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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-Q
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Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
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)
5 WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS 60154
(Address of principal executive offices) (Zip Code)
(708) 551-2600
(Registrant's telephone number, including area code)
6500 SOUTH ARCHER AVENUE
BEDFORD PARK, ILLINOIS 60501-1933
(Former Name, Former Address and Former Fiscal Year, (Former Zip Code)
if Changed Since Last Report)
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 such
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 OCTOBER 31, 2002
Common Stock, $.01 par value 35,662,511 shares
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -------------------------
2002 2001 2002 2001
--------------------- -------------------------
Net sales before shipping and handling costs $ 507.4 $ 505.7 $ 1,480.0 $ 1,525.8
Less: Shipping and handling costs 27.3 31.2 81.8 114.5
--------------------- -------------------------
Net sales 480.1 474.5 1,398.2 1,411.3
Cost of sales 410.1 390.4 1,198.0 1,179.7
--------------------- -------------------------
Gross profit 70.0 84.1 200.2 231.6
Operating expenses 32.4 40.9 102.2 115.8
Income from non-consolidated affiliates and other
income 2.8 3.8 13.9 13.0
--------------------- -------------------------
Operating income 40.4 47.0 111.9 128.8
Financing costs 9.3 14.8 25.6 45.3
--------------------- -------------------------
Income before income taxes and minority interest 31.1 32.2 86.3 83.5
Provision for income taxes 11.2 11.3 31.1 29.2
--------------------- -------------------------
19.9 20.9 55.2 54.3
Minority interest in earnings 2.8 1.4 8.3 6.9
--------------------- -------------------------
Net income $ 17.1 $ 19.5 $ 46.9 $ 47.4
===================== =========================
Weighted average common shares outstanding:
Basic 35.6 35.3 35.6 35.3
Diluted 35.7 35.5 35.7 35.4
Earnings per common share:
Basic $ 0.48 $ 0.55 $ 1.31 $ 1.34
Diluted $ 0.48 $ 0.55 $ 1.31 $ 1.34
See Notes To Condensed Consolidated Financial Statements
1
PART I FINANCIAL INFORMATION
ITEM I
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AMOUNTS) SEPTEMBER 30, DECEMBER 31,
2002 2001
------------ -----------
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 54 $ 65
Accounts receivable - net 220 279
Inventories 172 201
Prepaid expenses 11 10
- --------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 457 555
- --------------------------------------------------------------------------------------------------------------------
Property, plant and equipment - net 1,135 1,293
Goodwill 270 283
Deferred tax asset 20 20
Investments 44 41
Other assets 35 35
- --------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,961 $ 2,227
====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings and current portion of long-term debt 144 444
Accounts payable and accrued liabilities 195 231
- --------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 339 675
- --------------------------------------------------------------------------------------------------------------------
Non-current liabilities 76 50
Long-term debt 473 312
Deferred income taxes 180 186
Minority interest in subsidiaries 89 147
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 September 30, 2002 and December 31, 2001 1 1
Additional paid-in capital 1,073 1,073
Less: Treasury stock (common stock; 1,996,307 and 2,253,578 shares at
September 30, 2002 and December 31, 2001, respectively)
at cost (51) (56)
Deferred compensation - restricted stock (3) (3)
Accumulated comprehensive loss (427) (333)
Retained earnings 211 175
- --------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 804 857
- --------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,961 $ 2,227
====================================================================================================================
See Notes To Condensed Consolidated Financial Statements
2
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(IN MILLIONS) THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------------------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net income $ 17 $ 19 $ 47 $ 47
Comprehensive income/loss:
Gain (loss) on cash flow hedges:
Cumulative effect of adoption of SFAS 133,
net of income tax effect of $8 million -- -- -- 14
Amount of (gains) losses on cash flow
hedges reclassified to earnings, net of
income tax effect of $1 million, $4
million, $10 million and $5 million,
respectively 1 8 17 9
Unrealized gains (losses) on cash flow
hedges, net of income tax effect of
$-million, $- million, $2 million and $23
million, respectively 1 (1) 5 (42)
Currency translation adjustment (37) (25) (116) (60)
---------- ---------- ---------- ----------
Comprehensive income (loss) $ (18) $ 1 $ (47) $ (32)
========== ========== ========== ==========
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN MILLIONS) ADDITIONAL ACCUMULATED
COMMON PAID-IN TREASURY DEFERRED COMPREHENSIVE RETAINED
STOCK CAPITAL STOCK COMPENSATION INCOME (LOSS) EARNINGS
----------------------------------------------------------------------------------------
Balance, December 31, 2001 $1 $1,073 $(56) $(3) $(333) $175
Net income for the period 47
Dividends declared (11)
Amount of (gains)
losses on cash flow
hedges reclassified to
earnings, net of income
tax effect of $10
million 17
Unrealized gains
(losses) on cash flow
hedges, net of income
tax effect of $2 million 5
Currency translation
adjustment (116)
Other 5
----------------------------------------------------------------------------------------
Balance, September 30, 2002 $1 $1,073 $(51) $(3) $(427) $211
========================================================================================
See Notes To Condensed Consolidated Financial Statements
3
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS) NINE MONTHS ENDED
SEPTEMBER 30,
2002 2001
-------- ---------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net income $ 47 $ 47
Non-cash charges (credits) to net income:
Depreciation and amortization 79 98
Minority interest in earnings 8 7
Income from non-consolidated affiliates (5) (11)
Gain on sale of business (8) --
Loss on disposal of fixed assets 1 --
Changes in working capital, net of effect of disposal/acquisition:
Accounts receivable and prepaid items 18 (34)
Inventories 11 (2)
Accounts payable and accrued liabilities 15 (34)
Other (2) 11
- ------------------------------------------------------------------------------------------------------
Cash provided by operating activities 164 82
- ------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Capital expenditures, net of proceeds on disposal (51) (57)
Proceeds from sale of business 35 --
Payments for acquisitions (42) (78)
- ------------------------------------------------------------------------------------------------------
Cash used for investing activities (58) (135)
- ------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from borrowings 208 126
Payments on debt (309) (73)
Dividends paid (15) (19)
Issuance of common stock 3 1
- ------------------------------------------------------------------------------------------------------
Cash (used for) provided by financing activities (113) 35
- ------------------------------------------------------------------------------------------------------
Effect of foreign exchange rate changes on cash (4) (3)
- ------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (11) (21)
Cash and cash equivalents, beginning of period 65 41
- ------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 54 $ 20
======================================================================================================
See Notes To Condensed Consolidated Financial Statements
4
CORN PRODUCTS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 notes to
those statements contained in the Company's Annual Report to Stockholders that
were incorporated by reference in Form 10-K/A for the year ended December 31,
2001.
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 and
cash flows for the interim periods ended September 30, 2002 and 2001, and the
financial position of the Company as of September 30, 2002. The results for the
three months and the nine months ended September 30, 2002 are not necessarily
indicative of the results expected for the year.
Certain prior year amounts in the Condensed Consolidated Financial
Statements have been reclassified to conform with the current year presentation.
2. REFINANCINGS
On June 28, 2002, the Company sold $200 million of 8.25 percent Senior
Notes due July 15, 2007. Interest will be paid semi-annually on January 15 and
July 15, beginning on January 15, 2003. The notes are unsecured obligations of
the Company and rank equally with the Company's other unsecured, senior
indebtedness. The Company may redeem all or any portion of the notes at any
time, subject to the payment of principal and any applicable premium thereon.
The net proceeds from the sale of the notes were used to repay $197 million of
borrowings outstanding under the Company's then existing $340 million revolving
credit facility.
On October 15, 2002, the Company entered into a new 3-year, $125
million Revolving Credit Agreement (the "Revolving Credit Agreement"). The
Revolving Credit Agreement replaced the Company's previously existing $340
million revolving credit facility. On October 18, 2002, the commitments under
the $340 million revolving credit facility were permanently terminated.
Borrowings that had been outstanding under the $340 million revolving credit
facility were repaid with excess cash.
3. MEXICO HFCS TAX
On January 1, 2002, the Mexican Congress passed a value-added tax on
soft drinks sweetened with high fructose corn syrup (HFCS), which on March 5,
2002, was suspended until September 30, 2002. In response to the enactment of
the tax, which at the time effectively ended the use of HFCS for soft drinks in
Mexico, the Company ceased production of HFCS 55 at its San Juan del Rio plant,
one of its four plants in Mexico. Effective with the March 5, 2002 suspension of
the tax, the Company resumed the production and sale of HFCS in Mexico, although
at levels below historical volumes. On July 12, 2002, the Mexican Supreme Court
annulled the temporary suspension of the tax, thereby resuming the tax, and the
Company curtailed the production of HFCS 55 at its San Juan del Rio plant. Until
there is a resolution of
5
the Mexican value-added tax on soft drinks sweetened with HFCS, the Company
expects to make no HFCS sales to the soft drink industry in Mexico. Management
continues to seek a permanent repeal of the tax and currently believes that the
problem will ultimately be resolved by the governments of the United States
and/or Mexico. Until that occurs, the Company's operating results and cash flows
will continue to be adversely affected by the Mexico HFCS tax issue.
4. DEVALUATION OF THE ARGENTINE PESO
On January 6, 2002, the Argentine government announced a devaluation of
its currency and the establishment of a floating exchange rate. The Company's
financial statements for the year ended December 31, 2001 reflect this event.
For the first nine months of 2002, the Company recognized an other comprehensive
loss of approximately $55 million relating to the further devaluation of the
Argentine peso in relation to the U.S. dollar. This loss was included in the
accumulated comprehensive loss account within the stockholders' equity section
of the Company's Condensed Consolidated Balance Sheet. However, as a result of
actions taken in both Argentina and throughout the Southern Cone of South
America, the devaluation did not have a material adverse effect on the Company's
third quarter or first nine month 2002 net income. Continued weakening of the
Argentine peso relative to the U.S. dollar could result in the recognition of
additional foreign currency translation losses in accumulated comprehensive loss
and a reduction in the Company's total stockholders' equity in the future.
Additionally, any further devaluation of the Argentine currency and/or other
economic and policy developments in Argentina could have an adverse impact on
the Company's financial position, results of operations and cash flows in future
periods, and such effects could be significant.
5. ADOPTION OF NEW ACCOUNTING STANDARDS
On January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS
142"), which supersedes APB Opinion No. 17, "Intangible Assets." SFAS 142
addresses how intangible assets that are acquired individually or with a group
of other assets (but not those acquired in a business combination) should be
accounted for in financial statements upon their acquisition. SFAS 142 also
addresses how goodwill and other intangible assets should be accounted for after
they have been initially recognized in the financial statements. SFAS 142
stipulates that goodwill should no longer be amortized and should instead be
subject to an annual impairment assessment. The Company completed the
transitional impairment test required by SFAS 142 during the first quarter of
2002. No impairment loss was recognized in connection with the adoption of SFAS
142 as of January 1, 2002.
6
The following information is disclosed in accordance with SFAS 142:
Goodwill
The carrying amount of goodwill by geographic segment as of September 30, 2002,
was as follows:
AT
SEPTEMBER 30,
2002
------------
(in millions)
North America $ 119
South America 19
Asia/Africa 132
------------
Total goodwill $ 270
------------
The adoption of SFAS 142's provisions relating to goodwill amortization
resulted in the Company discontinuing the amortization of goodwill beginning
January 1, 2002. On a pretax basis, goodwill amortization recorded in the third
quarter of 2001 was $2.9 million, consisting of $0.8 million in North America,
$0.5 million in South America and $1.6 million in Asia/Africa. For the nine
months ended September 30, 2001, goodwill amortization on a pretax basis was
$8.9 million, consisting of $2.4 million in North America, $1.6 million in South
America and $4.9 million in Asia/Africa. On an after-tax basis, goodwill
amortization recorded for the three months and nine months ended September 30,
2001 was $1.9 million and $5.8 million, respectively. The following table
provides a comparison of the effects of adopting SFAS 142 for the three months
and nine months ended September 30, 2002 and 2001:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
-------- -------- -------- --------
(In millions, except per share data)
Net income as reported $ 17.1 $ 19.5 $ 46.9 $ 47.4
Add back: goodwill amortization
(net of income taxes) -- 1.9 -- 5.8
-------- -------- -------- --------
Adjusted net income $ 17.1 $ 21.4 $ 46.9 $ 53.2
======== ======== ======== ========
Basic and diluted earnings per common share:
As reported earnings per share $ 0.48 $ 0.55 $ 1.31 $ 1.34
Add back: goodwill amortization -- 0.05 -- 0.16
-------- -------- -------- --------
Adjusted earnings per share $ 0.48 $ 0.60 $ 1.31 $ 1.50
========= ======== ========= =========
Also on January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"), which supersedes SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS 121"). While SFAS 144 retains many of the fundamental recognition and
measurement provisions of SFAS 121, it changes the criteria
7
required to be met to classify an asset as held for sale. SFAS 144 also
supersedes the accounting and reporting provisions of APB Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," and, among other things, broadens reporting for
discontinued operations to include a component of an entity, rather than just a
segment of a business. The adoption of SFAS 144 did not have an effect on the
Company's consolidated financial statements.
6. SALE OF NON-CORE BUSINESS
On February 5, 2002, the Company sold its interest in Enzyme
Bio-Systems Ltd. of Beloit, Wisconsin for approximately $35 million in cash. The
Company recorded a pretax gain from the sale of approximately $8 million, which
is included in other income in the Condensed Consolidated Statement of Income
for the nine months ended September 30, 2002.
7. ACQUISITIONS
On March 4, 2002, the Company increased its ownership in Arancia Corn
Products, S.A. de C.V., its consolidated Mexican subsidiary, from 90 percent to
100 percent by paying approximately $39 million in cash and issuing 70,000
shares of common stock valued at approximately $2 million.
8. RESTRUCTURING CHARGES
One of the Company's continuing business strategies is to improve North
America profitability. In order to remain competitive while improving margins,
the Company has implemented a restructuring plan that includes the termination
of approximately 200 employees throughout the three North American countries in
which it operates and the cancellation of certain lease obligations. In
connection with this restructuring plan, the Company recorded charges of $4.3
million during the first quarter of 2002. Of this amount, approximately $3.5
million represents employee severance costs and related benefits and the balance
represents provisions relating to the lease obligations. The charge of $4.3
million was recorded in general and administrative expenses. As of September 30,
2002, all of the employee terminations under the restructuring plan were
completed.
9. INTEREST RATE SWAPS
On March 14, 2002, the Company entered into interest rate swap
agreements to take advantage of the current interest rate environment by
effectively converting the interest rate associated with the Company's 8.45
percent $200 million senior notes due 2009 to variable rates. These agreements
involve the exchange of fixed rate payments (at 8.45 percent) for variable rate
payments on $200 million of notional principal without the exchange of the
underlying face amount. Under the terms of the agreements, the Company receives
fixed rate payments and makes variable rate payments based on the six-month U.S.
dollar LIBOR rate plus a spread. The fair value of these agreements is reflected
in the accompanying Condensed Consolidated Balance Sheets as an adjustment to
the carrying value of the hedged debt obligation. Interest rate differentials to
be paid or received under these agreements are recognized as adjustments to
interest expense using the accrual method. The Company does not hold or issue
interest rate swap agreements for trading purposes.
8
10. INVENTORIES
Inventories are summarized as follows: AT AT
SEPTEMBER 30, DECEMBER 31,
(in millions) 2002 2001
---- ----
Finished and in process $ 78 $ 91
Raw materials 65 75
Manufacturing supplies and other 29 35
- --------------------------------------------------------------------------------
Total inventories $172 $201
================================================================================
11. 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 CornProductsMCP Sweeteners LLC. 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(in millions) 2002 2001 2002 2001
-------------------- ------------------------
NET SALES
North America $ 321.9 $ 310.7 $ 916.1 $ 907.4
South America 94.2 105.5 294.5 326.4
Asia/Africa 64.0 58.3 187.6 177.5
-------------------- ------------------------
Total $ 480.1 $ 474.5 $ 1,398.2 $ 1,411.3
==================== ========================
OPERATING INCOME
North America $ 17.6 $ 18.3 * $ 41.3 $ 51.6 *
South America 13.6 16.3 42.2 50.7
Asia/Africa 14.4 11.3 40.3 34.8
Corporate (5.2) (4.3)* (16.5) (13.7)*
Non-recurring items, net -- 5.4 4.6 5.4
-------------------- ------------------------
Total $ 40.4 $ 47.0 $ 111.9 $ 128.8
==================== ========================
* Certain expenses that had previously been reflected in North America results
are now classified as corporate expenses. Prior year information has been
reclassified to conform to the current year presentation.
AT AT
(in millions) SEPTEMBER 30, 2002 DECEMBER 31, 2001
------------------ -----------------
TOTAL ASSETS
North America $1,308 $1,430
South America 317 489
Asia/Africa 336 308
------ ------
Total $1,961 $2,227
====== ======
9
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002
WITH COMPARATIVES FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2001
NET INCOME. Net income for the quarter ended September 30, 2002 was
$17.1 million, or $0.48 per diluted share, compared to $19.5 million, or $0.55
per diluted share, in the third quarter of 2001. The results for the year-ago
period included net non-recurring after-tax earnings of $3.5 million ($0.10 per
diluted share) related to a value-added tax (VAT) refund, net of certain
one-time charges. Excluding last year's net non-recurring earnings, third
quarter 2002 net income increased 7 percent from the $16.0 million, or $0.45 per
diluted share earned in the prior year period. This increase primarily reflects
significantly lower financing costs and, to a lesser extent, the discontinuation
of goodwill amortization which more than offset a reduction in operating income
mainly attributable to lower earnings in South America and an increase in
minority interest. Third quarter 2001 results included goodwill amortization
expense of $2.9 million ($1.9 million, net of income taxes), or $0.05 per
diluted share. Net income for the nine months ended September 30, 2002 decreased
to $46.9 million, or $1.31 per diluted share, from $47.4 million, or $1.34 per
diluted share in the prior year period. Results for the first nine months of
2002 include $4.6 million ($3.0 million after-tax) of net non-recurring earnings
consisting primarily of a gain from the sale of a business unit, net of certain
one-time charges. The non-recurring earnings include an $8.0 million pretax gain
from the February 2002 sale of Enzyme-Bio Systems Ltd. ("EBS"), partially offset
by $4.3 million of charges principally related to workforce reductions in North
America. Additionally, a one-time gain of $0.9 million associated with the
curtailment of certain benefit costs pertaining to the aforementioned sale and
workforce reduction was recorded. Net income for the nine months ended September
30, 2001 included the previously mentioned non-recurring earnings from a VAT
refund, net of certain one-time charges. Excluding the net non-recurring income
from both 2002 and 2001, the Company earned $43.9 million, or $1.23 per diluted
share for the first nine months of 2002, compared to $43.9 million, or $1.24 per
diluted share in the year-ago period. Results for the first nine months of 2001
include goodwill amortization expense of $8.9 million ($5.8 million after-tax),
or $0.16 per diluted share.
NET SALES. Third quarter 2002 net sales totaled $480 million, up 1
percent from third quarter 2001 net sales of $475 million. This slight increase
reflects a 10 percent price/mix improvement and 3 percent volume growth, which
more than offset a 12 percent reduction attributable to weaker foreign
currencies. Net sales for the first nine months of 2002 decreased 1 percent to
$1,398 million from $1,411 million in the year-ago period, as a 9 percent
decline attributable to weaker currencies and a 1 percent volume reduction more
than offset a price/mix improvement of 9 percent.
North American net sales for third quarter 2002 were up 4 percent from
the same period last year reflecting 4 percent volume growth and 2 percent
price/mix improvement, partially offset by a 2 percent reduction attributable to
weaker currencies. Volumes in the region grew despite reduced demand in Mexico
caused by the Mexican HFCS tax issue (see following section entitled "Mexico
HFCS Tax"). For the nine months ended September 30, 2002, North
10
American net sales increased 1 percent from the year-ago period, as a 3 percent
price/mix improvement was partially offset by a 1 percent volume decline and
weaker currencies.
South American net sales for third quarter 2002 decreased 11 percent
from the year-ago period as currency weakness, particularly in Argentina and
Brazil, more than offset substantial price/mix improvement. Volume in the region
was flat. For the nine months ended September 30, 2002, South American net sales
were down 10 percent from the prior year period due, in part, to a 3 percent
regional volume decline driven by difficult economic conditions in Argentina and
Brazil. Additionally, while price/mix improvements in the region have been
significant (up approximately 40 percent and 29 percent from the third quarter
and first nine months of 2001, respectively), the increases are currently
lagging local currency devaluation.
Asia/Africa net sales for third quarter 2002 were up 10 percent from
the prior year period, reflecting a 7 percent increase attributable to stronger
local currencies, 2 percent volume growth and modest price/mix improvement. For
the nine months ended September 30, 2002, Asia/Africa net sales increased 6
percent from the year-ago period, reflecting a 3 percent increase attributable
to stronger local currencies, 2 percent volume growth and modest price/mix
improvement.
COST OF SALES AND OPERATING EXPENSES. Cost of sales for the third
quarter and first nine months of 2002 increased 5 percent and 2 percent,
respectively, from the comparable prior year periods. Excluding the effect of
certain non-recurring items from the prior year periods, cost of sales for the
third quarter and first nine months of 2002 were up 2 percent and 1 percent,
respectively, from the year-ago periods. The Company's gross profit percentage
for the three months and nine months ended September 30, 2002 decreased to 14.6
percent and 14.3 percent, respectively, from 15.5 percent and 15.7 percent in
the comparable prior year periods (excluding non-recurring items). The lower
gross profit percentages principally reflect reduced operating margins mainly
due to the HFCS tax issue in Mexico and economic weakness in Brazil.
Due primarily to a change in accounting that prohibits the amortization
of goodwill and the recording in third quarter 2001 of certain non-recurring
charges, third quarter and first nine month 2002 operating expenses declined 21
percent and 12 percent, respectively, from the prior year periods, despite the
recording in first quarter 2002 of the aforementioned one-time charges and
curtailment gain, which together totaled $3.4 million. Excluding the effect of
the one-time items and goodwill amortization, third quarter and first nine month
2002 operating expenses were $32.4 million and $98.9 million, respectively,
compared with $32.7 million and $101.6 million in the corresponding prior year
periods.
OPERATING INCOME. Third quarter 2002 operating income declined 14
percent to $40.4 million from $47.0 million a year ago. Excluding the net
non-recurring earnings and goodwill amortization from the prior year, operating
income fell 9 percent from third quarter 2001. The decline in operating income
principally reflects lower earnings in South America. Slightly lower earnings in
North America and increased corporate expenses also contributed to the reduced
operating income. North America operating income declined 4 percent to $17.6
million from $18.3 million in third quarter 2001. Excluding goodwill
amortization from the prior year, operating income in the region decreased 8
percent from third quarter 2001. The decline primarily reflects lower results in
Mexico, due principally to the HFCS tax issue, which more than offset improved
earnings in the United States and Canada. South America operating
11
income decreased 17 percent to $13.6 million from $16.3 million. Excluding
goodwill amortization, operating income in the region was down 19 percent from
the prior year period principally due to lower results in Brazil attributable to
the economic slowdown in that country. Asia/Africa operating income increased 27
percent to $14.4 million from $11.3 million a year ago. Excluding goodwill
amortization, operating income in the region increased 12 percent from third
quarter 2001 primarily reflecting volume growth and stronger local currencies.
Operating income for the nine months ended September 30, 2002, which includes
the previously mentioned $4.6 million of net non-recurring earnings, decreased
13 percent to $111.9 million from $128.8 million last year. Excluding the net
non-recurring earnings from both years and goodwill amortization from the 2001
period, operating income decreased 19 percent from the first nine months of
2001, reflecting significantly lower earnings in North America and South
America. North America operating income of $41.3 million decreased 20 percent
from $51.6 million in the year-ago period, mainly due to the impact of Mexico's
HFCS tax on our Mexican business. Excluding goodwill amortization from the prior
year, operating income in North America dropped 23 percent from the year-ago
period. South America operating income of $42.2 million for the first nine
months of 2002 decreased 17 percent from $50.7 million in the prior year period,
primarily due to soft economic conditions in Brazil. Excluding goodwill
amortization, operating income for the first nine months of 2002 declined 19
percent from last year. Asia/Africa operating income increased 16 percent to
$40.3 million from $34.8 million a year ago. Excluding goodwill amortization,
Asia/Africa operating income for the first nine months of 2002 was up 1 percent
from the prior year period.
FINANCING COSTS. Financing costs for the third quarter and first nine
months of 2002 declined 37 percent and 43 percent, respectively, from the
year-ago periods reflecting lower interest rates, reduced debt and, to a lesser
extent, foreign currency transaction gains.
PROVISION FOR INCOME TAXES. The effective tax rate increased to 36
percent for the three months and nine months ended September 30, 2002, from 35
percent in the prior year periods. The higher estimated tax rate for 2002 is
based on the expected change in the mix of domestic and foreign earnings for the
full year.
MINORITY INTEREST IN EARNINGS. Minority interest in earnings for the
third quarter and first nine months of 2002 increased $1.4 million from the
prior year periods. The increases primarily reflect improved earnings in the
Southern Cone of South America and Korea, which more than offset a reduction in
minority interest attributable to the Company's increased ownership in Arancia
Corn Products, S.A. de C.V. ("Arancia"). Arancia became a wholly-owned
subsidiary of the Company on March 4, 2002.
COMPREHENSIVE INCOME (LOSS). The Company recorded a comprehensive loss
of $18 million for third quarter 2002, as compared with comprehensive income of
$1 million in the prior year period. The decrease reflects a $12 million
unfavorable variance in the currency translation adjustment, a reduction in
gains from cash flow hedges (net of income taxes) and lower net income. For the
nine months ended September 30, 2002, the Company recorded a comprehensive loss
of $47 million, as compared with a $32 million comprehensive loss a year ago.
The increase in the comprehensive loss reflects a $56 million unfavorable
variance in the currency translation adjustment, which more than offset gains
from cash flow hedges (net of income taxes). The unfavorable $56 million
variance in the currency translation adjustment relates primarily to the
negative impact of weakened local currencies, particularly in Argentina and
Brazil.
12
MEXICO HFCS TAX
On January 1, 2002, the Mexican Congress passed a value-added tax on
soft drinks sweetened with high fructose corn syrup (HFCS), which on March 5,
2002, was suspended until September 30, 2002. In response to the enactment of
the tax, which at the time effectively ended the use of HFCS for soft drinks in
Mexico, the Company ceased production of HFCS 55 at its San Juan del Rio plant,
one of its four plants in Mexico. Effective with the March 5, 2002 suspension of
the tax, the Company resumed the production and sale of HFCS in Mexico, although
at levels below historical volumes. On July 12, 2002, the Mexican Supreme Court
annulled the temporary suspension of the tax, thereby resuming the tax, and the
Company curtailed the production of HFCS 55 at its San Juan del Rio plant. Until
there is a resolution of the Mexican value-added tax on soft drinks sweetened
with HFCS, the Company expects to make no HFCS sales to the soft drink industry
in Mexico. Management continues to seek a permanent repeal of the tax and
currently believes that the problem will ultimately be resolved by the
governments of the United States and/or Mexico. Until that occurs, the Company's
operating results and cash flows will continue to be adversely affected by the
Mexico HFCS tax issue.
DEVALUATION OF THE ARGENTINE PESO
On January 6, 2002, the Argentine government announced a devaluation of
its currency and the establishment of a floating exchange rate. The Company's
financial statements for the year ended December 31, 2001 reflect this event.
For the first nine months of 2002, the Company recognized an other comprehensive
loss of approximately $55 million relating to the further devaluation of the
Argentine peso in relation to the U.S. dollar. This loss was included in the
accumulated comprehensive loss account within the stockholders' equity section
of the Company's Condensed Consolidated Balance Sheet. However, as a result of
actions taken in both Argentina and throughout the Southern Cone of South
America, the devaluation did not have a material adverse effect on the Company's
third quarter or first nine month 2002 net income. Continued weakening of the
Argentine peso relative to the U.S. dollar could result in the recognition of
additional foreign currency translation losses in accumulated comprehensive loss
and a reduction in the Company's total stockholders' equity in the future.
Additionally, any further devaluation of the Argentine currency and/or other
economic and policy developments in Argentina could have an adverse impact on
the Company's financial position, results of operations and cash flows in future
periods, and such effects could be significant.
CORNPRODUCTSMCP SWEETENERS LLC ("CPMCP")
In 2001, the Company began selling, marketing and distributing
designated sweetener production destined for sale in the United States through
CPMCP, a limited liability joint marketing company owned by the Company and
Minnesota Corn Processors, LLC ("MCP"). On July 11, 2002, MCP announced that it
had signed a merger agreement with Archer-Daniels-Midland Company ("ADM"),
whereby MCP would merge with a subsidiary of ADM. The consummation of the merger
is subject to a number of conditions, including approval from the appropriate
regulatory agencies. On September 5, 2002, the unit holders of MCP approved the
proposed sale. The next day, the Justice Department's antitrust division filed a
lawsuit in U.S. District Court, formally blocking the proposed transaction
although it also filed a consent decree approving the sale if CPMCP is dissolved
by December 31, 2002.
13
On September 6, 2002, the Company was notified of MCP's desire to
terminate the business operations of CPMCP effective December 31, 2002. While it
appears likely, at this time, that CPMCP's business operations will be dissolved
on or before December 31, 2002, pursuant to a mutually acceptable plan of
dissolution to be agreed upon by the parties, and that ADM will acquire MCP, the
Company cannot give assurance that such will be the case.
If the business operations of CPMCP are terminated in connection with
the acquisition of MCP by ADM, the Company believes that it will be able to
unwind the joint marketing company and resume the marketing of its own
designated sweetener products without a material adverse impact on the Company's
future financial position, results of operations or cash flows. In addition, the
Company currently believes that the net financial impact of the dissolution,
although indeterminate at this time, would be positive.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2002, the Company's total assets decreased to $1,961
million from $2,227 million at December 31, 2001. The decline in total assets
mainly reflects weakening of the local currencies in Argentina and Brazil.
Additionally, improved working capital management and the sale of EBS
contributed to the decrease.
For the nine months ended September 30, 2002, cash provided by
operating activities was $164 million, compared to $82 million in the prior year
period. This increase primarily reflects a significant improvement in cash flow
pertaining to changes in working capital, compared to the year-ago period. Cash
used for investing activities totaled $58 million for the first nine months of
2002, reflecting capital expenditures and acquisition related payments,
partially offset by proceeds from the sale of EBS. Capital expenditures of $51
million for the first nine months of 2002 are in line with the Company's capital
spending plan for the year, which is currently expected to approximate $80
million for full year 2002. The Company's capital expenditures and acquisition
of the 10 percent minority interest in Arancia were funded by operating cash
flows and with proceeds from the sale of EBS.
On June 28, 2002, the Company sold $200 million of 8.25 percent senior
notes due July 15, 2007. The net proceeds from the sale of the notes were used
to repay $197 million of borrowings outstanding under the Company's then
existing $340 million U.S. revolving credit facility. On October 15, 2002, the
Company entered into a new 3-year, $125 million Revolving Credit Agreement (the
"Revolving Credit Agreement"). The Revolving Credit Agreement replaced the
Company's previously existing $340 million revolving credit facility. On October
18, 2002, the commitments under the $340 million revolving credit facility were
permanently terminated. Borrowings that had been outstanding under the $340
million revolving credit facility were repaid with excess cash.
In addition to the Revolving Credit Agreement, the Company has a number
of short-term credit facilities consisting of operating lines of credit. At
September 30, 2002, the Company had total debt outstanding of $617 million
compared to $756 million at December 31, 2001. The decrease mainly reflects
payments made during the first nine months of 2002. The debt outstanding
includes: $31 million outstanding under the Company's then existing $340 million
revolving credit facility at a weighted average interest rate of 2.2 percent for
the nine months ended September 30, 2002; $200 million of 8.25 percent senior
notes due 2007; $200 million of 8.45 percent senior notes due 2009; and various
affiliate indebtedness totaling $210 million which includes borrowings
outstanding under local country operating credit lines.
14
Approximately $113 million of the affiliate debt represents short-term
borrowings. The weighted average interest rate on affiliate debt was
approximately 6.2 percent for the first nine months of 2002. On March 14, 2002,
the Company entered into interest rate swap agreements that effectively
converted the interest rate associated with the Company's 8.45 percent senior
notes to a variable interest rate.
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 for the foreseeable future.
MINORITY INTEREST IN SUBSIDIARIES. Minority interest in subsidiaries
decreased $58 million to $89 million at September 30, 2002 from $147 million at
December 31, 2001. The decrease is mainly attributable to the Company's purchase
of the 10 percent minority interest in Arancia on March 4, 2002. Effective with
the purchase, Arancia became a wholly-owned subsidiary of the Company.
Additionally, a weakening of the Argentine peso contributed to the reduction in
minority interest.
ACCUMULATED COMPREHENSIVE LOSS. The accumulated comprehensive loss
account included in the stockholders' equity section of the Condensed
Consolidated Balance Sheets increased to $427 million at September 30, 2002 from
$333 million at December 31, 2001. The increase in the accumulated comprehensive
loss primarily reflects a $116 million reduction in the currency translation
adjustment attributable to a weakening of local currencies relative to the U.S.
dollar, particularly in Argentina and Brazil. For the nine months ended
September 30, 2002, weaker currencies in Argentina and Brazil resulted in
reductions to the currency translation adjustment of approximately $55 million
and $57 million, respectively.
NEW ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), which
addresses financial accounting and reporting for legal obligations associated
with the retirement of tangible long-lived assets and the related asset
retirement costs. The Company is required to adopt SFAS 143 on January 1, 2003.
The impact of the adoption of SFAS 143, if any, is not expected to be
significant.
On July 30, 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146"), which addresses
financial accounting and reporting for costs associated with exit or disposal
activities. SFAS 146 replaces EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." SFAS 146 is required to
be applied prospectively to exit or disposal activities initiated after December
31, 2002. The Company is currently assessing the impact, if any, of the adoption
of SFAS 146.
15
FORWARD-LOOKING STATEMENTS
This Form 10-Q 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/A 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/A for the year ended December 31, 2001, and is incorporated herein by
reference. Except for the items referenced below, there have been no material
changes to the Company's market risk during the nine months ended September 30,
2002.
On January 1, 2002, the Mexican Congress passed a value-added tax on
soft drinks sweetened with high fructose corn syrup (HFCS), which on March 5,
2002, was suspended until September 30, 2002. On July 12, 2002, the Mexican
Supreme Court annulled the temporary suspension of the tax, thereby resuming the
tax. Please refer to Item 2, Management's Discussion and Analysis of Financial
Condition and Results of Operations, section entitled "Mexico HFCS Tax",
included herewith, for information pertaining to the tax.
On January 6, 2002 the Argentine government announced a devaluation of
its currency and the establishment of a floating currency exchange rate. Please
refer to Item 2, Management's Discussion and Analysis of Financial Condition and
Results of Operations, section entitled "Devaluation of the Argentine Peso",
included herewith, for information pertaining to the devaluation.
As described in Note 2 to the Condensed Consolidated Financial
Statements included herewith, on June 28, 2002, the Company sold $200 million of
8.25 percent senior notes due
16
July 15, 2007. The net proceeds from the sale of the notes were used to repay
borrowings outstanding under the Company's then existing $340 million revolving
credit facility.
As described in Note 9 to the Condensed Consolidated Financial
Statements included herewith, on March 14, 2002, the Company entered into
interest rate swap agreements that effectively converted the interest rate
associated with the Company's 8.45 percent $200 million senior notes to a
variable interest rate.
On October 15, 2002, the Company entered into a new 3-year, $125
million Revolving Credit Agreement. Please refer to Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations,
section entitled "Liquidity and Capital Resources", included herewith, for
information pertaining to the $125 million Revolving Credit Agreement.
ITEM 4
CONTROLS AND PROCEDURES
The Chief Executive Officer and the Chief Financial Officer performed
an evaluation of the effectiveness of the Company's disclosure controls and
procedures as of September 30, 2002. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the disclosure
controls and procedures are effective in ensuring that all material information
required to be filed in this quarterly report has been made known to them in a
timely fashion. There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect the Company's
internal controls subsequent to the date the Chief Executive Officer and Chief
Financial Officer completed their evaluation.
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
On July 8, 2002, a report was filed disclosing the First Supplemental
Indenture to the Indenture dated as of August 18, 1999 between Corn
Products International, Inc. and The Bank of New York, as trustee.
On August 13, 2002, a report was filed disclosing the sworn statements
submitted to the SEC pursuant to Securities and Exchange Commission
Order No. 4-460 by each of the Principal Executive Officer and
Principal Financial Officer of Corn Products International, Inc.
All other items hereunder are omitted because either such item is inapplicable
or the response is negative.
17
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: November 12, 2002 By /s/ James W. Ripley
------------------------------------------
James W. Ripley
Vice President and Chief Financial Officer
DATE: November 12, 2002 By /s/ Robin A. Kornmeyer
------------------------------------------
Robin A. Kornmeyer
Vice President and Corporate Controller
18
CERTIFICATIONS
I, Samuel C. Scott III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Corn Products
International, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002
/s/ Samuel C. Scott III
-----------------------------
Samuel C. Scott III
Chairman, President and
Chief Executive Officer
19
CERTIFICATIONS
I, James W. Ripley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Corn Products
International, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002
/s/ James W. Ripley
----------------------------
James W. Ripley
Vice President and
Chief Financial Officer
20
EXHIBIT INDEX
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
4 Rights Agreement, as amended and restated as of September 9, 2002
10 Amendment to CornProductsMCP Sweeteners LLC Limited Liability
Company Agreement dated July 1, 2002
11 Statement re: computation of earnings per share
99.1 CEO Certification Pursuant to Section 1350 of Chapter 63 of Title
18 of the United States Code
99.2 CFO Certification Pursuant to Section 1350 of Chapter 63 of Title
18 of the United States Code
21