1-708-551-2602, both of Corn Products International, Inc./