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Corn Products International, Inc. Reports Second Quarter 2001 Results In-Line With Expectations

BEDFORD PARK, Ill., Jul 17, 2001 /PRNewswire/ -- Corn Products International, Inc. (NYSE: CPO) today reported results for the second quarter ended June 30, 2001. Fully diluted earnings per share were $0.43, compared with $0.55 per share for the same period in 2000. Results reflected gains from strong global volume growth that were more than offset by weak currencies and high-energy costs.

    For the second quarter of 2001 relative to the same period in 2000 --

    - Net sales were $482 million, up from $474 million
    - Operating income was $42 million versus $51 million
    - Net income was $15 million versus $19 million
In the second quarter, the 22-percent increase in financing costs was more than offset by lower minority stockholders' interest associated primarily with the additional 25-percent equity purchase in the Company's Korean business. The Company also invested in a tapioca starch refining facility in Thailand.

"Our business performed well in the second quarter with results up 19 percent from the first quarter 2001," said Sam Scott, chairman, president and chief executive officer. "However, we were off from second quarter 2000 due to difficult comparisons against last year's more favorable energy costs and by-product prices. Good volume growth worldwide was a strong factor in the quarter, despite the continued unfavorable effects of weakness in currencies. In North America, volume showed continued strong momentum, demonstrating our geographic advantage and the benefits of our new joint marketing company -- CornProductsMCP Sweeteners LLC."

Commenting on Thailand, Scott said, "As part of our strategy, we look for businesses with attributes and geography complementary to our base. We believe that this investment provides an excellent opportunity for our continued growth in Southeast Asia. It's a promising business and we're working to grow it."

2001 second quarter results compared with the same period last year by region reflected:

    In North America
    - Sales increased 6 percent to $317 million, driven by stronger volume
      throughout Canada, Mexico and the United States
    - Better prices for sweeteners were seen throughout the region, by-product
      prices were lower, but were improving at the quarter's end
    - Operating income declined 27 percent primarily caused by high-energy
      costs, low corn oil pricing as well as a short-term corn cost problem in
      Canada, which more than offset the benefits from last year's
      restructuring program

    In the Rest of World
    - Sales decreased 6 percent to $166 million due to the weakness in
    - Volume improved in Asia/Africa and much of South America; sales in the
      Southern Cone of South America were robust as Argentina recorded
      increased HFCS-55 sales and strong sweetener exports into Chile and
      Uruguay; volume in Brazil decreased slightly as the business felt the
      effects of the slowing economy
    - Operating income declined 7 percent primarily due to currency erosion

For the six-month period ending June 30, 2001, fully diluted earnings were $0.79 per share, compared with the results for the same period last year of $0.65 per share, or $1.02 per share for ongoing earnings that excluded a one- time, special restructuring charge of $0.37 per share taken in the first quarter of 2000.

For the first and second quarters of 2001 versus the same six months in 2000 including the special charge --

    - Net Sales were $937 million, up from $918 million
    - Operating income was $82 million, compared with $74 million
    - Net income was $28 million, compared with $23 million

Scott said, "Looking ahead, the strong fundamentals of our business have not changed, and we expect to deliver improved results in the second half, despite continuing weakening of foreign currencies. We are staying with our previously announced guidance of fully diluted earnings-per-share of $1.95 to $2.05 for the full year 2001 versus $1.72 before the charge in 2000. However, due to a lag in recovering exchange rate movements, if the currency decline becomes more severe and if world economic conditions deteriorate, then it will be more difficult to meet these numbers. We are confident that we are well positioned for even stronger performance in 2002."

Corn Products International, Inc. is one of the world's largest corn refiners and a major supplier of high-quality food ingredients and industrial products derived from the wet milling and processing of corn and other starch- based materials. The Company is the No. 1 worldwide producer of dextrose and a leading regional producer of starch, high fructose corn syrup and glucose. In 2000, the Company recorded sales of $1.9 billion with domestic and international operations through wholly owned businesses, affiliates and alliances. Headquartered in Bedford Park, Ill., it was founded in 1906. The Company is listed on the New York Stock Exchange under the symbol CPO. Additional information can be found on the World Wide Web at .

This press release contains or may contain certain forward-looking statements concerning the Company's financial position, business and future prospects, in addition to other statements using words such as "anticipate," "believe," "plan," "estimate," "expect," "intend" and other similar expressions. These statements contain certain inherent risks and uncertainties. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, stockholders are cautioned that no assurance can be given that our expectations will prove correct. Actual results and developments may differ materially from the expectations conveyed in these statements, based on factors such as the following: fluctuations in worldwide commodities markets and the associated risks of hedging against such fluctuations; fluctuations in aggregate industry supply and market demand; general economic, business, market and weather conditions in the various geographic regions and countries in which we manufacture and sell our products, including fluctuations in the value of local currencies, energy costs and availability and changes in regulatory controls regarding quotas, tariffs and biotechnology issues; and increased competitive and/or customer pressure in the corn refining industry. Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. For a further description of risk factors, see the Company's most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q or 8-K.

                 Condensed Consolidated Statements of Income

    (All figures are in millions, except per share amounts)

                      Three Months Ended   Change  Six Months Ended   Change
                           June 30,          %         June 30,          %
                        2001      2000              2001      2000

    Net sales         $482.2     $473.9      2%   $936.7    $918.1       2%
    Cost of sales      409.7      389.2      5%    789.2     755.5       4%
    Gross profit        72.5       84.7    -14%    147.5     162.6      -9%

    Operating expense   35.1       34.5      2%     74.5      71.0       5%
    (Fees and income)
      from unconsolidated
      affiliates        (4.8)      (0.7)   586%     (8.8)     (2.1)    319%

    Operating income
      before special
      charge            42.2       50.9    -17%     81.8      93.7     -13%

    Special charge         -          -                -      20.0

    Operating income    42.2       50.9    -17%     81.8      73.7      11%

    Financing costs     15.0       12.3     22%     30.6      22.7      35%

    Income before taxes 27.2       38.6    -30%     51.2      51.0       0%
    Provision for income
      taxes              9.5       13.5             17.9      17.8
                        17.7       25.1    -29%     33.3      33.2       0%
    Minority stockholders'
     interest            2.4        5.8    -59%      5.4      10.3     -48%
    Net income         $15.3      $19.3    -21%    $27.9     $22.9      22%

    Weighted average
      common shares
    Basic               35.3       35.2             35.3      35.3
    Diluted             35.4       35.2             35.4      35.3

    Earnings per common
    Basic              $0.43      $0.55    -22%    $0.79     $0.65      22%
    Diluted            $0.43      $0.55    -22%    $0.79     $0.65      22%

                    Condensed Consolidated Balance Sheets

    (In millions, except share and per share amounts)

                                                      June 30,   December 31,
                                                        2001           2000
      Current assets
        Cash and cash equivalents                        $27            $41
        Accounts receivable - net                        301            274
        Inventories                                      211            232
        Prepaid expenses                                  15              8
      Total current assets                               554            555

        Plants and properties - net                    1,368          1,407
        Goodwill, net of accumulated amortization        314            313
        Deferred tax asset                                 2              2
        Investments                                       35             28
        Other assets                                      38             34
      Total assets                                     2,311          2,339

    Liabilities and stockholders' equity
      Current liabilities
        Short-term borrowings and current portion
          of long-term debt                              230            267
        Accounts payable and accrued liabilities         208            219
      Total current liabilities                          438            486

        Non-current liabilities                           45             47
        Long-term debt                                   586            453
        Deferred taxes on income                         170            185
        Minority interest in subsidiaries                152            208
    Stockholders' equity
        Preferred stock - authorized 25,000,000 shares-
          $0.01 par value, none issued                    --             --
        Common stock - authorized 200,000,000 shares-
          $0.01 par value - 37,659,887 issued at
          June 30, 2001 and December 31, 2000              1              1
        Additional paid in capital                     1,073          1,073
        Less: Treasury stock (common stock; 2,353,528
          and 2,391,913 shares on June 30, 2001 and
          December 31, 2000, respectively) at cost       (59)           (60)
        Deferred compensation - restricted stock          (3)            (3)
        Accumulated comprehensive loss                  (244)          (183)
        Retained earnings                                152            132

      Total stockholders' equity                         920            960

    Total liabilities and stockholders' equity        $2,311         $2,339

               Condensed Consolidated Statements of Cash Flows

    (In millions)                                        For The Six Months
                                                             Ended June 30,
                                                            2001       2000
    Cash flows from (used for) operating activities

      Net income                                            $28         $23
      Adjustments to reconcile net income to net cash
       provided by (used for) operating activities:
        Depreciation and amortization                        66          69
        Increase in trade working capital                   (71)        (39)
        Other                                                (5)          -
      Net cash flows from operating activities               18          53

    Cash flows from (used for) investing activities:
        Capital expenditures paid, net of proceeds
          on disposal                                       (39)        (56)
        Payments for acquisitions, net of cash acquired     (77)       (117)
      Net cash flows used for investing activities         (116)       (173)

    Cash flows from (used for) financing activities:
        Proceeds from borrowings                            122         231
        Payments on debt                                    (21)        (67)
        Dividends paid                                      (15)         (7)
    Common stock repurchased                                  -         (44)
    Net cash flows from financing activities                 86         113
    Decrease in cash and cash equivalents                   (12)         (7)
    Effect of foreign exchange rate changes on cash          (2)          1
    Cash and cash equivalents, beginning of period           41          41
    Cash and cash equivalents, end of period                $27         $35

                      Supplemental Financial Information
    (Dollars in millions, except per share amounts)

    I.  Geographic Information of Net Sales and Operating Income

                      Three Months Ended           Six Months Ended
                           June 30,       Change       June 30,       Change
                        2001      2000       %       2001    2000        %
    Net sales
      North America   $316.6     $297.4      6%   $596.7    $580.6       3%
      Rest of World    165.6      176.5     -6%    340.0     337.5       1%
      Total           $482.2     $473.9      2%   $936.7    $918.1       2%

    Operating income
      North America    $17.5      $23.9    -27%    $31.7     $44.1     -28%
      Rest of World     28.5       30.6     -7%     57.9      56.3       3%
      Corporate         (3.8)      (3.5)     9%     (7.8)     (6.7)     16%
    Special charge         -          -                -     (20.0)
       Total           $42.2      $50.9    -17%    $81.8     $73.7      11%

    II.  Estimated Source of Earnings Per Share for the Three and Six Months
         Ended June 30
The following is a list of the major items that impacted our second quarter and year to date results. The amounts are calculated on a net after tax basis and attempt to estimate total business effects.

                                                  Earnings Per  Earnings Per
                                                      Share           Share
                                                   Three Months    Six Months
    Net Income Per Share June 30, 2000                 $0.55          $0.65
      Volumes                                           0.09           0.24
      Operating margin                                 (0.16)         (0.29)
      Foreign currency translation                     (0.09)         (0.17)
      Financing costs                                  (0.05)         (0.14)
      Minority interest                                 0.09           0.13
      Special charge                                       -           0.37
    Net Change                                         (0.12)          0.14
    Net Income Per Share June 30, 2001                 $0.43          $0.79

    III.    Capital expenditures

Capital expenditures for the quarter were $26 million and $33 million in June
2001 and 2000, respectively. 
Capital expenditures for the first six months of the year were $39 million and $56 million in June 2001 and 2000, respectively. Capital expenditures for 2001 are expected to be $90 million versus $143 million in 2000.

Corn Products International

Investor, Richard Vandervoort, +1-708-563-6824, or Media, Jennifer Woomer Dinehart, +1-708-563-6580, both of Corn Products