Attached files
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8-K - FORM 8-K - Ingredion Inc | c60213e8vk.htm |
EX-99.1 - EX-99.1 - Ingredion Inc | c60213exv99w1.htm |
EX-99.3 - EX-99.3 - Ingredion Inc | c60213exv99w3.htm |
EX-23.1 - EX-23.1 - Ingredion Inc | c60213exv23w1.htm |
Exhibit 99.2
The National Starch Business of
Akzo Nobel N.V.
(National Starch)
Akzo Nobel N.V.
(National Starch)
Unaudited condensed combined interim financial statements as of and for the 176 days
ended June 25, 2010
ended June 25, 2010
August 17, 2010
Prepared in anticipation of Corn Products International, Inc.s SEC reporting requirements
INDEX TO THE UNAUDITED CONDENSED COMBINED INTERIM FINANCIAL STATEMENTS
Condensed combined statements of operating activities for the 176 days ended
June 25, 2010 and the 177 days ended June 26, 2009 |
2 | |||
Condensed combined statements of assets and liabilities as of June 25, 2010
and as of December 31, 2009 |
3 | |||
Condensed combined statements of identifiable cash flows for the 176 days ended
June 25, 2010 and for the 177 days ended June 26, 2009 |
4 | |||
Notes to the unaudited condensed combined interim financial statements |
5 |
1
NATIONAL STARCH
CONDENSED COMBINED STATEMENTS OF OPERATING ACTIVITIES
(Amounts in millions of US dollars)
(Unaudited)
CONDENSED COMBINED STATEMENTS OF OPERATING ACTIVITIES
(Amounts in millions of US dollars)
(Unaudited)
June 25, | June 26, | |||||||||||||||
For the 176 days and 177 days ended | 2010 | 2009 | ||||||||||||||
Revenues |
646.3 | 568.0 | ||||||||||||||
Revenues from related parties |
8.1 | 8.2 | ||||||||||||||
Cost of sales |
(486.9 | ) | (477.8 | ) | ||||||||||||
Gross profit |
167.5 | 98.4 | ||||||||||||||
Selling expenses |
(39.0 | ) | (36.5 | ) | ||||||||||||
General and administrative expenses |
(53.3 | ) | (41.9 | ) | ||||||||||||
Research and development expenses |
(8.9 | ) | (8.2 | ) | ||||||||||||
Other operating income / (expenses) |
(0.6 | ) | (0.1 | ) | ||||||||||||
(101.8 | ) | (86.7 | ) | |||||||||||||
Operating income |
65.7 | 11.7 | ||||||||||||||
The accompanying notes are an integral part of these combined financial statements.
2
NATIONAL STARCH
CONDENSED COMBINED STATEMENTS OF ASSETS AND LIABILITIES
(Amounts in millions of US dollars)
(Unaudited)
CONDENSED COMBINED STATEMENTS OF ASSETS AND LIABILITIES
(Amounts in millions of US dollars)
(Unaudited)
June 25, | December 31, | |||||||||||||||
As of | 2010 | 2009 | ||||||||||||||
Assets |
||||||||||||||||
Non-current assets |
||||||||||||||||
Property, plant and equipment |
472.4 | 491.0 | ||||||||||||||
Other assets |
29.7 | 28.4 | ||||||||||||||
Total non-current assets |
502.1 | 519.4 | ||||||||||||||
Current assets |
||||||||||||||||
Inventories |
210.0 | 176.9 | ||||||||||||||
Trade and other receivables |
177.9 | 171.7 | ||||||||||||||
Total current assets |
387.9 | 348.6 | ||||||||||||||
Total assets |
890.0 | 868.0 | ||||||||||||||
Liabilities |
||||||||||||||||
Non-current liabilities |
||||||||||||||||
Provisions |
143.9 | 125.6 | ||||||||||||||
Total non-current liabilities |
143.9 | 125.6 | ||||||||||||||
Current liabilities |
||||||||||||||||
Trade and other payables |
204.8 | 211.9 | ||||||||||||||
Current portion of provisions |
5.8 | 4.4 | ||||||||||||||
Total current liabilities |
210.6 | 216.3 | ||||||||||||||
Total liabilities |
354.5 | 341.9 | ||||||||||||||
Net assets |
535.5 | 526.1 | ||||||||||||||
The accompanying notes are an integral part of these combined financial statements.
3
NATIONAL STARCH
CONDENSED COMBINED STATEMENTS OF IDENTIFIABLE CASH FLOWS
(Amounts in millions of US dollars)
(Unaudited)
CONDENSED COMBINED STATEMENTS OF IDENTIFIABLE CASH FLOWS
(Amounts in millions of US dollars)
(Unaudited)
For the 176 days and 177 days ended | June 25, 2010 |
June 26, 2009 |
||||||||||||||
Operating income |
65.7 | 11.7 | ||||||||||||||
Adjustments to reconcile operating income to net cash generated from operating activities: |
||||||||||||||||
Depreciation and amortization |
22.5 | 21.6 | ||||||||||||||
Realized (gain)/loss on corn inventory hedging positions (non-cash recognized in income) |
(3.3 | ) | 24.4 | |||||||||||||
Loss on disposals of property, plant and equipment |
0.1 | 0.8 | ||||||||||||||
Unrealized gain on derivative contracts |
(0.3 | ) | | |||||||||||||
Corporate overhead allocations from parent |
1.5 | 1.5 | ||||||||||||||
Changes in working capital: |
||||||||||||||||
Trade and other receivables |
(8.2 | ) | 5.3 | |||||||||||||
Inventories |
(37.9 | ) | 21.8 | |||||||||||||
Trade and other payables |
(1.2 | ) | (65.7 | ) | ||||||||||||
Net change in provisions |
2.0 | 4.8 | ||||||||||||||
Net cash payments made on settled corn derivative contracts |
(3.9 | ) | (2.4 | ) | ||||||||||||
Net cash from operating activities |
37.0 | 23.8 | ||||||||||||||
Investing activities |
||||||||||||||||
Purchases of property, plant and equipment |
(17.5 | ) | (18.4 | ) | ||||||||||||
Proceeds from disposals of property, plant and equipment |
0.1 | | ||||||||||||||
Net change in other investments |
0.2 | (0.3 | ) | |||||||||||||
Acquisition of combined companies |
(1.8 | ) | | |||||||||||||
Net cash from investing activities |
(19.0 | ) | (18.7 | ) | ||||||||||||
Net cash from operating and investing activities |
18.0 | 5.1 | ||||||||||||||
The accompanying notes are an integral part of these combined financial statements.
4
NATIONAL STARCH
NOTES TO THE UNAUDITED CONDENSED COMBINED INTERIM FINANCIAL STATEMENTS
(Amounts in US dollars)
(Unaudited)
NOTES TO THE UNAUDITED CONDENSED COMBINED INTERIM FINANCIAL STATEMENTS
(Amounts in US dollars)
(Unaudited)
Note 1 Business and Basis of Presentation
Business
National Starch (the Business or the Company) is a business of Akzo Nobel N.V. (AkzoNobel).
The Company is a leading global supplier of specialty starches, principally focused on supplying
the food industry. Additionally, the Company serves niche papermaking markets and supplies
high-end industrial starch applications.
The Companys headquarters are located in Bridgewater, New Jersey, USA. Operating facilities which
manufacture products from different indigenous sources of starch (e.g. corn, tapioca, potato and
rice) are located in Australia, Brazil, China, Germany, Mexico, Thailand, the UK and the USA. In
total, the Business has 11 manufacturing facilities globally in eight countries, and there is a
blend of upstream (wet milling) and downstream (specialty processing) capabilities amongst the
plants.
At April 23, 2010, AkzoNobel announced its intention to divest the National Starch business. On
June 19, 2010, AkzoNobel and Corn Products International, Inc. (CPI) signed an international
share and business sale agreement in relation to the National Starch business. The change in
ownership is subject to completion of certain closing conditions, and the transfer of assets and
liabilities is governed by the International Share and Business Sale Agreement.
Basis of presentation
In January 2008, AkzoNobel completed the acquisition of Imperial Chemical Industries Plc. (ICI).
The Company was an existing business of ICI. These unaudited combined condensed interim financial
statements have been prepared on a combined carve-out basis from the books and records of
AkzoNobel to represent the assets and liabilities and operating activities of the Company as if it
had existed as a group of consolidated businesses as of and for the periods presented in these
unaudited condensed combined interim financial statements. International Accounting Standard
(IAS) 27, Consolidated and Separate Financial Statements, has been applied to account for
intergroup investments and transactions. Furthermore, these unaudited condensed combined interim
financial statements exclude all purchase price allocation impacts related to the National Starch
business resulting from AkzoNobels purchase of ICI and are stated at the historical amounts prior
to the acquisition by AkzoNobel.
These unaudited condensed combined interim financial statements have been prepared in order to
fulfill the anticipated reporting requirements of Corn Products International, Inc. (CPI) under
the Securities Act of 1933 and the Securities Exchange Act of 1934, including those of the
Securities and Exchange Commission Regulation S-X 3-05 (Regulation S-X 3-05), Financial
statements of businesses acquired or to be acquired. The recognition and measurement principles of
International Financial Reporting Standards as issued by the International Accounting Standards
Board (IFRS), including International Accounting Standard 34, Interim Financial Reporting (IAS
34) have been applied to the assets, liabilities, income, expenses and cash flows included in
these combined interim financial statements as described in Note 1 and 2 to comply with Regulation
S-X 3-05.
As these unaudited condensed combined interim financial statements do not include the effects of
financing and income taxes, certain presentation and disclosures required by IFRS have been omitted
in these unaudited condensed combined financial statements, including complete statements of
financial position, statements of comprehensive income, statements of equity and statements of cash
flows, and certain other disclosures required by IAS 34.
These unaudited condensed combined interim financial statements reflect the assets, liabilities,
revenues, expenses and cash flows of the Company, except as noted below. During the periods
presented, several legal restructurings have taken place and therefore the legal structure during
those periods is different from the structure at June 25, 2010. The legal entities wholly owned by
AkzoNobel forming part of the Company as of June 25, 2010, are as follows:
Legal Entity | Country of Incorporation | |
National Starch Pty Ltd*
|
Australia | |
NSC Industrial Ltda
|
Brazil |
5
Legal Entity | Country of Incorporation | |
National Starch ULC
|
Canada | |
NSS (Shanghai) Ltd
|
China | |
Almidones y Quimicos Internacionales SA
|
Costa Rica | |
Deutsche ICI GmbH
|
Germany | |
NSC GmbH
|
Germany | |
PT National Starch
|
Indonesia | |
Nippon NSC Ltd
|
Japan | |
N-Starch Sdn Bhd
|
Malaysia | |
ICI Mauritius (Holdings) Ltd
|
Mauritius | |
Aranal SA de CV
|
Mexico | |
Grupo ICI Mexico SA de CV
|
Mexico | |
ICI Servicios Mexico SA de CV
|
Mexico | |
National Starch Servicios SA de CV
|
Mexico | |
National Starch Mexico SA de CV
|
Mexico | |
Inter-National Starch Inc
|
Philippines | |
National Starch Pte Ltd
|
Singapore | |
NSC (Thailand) Ltd
|
Thailand | |
Brunob II B.V.
|
The Netherlands | |
Brunob IV B.V.
|
The Netherlands | |
Laing National Ltd
|
United Kingdom | |
National Starch LLC
|
United States of America | |
Raymond and White River LLC
|
United States of America |
* | Including Branch Office New Zealand |
At May 25, 2010, AkzoNobels Board of Management approved a reorganization plan to reduce
National Starchs number of legal entities in Mexico. At June 11, 2010, a new legal entity was
formed in Mexico (National Starch Mexico SA de CV) for the purpose of subsequently merging several
existing entities.
Additionally, for the following legal entities wholly owned by AkzoNobel which will not be
transferred in any sale of National Starch, National Starch has historically had employees based in
and/or has had trading activities included within these legal entities. Any National Starch
related assets, liabilities, revenues, expenses, or cash flows that pertain directly to the
National Starch business from these entities have been included in these unaudited condensed
combined interim financial statements. The non-National Starch businesses of these legal entities
are dissimilar from National Starch, have historically been managed as if they were autonomous from
National Starch, have no more than incidental common facilities and costs with National Starch,
will be operated and financed autonomously from National Starch after the sale of National Starch,
and National Starch is not expected to have material financial commitments, guarantees, or
contingent liabilities to or from the non-National Starch businesses after the sale of National
Starch.
Legal Entity | Country of Incorporation | |
Akzo Nobel Quimica SA
|
Argentina | |
Akzo Nobel Coatings CZ s.r.o.
|
Czech Republic | |
Akzo Nobel SAS
|
France | |
Akzo Nobel India Ltd.
|
India | |
Akzo Nobel Chemical Spa
|
Italy | |
Akzo Nobel Powder Coatings Korea Co. Ltd.
|
Korea | |
Akzo Nobel Decorative Paints SP Z o.o.
|
Poland | |
Akzo Nobel Representative Office
|
Russia | |
ICI South Africa (Pty) Ltd.
|
South Africa | |
Akzo Nobel Packaging Coatings SA
|
Spain | |
EKA Chemicals AB
|
Sweden | |
Elotex AG
|
Switzerland | |
Akzo Nobel Functional Chemicals B.V.
|
The Netherlands | |
Akzo Nobel Representative Office
|
Ukraine | |
National Starch & Chemical Ltd.
|
United Kingdom | |
Akzo Nobel Paints Vietnam Ltd.
|
Vietnam |
6
Under the carve-out basis of presentation, these unaudited condensed combined interim financial
statements include allocations for various expenses, including corporate administrative expenses
incurred by AkzoNobel and an allocation of certain assets and liabilities historically maintained by AkzoNobel, and an
allocation of income and expenses related to such assets and liabilities. These include corporate
overhead allocations, pension expenses and liabilities and other post-employment benefit expenses
and provisions. The various allocation methodologies for these items are discussed in Note 4
Related Party Transactions.
These condensed combined interim financial statements exclude the effects of financing and income
taxes since AkzoNobel uses a centralized approach to cash management and to finance its global
operations as well as to manage its global tax position.
Financing
The condensed combined statements of operating activities exclude financing costs. The condensed
combined statements of operating activities do include gains and losses related to futures and
options for commodity hedging as well as gains and losses related to forward foreign exchange
contracts and foreign exchange differences.
The condensed combined statements of assets and liabilities exclude all cash and short-term and
long-term borrowings due from or to third parties (such as bank overdrafts, borrowings and loans)
as well as related parties. The condensed combined statements of identifiable cash flows exclude
all financing related cash flows.
Income taxes
The condensed combined statements of operating activities exclude income tax charges. The
condensed combined statements of assets and liabilities exclude all balances related to deferred
income taxes (both assets and liabilities), as well as current income tax payables and receivables.
The condensed combined statements of identifiable cash flows exclude all cash flows related to
income taxes.
As a result of the foregoing exclusions, the condensed combined interim financial statements may
not necessarily be indicative of the Companys financial position, results of operations, or cash
flows had the Company operated on a separate stand-alone basis during the periods presented, or for
future periods. Furthermore, the condensed combined interim financial statements do not reflect
the financial impact of the actual separation of the Company from AkzoNobel.
Note 2 Significant Accounting Policies
These unaudited condensed combined interim financial statements do not include all of the
information required for full annual financial statements and should be read in conjunction with
the combined financial statements as of and for the year ended December 31, 2009 dated August 17,
2010.
Compared with the accounting principles applied in the combined financial statements as of and for
the year ended December 31, 2009, there have been no changes in the basis of presentation and
accounting policies materially affecting the computation of the Companys results. These
accounting policies can be found in Note 1Basis of Preparation and Note 2
Significant Accounting Policies of those combined financial statements.
Provisions
By their nature, provisions and contingent liabilities are dependent upon estimates and assessments
as to whether the criteria for recognition have been met, including estimates of the probability of
cash and other resources outflows. Management is not aware of any events during the 176 days ended
June 25, 2010, significantly impacting the estimates and assessments applied in accounting for the
provisions in the combined financial statements as of and for the year ended December 31, 2009.
Pensions and employee benefits
The funded status of the pension plans as of June 25, 2010 was estimated to be a deficit of $139.9
million compared with a deficit of $119.2 million as of December 31, 2009. The change is primarily
due to lower discount rates increasing the pension obligation, partially offset by increased asset
values.
7
Note 3 Commodity Price Risk Management
The Company hedges agricultural commodities with futures and options contracts purchased at the
Chicago Mercantile Exchange. Cash flow hedge accounting is applied to these contracts and the
Company has operated a hedging program throughout both the 176 days ended June 25, 2010 and the 177
days ended June 26, 2009. The futures and cash markets for agricultural commodities experienced
volatility during the 176 days ended June 25, 2010 and the 177 days ended June 26, 2009. The
Companys standard practice is to hedge a substantial portion of the ensuing years crop.
As of December 31, 2008, the Company included $33.8 million of realized losses and $0.5 million of
unrealized losses in net assets. During the 177 days ended June 26, 2009, the Company recognized
losses of $24.4 million into inventories, and also recognized losses of $2.4 million into net
assets, resulting in $11.8 million of realized losses included in net assets as of June 26, 2009.
In addition, $1.8 million of unrealized gains were included in net assets as of that date. At June
26, 2009, agricultural commodities were hedged by the business using futures contracts with a
notional value of $17.7 million and a fair value of $(1.4) million.
As of December 31, 2009, the Company included $8.5 million of realized gains and $0.3 million of
unrealized gains in net assets. During the 176 days ended June 25, 2010, the Company recognized
gains of $3.3 million into inventories, and also recognized losses of $3.9 million into net assets,
resulting in $1.3 million of realized gains included in net assets as of June 25, 2010. In
addition, $1.3 million of unrealized gains were included in net assets as of that date. At June
25, 2010, agricultural commodities were hedged by the business using futures and option contracts
with a notional value of $25.1 million and a fair value of $(0.4) million.
The Company regularly settles these cash flow hedge positions through margin accounts.
Note 4 Related Party Transactions
The related parties identified by the Company and disclosed in the combined financial statements as
of and for the year ended December 31, 2009, have not changed as of June 25, 2010.
With regard to corporate administrative expenses allocated to the Company from AkzoNobel, total
AkzoNobel costs approximating $22.7 million and $25.3 million have been considered for allocation
to these unaudited condensed combined interim financial statements for the 176 days ended June 25,
2010 and the 177 days ended June 26, 2009, respectively. These overhead costs include charges for
services provided to the Company relating to human resources, procurement, treasury, accounting,
tax, and legal related services. These costs have been allocated to the Company based primarily on
the headcount or revenues of the Company compared to those of AkzoNobel. Using these allocation
methods, corporate overheads of $1.5 million have been allocated to the Company for both the 176
days ended June 25, 2010 and the 177 days ended June 26, 2009.
During 2009 and 2010, various Transitional Service Agreements (TSAs) existed with former parts of
the ICI business, including businesses sold by AkzoNobel and integrated into AkzoNobel. These
agreements covered various items including finance, information technology, human resources and
support services, product supply and contract manufacturing. During 2009 and 2010, the Company
pursued a self-sufficiency agenda including the establishment of independent support functions
while exiting the vast majority of TSAs. For the 176 days ended June 25, 2010, $0.3 million of TSA
expenses were incurred.
The charges related to the TSAs, as well as the allocations for various expenses incurred by
AkzoNobel, that have been included in these condensed combined interim financial statements, may
not be representative of the cost which would have been incurred by the Company on a stand-alone
basis or which will be incurred under different ownership in the future.
The nature of key management compensation that was paid and accrued in the 176 days ended June 25,
2010 did not significantly change compared to the financial year 2009.
Note 5 Seasonality
The starch business experiences some seasonal influences. In a number of market sectors and in a
number of regions, revenue tends to be strongest in the fourth calendar quarter. Also, cash flow
from operations tends to be strongest in the fourth calendar quarter.
Bridgewater, August 17, 2010
J.P. Zallie
Chief Executive Officer and President of National Starch
/s/ J.P. Zallie
Chief Executive Officer and President of National Starch
/s/ J.P. Zallie
H.W.M. Kieftenbeld
Chief Financial Officer of National Starch
/s/ H.W.M. Kieftenbeld
Chief Financial Officer of National Starch
/s/ H.W.M. Kieftenbeld
8