1 FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported):December 2, 1998 CORN PRODUCTS INTERNATIONAL, INC. --------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-13397 22-3514823 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 6500 South Archer Avenue, Bedford Park, Illinois 60501-1933 ------------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (708) 563-2400 Not Applicable ----------------------------------------------------------------- (Former name or former address, if changed since last report) 2 This Amendment No. 1 to the Registrant's Current Report on Form 8-K dated December 2, 1998 (the "Form 8-K") is being filed for the purpose of including Items 7 (a), (b) and (c) to such Current Report. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Business Acquired: The following audited and unaudited consolidated financial statements of Arancia - CPC, S.A. de C.V. and Subsidiary (collectively "Arancia") are attached as Exhibit 99.1: 1. Report of Independent Accountants. 2. Consolidated Balance Sheets at September 30, 1998 unaudited and December 31, 1997. 3. Consolidated Statements of Income for the nine months ended September 30, 1998 unaudited and the year ended December 31, 1997. 4. Consolidated Statement of Changes in Stockholders' Equity for the nine month ended September 30, 1998 (unaudited) and the year ended December 31, 1997. 5. Consolidated Statements of Cash Flows for the nine months ended September 30, 1998 unaudited and the year ended December 31, 1997. 6. Notes to Consolidated Financial Statements. (b) Pro Forma Financial Information The following unaudited pro forma financial statements are attached as Exhibit 99.2: 1. Introduction to Unaudited Pro Forma Financial Information 2. Unaudited Pro Forma Consolidated Balance Sheet at September 30, 1998. 3. Unaudited Pro Forma Consolidated Statements of Income for the year ended December 31, 1997. 4. Unaudited Pro Forma Consolidated Statements of Income for the nine months ended September 30, 1998. 5. Notes to the Unaudited Proforma Consolidated Statements. (c) Exhibits 3 2.1 Transaction Agreement (incorporated by reference to Exhibit 1 to the Registrant's current Report on Form 8-K dated October 21, 1998). 2.2 Stockholder Agreement (incorporated by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K dated October 21, 1998). 2.3 Option Agreement (incorporated by reference to Exhibit 3 to the Registrant's Current Report on Form 8-K dated October 21,1998). 23.1 Consent of KPMG Cardenas Dosal, S.C.. 99.1 Consolidated Financial Statements of Arancia 99.2 Unaudited Pro Forma Consolidated Financial Statements. 4 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, thereto duly authorized. CORN PRODUCTS INTERNATIONAL, INC. (Registrant) Date: February 15, 1998 By: /s/ James W. Ripley ----------------------------- James W. Ripley Chief Financial Officer (principal financial officer) 5 EXHIBITS INDEX Exhibit Number Description 2.1 Transaction Agreement (incorporated by reference to Exhibit 1 to the Registrant's current Report on Form 8-K dated October 21, 1998). 2.2 Stockholder Agreement (incorporated by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K dated October 21, 1998). 2.3 Option Agreement (incorporated by reference to Exhibit 3 to the Registrant's Current Report on Form 8-K dated October 21,1998). 23.1 Consent of KPMG Cardenas Dosal, S.C.. 99.1 Consolidated Financial Statements of Arancia 99.2 Unaudited Pro Forma Consolidated Financial Statements.
1 Exhibit 23.1 CONSENT OF KPMG CARDENAS DOSAL, S.C. The Board of Directors and Stockholders Corn Products International, Inc. We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-71573, 333-43525 and 333-43479) of Corn Products International, Inc., of our report, dated January 30, 1998, on the consolidated financial statements of Arancia-CPC, S.A. de C.V. and subsidiary as of and for the year ended December 31, 1997 included herein, appearing in this Form 8-K/A. Guadalajara, Mexico February 12, 1999
1 Exhibit 99.1 ARANCIA-CPC, S.A. DE C.V. AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 (WITH THE INDEPENDENT AUDITORS' REPORT THEREON) 2 The Board of Directors and Stockholders Corn Products International, Inc.: We have audited the accompanying consolidated balance sheet of ARANCIA - CPC, S.A. de C.V. and subsidiary as of December 31, 1997, and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ARANCIA - CPC, S.A. de C.V. and subsidiary as of December 31, 1997, and the results of their operations, the changes in their stockholders' equity and their cash flows for the year then ended, in conformity with generally accepted accounting principles in the United States of America. KPMG CARDENAS DOSAL, S.C. January 30, 1998, except notes 10 and 11 which are as of February 4, 1999. Guadalajara, Mexico 3 ARANCIA-CPC, S.A. DE C.V. AND SUBSIDIARY Consolidated Statements of Income Nine months ended September 30, 1998 (unaudited) and year ended December 31, 1997 (Thousands of US dollars) See accompanying notes to consolidated financial statements.
Nine months ended Year ended September 30 December 31 1998 1997 ----------------- ----------- Unaudited Net sales $ 248,939 $ 327,668 Cost of sales 203,110 292,789 --------- --------- Gross profit 45,829 34,879 Selling and administrative expenses 15,176 16,963 --------- --------- Operating income 30,653 17,916 --------- --------- Other income and expense: Interest expense, net 13,158 25,525 Translation loss 7,981 1,862 --------- --------- 21,139 27,387 --------- --------- Income (loss) before taxes 9,514 (9,471) --------- --------- Income tax expense (benefit) Current 506 42 Deferred 2,824 (2,944) --------- --------- 3,330 (2,902) --------- --------- Net income (loss) $ 6,184 $ (6,569) ========= ========= 4 See accompanying notes to consolidated financial statements.
ARANCIA-CPC, S.A. DE C.V. AND SUBSIDIARY Consolidated Balance Sheets September 30, 1998 (unaudited) and December 31, 1997 (Thousands of US dollars) September 30 December 31 Assets 1998 1997 ------ ------------ ----------- Unaudited Current assets: Cash and cash equivalents $ 18,216 79,864 Accounts receivable, net of allowance of $316 and $439, respectively 33,480 38,048 Inventories, net 36,045 43,801 Prepaid expenses 5 107 ---------- ---------- Total current assets 87,746 161,820 Plants and properties, net 266,716 268,783 Other assets, net 2,971 5,869 ---------- ---------- Total assets $ 357,433 436,472 ========== ========== Liabilities and Stockholders' Equity 1998 1997 ---------- ---------- Current liabilities: Notes payable to banks $ - 35,381 Current portion of long-term debt 17,501 11,956 Accounts payable 8,194 11,369 Accrued liabilities 8,736 9,475 Due to affiliated companies 4,621 661 Deferred income taxes 1,072 2,024 ---------- ---------- Total current liabilities 40,124 70,866 Long-term debt 150,235 209,299 Deferred income taxes 31,832 26,986 Other non-current liabilities 1,529 1,792 ---------- ---------- Total liabilities 223,720 308,943 ---------- ---------- Stockholders' equity Common stock 88,466 88,466 Additional paid-in capital 31,913 31,913 Retained earnings 13,334 7,150 ---------- ---------- Total stockholders' equity 133,713 127,529 ---------- ---------- Contingent liabilities (note 10) $ 357,433 436,472 ========== ========== 5 ARANCIA-CPC, S.A. DE C.V. AND SUBSIDIARY Consolidated Statement of Changes in Stockholders' Equity Nine months ended September 30, 1998 (unaudited) and year ended December 31, 1997 (Thousands of US dollars) See accompanying notes to consolidated financial statements.
Additional Total Common paid-in Retained stockholders' stock capital earnings equity ---------- ---------- ---------- ------------- Balances at December 31, 1996 $ 68,466 20,935 13,719 103,120 Increase in common stock 20,000 - - 20,000 Additional paid-in capital - 10,978 - 10,978 Net loss - - (6,569) (6,569) ---------- ---------- ---------- ------------- Balances at December 31, 1997 $ 88,466 31,913 7,150 127,529 ========== ========== ========== ============= Net income - - 6,184 6,184 ---------- ---------- ---------- ------------- Balances at September 30, 1998 $ 88,466 31,913 13,334 133,713 ========== ========== ========== ============= 6 ARANCIA-CPC, S.A. DE C.V. AND SUBSIDIARY Consolidated Statements of Cash Flows Nine months ended September 30, 1998 (unaudited) and year ended December 31, 1997 (Thousands of US dollars) See accompanying notes to consolidated financial statements.
Nine months ended Year ended September 30, December 31 1998 1997 ------------------ ----------- Unaudited Cash flows from (used for) operating activities Net income (loss) $ 6,184 (6,569) Non-cash charges (credits) to net income Depreciation and amortization 13,133 16,817 Deferred taxes 2,852 (4,211) Changes in working capital Accounts receivable and prepaid items 5,266 (3,299) Inventories 8,586 18,023 Due from affiliated companies 3,932 926 Accounts payable and accrued liabilities (3,942) (1,914) ------------------ ---------- Net cash flows from operating activities 36,011 19,773 ------------------ ---------- Cash flows from (used for) investing activities Acquisition of machinery (9,254) (14,515) Decrease in other noncurrent assets 590 1,081 ------------------ ---------- Net cash flows used for investing activities (8,664) (13,434) ------------------ ---------- Cash flows from (used for) financing activities Issuance of common stock - 20,000 Increase in additional paid-in capital - 10,978 Increase in debt - 31,497 Reduction in debt (88,995) - ------------------ ---------- Net cash flows from (used for) financing activities (88,995) 62,475 ------------------ ---------- (Decrease) Increase in cash and cash equivalents (61,648) 68,814 Cash and cash equivalents, beginning of period 79,864 11,050 ------------------ ---------- Cash and cash equivalents, end of period $ 18,216 79,864 ================== ========== Supplemental disclosures of cash flow information Interest paid $ 14,372 23,700 Income taxes paid 1,880 - ------------------ ---------- $ 16,252 23,700 ================== ========== 7 ARANCIA-CPC, S.A. DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 1997 (Thousands of US dollars) (1) Operations and summary of significant accounting policies: The Company and subsidiary's main activity is the manufacturing and sale of starch, glucose and cornstarch. Some operations are carried out with affiliated companies. The Consolidated Balance Sheet at September 30, 1998 and the Consolidated Statements of Income and Cash Flows for the nine months ended September 30, 1998 have not been audited, but have been prepared by management and reflect all adjustments (consisting solely of normal recurring items) which are, in the opinion of management, necessary to present a fair statement of results of operations for the nine month period ended September 30, 1998 and the financial position as of September 30, 1998 in conformity with generally accepted accounting principles as applied in the Company's audited combined financial statements for the year ended December 31, 1997. Below is a description of the significant accounting policies and practices followed by the Company, which affect the main captions of the financial statements: a. Financial statement presentation - The accompanying financial statements have been translated from Mexican pesos to U.S. dollars using the reporting currency as the functional currency, therefore, the translation loss was booked in the statements of income. b. Translation method - The Company used the following exchange rates to translate into U.S. dollars the financial statements: Monetary assets, liabilities and tax loss - At the balance sheet date Fixed assets and capital stock - At the historical date Revenues, expenses, gain and losses - Weighted average for the period c. Consolidated financial statements - The consolidated financial statements include the assets, liabilities and operating results of those subsidiaries where ARANCIA-CPC, S.A. de C.V. holds the majority of capital stock. All significant intercompany transactions have been eliminated in the consolidated financial statements. The consolidated financial statements as of December 31, 1997 include financial statements of ARANCIA-CPC, S.A. de C.V. and Arrendadora Gefemesa, S.A. de C.V. d. Cash and cash equivalents - Cash equivalents consist of all investments purchased with an original maturity of three months or less, and which have virtually no risk of loss in value. e. Inventories - Inventories in the balance sheet are stated at the lower of cost or market. Corn is valued at average cost. The Company's policy is to determine raw material costs by contracting raw material futures, securing purchases of raw materials in the United States of America according to its production needs in the short-term and minimizing market price fluctuation risks. Such raw materials have 8 ARANCIA-COC, S.A DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements (Thousands of US dollars) a hedge effect; thus, gains or losses derived from such contracts are included in the unit cost of raw materials. f. Plants and properties - Plants and properties are stated at cost. Depreciation is generally computed on the straight-line method over the estimated useful lives of depreciable assets at rates ranging from 25 years for buildings and 3 to 16 years for all other assets. Where permitted by law, accelerated depreciation methods are used for tax purposes. Long-lived assets are reviewed for impairment whenever the facts and circumstances indicate that the carrying amount may not be recoverable. g. Income taxes - Deferred income taxes reflect the differences between the assets and liabilities recognized for financial reporting purposes and amounts recognized for tax purposes. Deferred taxes are based on tax laws as currently enacted. The Company makes provisions for estimated income tax, less available tax credits and deductions. h. Seniority premiums and severance payments - Seniority premiums to which employees may be entitled upon retirement after fifteen years of service or more, pursuant to the Federal Labor Law, are recognized as cost of the years in which services are rendered, based on actuarial calculations. To this end, the companies have established an irrevocable trust. Contributions to the trust are charged to operations. Any other compensation to which employees may be entitled in case of separation, disability or death, are charged to operations of the years in which paid. i. Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. j. Risk and uncertainties - The Company operates in one business segment. The business is subject to varying degrees of risk and uncertainty. It insures its business and assets against insurable risks in a manner that it deems appropriate. The Company believes that the risk of loss from non-insurable events would not have a material adverse effect on the Company's operations as a whole. (Continued) 9 ARANCIA-CPC, S.A DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements (Thousands of US dollars) (2) Foreign currency exposure: At December 31, 1997, the companies have $13.5 million under exchange coverage. These hedge agreements provide that the financial institutions will be liable to pay (in domestic currency for each U.S. Dollar covered by the agreement), the difference between the official rate of exchange at the original and maturing dates. The exchange rate of the Mexican Peso to the U.S. Dollar at December 31, 1997 was $8.06. (3) Transactions with affiliated companies: Transactions carried out during 1997 with affiliated companies were as follows: Sales $ 8,377 Income on services 2,083 Interest expense 7,406 Royalties Expense 7,072 Other expense 786 (4) Inventories: Inventories at December 31, 1997 are comprised of the following: Finished goods $ 11,028 Raw materials 9,958 Material, packing and containers 1,973 Spare parts 4,352 Goods in transit 17,323 Advances to suppliers 56 --------- 44,690 Less allowance for obsolescence 889 --------- Inventories, net $ 43,801 ========= (Continued) 10 ARANCIA-CPC, S.A DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements (Thousands of US dollars) (5) Plants and Properties: Plants and properties at December 31, 1997 are: Land $ 7,567 Buildings and leasehold improvements 49,748 Machinery and equipment 226,452 Other 4,064 Construction in progress 17,404 ---------- 305,235 Less accumulated depreciation 36,452 ---------- Plants and properties, net $ 268,783 ========== In 1997, the Company capitalized $891 in interest cost as a component of the cost of construction in progress. (6) Financial Instruments The carrying values of cash equivalents, accounts receivable, accounts payable and debt approximate fair values. Raw material futures contracts: At December 31, 1997, the Company had entered into raw material futures contracts for purchases aggregating $5,044. Contracts to buy raw materials after March 1998 amount to $3,934 and after July 1998 to $1,110. At December 31, 1997 there are unrealized losses of $2,314 and realized losses on 1998 futures contracts of $462. (Continued) 11 ARANCIA-CPC, S.A DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements (Thousands of US dollars) (7) Notes payable and Long-term debt: Long-term debt at December 31, 1997 is comprised of the following: Payable in U.S. Dollars: Commercial loans for imports, financing and mortgage loans bearing variable interest rates based on the LIBOR or Prime rate plus a differential, secured by property, plant and equipment and due in semi-yearly installments, and maturity through December, 2007. $ 127,172 Commodity Credit Corporation (CCC) loans for specific business purposes current through January 2001 for the purchase of corn through the subscription of new documents and the preceding documents every six months, bearing at LIBOR rate plus the amount determinate by the parties at the time of disposing of founds and subject to a review of credit terms by the intermediary bank in August of each year and secured by inventories. Due to the nature of the agreement, it was considered that no current installments exist. 31,106 Commercial mortgage loans for the purchase of machinery and equipment with fixed interest rate, secured by industrial plant, payable semi-annually and maturity through the year 2006. 62,977 ---------- 221,255 Less current installments 11,956 ---------- Long-term debt, excluding current installments $ 209,299 ========== 12 ARANCIA-CPC, S.A DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements (Thousands of US dollars) Maturity dates of long-term debt over the following five years are as follows: 2000 $ 49,340 2001 47,380 2002 23,389 2003 19,151 2004 and thereafter 70,039 ---------- $ 209,299 ========== The Company has several notes payable to banks which are unsecured and with maturities of less than one year. The total of $35,381 incurs interest at 6.65% to 21.25% at December 31, 1997. (8) Stockholders' equity: The main characteristics of the accounts that comprise stockholders' equity are described below: a. At December 31, 1997 capital stock is represented by 1,000,000 common, registered shares with no par value, divided in two series: 510,000 Series "I" and 490,000 Series "II" shares. b. 5% of earnings for each period must be appropriated to create a legally required reserve until the reserve reaches one fifth of capital stock and is therefore not available for distribution to the shareholders. c. The updated amount on the tax basis of contributions made by shareholders and retained earnings on which income tax has already been paid, as applicable, may be refunded or distributed tax free. Other refunds and distributions in excess of such amounts, according to the procedure set forth in the Law, are subject to a dividend tax at a 34% rate, therefore, stockholders may only dispose of 66% of such amounts. (9) Income tax (IT), tax on assets (TA), employees' statutory profit sharing (ESPS) and unamortized tax losses: The companies file individual IT and TA returns; therefore, the combined statement of earnings includes a summary of the IT and TA expense. Promociones Industriales Aralia, S.A. de C.V., as holding and ARANCIA-CPC, S.A. de C.V. and its Subsidiary as subsidiaries obtained authorization from the Ministry of Finance and Public Credit to consolidate for tax purposes. Pursuant to the current tax provisions, corporations must pay the greater of IT and TA. Both taxes recognize the effects of inflation although differently than accounting principles generally accepted in Mexico. (Continued) 13 ARANCIA-CPC, S.A DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements (Thousands of US dollars) ESPS is practically computed on the same bases as IT but without recognizing the effects of inflation. ESPS costs are reflected as compensation costs in the consolidated statements of income. TA payable in excess of IT for the period may be recovered in the succeeding ten periods, updated by inflation, provided IT exceeded TA in any of those periods. At December 31, 1997 of ARANCIA-CPC, S.A. de C.V. there is recoverable TA in the future as follows: Amount -------------------------------- Originated Restated at Expire In Original December 31, 1997 in ---------- -------- ----------------- ------ 1994 $ 502 579 2004 ======== === Through a Presidential Decree to promote investments published on November 1, 1995, up to 100% of some investments in fixed assets made in 1996 by taxpayers that had been operating prior to November 1, 1995 may be immediately deducted for tax purposes. Company investments in 1996 that are subject to immediate deduction gave rise to a loss for income tax purposes of $99,832. On the other hand, through a mechanism provided by the application rules of said Decree, the aforesaid immediate deduction results in the reduction of the TA liability of 1997 and, if such tax exceeds tax due, the updated difference may be used to reduce estimated tax payments for the current and five succeeding years. As a result of the aforesaid deduction, 1997 TA of $4,368, was eliminated leaving $29,064 to be applied to the succeeding four years. Pursuant to the current IT Law, it is possible that a tax loss, updated by inflation, be carried forward to the taxable income of the ten succeeding periods. Tax losses have no effect on ESPS. Of the tax losses sustained in previous periods $33,932 was applied to 1997 taxable income, giving rise to a tax benefit of $11,537. Therefore, the remaining benefit will be recognized as a reduction in current tax expense in the year in which TA is recovered. At December 31 1997, unamortized tax losses of Arancia-CPC, S.A. de C.V. and Arrendadora Gefemesa, S.A. de C.V. and the years in which their right to use them expires are as follows: Amount -------------------------------- Originated Restated at Expire in Original December 31, 1997 in ---------- ---------- ----------------- ------ 1996 $ 104,016 128,170 2006 --------- --------- $ 104,016 128,170 ========= ========= (Continued) 14 ARANCIA-CPC, S.A DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements (Thousands of US dollars) The temporary differences between the tax bases of assets and liabilities and their financial reporting amounts that give rise to the deferred tax asset and liability are as follows: 1997 ----------- Assets: Tax loss carryforwards $ 44,159 Allowance for doubtful accounts 193 Accrued expenses 861 ----------- Gross deferred tax assets 45,213 ----------- Liabilities: Inventories 11,910 Fixed assets 60,624 Other 1,689 ----------- Total liabilities 74,223 ----------- Deferred tax liability $ 29,010 =========== The Company has not recorded a valuation allowance as management believes it is more likely than not that all tax assets will be utilized. The statutory tax rate for Mexico is 34%. The effective tax benefit in 1997 was 31%. (10) Contingent liabilities: ----------------------- In 1998, the Company developed a plan to deal with the Year 2000 problem and began converting its computer systems to be Year 2000 compliant. The plan provides for the conversion efforts to be completed by the end of 1999. The Year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. The total cost of the project is estimated to be $4 million and is being funded through operating cash flows. (Continued) 15 ARANCIA-CPC, S.A DE C.V. AND SUBSIDIARY Notes to Consolidated Financial Statements (Thousands of US dollars) (11) Subsequent events: ------------------ a) On January 20, 1998 the commercial mortgage loan for $63 million was prepaid, leading to a prepayment refund of $500. b) On January 1, 1999 the income tax rate was increased from 34% to 35%. Additionally, certain distributions to stockholders will be subject to a 5% withholding tax. (Continued)
1 Exhibit 99.2 The following unaudited pro forma consolidated condensed balance sheet as of September 30, 1998 gives effect to the acquisition of 100% of Arancia - CPC, S.A. de C.V. ("Arancia") by Corn Products International, Inc. "the "Company") as of September 30, 1998 as if the acquisition had occurred September 30, 1998. The following unaudited pro forma consolidated condensed statements of income for the year ended December 31, 1997 and the nine months ended September 30, 1998 are presented as if 100% of the acquisition of Arancia had occurred, and the operations of the Company and Arancia had been consolidated, as of January 1, 1997. The future installment payments of $73 million, for the remaining 20.9% of Arancia and the minimum contingent payments of $9 million are reflected as minority interest. Interest on the installment payments of $73 million is recorded as minority income and accrues at the same rate of interest as the Company's short term U.S. credit facility. The unaudited pro forma consolidated condensed financial statements are presented for comparative purposes only and do not purport to be indicative of the combined financial position or results of operations which would have been realized had the acquisition of Arancia been consummated as of the date or during the periods for which unaudited pro forma financial statements are presented or for any future period or date. The unaudited pro forma financial information should be read in conjunction with the Company's previously filed year end and interim financial statements and the audited financial statement and notes thereto for Arancia that appear elsewhere in this Form 8-K amendment. 2 CORN PRODUCTS INTERNATIONAL Unaudited Pro Forma Consolidated Balance Sheets September 30, 1998 (Millions of US dollars) See accompanying notes to unaudited pro forma consolidated Financial Statements
Historical Historical Proforma Proforma Assets Corn Products Arancia Adjustments Consolidated ------ ------------- ---------- ----------- ------------ Current assets: Cash and cash equivalents $ 51 18 (48)(a) 21 Accounts receivable, net 223 33 256 Inventories 141 36 177 Deferred tax asset 13 -- 13 Prepaid expenses 19 -- 19 ---------- ----- --------- Total current assets 447 87 486 Plants and properties, net 1,013 267 1,280 Goodwill -- -- 121 (b) 121 Investments in and loans to unconsolidated affiliates 111 -- (74)(c) 37 Other assets, net 19 3 22 ---------- ----- --------- Total assets $ 1,590 357 1,946 ========= ===== ========= Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Short term borrowings and current portion of long-term debt $ 236 17 253 Accounts payable and accrued liabilities 162 22 184 Taxes payable on income -- 1 1 ---------- ----- --------- Total current liabilities 398 40 438 Long-term debt 10 150 160 Deferred taxes on income - non-current 142 33 175 Other non-current liabilities 38 1 39 Minority stockholder's interest 8 -- 82 (d) 90 ---------- ----- --------- Total liabilities 596 224 902 ---------- ----- --------- Stockholders' equity: Common stock 1 88 (88)(e) 1 Additional paid-in capital 1,020 32 18 (f) 1,070 Cumulative translation adjustment (55) -- (55) Retained earnings 28 13 (13)(g) 28 --------- ----- --------- Total stockholders' equity 994 133 1,044 $ 1,590 357 1,946 ========= ===== ========= 3 CORN PRODUCTS INTERNATIONAL Unaudited Pro Forma Consolidated Statements of Income for the nine month period ended September 30, 1998 (Millions of US dollars, except per share amounts) See accompanying notes to unaudited pro forma consolidated Financial Statements
Historical Historical Proforma Proforma Corn Products Arancia Adjustments Consolidated ------------- ---------- ----------- ------------ Net sales $ 1,065 249 (2)(aa) 1,312 Cost of sales 942 203 (2)(aa) 1,143 ----------- ------- --------- Gross profit $ 123 46 169 Selling, general and administrative expenses 68 15 (2)(bb), (5)(cc) 80 Income from unconsolidated subsidiaries (7) -- 7 (dd) -- ----------- ------- --------- Operating income $ 62 31 89 ----------- ------- --------- Other (income) and expenses $ 10 21 31 ----------- ------- --------- Income (loss) before income tax and minority interest 51 9 58 Provision (benefit) for income taxes 18 3 (1)(ee) 20 Minority stockholder interest 2 -- 4 (ff) 6 ----------- ------- --------- Net Income $ 31 6 32 =========== ======= ========= Earnings per share: Basic $ 0.87 0.86 Diluted $ 0.87 0.85 4 CORN PRODUCTS INTERNATIONAL Unaudited Pro Forma Consolidated Statements of Income for the year ended December 31, 1997 (Millions of US dollars, except per share amounts) See accompanying notes to unaudited pro forma consolidated Financial Statements
Historical Historical Proforma Proforma Corn Products Arancia Adjustments Consolidated ------------- ---------- ----------- ------------ Net sales $ 1,418 328 (2)(aa) 1,744 Cost of sales 1,280 293 (2)(aa) 1,571 ------------- ---------- ------------ Gross profit $ 138 35 173 Selling, general and administrative expenses 90 17 3 (bb), (7)(cc) 103 Restructuring and spin-off charges, net 109 -- 109 Income from unconsolidated subsidiaries -- -- -- ------------- ---------- ------------ Operating income (loss) $ (61) 18 (39) ------------- ---------- ------------ Other (income) and expenses $ 28 27 1 (gg) 56 ------------- ---------- ------------ Income (loss) before income tax and minority interest (89) (9) (95) Provision (benefit) for income taxes (19) (3) 1 (ee) (21) Minority stockholder interest 2 -- 5 (ff) 7 ------------- ---------- ------------ Net income before change in accounting principle $ (72) (6) (81) ============= ========== ============ Cumulative effect of change in accounting principle 3 -- 3 Net income (loss) $ (75) (6) (84) ============= ========== ============ Earnings per share: Basic and Diluted: Net loss before change in accounting principle $ (2.02) (2.22) Cumulative effect of change in accounting principle (0.08) (0.08) ------------- ------------ Net income $ (2.10) (2.30) 5 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION The accompanying historical financial statements of Arancia were prepared in accordance with U.S. generally accepted accounting principles and are presented in U.S. dollars. Arancia amounts presented in the pro forma consolidated balance sheet consist of the Arancia historical balance sheet amounts which were converted into U.S. dollars at the year end exchange rate. Arancia amounts presented in the pro forma condensed consolidated statement of income consist of the Arancia historical statement of income amounts, which were converted into U.S. dollars at the average exchange rate for the year. NOTE 2 - PROFORMA CONSOLIDATED BALANCE SHEET ADJUSTMENTS a) To record cash consideration paid for acquisition b) To record goodwill arising as a result of purchase of net assets c) To eliminate investment under equity method d) To record balance owed for purchase e) To record issuance of common stock at par value and eliminate Arancia common stock f) To record additional paid-in-capital in excess of par on issue of 1,764,705 shares, $51 million and eliminate Arancia APIC g) To eliminate Arancia retained earnings NOTE 3 - PROFORMA CONSOLIDATED STATEMENTS OF INCOME ADJUSTMENTS aa) To eliminate intercompany transactions bb) To record income effect of amortization of goodwill - 9 mos. and 12 mos., respectively cc) To eliminate royalties for trademark and technology acquired dd) To eliminate income from investment (under equity method) ee) To record tax effect of goodwill deduction, royalty income, interest ff) To record interest on outstanding amount owed on purchase gg) To record incremental interest expense, net of reduced interest for Arancia debt reduction (1997)