EX-99.1 2 pressrelease.htm PRESSRELEASE pressrelease

 
 
Archer Daniels Midland Company
4666 Faries Parkway
Decatur, Il 62526
News Release 
 
 FOR IMMEDIATE RELEASE 
 May 2, 2006
 
ARCHER DANIELS MIDLAND REPORTS THIRD QUARTER RESULTS
 
Decatur, IL — May 2, 2006 — Archer Daniels Midland (NYSE: ADM)
 
Ø  
Net earnings for the quarter ended March 31, 2006 increased 29% to $ 348 million - $ .53 per share from
$ 269 million - $ .41 per share last year.
·  
Net earnings for the quarter ended March 31, 2005 included a gain of $ 74 million, $ .11 per share, representing the Company’s gain upon the sale of its interest in Tate & Lyle.

Ø  
Third quarter operating profit increased 46 % to $ 549 million from $ 377 million last year.
·  
Oilseeds Processing operating profit increased on improved global market conditions.
·  
Corn Processing operating profit increased principally due to improved ethanol and sweetener selling prices.
·  
Agricultural Services operating profit increased principally on improved transportation results.
·  
Other segment operating profit declined primarily due to decreased results of Food and Feed Ingredients.

Ø  
Financial Highlights
(Amounts in thousands, except per share data and percentages)

   
 
THREE MONTHS ENDED
NINE MONTHS ENDED
 
 
 
3/31/06
 
 
3/31/05
 
 
% CHANGE
 
 
3/31/06
 
 
3/31/05
 
 
% CHANGE
  
Net sales and other operating income
  
$
9,122,841
  
$
8,484,171
    
   8%
 
$
27,048,775
  
$
26,520,108
    
 2%
 
Segment operating profit
  
$
549,492
  
$
376,587
    
 46%
 
$
1,423,905
  
$
1,199,944
    
19%
 
Net earnings
  
$
347,796
  
$
269,095
    
 29%
 
$
901,811
  
$
848,901
    
 6%
 
Earnings per share
  
$
.53
  
$
.41
    
 29%
 
$
1.38
  
$
1.29
    
 7%
 
Average number of shares outstanding
    
657,130
    
658,904
    
-
    
655,469
    
656,365
    
-
  

 
“This quarter’s solid results across ADM’s major business lines improve the outlook for fiscal 2006. We welcome our newly-elected President and Chief Executive Officer, Patricia Woertz. She adds a strong dimension to the deep reserve of talent within ADM’s executive team.”
 
 
G. Allen Andreas, Chairman of the Board of Directors
 

 
Archer Daniels Midland
Page 2
 
Discussion of Operations
Net earnings for the quarter ended March 31, 2006 were $ 348 million, or $ .53 per share, compared to $ 269 million, or $ .41 per share, last year. Net earnings for the nine months ended March 31, 2006 were $ 902 million, or $ 1.38 per share, compared to $ 849 million, or $ 1.29 per share, last year. This year’s nine month results include a $ 36 million tax credit related to the adjustment of state and federal income taxes, securities gains of $ 29 million ($ 18 million after tax), Brazilian transactional tax credits of $19 million ($12 million after tax), asset impairment charges of $ 36 million ($ 22 million after tax), and a charge of $ 22 million related to costs associated with a citric acid plant shut down and an exit from the European animal feed business. Net earnings for the quarter and nine months ended March 31, 2005 included a gain of $ 114 million ($ 74 million after tax) from the sale of the Company’s direct interest in Tate & Lyle. Last year’s results for the nine months also included an after-tax gain of $ 45 million representing the Company’s equity share of the gain reported by its unconsolidated subsidiary, CIP, upon the sale of its interest in Tate & Lyle.

Segment operating profit increased $ 173 million to $ 549 million for the quarter and increased $ 224 million to $ 1.4 billion for the nine months.

Oilseeds Processing operating profit increased $ 116 million to $ 177 million for the quarter and increased $ 133 million to $ 404 million for the nine months as improved global market conditions resulted in improved operating results in North America, South America, Europe and Asia.

Corn Processing operating profit increased $ 41 million to $ 219 million for the quarter and increased $ 179 million to $ 591 million for the nine months reflecting improved starch, sweetener and ethanol selling prices and lower net corn costs. Sweeteners and Starches operating profits increased $ 33 million to $ 113 million for the quarter and increased $ 140 million to $ 320 million for the nine months due to lower net corn costs and increased sweetener and starch selling prices, partially offset by higher energy costs. Bioproducts operating profits increased $ 7 million to $ 105 million for the quarter and increased $ 38 million to $ 271 million for the nine months due to lower net corn costs and higher ethanol selling prices, partially offset by increased energy costs. For the quarter, ethanol sales volumes declined versus year-ago levels as last year’s volumes included a draw-down of ethanol stocks which were built up in anticipation of new markets. For the nine months, Bioproducts operating profit improved as increased ethanol sales volumes were partially offset by lower lysine selling prices and $ 20 million of employee severance costs associated with the closure of a citric acid plant.

Agricultural Services operating profit increased $ 24 million to $ 79 million for the quarter due principally to improved operating results of transportation operations. For the nine months operating profits decreased $ 2 million to $ 192 million as improved results from transportation operations were offset by a decline in global grain merchandising operations and the negative impact of hurricanes on North American origination and export operating results.

Other segment operating profit decreased $ 8 million to $ 76 million for the quarter due principally to decreased results of Food and Feed Ingredients related principally to costs associated with exiting the European animal feed business. Financial results for the quarter were comparable to last year as an $ 18 million reduction in earnings of the Company’s private equity fund investments was offset by improved earnings of ADM Investor Services and captive insurance operations. For the nine months, Other segment operating profit declined $ 86 million to $ 236 million. Food and Feed Ingredient operations declined $ 65 million due principally to impairment charges of $ 32 million, decreased operating results of natural health and nutrition, and costs associated with exiting the European animal feed business. Financial results declined $ 21 million primarily due to a $ 63 million decrease in earnings of our private equity funds partially offset by improved earnings of ADM Investor Services and captive insurance operations. 
 
Archer Daniels Midland
Page 3
 
Significant components of Corporate results are as follows:

 
Three months ended
 Nine months ended
 
March 31,
 March 31,
 
 
2006
 
 
2005
 
 
2006
 
 
2005
 
 
(in millions)
                         
LIFO inventory valuation adjustments
$
1
  
$
-
  
$
13
  
$
135
  
Gain on sale of securities
  
-
    
114
    
29
    
159
  
Brazilian transactional tax reversal
  
-
    
-
    
19
    
-
  
Other
  
(58
)
  
(82
)
  
(212
)
  
(245
)
Total Corporate
$
(57
)
$
32
  
$
(151
)
$
49
  


 
Conference Call Information
 
Archer Daniels Midland will host a conference call and audio Web cast at 8:00 a.m. Central Daylight Time (CDT) on Tuesday, May 2, 2006 to discuss third quarter financial results and provide a Company update. To listen by phone, dial 800-706-7741 or 617-614-3471; the access code is 69620120. Digital replay of the call will be available beginning on May 2, 2006 from 10:00 a.m. CDT and ending on May 9, 2006. To access this replay, dial 888-286-8010 or 617-801-6888 and enter access code: 50723336. To listen to a live broadcast via the Internet go to: http://www.admworld.com/webcast/. A replay of the Webcast will be available on ADM’s Website.
 
Archer Daniels Midland Company (ADM) is a world leader in agricultural processing and fermentation technology. ADM is one of the world's largest processors of soybeans, corn, wheat and cocoa. ADM is also a leader in the production of soybean oil and meal, 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 Website 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)
 
May 2, 2006

ARCHER DANIELS MIDLAND COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
 
 
Three months ended
 Nine months ended
 
March 31,
 March 31,
 
 
2006
 
 
2005
 
 
2006
 
 
2005
 
(in thousands, except per share amounts)
                         
Net sales and other operating income
  
$
9,122,841
  
$
8,484,171
  
$
27,048,775
  
$
26,520,108
  
Cost of products sold
    
8,352,109
    
7,909,315
    
24,911,864
    
24,613,112
  
Gross profit
    
770,732
    
574,856
    
2,136,911
    
1,906,996
  
Selling, general and administrative expenses
    
297,295
    
280,395
    
896,142
    
801,645
  
Other (income) expense - net
    
(19,526
)
  
(114,575
)
  
(32,630
)
  
(143,984
)
Earnings before income taxes
    
492,963
    
409,036
    
1,273,399
    
1,249,335
  
Income taxes
    
145,167
    
139,941
    
371,588
    
400,434
  
Net earnings
  
$
347,796
  
$
269,095
  
$
901,811
  
$
848,901
  
Diluted earnings per common share
  
$
.53
  
$
.41
  
$
1.38
  
$
1.29
  
Average number of shares outstanding
    
657,130
    
658,904
    
655,469
    
656,365
  
                           
Other (income) expense - net consists of:
                          
Interest expense
  
$
90,446
  
$
80,293
  
$
263,344
  
$
241,903
  
Investment income
    
(48,295
)
  
(36,300
)
  
(146,143
)
  
(91,756
)
Net (gain) loss on marketable securities transactions
    
282
    
(113,820
)
  
(27,952
)
  
(113,261
)
Equity in (earnings) losses of unconsolidated affiliates
    
(54,930
)
  
(36,611
)
  
(113,604
)
  
(173,409
)
Other - net
    
(7,029
)
  
(8,137
)
  
(8,275
)
  
(7,461
)
   
$
(19,526
)
$
(114,575
)
$
(32,630
)
$
(143,984
)
                           
Operating profit by segment is as follows:
                          
Oilseeds Processing (2)
  
$
176,550
  
$
60,734
  
$
403,742
  
$
270,789
  
Corn Processing
                          
Sweeteners and Starches
    
113,223
    
79,817
    
319,747
    
179,455
  
Bioproducts (4)
    
105,469
    
98,056
    
271,735
    
233,499
  
Total Corn Processing (4)
    
218,692
    
177,873
    
591,482
    
412,954
  
Agricultural Services
   
78,601
    
54,644
    
192,216
    
193,779
  
Other  
                          
Food and Feed Ingredients (2)
    
34,764
    
43,544
    
138,895
    
203,591
  
Financial
    
40,885
    
39,792
    
97,570
    
118,831
  
Total Other (2)
    
75,649
    
83,336
    
236,465
    
322,422
  
Total segment operating profit
    
549,492
    
376,587
    
1,423,905
    
1,199,944
  
Corporate  (1) (3)
    
(56,529
)
  
32,449
    
(150,506
)
  
49,391
  
Earnings before income taxes
  
$
492,963
  
$
409,036
  
$
1,273,399
  
$
1,249,335
  
 
 
(1)
Fiscal 2005 third quarter and nine months results include gains of $ 114 million and $ 159 million, respectively, related to sales of the Company’s interests in Tate & Lyle. 
(2)
Fiscal 2006 third quarter results include a charge for the abandonment and write down of long-lived assets of $ 4 million in Oilseeds Processing. Fiscal 2006 nine month results include a charge for the abandonment and write down of long-lived assets of $ 4 million in Oilseeds Processing and $ 32 million in Food and Feed Ingredients.
(3)
Includes LIFO income of $ 1 million for the quarter and $ 13 million for the nine months ended March 31, 2006. Includes LIFO income of $ 135 million for the nine months ended March 31, 2005.
(4)
Fiscal 2006 third quarter and nine months results include severance-related costs of $ 4 million and $ 20 million, respectively, related to a closure of a citric acid plant.

 
May 2, 2006

ARCHER DANIELS MIDLAND COMPANY
SUMMARY OF FINANCIAL CONDITION
(unaudited)

     
March 31, 2006
 
 
June 30, 2005
 
 
 
(in thousands)
               
NET INVESTMENT IN
              
Working capital
  
$
5,858,774
  
$
4,992,583
  
Property, plant and equipment
    
5,235,524
    
5,184,380
  
Investments in and advances to affiliates
    
1,974,747
    
1,879,501
  
Long-term marketable securities
    
1,120,788
    
1,049,952
  
Other non-current assets
    
883,052
    
773,571
  
 
$
15,072,885
  
$
13,879,987
  
               
FINANCED BY
              
Short-term debt
  
$
624,120
  
$
425,808
  
Long-term debt, including current maturities
    
4,089,156
    
3,753,078
  
Deferred liabilities
    
1,184,211
    
1,267,629
  
Shareholders' equity
    
9,175,398
    
8,433,472
  
   
$
15,072,885
  
$
13,879,987
  
               
SUMMARY OF CASH FLOWS
              
(unaudited)
              
   
Nine Months Ended
 
 
March 31,
 
 
 
2006
 
 
2005
 
 
 
(in thousands)
Operating activities
              
Net earnings
  
$
901,811
  
$
848,901
  
Depreciation
   
490,780
    
507,599
  
Asset abandonments
    
27,013
    
1,896
  
Other - net
    
(268,700
)
  
31,742
  
Changes in operating assets and liabilities
    
(251,224
)
  
653,614
  
Total Operating Activities
    
899,680
    
2,043,752
  
Investing Activities
              
Purchases of property, plant and equipment
    
(533,494
)
  
(451,223
)
Net assets of businesses acquired
    
(168,520
)
  
(4,670
)
Other investing activities
    
(182,293
)
  
351,223
  
Total Investing Activities
    
(884,307
)
  
(104,670
)
Financing Activities
              
Long-term borrowings
    
603,874
    
8,547
  
Long-term debt payments
    
(262,042
)
  
(174,018
)
Net borrowings (payments) under lines of credit
    
196,982
    
(1,520,661
)
Purchases of treasury stock
    
(74
)
  
(3,514
)
Cash dividends
    
(176,433
)
  
(153,967
)
Proceeds from exercises of stock options
    
18,128
    
26,207
  
Total Financing Activities
    
380,435
    
(1,817,406
)
Increase in cash and cash equivalents
    
395,808
    
121,676
  
Cash and cash equivalents beginning of period
    
522,420
    
540,207
  
Cash and cash equivalents end of period
  
$
918,228
  
$
661,883