 | 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)
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 | |
