EX-99.1 2 pressrelease.htm 8K PRESS RELEASE 8k Press Release
 
 ADM Logo
 
Archer Daniels Midland Company
4666 Faries Parkway
Decatur, Il 62526
News Release 
 
 FOR IMMEDIATE RELEASE 
 January 31, 2006
 
ARCHER DANIELS MIDLAND REPORTS SECOND QUARTER RESULTS
 
Decatur, IL — January 31, 2006 — Archer Daniels Midland (NYSE: ADM)
 
►
Net earnings for the quarter ended December 31, 2005 increased 17% to $ 368 million - $ .56 per share from $ 314 million - $ .48 per share last year.
·  
Net earnings for the quarter ended December 31, 2005 includes a $ 36 million tax credit related to the adjustment of state and federal income taxes. Net earnings for the quarter ended December 31, 2004 included a gain of $ 45 million representing the Company’s equity share of the gain reported by an unconsolidated affiliate upon the sale of its Tate & Lyle interest.
 
►
Second quarter segment operating profit increased 8% to $ 524 million from $ 485 million last year.
·  
Oilseeds Processing operating profit increased on generally improved market conditions.
·  
Corn Processing operating profit increased principally due to lower net corn costs.
·  
Agricultural Services operating profit increased on improved transportation results.
·  
Other segment operating profit declined primarily due to Food & Feed Ingredients impairment charges and a decline in Financial earnings from our private equity funds.
 
► Financial Highlights
(Amounts in thousands, except per share data and percentages)
     
THREE MONTHS ENDED
  
 SIX MONTHS ENDED
  
     
12/31/05
 
 
12/31/04
 
 
% CHANGE
 
 
12/31/05
 
 
12/31/04
 
 
% CHANGE
  
 Net sales and other operating income  
$
9,298,985
  
$
9,063,526
    
  3%
 
$
17,925,934
  
$
18,035,937
    
-1%
 
 Segment operating profit  
$
523,895
  
$
484,685
    
  8%
 
$
874,413
  
$
823,357
    
  6%
 
 Net Earnings  
$
367,677
  
$
313,509
    
17%
 
$
554,015
  
$
579,806
    
-4%
 
 Earnings per share  
$
0.56
  
$
0.48
    
17%
 
$
0.85
  
$
0.89
    
-4%
 
 Average number of shares outstanding    
655,508
    
657,120
    
–
    
654,656
    
655,122
    
–
  
 
 
“The results from this past quarter reflect the Company’s strategic utilization of its global asset base to capitalize upon the growing opportunities for agriculture in expanding food and industrial markets.”
 
G. Allen Andreas, Chairman and Chief Executive
 
 
Archer Daniels Midland Company
Page 2
 
Discussion of Operations
Net earnings for the quarter ended December 31, 2005 were $ 368 million, or $ .56 per share, compared to $ 314 million, or $ .48 per share, last year. Net earnings for the six months ended December 31, 2005 were $ 554 million, or $ .85 per share, compared to $ 580 million, or $ .89 per share, last year. This year’s results for the quarter and six months ended December 31, 2005 include a $ 36 million tax credit related to the adjustment of state and federal income taxes, a $ 31 million ($ 19 million after tax) Food and Feed Ingredient asset impairment charge, and severance costs of $ 15 million related to a citric acid plant shut down. Net earnings for the quarter ended December 31, 2004 included a gain of $ 45 million representing the Company’s equity share of the gain reported by the Company’s unconsolidated affiliate, Compagnie Industrielle et Financiere des Produits Amylaces SA (“CIP”), upon the sale of its Tate & Lyle interest.
 
Segment operating profit increased $ 39 million to $ 524 million for the quarter and increased $ 51 million to $ 874 million for the six months.
 
Oilseeds Processing operating profit increased $ 9 million to $ 128 million for the quarter and increased $ 17 million to $ 227 million for the six months due principally to improved processing results in North America, South America and Europe. Operating results of Asia declined in the quarter and were slightly ahead of last year’s levels for the six months.
 
Corn Processing operating profit increased $ 105 million to $ 237 million for the quarter and increased $ 138 million to $ 373 million for the six months due primarily to lower net corn costs and, to a lesser extent, improved ethanol prices and volumes. These gains were partially offset by lower lysine selling prices and higher energy costs. Sweeteners & Starches operating profit increased $ 69 million to $ 114 million for the quarter and increased $ 107 million to $ 206 million for the six months due to lower net corn costs partially offset by higher energy costs. Bioproducts operating profit increased $ 35 million to $ 122 million for the quarter and increased $ 31 million to $ 166 million for the six months due to higher ethanol selling prices and volumes and lower net corn costs partially offset by lower lysine selling prices and $ 15 million of employee severance costs associated with the closure of a citric acid plant.
 
Agricultural Services operating profit increased $ 6 million to $ 94 million for the quarter due principally to improved operating results of transportation operations. For the six months, operating profit decreased $ 26 million to $ 114 million as improved results from transportation operations were more than offset by a decline in global grain merchandising results and the negative impact of the hurricanes on North American origination and export operating results.
 
Other segment operating profit decreased $ 80 million to $ 66 million for the quarter and decreased $ 78 million to $ 161 million for the six months due primarily to Food & Feed Ingredients impairment charges of $ 31 million and a $ 45 million decline in earnings of our private equity funds.
 
Significant components of Corporate results are as follows:
 
 
Three months ended
 Six months ended
 
December 31,
 December 31,
 
 
2005
 
 
2004
 
 
2005
 
 
2004
 
 
(in millions)
                       
LIFO inventory valuation adjustments
$
3
  
$
19
  
$
12
  
$
135
  
Gain on sale of securities
  
23
    
45
    
29
    
45
  
Brazilian transactional tax reversal
  
19
    
-
    
19
    
-
  
Other
  
(62
)
  
(94
)
  
(154
)
  
(163
)
Total Corporate
$
(17
)
$
(30
)
$
(94
)
$
17
  
 
 
Archer Daniels Midland Company
Page 3
 
Conference Call Information
 
Archer Daniels Midland will host a conference call and audio Web cast to discuss second quarter results at 8:00 a.m. Central Standard Time (CST) on Tuesday, January 31, 2006. To listen by phone, dial 800-261-3417 or 617-614-3673; the access code is 69620120. Digital replay of the call will be available beginning on January 31, 2006 from 10:00 a.m. CST and ending on February 7, 2006. To access this replay, dial 888-286-8010 or 617-801-6888 and enter access code: 84984942. To listen to the call via the Internet go to: http://www.admworld.com/webcast/.  A replay of the Web cast will be available on the ADM World Web site.
 
Archer Daniels Midland Company (ADM) is a world leader in agricultural processing. ADM is one of the world's largest processors of soybeans, corn, wheat and cocoa. ADM is also a leader in the production of soy meal and oil, ethanol, corn sweeteners and flour. In addition, ADM produces value-added food and feed ingredients. Headquartered in Decatur, Illinois, ADM has over 25,000 employees, more than 250 processing plants and net sales for the fiscal year ended June 30, 2005 of $35.9 billion. Additional information can be found on ADM's Web site at http://www.admworld.com.
 
###
Contacts:
  
Brian Peterson
Dwight Grimestad
Senior Vice President - Corporate Affairs
Vice President - Investor Relations
217/424-5413
217/424-4586
 
 
(Financial Tables Follow)
 
January 31, 2006
ARCHER DANIELS MIDLAND COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
 
Three months ended
 Six months ended
 
December 31,
 December 31,
 
 
2005
 
 
2004
 
 
2005
 
 
2004
 
 
(in thousands, except per share amounts)
Net sales and other operating income
$
9,298,985
  
$
9,063,526
  
$
17,925,934
  
$
18,035,937
  
Cost of products sold
  
8,515,517
    
8,394,818
    
16,559,755
    
16,703,797
  
Gross profit
  
783,468
    
668,708
    
1,366,179
    
1,332,140
  
Selling, general and administrative expenses
  
294,392
    
269,741
    
598,847
    
521,250
  
Other (income) expense - net
  
(17,628
)
  
(55,395
)
  
(13,104
)
  
(29,409
)
Earnings before income taxes
  
506,704
    
454,362
    
780,436
    
840,299
  
Income taxes
  
139,027
    
140,853
    
226,421
    
260,493
  
Net earnings
$
367,677
  
$
313,509
  
$
554,015
  
$
579,806
  
Basic and diluted earnings per common share
$
0.56
  
$
0.48
  
$
0.85
  
$
0.89
  
Average number of shares outstanding
  
655,508
    
657,120
    
654,656
    
655,122
  
                         
Other (income) expense - net consists of:
                        
Interest expense
$
86,609
  
$
82,561
  
$
172,898
  
$
161,610
  
Investment income
  
(60,074
)
  
(24,621
)
  
(97,848
)
  
(55,456
)
Net (gain) loss on marketable securities
transactions
  
(22,975
)
  
566
    
(28,234
)
  
559
  
Equity in (earnings) losses of
unconsolidated affiliates
  
(22,994
)
  
(115,905
)
  
(58,674
)
  
(136,798
)
Other - net
  
1,806
    
2,004
    
(1,246
)
  
676
  
 
$
(17,628
)
$
(55,395
)
$
(13,104
)
$
(29,409
)
                         
Operating profit by segment is as follows:
                        
Oilseeds Processing
$
128,077
  
$
118,782
  
$
227,192
  
$
210,055
  
Corn Processing
                        
Sweeteners and Starches
  
114,043
    
44,758
    
206,524
    
99,638
  
Bioproducts (4)
  
122,489
    
87,250
    
166,266
    
135,443
  
Total Corn Processing (4)
  
236,532
    
132,008
    
372,790
    
235,081
  
Agricultural Services
 
93,606
    
87,863
    
113,615
    
139,135
  
Other  
                        
Food and Feed Ingredients (2)
  
34,902
    
70,808
    
104,131
    
160,047
  
Financial
  
30,778
    
75,224
    
56,685
    
79,039
  
Total Other (2)
  
65,680
    
146,032
    
160,816
    
239,086
  
Total segment operating profit
  
523,895
    
484,685
    
874,413
    
823,357
  
Corporate (1) (3)
  
(17,191
)
  
(30,323
)
  
(93,977
)
  
16,942
  
Earnings before income taxes
$
506,704
  
$
454,362
  
$
780,436
  
$
840,299
  
 
(1) 
 Fiscal 2005 second quarter and six months results include a $ 45 million gain representing the Company’s equity share of the gain reported by its unconsolidated affiliate, CIP, upon the sale of its interest in Tate & Lyle.
(2)
Fiscal 2006 second quarter and six months results include a charge for the abandonment and write down of long-lived assets of
$ 31 million in Food and Feed Ingredients.
(3)
Includes LIFO income of $ 3 million for the quarter and $ 12 million for the six months ended December 31, 2005. Includes LIFO income of $ 19 million for the quarter and $ 135 million for the six months ended December 31, 2004.
(4)
Fiscal 2006 second quarter and six months results include severance costs of $15 million related to closure of a citric acid plant.
 
January 31, 2006
ARCHER DANIELS MIDLAND COMPANY
SUMMARY OF FINANCIAL CONDITION
(unaudited)
   
 
December 31, 2005
 
 
June 30, 2005
 
 
 
(in thousands)
               
NET INVESTMENT IN
              
Working capital
  
$
5,641,011
  
$
4,992,583
  
Property, plant and equipment
    
5,170,551
    
5,184,380
  
Investments in and advances to affiliates
    
1,983,910
    
1,879,501
  
Long-term marketable securities
    
1,094,342
    
1,049,952
  
Other non-current assets
    
815,860
    
773,571
  
   
$
14,705,674
  
$
13,879,987
  
               
FINANCED BY
              
Short-term debt
  
$
398,754
  
$
425,808
  
Long-term debt, including current maturities
    
4,215,057
    
3,753,078
  
Deferred liabilities
    
1,226,511
    
1,267,629
  
Shareholders' equity
    
8,865,352
    
8,433,472
  
   
$
14,705,674
  
$
13,879,987
  
               
SUMMARY OF CASH FLOWS
              
(unaudited)
              
   
Six Months Ended
 
 
December 31,
 
 
 
2005
 
 
2004
 
 
 
(in thousands)
Operating activities
              
Net earnings
  
$
554,015
  
$
579,806
  
Depreciation
   
327,265
    
337,086
  
Asset abandonments
    
22,725
    
1,896
  
Other - net
    
(227,783
)
  
82,737
  
Changes in operating assets and liabilities
    
67,977
    
341,357
  
Total Operating Activities
    
744,199
    
1,342,882
  
Investing Activities
              
Purchases of property, plant and equipment
    
(318,450
)
  
(284,286
)
Net assets of businesses acquired
    
(91,911
)
  
(6,797
)
Other investing activities
    
(380,825
)
  
41,440
  
Total Investing Activities
    
(791,186
)
  
(249,643
)
Financing Activities
              
Long-term borrowings
    
598,624
    
8,547
  
Long-term debt payments
    
(121,799
)
  
(155,988
)
Net borrowings (payments) under lines of credit
    
(27,488
)
  
(1,070,423
)
Purchases of treasury stock
    
(29
)
  
(45
)
Cash dividends
    
(111,021
)
  
(98,175
)
Proceeds from exercises of stock options
    
10,146
    
16,957
  
Total Financing Activities
    
348,433
    
(1,299,127
)
Increase (decrease) in cash and cash equivalents
    
301,446
    
(205,888
)
Cash and cash equivalents beginning of period
    
522,420
    
540,207
  
Cash and cash equivalents end of period
  
$
823,866
  
$
334,319