Bestfoods' 1997 Earnings Per Share From Continuing Operations Grows 5.6%, Excluding Restructuring Charge; Fourth-Quarter Operating Income Up 14%.ENGLEWOOD CLIFFS, NJ--(BUSINESS WIRE)--February 11, 1998-- Bestfoods, comprising the consumer foods operations of the former CPC (1) (Central Processing Complex) An IBM mainframe that has two or more central processors (CPs) that share memory. It is the collection of processors, memory and I/O subsystems manufactured with a single serial number, typically all contained in one cabinet. International, today reported a fourth-quarter decline of approximately 1% in basic earnings per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , to $1.16. Fourth-quarter income from continuing operations was also down slightly to $169 million from $170 million last year. However, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. advanced 14% to $315 million. The decline in both earnings per share and income from continuing operations was due principally to the effect of a higher effective tax rate of 34.7% in the quarter compared to a rate of 24.5% in the same period last year. The increase in operating income reflected volume growth of 5%, including added volumes from the third-quarter Starlux acquisition in Spain, and margin improvements in all five divisions, which overcame a $20 million setback setback In architecture, a steplike recession in the profile of a high-rise building. Usually dictated by building codes to allow sunlight to reach streets and lower floors, the building must take another step back from the street for every specified added height interval. to earnings from unfavorable European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. , and to a small extent Asian, currency variances. Fourth-quarter worldwide sales declined 2.7% to $2.1 billion, also reflecting the strongly negative European currency values. For the full year 1997, Bestfoods' basic earnings per common share from continuing operations were $3.99, up 5.6%, excluding a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $1.08 per share. Also excluding this charge, income from continuing operations rose 4.9% to $585 million, compared to $558 million last year, and operating income advanced 7.9% to $1.11 billion from $1.03 billion in 1996. Volume growth and margin improvements contributed equally to the 1997 gains in operating income; however, unfavorable currency values, primarily in Europe, offset these gains by $43 million. The 1997 results also reflect Bestfoods' higher effective tax rate in 1997 compared to 1996, as well as higher financing costs related mostly to the acquisition of the Starlux business in Spain. Worldwide sales declined nearly 1% to $8.4 billion, including the $338 million negative impact of primarily European currencies. Bestfoods' fourth-quarter basic earnings per share also included a charge of $.09 per share for the cumulative effect of adopting a required change in accounting for business process re-engineering See reengineering. (business) Business Process Re-engineering - (BPR) Any radical change in the way in which an organisation performs its business activities. BPR involves a fundamental re-think of the business processes followed by a redesign of business activities to costs. A Year of Major Progress; Strongly Improved Prospects as Consumer Foods Company Commenting on the company's 1997 performance, C.R. Shoemate, chairman and chief executive officer of Bestfoods, said: "1997 was a year of major progress for Bestfoods. We completed the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of our corn refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar business, renamed the company to reflect our new and total focus on high-quality consumer foods, and completed important restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities that will result in substantial additions to the bottom line in 1998 and beyond. "Operating results were strong in all divisions. Total volume was up 2.4% for the year. Operating income was up 7.9% for the year and 14% for the fourth quarter. And it's important to note that these operating income gains are in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a $43 million hit from unfavorable currency variances, essentially all in Europe. "Investors' confidence in our company and our future was expressed, we believe, in the 39% gain in our share price last year. "We begin 1998 with greatly enhanced opportunities to build value aggressively for Bestfoods shareholders. We are now free of the earnings volatility of the corn refining industry and totally focused on maximizing the power of our great global and regional brands. In addition, we have a more dependable cash flow and a clearer planning horizon Planning horizon The length of time a model or investor or plan projects into the future. , as we pursue our strategies and execute for rapid growth in one industry instead of two. "Our objective is not modest. We want Bestfoods to be -- and firmly believe it can be -- the best investment for shareholders in the food industry. That means continuously ranking in the top-quartile of our food industry peer group in terms of total return to shareholders. We have the global brands, the global positions, the global experience, and the operating track record to make this objective a reality. Bestfoods' operating income, excluding special items, grew 10.6% compounded annually over the last 10 years, and we fully expect to exceed this growth rate in 1998." Corn Refining (Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ) Corn Products International, which was spun off at the end of 1997, earned $.07 per CPC share in the fourth quarter, compared to a loss of $.10 per share for the same period last year (or $.29 per Corn Products International basic share, compared to a $.39 per share loss last year computed on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, reflecting a distribution of one Corn Products share for four CPC shares). Fourth-quarter operating income was $23 million, compared to a fourth-quarter loss of $17 million in 1996. The 1996 figure includes a $40 million loss from certain liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. corn futures contracts Futures Contract An exchange traded agreement to buy or sell a particular type and grade of commodity for delivery at an agreed upon place and time in the future. Futures contracts are transferable between parties. in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Excluding the $40 million loss, fourth-quarter operating income was at last year's level for the same period. Profits in the company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. were strong in the quarter, but were partially offset by operating results in North America, where excess supply in the high fructose fructose (frŭk`tōs), levulose (lĕv`yəlōs'), or fruit sugar, simple sugar found in honey and in the fruit and other parts of plants. corn syrup corn syrup Sweet syrup produced by breaking down (hydrolyzing) cornstarch (a product of corn). Corn syrup contains dextrins, maltose, and dextrose and is used in baked goods, jelly and jam, and candy. industry continued to have a strongly negative impact on pricing. Volumes during the quarter advanced in total, on a double-digit increase in the international areas and a modest advance in North American operations North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. . For the year, earnings per share from corn refining were $.07 compared to $.15 in 1996 (or $.30 per Corn Products share on a pro forma basis, compared to $.62 per Corn Products share last year). 1997 operating income was $48 million, versus $65 million in 1996. Volumes advanced more than 5%. Volumes from international operations, continuing to grow strongly, were up 13%, while North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. volumes increased 2%. International sales rose 11%, following the higher volumes, while sales in North America declined 16%, as significant price declines more than offset the modest volume gains. Total worldwide sales declined 7% on lower pricing, which was significantly influenced by lower corn costs this year. Konrad Schlatter, chairman and chief executive officer of Corn Products, said, " The substantial high fructose capacity expansion by North American corn refining during the last two years outpaced the growing demand for this product and reduced profitability sharply in the industry and for Corn Products. However, our company's financial performance in the fourth quarter of 1997 was by far the best of 1997. This bodes well for 1998, Corn Products' first year as an independent company." Bestfoods recorded a charge amounting to $108.6 million ($83 million after taxes, or $.57 per share), for costs related to the spin-off of the corn refining business. Bestfoods' Reported Earnings Per Share, Including Special Charges Including the charge for the change in accounting, the earnings from discontinued operations, and the costs for the spin-off (loss on disposal of discontinued operations) discussed above, the company reported earnings per common share of $1.14 in the fourth quarter, compared to $1.07 last year, and $2.32 per share for the full year, compared to $3.93 last year. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of including the charge rose 6.7% to $1.11 from $1.04 for the quarter, compared to the prior year. For the year, including the charges, diluted earnings per share declined 41% to $2.29 from $3.85 for the year before. Bestfoods: 1997 Highlights - The company's share price rose 39% during the year and the quarterly dividend was increased 9.8% to $.45 per share. - The spin-off of CPC International's corn refining operations was completed at the end of the year, resulting in two independent companies, Bestfoods and Corn Products International. Bestfoods now trades under the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors , BFO BFO Beat Frequency Oscillator BFO Basic Formal Ontology BFO Blinding Flash of the Obvious BFO Bunker Fuel Oil BFO Balanced Forearm Orthosis BFO Blood Forming Organ BFO Blazing Flash of the Obvious BFO Best & Final Offer BFO Bug-Fix Only . Corn Products International trades on the NYSE NYSE See: New York Stock Exchange as CPO (Chief Privacy Officer) An individual who manages the privacy issues within an organization. Arising out of the privacy regulations in finance and health care in the late 1990s, the CPO position eventually crossed over to all industries. . New Products - Notable among many new product launches around the world was the introduction of four new fat free varieties of Hellmann's and Best Foods Hellmann's and Best Foods are brand names that are used for the same line of mayonnaise and other food products. The Hellmann's brand is sold in the United States east of the Rocky Mountains, and also in Latin America, Europe, and Canada. pourable dressings and two new regular varieties in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Regular pourable dressings were introduced in 1996 and rolled out nationally in 1997. Pourable dressings have also been launched throughout Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . - Reformulation and relaunch Relaunch can refer to several things:
or grain Any grass yielding starchy seeds suitable for food. The most commonly cultivated cereals are wheat, rice, rye, oats, barley, corn, and sorghum. As human food, cereals are usually marketed in raw grain form or as ingredients of food products. bars, Donut Dippers Noun 1. Dippers - a Baptist denomination founded in 1708 by Americans of German descent; opposed to military service and taking legal oaths; practiced trine immersion Church of the Brethren, Dunkers Baptist denomination - group of Baptist congregations , Soft-Baked cookies, and Soft-Icing cupcakes. - Oroweat bagels are the latest addition to Bestfoods' fast-growing bagel business, which also includes Brownberry and Thomas' bagels. Thomas' is now the number one fresh packaged bagel. Acquisitions and Divestitures - Bestfoods acquired the Starlux business in Spain, tripling the size of its Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. affiliate. The Starlux portfolio, with $160 million in sales, includes Starlux bouillons and Nocilla hazel nut spreads, both leading Spanish brands in their categories, as well as Starlux meal dishes, tomato products, and foodservice business. The integration of the Starlux operations with the existing business is producing important synergies and significant cost savings. - The company sold its Old London and Devonsheer melba toast Melba toast n. Very thinly sliced crisp toast. [After Nellie Dame Melba.] Word History: business in the U.S. and its Frank Cooper's jam business in the U.K. Geographic Expansion - Bestfoods established a fourth venture in China and laid the groundwork for production of mayonnaise in Russia. The company signed an agreement to lease a facility for manufacturing mayonnaise in Tula, south of Moscow, and expects to begin production by year's end. In Romania, a new plant began producing Knorr products for the local market. - The company increased its stake in its Israeli business from 51% to 85%, as the business returned to double-digit earnings progress. Restructuring - Restructuring of Bestfoods' operations worldwide has lowered costs significantly. Savings from restructuring are expected to be $60 million in 1998 and $90 million in 1999 and annually thereafter. In North America, production realignments allowed the company to shut down three bakeries and a pasta While the only basic difference between these names is the shape of the pasta, each pasta is typically matched with a particular sauce based on cooking time, consistency, ability to hold sauce, ease of eating, etc. plant in the U.S., a Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. consumer foods plant, and four Latin American consumer foods plants during 1997; additional bakery shutdowns have been announced. Brand Vitalization - The Skippy peanut butter business in the U.S. delivered higher sales, volumes, and market share, benefiting from a formula improvement and aggressive marketing support. - Significant quality and cost improvements in the Mueller's pasta business are among the benefits of a manufacturing and distribution alliance formed during the year between Bestfoods and American Italian Pasta Company. AIPC AIPC Androgen-Independent Prostate Cancer AIPC American Italian Pasta Company (Kansas City, MO) AIPC Aquidneck Island Planning Commission (Rhode Island) now manufactures Mueller's products at its highly efficient Columbia, SC, plant. Operating Division Results The financial results of Bestfoods' operating divisions follow. To provide the clearest possible description of our business and outlook, this report contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on our best current information and reasonable assumptions about anticipated developments. However, because of the risks and uncertainties that always exist in any operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. or business, we cannot make any assurances that these expectations will prove correct. Actual results and developments may differ materially, depending upon currency values, competitive pricing, economic conditions in our countries of operations, and other factors. Further information on factors that could affect the company's financial and other results are included in the company's Forms 10-Q and 10-K, filed with the Securities and Exchange Commission. ABOUT BESTFOODS: Bestfoods, formerly CPC International Inc., is among the largest U.S. food companies, with sales of $8.4 billion in 1997. Best known among Bestfoods' U.S. products are: Hellmann's and Best Foods mayonnaise and dressings; Mazola corn oil corn oil n. A pale yellow liquid obtained from the embryos of corn grains, used especially as a cooking and salad oil and in the manufacture of margarines. Noun 1. and margarine margarine, manufactured substitute for butter. It consists of a blend of vegetable oils or meat fats (or a combination of both) mixed with milk and salt. It was developed in the late 1860s by the French chemist Hippolyte Mège-Mouries in a contest sponsored by ; Skippy peanut butter; Knorr soups, sauces, and bouillons; Entenmann's sweet baked products; Thomas' English muffins; Arnold, Brownberry, Freihofer's, and Oroweat breads; Boboli pizza crusts; Mueller's pasta; and Karo KARO Kane Amateur Radio Operators (Kane, PA) syrup syrup /syr·up/ (sir´up) a concentrated solution of a sugar, such as sucrose, in water or other aqueous liquid, sometimes with a medicinal agent added; usually used as a flavored vehicle for drugs. . Bestfoods' global Knorr brand comprises one of the world's most extensive lines of products. Bestfoods is one of the nation's most international food companies, with operations in more than 60 countries and products marketed in 110 countries. For more information about Bestfoods, visit the company's Web site on the Internet at: http://www.bestfoods.com. -0-
Bestfoods - Divisional Results
($ millions) Three Months Ended December 31,
Net Sales 1997 1996 %
North America $508.2 $495.4 2.6
Europe 845.2 923.1 (8.4)
Latin America 271.4 272.1 (0.3)
Asia 89.7 98.3 (8.8)
Baking 408.5 393.3 3.8
Total Continuing
Operations $2,123.0 $2,182.2 (2.7)
($ millions) Twelve Months Ended December 31,
Net Sales 1997 1996 %
North America $1,786.4 $1,744.0 2.4
Europe 3,518.8 3,692.1 (4.7)
Latin America 1,104.9 1,076.2 2.7
Asia 382.2 398.0 (4.0)
Baking 1,608.1 $1,567.3 2.6
Total Continuing
Operations $8,400.4 $8.477.6 (0.9)
($ millions) Three Months Ended December 31,
Operating Income(a) 1997 1996 %
North America $102.2 $90.2 13.2
Europe 108.9 108.9 0.0
Latin America 63.9 47.5 34.6
Asia 15.4 12.5 23.5
Baking 34.4 27.6 24.9
Corporate Expenses (9.8) (11.4) NM
Total Operating
Income $315.0 $275.3 14.4
($ millions) Twelve Months Ended December 31,
Operating Income(a) 1997 1996 %
North America $307.4 $284.6 8.1
Europe 457.1 425.3 7.5
Latin America 232.9 211.5 10.1
Asia 52.6 48.9 7.6
Baking 97.3 89.3 9.0
Corporate Expenses (38.7) (32.4) --
Total Operating
Income $1,108.6 $1,027.2 7.9
(a) excludes restructuring charge taken in the second quarter of
1997 of $242.3 million
Bestfoods
Consolidated Statements of Income
(All figures are in millions except per share amounts)
Three Months Ended
December 31,
1997 1996
Net sales $2,123.0 $2,182.2
Cost of sales 1,150.6 1,229.8
Gross profit 972.4 952.4
Operating expenses 657.4 677.1
Restructuring charge -- --
Operating income from
continuing operations 315.0 275.3
Financing costs 43.5 36.6
Income from continuing operations
before income taxes 271.5 238.7
Provision for income taxes 94.2 58.6
177.3 180.1
Minority stockholders' interest 8.2 10.4
Income from continuing
operations 169.1 169.7
Income from discontinued
operations, net of income taxes
($6.0-1997; $(10.1)-1996;
$7.1-1997; $12.4-1996) 10.7 (14.1)
Loss on disposal of discontinued
operations net of income
taxes $ (26.0) -- --
Cumulative effect of change in
accounting
principle, net of income
taxes $ (7.3) (13.2) --
Net income $166.6 $155.6
Average common shares outstanding
Basic 143,922 143,716
Diluted 149,562 148,836
Basic earnings (loss) per
common share
Continuing operations $1.16 $1.17
Discontinued operations .07 (.10)
Loss on disposal of discontinued
operations -- --
Cumulative effect of change
in accounting principle (.09) --
Net earnings per common
share $1.14 $1.07
Diluted earnings (loss) per
common share
Continuing operations $1.12 $1.13
Discontinued operations .07 (.09)
Loss on disposal of discontinued
operations -- --
Cumulative effect of change
in accounting principle (.08) --
Net earnings per common
share $1.11 $1.04
Cash dividends declared
per common share $.45 $.41
Twelve Months Ended
December 31,
1997 1996
Net sales $8,400.4 $8,477.6
Cost of sales 4,655.2 4,825.4
Gross profit 3,745.2 3,652.2
Operating expenses 2,636.6 2,625.0
Restructuring charge 242.3 --
Operating income from
continuing operations 866.3 1,027.2
Financing costs 162.1 147.0
Income from continuing operations
before income taxes 704.2 880.2
Provision for income taxes 250.0 295.9
454.2 584.3
Minority stockholders' interest 25.4 26.8
Income from continuing
operations 428.8 557.5
Income from discontinued
operations, net of income taxes
($6.0-1997; $(10.1)-1996;
$7.1-1997; $12.4-1996) 11.1 22.5
Loss on disposal of discontinued
operations net of income
taxes $ (26.0) (82.6) --
Cumulative effect of change in
accounting
principle, net of income
taxes $ (7.3) (13.2) --
Net income $344.1 $580.0
Average common shares outstanding
Basic 143,658 144,697
Diluted 149,252 149,804
Basic earnings (loss) per
common share
Continuing operations $2.91 $3.78
Discontinued operations .07 .15
Loss on disposal of discontinued
operations (.57) --
Cumulative effect of change
in accounting principle (.09) --
Net earnings per common
share $2.32 $3.93
Diluted earnings (loss) per
common share
Continuing operations $2.85 $3.70
Discontinued operations .07 .15
Loss on disposal of discontinued
operations (.55) --
Cumulative effect of change
in accounting principle (.08) --
Net earnings per common
share $2.29 $3.85
Cash dividends declared
per common share $1.72 $1.58
This is an unaudited interim statement prepared by management and reflects all adjustments which are, in the opinion of management, necessary to a fair statement of results for the interim periods. Englewood Cliffs, NJ, February 11, 1998 Rainer H. Mimberg, Vice President Finance & Comptroller CONTACT: Bestfoods, Englewood Cliffs Media Contact: Gale Griffin, Vice President, Corp. Communications (201) 894-2407 or Analyst Contact: Bernard Kastory, Senior Vice President, Finance and Administration (201) 894-2837 |
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