WESTCHESTER, Ill., Jan. 30 /PRNewswire-FirstCall/ -- Corn Products
International, Inc. (NYSE:CPO), a leading global provider of
agriculturally derived ingredients for diversified markets, today
reported diluted earnings per share of $0.43 for the fourth quarter
ended December 31, 2006, a 39 percent increase compared with
diluted earnings per share of $0.31 a year ago. Net income of $33
million in the fourth quarter of 2006 rose 40 percent versus $23
million last year. Net sales of $687 million in the fourth quarter
of 2006, a record quarterly level, improved 17 percent versus $586
million in the prior-year period. The record net sales were driven
by favorable price/product mix, volumes and currency translations.
All three geographic regions recorded double-digit growth in net
sales. Gross profit of $107 million in the fourth quarter of 2006
increased 30 percent versus $82 million a year ago. Gross margins
of 15.5 percent in the fourth quarter of 2006 compared with 14.0
percent in 2005. Consistent with the first three quarters of 2006,
the Company's fourth-quarter gross profit increase was due
primarily to improved pricing and costs in the North American
region. Operating income of $57 million in the fourth quarter of
2006 increased 29 percent versus $44 million last year. Increased
operating expenses resulted primarily from higher variable
incentive compensation, which was driven by the Company's strong
earnings results and a 45 percent stock price improvement.
Operating margins expanded to 8.3 percent from 7.5 percent in 2005.
The fourth-quarter tax rate of 31.5 percent was favorable compared
with 34.5 percent last year. 2006 Full-Year Results The Company
reported record net sales and earnings for the year ended December
31, 2006. Net income of $124 million, or $1.63 per diluted share,
in 2006 increased 38 percent compared with net income of $90
million, or $1.19 per diluted share, last year. Net sales of $2.62
billion grew 11 percent versus $2.36 billion in the prior-year
period. Volumes, price/product mix and currency translations were
positive. Gross profit of $416 million in 2006 rose 25 percent
versus $332 million in 2005. Gross margins reached 15.9 percent in
2006 compared with 14.1 percent a year ago. Significantly higher
North American results, primarily due to improved US and Canadian
contract pricing, drove the increase. Net corn costs were up
slightly, while energy costs increased at a double-digit rate.
Record operating income of $224 million in 2006 was a 23 percent
improvement compared with $183 million a year earlier. Variable
incentive compensation, including the cost of stock option
expensing, was the major reason for a 28 percent increase in
operating expenses in 2006. Operating margins climbed to 8.6
percent in 2006 versus 7.8 percent in 2005. Net financing costs of
$27 million in 2006 were $8 million lower than the prior year due
primarily to capitalized interest on major projects and foreign
exchange swings. The effective tax rate of 35.3 percent compared
favorably with 37.5 percent in 2005, principally reflecting a
change in the mix between US and foreign income. Overall, the
Company's diluted earnings per share increase of 44 cents in 2006
was attributable to 18 cents per share from volumes, 9 cents per
share from operating margins, 7 cents per share from foreign
currency translation, 6 cents per share from financing costs, and 5
cents per share from the effective tax rate. An increase in
minority interest in earnings reduced earnings per share by 1 cent.
"It is particularly gratifying to achieve a record performance in
2006, when we celebrated our 100th anniversary year," said Sam
Scott, chairman, president and chief executive officer of Corn
Products International. "Importantly, our return on capital
employed, or ROCE, improved to 7.5 percent in 2006 from 6.0 percent
in 2005, moving us closer to our stated target of 8.5 percent by
the end of 2008. During the year, given our strong earnings growth,
we also announced two increases to our quarterly dividend rate, or
a combined increase of 29 percent." Regional Business Segment
Performance Regional results for the year ended December 31, 2006
were as follows: North America Net sales of $1.59 billion increased
12 percent versus $1.42 billion in 2005, primarily due to improved
price/product mix and favorable volumes and, to a lesser degree, a
stronger Canadian dollar. Operating income of $130 million more
than doubled from $59 million last year. All three country
businesses reported solid increases in net sales and operating
income. Canada and Mexico posted record operating income. South
America Net sales of $670 million increased 11 percent compared
with $603 million a year ago. Strong volume growth and favorable
currency translations more than offset a reduction in price/product
mix. Operating income of $84 million in 2006 fell from a record
$101 million in the prior year. However, the region's 2006 second
half results improved over the first half, notably in Brazil, which
was in line with the Company's comments at the end of the first
quarter. The Andean region turned in a strong 2006 performance,
while lower results in Argentina were principally due to high corn
and energy costs throughout the year. Asia/Africa Net sales of $363
million grew 8 percent versus $335 million last year as a result of
higher volumes, as well as currency appreciation, particularly the
South Korean won. Price/product mix was unfavorable. Operating
income of $53 million was unchanged from 2005, which included a
pre-tax gain of $1.8 million from a land sale in Malaysia. A strong
year in Pakistan was partially offset by South Korea's lower
results. Balance Sheet and Cash Flow The Company continued to carry
a strong balance sheet and excellent liquidity as of December 31,
2006. Cash provided by operations for 2006 was $230 million,
slightly below a record $245 million in 2005. Capital expenditures
in 2006, including the impact of the final year of the Argo coal
boiler project, were $171 million. 2007 Outlook Separately, the
Company announced today that it expects 2007 diluted earnings per
share to increase in a range of 13 to 23 percent, to between $1.84
and $2.01, versus diluted earnings per share of $1.63 in 2006.
Conference Call and Webcast Corn Products International will
conduct a conference call today at 8:30 a.m. Eastern Time (7:30
a.m. Central Time) to be hosted by Sam Scott, chairman, president
and chief executive officer, and Cheryl Beebe, vice president and
chief financial officer. The call will be broadcast in a real-time
webcast. The broadcast will consist of the call and a visual
presentation accessible through the Corn Products International web
site at http://www.cornproducts.com/. The "listen-and- view-only"
presentation will be available to download approximately 60 minutes
prior to the start of the call. A replay of the webcast will be
available at http://www.cornproducts.com/. Individuals without
Internet access may listen to the live conference call by dialing
719.457.2626. A replay of the audio call will be available through
Friday, February 9 by calling 719.457.0820 and using passcode
7992482. About the Company Corn Products International 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, headquartered in Westchester, Ill., is the
number-one worldwide producer of dextrose and a leading regional
producer of starch, high fructose corn syrup and glucose. In 2006,
Corn Products International reported net sales of $2.62 billion
with operations in 15 countries at 33 plants, including wholly
owned businesses, affiliates and alliances. For more information,
visit http://www.cornproducts.com/. Forward-Looking Statement This
news release contains or may contain forward-looking statements
within the meaning of Section 27A of the Securities Exchange Act of
1933 and Section 21E of the Securities Exchange Act of 1934. The
Company intends these forward looking statements to be covered by
the safe harbor provisions for such statements. These statements
include, among other things, any predictions regarding the
Company's future financial condition, earnings, revenues, expenses
or other financial items, any statements concerning the Company's
prospects or future operation, including management's plans or
strategies and objectives therefor and any assumptions underlying
the foregoing. These statements can sometimes be identified by the
use of forward looking words such as "may," "will," "should,"
"anticipate," "believe," "plan," "project," "estimate," "expect,"
"intend," "continue," "pro forma," "forecast" or other similar
expressions or the negative thereof. All statements other than
statements of historical facts in this release or referred to in
this release are "forward-looking statements." These statements are
subject to 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 various factors, including fluctuations in worldwide
markets for corn and other commodities, 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/or sell our
products; fluctuations in the value of local currencies, energy
costs and availability, freight and shipping costs, and changes in
regulatory controls regarding quotas, tariffs, duties, taxes and
income tax rates; operating difficulties; boiler reliability; our
ability to effectively integrate acquired businesses; labor
disputes; genetic and biotechnology issues; changing consumption
preferences and trends; increased competitive and/or customer
pressure in the corn-refining industry; the outbreak or
continuation of serious communicable disease or hostilities
including acts of terrorism; stock market fluctuation and
volatility; and our ability to maintain sales levels of HFCS in
Mexico. 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 these risks, see Risk
Factors included in our Annual Report on Form 10-K for the year
ended December 31, 2005 and subsequent reports on Forms 10-Q or
8-K. This news release also may contain references to the Company's
long term objectives and goals or targets with respect to certain
metrics. These objectives, goals and targets are used as a
motivational and management tool and are indicative of the
Company's long term aspirations only, and they are not intended to
constitute, nor should they be interpreted as, an estimate,
projection, forecast or prediction of the Company's future
performance. Corn Products International, Inc. Condensed
Consolidated Statements of Income (Unaudited) (In millions, except
per share amounts) Three Months Ended Change Year Ended Change
December 31, % December 31, % 2006 2005 2006 2005 Net sales before
shipping and handling costs $743.2 $635.5 17% $2,843.4 $2,559.4 11%
Less: shipping and handling costs 56.5 49.9 13% 222.8 199.0 12% Net
sales $686.7 $585.6 17% $2,620.6 $2,360.4 11% Cost of sales 580.1
503.9 15% 2,204.6 2,028.4 9% Gross profit $106.6 $81.7 30% $416.0
$332.0 25% Operating expenses 54.9 40.7 35% 201.9 158.0 28% Other
income, net 5.0 2.8 79% 10.4 9.2 13% Operating income $56.7 $43.8
29% $224.5 $183.2 23% Financing costs, net 6.7 6.9 -3% 27.4 34.8
-21% Income before income taxes $50.0 $36.9 36% $197.1 $148.4 33%
Provision for income taxes 15.8 12.7 69.5 55.7 $34.2 $24.2 41%
$127.6 $92.7 38% Minority interest in earnings 1.3 0.7 86% 4.1 3.1
32% Net income $32.9 $23.5 40% $123.5 $89.6 38% Weighted average
common shares outstanding: Basic 74.4 73.8 74.1 74.7 Diluted 76.2
74.6 75.8 75.6 Earnings per common share: Basic $0.44 $0.32 38%
$1.67 $1.20 39% Diluted $0.43 $0.31 39% $1.63 $1.19 37% CORN
PRODUCTS INTERNATIONAL, INC. Condensed Consolidated Balance Sheets
(In millions, except share and per share amounts) December 31, 2006
December 31, 2005 (Unaudited) Assets Current Assets Cash and cash
equivalents $131 $116 Accounts receivable - net 357 287 Inventories
321 258 Prepaid expenses 12 11 Deferred income tax assets 16 13
Total current assets $837 $685 Property, plant and equipment - net
1,356 1,274 Goodwill and other intangible assets 381 359 Deferred
income tax assets 1 3 Investments 33 11 Other assets 54 57 Total
assets $2,662 $2,389 Liabilities and equity Current liabilities
Short-term borrowings and current portion of long-term debt 74 57
Deferred income taxes 14 1 Accounts payable and accrued liabilities
429 366 Total current liabilities $517 $424 Non-current liabilities
147 110 Long-term debt 480 * 471 Deferred income taxes 121 128
Minority interest in subsidiaries 19 17 Redeemable common stock
(1,227,000 shares issued and outstanding at December 31, 2006 and
2005) stated at redemption value 44 29 Share-based payments subject
to redemption 4 - 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 - 74,092,774 issued
at December 31, 2006 and 2005 1 1 Additional paid in capital 1,051
1,068 Less: Treasury stock (common stock; 1,017,207 and 1,528,724
shares at December 31, 2006 and 2005, respectively) at cost (27)
(36) Deferred compensation - restricted stock - (1) Accumulated
other comprehensive loss (223) (251) Retained earnings 528 429
Total stockholders' equity $1,330 $1,210 Total liabilities and
equity $2,662 $2,389 * Includes $255 million of senior notes due
July 2007 that are expected to be refinanced on a long-term basis.
CORN PRODUCTS INTERNATIONAL, INC. Condensed Consolidated Statements
of Cash Flows (Unaudited) For the Year Ended December 31, (In
millions) 2006 2005 Cash provided by operating activities: Net
income $124 $90 Adjustments to reconcile net income to net cash
provided by (used for) operating activities: Depreciation 114 106
Decrease (increase) in working capital (29) 60 Other 21 (11) Cash
provided by operating activities 230 245 Cash used for investing
activities: Capital expenditures, net of proceeds on disposals
(168) (136) Payments for investments/acquisitions (42) (5) Cash
used for investing activities (210) (141) Cash used for financing
activities: Proceeds from (payments on) borrowings, net 16 (44)
Repurchases of common stock, net of issuances (2) (25) Dividends
paid (including minority interest shareholders) (26) (22) Excess
tax benefit on share- based compensation 6 - Cash used for
financing activities (6) (91) Effect of foreign exchange rate
changes on cash 1 2 Increase in cash and cash equivalents 15 15
Cash and cash equivalents, beginning of period 116 101 Cash and
cash equivalents, end of period $131 $116 Corn Products
International, Inc. Supplemental Financial Information (Unaudited)
(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 2006 2005 % 2006 2005 % Net
Sales North America $402.8 $340.1 18% $1,587.7 $1,422.2 12% South
America 193.9 164.6 18% 670.1 603.2 11% Asia/Africa 90.0 80.9 11%
362.8 335.0 8% Total $686.7 $585.6 17% $2,620.6 $2,360.4 11%
Operating Income North America $31.4 $12.6 149% $130.2 $59.0 121%
South America 25.5 29.0 -12% 83.6 101.1 -17% Asia/Africa 10.5 10.1
4% 53.2 53.2 0% Corporate (10.7) (7.9) 35% (42.5) (30.1) 41% Total
$56.7 $43.8 29% $224.5 $183.2 23% II. Estimated Sources of Diluted
Earnings Per Share for the Year Ended December 31, The following is
a list of the major items that impacted our 2006 results. The
amounts are calculated on a net after tax basis and attempt to
estimate total business effects. Earnings Per Share Full year 2006
Diluted Earnings Per Share - December 31, 2005 $1.19 Change Volumes
0.18 Operating margin 0.09 Foreign currency translation 0.07
Financing costs 0.06 Minority interest (0.01) Effective tax rate
0.05 Shares outstanding - Net change 0.44 Diluted Earnings Per
Share - December 31, 2006 $1.63 III. Capital expenditures Capital
expenditures, net of proceeds on disposals, for the years ended
December 31, 2006 and 2005, were $168 million and $136 million,
respectively. For 2007, the company anticipates capital
expenditures of approximately $145 million. IV. Non-GAAP
Information The Company uses certain key metrics to better monitor
our progress towards achieving our strategic business objectives.
Among these metrics are the Total Debt to Capitalization Percentage
and Return on Capital Employed Percentage ("ROCE"), which is not
calculated in accordance with Generally Accepted Accounting
Principles ("GAAP"). Management believes that this non- GAAP
information provides investors with a meaningful presentation of
useful information on a basis consistent with the way in which
management monitors and evaluates the Company's operating
performance. The information presented should not be considered in
isolation and should not be used as a substitute for our financial
results calculated under GAAP. In addition, these non-GAAP amounts
are susceptible to varying interpretations and calculations, and
the amounts presented below may not be comparable to similarly
titled measures of other companies. In prior years, we calculated
ROCE using the ending balances of the period being presented for
the balance sheet items used in calculating the capital employed
portion of the metric. We have determined that utilizing the
beginning balances for the period being presented in computing
capital employed is a more appropriate method and more closely
aligns with how we evaluate our performance. If the ROCE
calculation was performed using end of year balances to compute
capital employed, the percentages for 2006 and 2005 would have been
7.1% and 5.9% respectively. Our calculations of the Total Debt to
Capitalization Percentage and the Return on Capital Employed
Percentage at December 31, 2006 and 2005 are as follows: Total Debt
to Capitalization Percentage December 31, December 31, (Dollars in
millions) 2006 2005 Short-term debt $74 $57 Long-term debt 480 471
Total debt (a) $554 $528 Deferred income tax liabilities 121 128
Minority interest in subsidiaries 19 17 Redeemable common stock 44
29 Share-based payments subject to redemption 4 0 Stockholders'
equity 1,330 1,210 Total capital $1,518 $1,384 Total debt and
capital (b) $2,072 $1,912 Debt to capitalization percentage (a/b)
26.7% 27.6% Return on Capital Employed Percentage (ROCE) December
31, December 31, (Dollars in millions) 2006 2005 Total
stockholders' equity * $1,210 $1,081 Add: Cumulative translation
adjustment * 257 292 Minority interest in subsidiaries * 17 18
Redeemable common stock * 29 33 Total debt * 528 568 Less: Cash and
cash equivalents * (116) (101) Capital employed* (a) $1,925 $1,891
Operating Income $224 $183 Effective tax rate 35.25% 37.50% Tax at
effective tax rate (79) (69) Adjusted operating income, net of tax
(b) $145 $114 Return on Capital Employed (b/a) 7.5% 6.0% * Balance
sheet items used in computing capital employed represent beginning
of period balances DATASOURCE: Corn Products International, Inc.
CONTACT: Investor, Dave Prichard, +1-708-551-2592, or Media, Mark
Lindley, +1-708-551-2602 Web site: http://www.cornproducts.com/
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