| | Archer Daniels Midland Company 4666 Faries Parkway Decatur, IL 62525 |
| FOR IMMEDIATE RELEASE | July 30, 2004 |
ARCHER DANIELS MIDLAND REPORTS FOURTH QUARTER AND ANNUAL RESULTS
Decatur, IL— July 30, 2004— Archer Daniels Midland (NYSE: ADM)
n | | Net earnings for the year ended June 30, 2004 increased 10% to $ 495 million - $ .76 per share compared to $ 451 million - $ .70 per share last year. |
n | | Segment operating profit for the year ended June 30, 2004 increased 55% to a record level of $ 1.56 billion. |
n | | Results for the quarter ended June 30, 2004 were a loss of $ 103 million – ($ .16) per share including a $ 400 million ($ 252 million after tax – ($ .39) per share) charge related to the fructose litigation settlement compared to profits last year of $ 95 million - $ .15 per share. |
n | | Segment operating profit for the quarter increased to $ 268 million from $ 230 million last year. |
| s | Oilseed Processing recorded a loss as Chinese contract defaults impacted global oilseed markets. |
| s | Corn Processing profits increased on improved Bioproducts results. |
| s | Agricultural Services continued its strong performance. |
| s | Other segment operating profits increased as Wheat Processing, Cocoa Processing and private equity investments continued to improve. |
| | | THREE MONTHS ENDED | TWELVE MONTHS ENDED |
| | | | 6/30/04 | | | 6/30/03 | | | % CHANGE | | | 6/30/04 | | | 6/30/03 | | | % CHANGE | |
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| Net sales and other operating income | | $ | 9,685,969 | | $ | 8,048,226 | | | 20% | | $ | 36,151,394 | | $ | 30,708,033 | | | 18% | |
| Segment operating profit | | $ | 267,617 | | $ | 230,227 | | | 16% | | $ | 1,561,011 | | $ | 1,009,912 | | | 55% | |
| Net earnings (loss) | | $ | (103,061 | ) | $ | 95,020 | | | -208% | | $ | 494,710 | | $ | 451,145 | | | 10% | |
| Earnings (loss) per share | | $ | (.16 | ) | $ | .15 | | | -207% | | $ | .76 | | $ | .70 | | | 9% | |
| Average number of shares outstanding | | | 650,279 | | | 644,611 | | | 1% | | | 647,698 | | | 646,086 | | | - | |
" | 2004 was a year characterized by extreme volatility and difficult business conditions for global agribusiness. In addition, during this past quarter, ADM settled its remaining significant litigation exposures. Despite these challenges, we reported record operating profits for the fiscal year and a solid improvement in full year earnings. ADM is today strongly positioned to meet the needs of its global customers and deliver value to its shareholders.” G. Allen Andreas, Chairman and Chief Executive |
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Archer Daniels Midland
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Discussion of Operations
Net earnings for the year ended June 30, 2004 were $ 495 million, or $ .76 per share, compared to $ 451 million, or $ .70 per share, last year. Results for the quarter ended June 30, 2004 were a loss of $ 103 million, or $ .16 per share, compared to earnings of $ 95 million, or $ .15 per share, last year. The quarter and year ended June 30, 2004 includes a $ 400 million charge ($ 252 million after tax, or $ .39 per share) related to the settlement of fructose litigation.
Segment operating profit increased $ 37 million to $ 268 million for the quarter and increased $ 551 million to $ 1.56 billion for the year as operating profit improvements were realized in all major segments except the Oilseed Processing segment. Oilseed Processing operating results declined to a loss of $ 15 million for the quarter and earnings of $ 291 million for the year as Chinese contract defaults in the fourth quarter had a significant impact on global oilseed markets which negatively impacted our oilseeds operation. Corn Processing operating earnings increased to $ 150 million for the quarter and $ 661 million for the year as Bioproducts results improved due to increased volumes and selling prices of alcohol and lysine product categories which more than offset higher net corn costs. Earnings of Sweetener and Starch products declined for the quarter as increased net corn costs more than offset improved volumes and selling prices. For the year, Sweetener and Starch earnings improved due to increased volumes and selling prices. Agricultural Services’ balanced global grain and marketing system continued its strong performance resulting in improved operating profits. Other segment operating profit increased to $ 88 million for the quarter and $ 359 million for the year as Food and Feed Ingredient earnings increased due to improved operating results of wheat processing and cocoa processing operations. In addition, financial operations increased primarily due to improved results of our private equity fund investments. Corporate expense for the quarter increased $ 328 million to $ 426 million due principally to the $ 400 million fructose litigation settlement partially offset by a $ 42 million credit due to changing commodity prices on LIFO inventory valuations and an increase of $ 10 million in security gains. For the year, corporate expense increased $ 464 million due primarily to the $ 400 million fructose litigation settlement and an increased charge of $ 104 million due to changing commodity price effects on LIFO inventory valuations partially offset by increased security gains of $ 24 million.
Fiscal 2004 fourth quarter includes a $ 400 million ($ 252 million after tax, equal to $ .39 per share) charge for the fructose litigation settlement, $ 10 million ($ 6 million after tax, equal to $ .01 per share) of asset abandonment charges and $ 12 million ($ 8 million after tax, equal to $ .01 per share) of security gains. Last years fourth quarter included $ 13 million ($ 8 million after tax, equal to $ .01 per share) of asset abandonment charges and $ 2 million ($ 1 million after tax) of security gains. Fiscal 2004 twelve month results includes a $ 400 million ($ 252 million after tax, equal to $ .39 per share) charge for the fructose litigation settlement, $ 51 million ($32 million after tax, equal to $ .05 per share) of asset abandonment charges, a $ 21 million ($ 13 million after tax, equal to $ .02 per share) gain from an insurance-related lawsuit pertaining to the flood of 1 993 and $ 24 million ($ 15 million after tax, equal to $ .02 a share) of security gains. Fiscal 2003 twelve month results include $ 13 million ($ 8 million after tax, equal to $ .01 per share) of asset abandonment charges, a $ 28 million ($ 17 million after tax, equal to $ .03 per share) gain from partial settlements of the Company’s claims related to vitamin antitrust litigation, and an $ 11 million ($ 7 million after tax, equal to $ .01 per share) charge related to the company’s global settlement with the EPA.
Archer Daniels Midland
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The Company has changed its reportable segments to reflect how the Company now manages its businesses and to reflect the activities of the Company as viewed by the Company’s chief operating decision maker. The Company’s Corn Processing segment now includes all of the Company’s fermentation activities, including operations such as Specialty Feed Ingredients that was previously classified in Other. The results of the Corn Processing segment are presented as two classes of products: Sweeteners & Starches and Bioproducts. Additionally, the Company will present two sub-categories of Other: Food & Feed Ingredients and Financial. Prior periods segment information has been reclassified to conform to the new presentation. Attached to this release are restated segment operating profit disclosures for each quarter in the fiscal years ended June 30, 2004 and 2003.
Conference Call Information
Archer Daniels Midland will host a conference call and audio Web cast to discuss fourth quarter results at 10:00 a.m. Central Daylight Time on July 30, 2004. To listen by phone, dial 888-639-3004 or 706-679-8315, no access code is required. Digital replay of the call will be available for fourteen days beginning on July 30, 2004 approximately 2 hours after the call and ending on August 13, 2004 at 10:59 p.m. CDT. To access this replay, dial 800-642-1687 or 706-645-9291 and enter access code: 8533881. To listen to a live broadcast via the Internet go to: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ADM&script=1010&item_id=825235. A replay of the Web cast will be available for 10 days on thewww.admworld.com 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 26,000 employees, more than 260 processing plants and net sales for the fiscal year ended June 30, 2004 of $36.2 billion. Additional information can be found on ADM's Web site athttp://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)
July 30, 2004 | | | |
| | | | |
ARCHER DANIELS MIDLAND COMPANY | | | |
CONSOLIDATED STATEMENTS OF EARNINGS | |
| (unaudited) | | | |
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| | Three months ended | Twelve months ended |
| | | June 30, | June 30, |
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| | | 2004 | | | 2003 | | | 2004 | | | 2003 | |
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| (in thousands, except per share amounts) |
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| Net sales and other operating income | | $ | 9,685,969 | | $ | 8,048,226 | | $ | 36,151,394 | | $ | 30,708,033 | |
| Cost of products sold | | | 9,182,712 | | | 7,646,306 | | | 34,003,070 | | | 28,980,895 | |
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| Gross profit | | | 503,257 | | | 401,920 | | | 2,148,324 | | | 1,727,138 | |
| Selling, general and administrative expenses | | | 652,695 | | | 254,127 | | | 1,401,833 | | | 947,694 | |
| Other expense – net | | | 8,695 | | | 14,897 | | | 28,480 | | | 148,471 | |
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| Earnings (loss) before income taxes | | | (158,133 | ) | | 132,896 | | | 718,011 | | | 630,973 | |
| Income taxes | | | (55,072 | ) | | 37,876 | | | 223,301 | | | 179,828 | |
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| Net earnings (loss) | | $ | (103,061 | ) | $ | 95,020 | | $ | 494,710 | | $ | 451,145 | |
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| Basic and diluted earnings (loss)per common share | | $ | (.16 | ) | $ | .15 | | $ | .76 | | $ | .70 | |
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| Average number of shares outstanding | | | 650,279 | | | 644,611 | | | 647,698 | | | 646,086 | |
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Other expense – net consists of: | | | | | | | | | | | | | |
| Interest expense | | $ | 82,142 | | $ | 86,853 | | $ | 341,991 | | $ | 359,971 | |
| Investment income | | | (26,828 | ) | | (29,469 | ) | | (116,352 | ) | | (121,887 | ) |
| Net (gain) loss on marketable securities transactions | | | (12,271 | ) | | (2,341 | ) | | (23,968 | ) | | 363 | |
Equity in (earnings) losses of unconsolidated affiliates | | | (39,263 | ) | | (36,336 | ) | | (180,716 | ) | | (65,991 | ) |
| Other – net | | | 4,915 | | | (3,810 | ) | | 7,525 | | | (23,985 | ) |
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| | | $ | 8,695 | | $ | 14,897 | | $ | 28,480 | | $ | 148,471 | |
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Operating profit (loss) by segment is as follows: | | | | | | | | | | | | | |
Oilseeds Processing(1) | | $ | (15,491 | ) | $ | 82,612 | | $ | 290,732 | | $ | 337,089 | |
| Corn Processing | | | | | | | | | | | | | |
Sweeteners and Starches(1) (3) | | | 62,155 | | | 71,048 | | | 318,369 | | | 228,227 | |
Bioproducts(1) | | | 87,897 | | | 18,442 | | | 342,578 | | | 130,473 | |
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| Total Corn Processing | | | 150,052 | | | 89,490 | | | 660,947 | | | 358,700 | |
Agricultural Services(1) (3) | | | 44,852 | | | 13,526 | | | 249,863 | | | 92,124 | |
| Other | | | | | | | | | | | | | |
Food and Feed Ingredients(1) (4) | | | 58,260 | | | 27,953 | | | 260,858 | | | 212,507 | |
| Financial | | | 29,944 | | | 16,646 | | | 98,611 | | | 9,492 | |
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| Total Other | | | 88,204 | | | 44,599 | | | 359,469 | | | 221,999 | |
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| Total segment operating profit | | | 267,617 | | | 230,227 | | | 1,561,011 | | | 1,009,912 | |
Corporate(1) (2) (3) (5) | | | (425,750 | ) | | (97,331 | ) | | (843,000 | ) | | (378,939 | ) |
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| Earnings (loss) before income taxes | | $ | (158,133 | ) | $ | 132,896 | | $ | 718,011 | | $ | 630,973 | |
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(1) | Fiscal 2004 fourth quarter results include a charge for abandonment and write down of long-lived assets of: Oilseeds Processing ($1 million), Other - Food and Feed Ingredients ($9 million). Fiscal 2004 twelve month results include a charge for abandonment and write down of long-lived assets of: Oilseeds Processing ($4 million), Corn Processing – Sweeteners and Starches ($1 million), Corn Processing – Bioproducts ($14 million), Agricultural Services ($5 million), Other – Food and Feed Ingredients ($12 million), and Corporate ($14 million). Fiscal 2003 twelve month results include a charge for abandonment and write down of long-lived assets of: Oilseeds Processing ($7 million) and Other – Food and Feed Ingredients ($ 6 million). |
(2) | Fiscal 2004 fourth quarter and twelve months results include a $400 million charge for the settlement of fructose litigation. |
(3) | Fiscal 2004 twelve months results include a gain from an insurance-related lawsuit of: Corn Processing ($15 million), Agricultural Services ($2 million), and Corporate ($4 million). |
(4) | Fiscal 2003 twelve months results include partial settlements of the Company’s claims related to vitamin antitrust litigation of $28 million. |
(5) | Fiscal 2003 twelve months results include a charge related to the Company’s global settlement with the EPA of $11 million. |
July 30, 2004 | | | |
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ARCHER DANIELS MIDLAND COMPANY | | | |
SUMMARY OF FINANCIAL CONDITION | | | |
| (unaudited) | | | |
| | | | June 30, 2004 | | | June 30, 2003 | |
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| | | (in thousands) |
| NET INVESTMENT IN | | | | | | | |
| Working capital | | $ | 5,520,066 | | $ | 4,584,756 | |
| Property, plant and equipment | | | 5,254,738 | | | 5,468,716 | |
| Investments in and advances to affiliates | | | 1,832,619 | | | 1,763,453 | |
| Long-term marketable securities | | | 1,161,388 | | | 818,016 | |
| Other non current assets | | | 781,080 | | | 710,837 | |
| | | $ | 14,549,891 | | $ | 13,345,778 | |
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| FINANCED BY | | | | | | | |
| Short-term debt | | $ | 1,770,512 | | $ | 1,279,483 | |
| Long-term debt, including current maturites | | | 3,900,670 | | | 3,903,175 | |
| Deferred liabilities | | | 1,180,493 | | | 1,093,923 | |
| Shareholders' equity | | | 7,698,216 | | | 7,069,197 | |
| | | $ | 14,549,891 | | $ | 13,345,778 | |
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SUMMARY OF CASH FLOWS | | | | | | | |
(unaudited) | | Twelve Months Ended |
| | | June 30 |
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| | | | 2004 | | | 2003 | |
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| | | (in thousands) |
| Operating activities | | | | | | | |
| Net earnings | | $ | 494,710 | | $ | 451,145 | |
| Depreciation | | | 685,613 | | | 643,615 | |
| Asset abandonments | | | 50,576 | | | 13,221 | |
| Other | | | (212,260 | ) | | 247,585 | |
| Changes in operating assets and liabilities | | | (985,300 | ) | | (284,134 | ) |
| Total Operating Activities | | | 33,339 | | | 1,071,432 | |
| Investing Activities | | | | | | | |
| Purchases of property, plant and equipment | | | (509,237 | ) | | (435,952 | ) |
| Net assets of businesses acquired | | | (93,022 | ) | | (526,970 | ) |
| Other investing activities | | | 27,824 | | | (98,432 | ) |
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| Total Investing Activities | | | (574,435 | ) | | (1,061,354 | ) |
| Financing Activities | | | | | | | |
| Long-term borrowings | | | 4,366 | | | 517,222 | |
| Long-term debt payments | | | (32,381 | ) | | (315,319 | ) |
| Net borrowings under lines of credit | | | 483,764 | | | 281,669 | |
| Purchases of treasury stock | | | (4,113 | ) | | (101,212 | ) |
| Cash dividends | | | (174,109 | ) | | (155,565 | ) |
| Proceeds from exercises of stock options | | | 38,817 | | | 1,971 | |
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| Total Financing Activities | | | 316,344 | | | 228,766 | |
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| Increase (decrease) in cash and cash equivalents | | | (224,752 | ) | | 238,844 | |
| Cash and cash equivalents beginning of period | | | 764,959 | | | 526,115 | |
| Cash and cash equivalents end of period | | $ | 540,207 | | $ | 764,959 | |
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July 30, 2004 | | | |
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ARCHER DANIELS MIDLAND COMPANY | |
OPERATING PROFIT (LOSS) BY SEGMENT (AS RESTATED) | |
| (unaudited) | | | |
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| | | Quarter Ended | | Fiscal Year | |
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| | | | 09/30/03 | | | 12/31/03 | | | 03/31/04 | | | 06/30/04 | | | 2004 | |
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| Oilseeds Processing | | $ | 67,830 | | $ | 120,883 | | $ | 117,510 | | $ | (15,491 | ) | $ | 290,732 | |
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| Corn Processing | | | | | | | | | | �� | | | | | | |
| Sweeteners and Starches | | | 88,860 | | | 75,812 | | | 91,542 | | | 62,155 | | | 318,369 | |
| Bioproducts | | | 18,437 | | | 96,295 | | | 139,949 | | | 87,897 | | | 342,578 | |
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| Total Corn Processing | | | 107,297 | | | 172,107 | | | 231,491 | | | 150,052 | | | 660,947 | |
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| Agricultural Services | | | 42,849 | | | 106,335 | | | 55,827 | | | 44,852 | | | 249,863 | |
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| Other | | | | | | | | | | | | | | | | |
| Food and Feed Ingredients | | | 59,998 | | | 72,569 | | | 70,031 | | | 58,260 | | | 260,858 | |
| Financial | | | 18,601 | | | 23,217 | | | 26,849 | | | 29,944 | | | 98,611 | |
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| Total Other | | | 78,599 | | | 95,786 | | | 96,880 | | | 88,204 | | | 359,469 | |
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| Total segment operating profit | | | 296,575 | | | 495,111 | | | 501,708 | | | 267,617 | | | 1,561,011 | |
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| Corporate | | | (78,921 | ) | | (175,082 | ) | | (163,247 | ) | | (425,750 | ) | | (843,000 | ) |
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| Earnings (loss) before income tax | | $ | 217,654 | | $ | 320,029 | | $ | 338,461 | | $ | (158,133 | ) | $ | 718,011 | |
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| | | Quarter Ended | | Fiscal Year | |
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| | | | 09/30/02 | | | 12/31/02 | | | 03/31/03 | | | 06/30/03 | | | 2003 | |
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| Oilseeds Processing | | $ | 76,374 | | $ | 102,724 | | $ | 75,379 | | $ | 82,612 | | $ | 337,089 | |
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| Corn Processing | | | | | | | | | | | | | | | | |
| Sweeteners and Starches | | | 61,643 | | | 41,919 | | | 53,617 | | | 71,048 | | | 228,227 | |
| Bioproducts | | | 28,116 | | | 35,344 | | | 48,571 | | | 18,442 | | | 130,473 | |
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| Total Corn Processing | | | 89,759 | | | 77,263 | | | 102,188 | | | 89,490 | | | 358,700 | |
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| Agricultural Services | | | 40,113 | | | 34,959 | | | 3,526 | | | 13,526 | | | 92,124 | |
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| Other | | | | | | | | | | | | | | | | |
| Food and Feed Ingredients | | | 43,415 | | | 94,399 | | | 46,740 | | | 27,953 | | | 212,507 | |
| Financial | | | (9,715 | ) | | (11,976 | ) | | 14,537 | | | 16,646 | | | 9,492 | |
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| Total Other | | | 33,700 | | | 82,423 | | | 61,277 | | | 44,599 | | | 221,999 | |
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| Total segment operating profit | | | 239,946 | | | 297,369 | | | 242,370 | | | 230,227 | | | 1,009,912 | |
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| Corporate | | | (84,442 | ) | | (108,527 | ) | | (88,639 | ) | | (97,331 | ) | | (378,939 | ) |
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| Earnings before income tax | | $ | 155,504 | | $ | 188,842 | | $ | 153,731 | | $ | 132,896 | | $ | 630,973 | |
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