 | Archer Daniels Midland Company 4666 Faries Parkway Decatur, Il 62526 |
News Release
| FOR IMMEDIATE RELEASE | May 1, 2007 |
ARCHER DANIELS MIDLAND REPORTS THIRD QUARTER RESULTS
Decatur, IL — May 1, 2007 — Archer Daniels Midland (NYSE: ADM)
► | Net earnings for the quarter ended March 31, 2007 increased 4 % to $ 363 million - $ .56 per share from $ 348 million - $ .53 per share last year. Net earnings for the quarter ended March 31, 2007 includes a gain of $ 33 million realized on the sale of the Company’s Arkady food ingredient business. |
“We performed well in a challenging quarter,” said ADM Chairman and CEO Patricia A. Woertz. “We are particularly pleased with continued strong performance in our corn processing segment. Our results also benefited from actions to strategically align our portfolio and our outlook on future opportunities remains quite strong.”
► | Third quarter segment operating profit increased 8 % to $ 593 million from $ 549 million last year. |
| · | Oilseeds Processing operating profit decreased due to lower softseed and biodiesel processing margins. |
| · | Corn Processing operating profit increased due to lower operating costs and increased ethanol and sweetener selling prices partially offset by increased net corn costs. |
| · | Agricultural Services operating profit decreased due to lower global merchandising and handling results. |
| · | Other segment operating profit increased due to a gain realized upon the sale of the Arkady food ingredient business. |
► Financial Highlights
(Amounts in thousands, except per share data and percentages)
| THREE MONTHS ENDED | NINE MONTHS ENDED |
| | | 3/31/07 | | | 3/31/06 | | | % CHANGE | | | 3/31/07 | | | 3/31/06 | | | % CHANGE | |
| Net sales and other operating income | $ | 11,381,150 | | $ | 9,122,841 | | | 25% | | $ | 31,804,111 | | $ | 27,048,775 | | | 18% | |
| Segment operating profit | $ | 593,135 | | $ | 549,492 | | | 8% | | $ | 2,008,106 | | $ | 1,423,905 | | | 41% | |
| Net earnings | $ | 362,891 | | $ | 347,796 | | | 4% | | $ | 1,206,904 | | $ | 901,811 | | | 34% | |
| Earnings per share | $ | .56 | | $ | .53 | | | 6% | | $ | 1.83 | | $ | 1.38 | | | 33% | |
| Average number of shares outstanding | | 653,177 | | | 657,130 | | | (1)% | | | 658,232 | | | 655,469 | | | - | |
Archer Daniels Midland Company
Page 2
Discussion of Operations
Net earnings for the quarter ended March 31, 2007 were $ 363 million, or $ .56 per share, compared to $ 348 million, or $ .53 per share, last year. Net earnings for the nine months ended March 31, 2007 were $ 1.2 billion, or $ 1.83 per share, compared to $ 902 million, or $ 1.38 per share, last year.
Segment operating profit increased $ 44 million to $ 593 million for the quarter and increased $ 584 million to $ 2 billion for the nine months.
Oilseeds Processing operating profits decreased $ 8 million to $ 169 million for the quarter and increased $ 126 million to $ 530 million for the nine months. Improved gross margins in all geographic regions for the nine months contributed to the increase although the current quarter declined on reduced softseed and biodiesel processing margins. Results for the quarter and nine months ended March 31, 2006 included a $4 million charge for abandonment and write down of long lived assets.
Corn Processing operating profits increased $ 33 million to $ 252 million for the quarter and increased $ 286 million to $ 878 million for the nine months. Lower operating costs and increased starch, sweetener and ethanol selling prices contributed to the earnings improvement and were partially offset by increasing net corn costs. Fiscal 2006 third quarter results included a gain of $ 8 million upon the sale of a citric acid plant. Fiscal 2006 nine months included a charge of $ 14 million (net of the $ 8 million gain) related to the closure of this citric acid plant.
Agricultural Services operating profits decreased $ 38 million to $ 41 million for the quarter due to a $ 39 million decrease in global merchandising and handling results. For the nine months, operating profits increased $ 82 million to $ 275 million due principally to improved earnings of global merchandising and handling operations and improved operating results of transportation operations.
Other segment operating profit increased $ 57 million to $ 132 million for the quarter and increased $ 89 million to $ 325 million for the nine months principally due to a gain of $ 53 million realized upon the sale of the Company’s Arkady food ingredient business. Fiscal 2006 third quarter and nine month results included $ 15 million of cost related to the sale and discontinuance of the Irish feed business. Results for the nine months ended March 31, 2006 also included a $ 32 million asset impairment charge.
Significant components of Corporate results are as follows:
| | | Three months ended | | Nine months ended | |
| | | March 31, | | | March 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | (in millions) |
| | | | | | | | | | | | | |
| LIFO income (charge) | $ | (23 | ) | $ | 1 | | $ | (146 | ) | $ | 13 | |
| Investment income (expense) | | 22 | | | (6 | ) | | 52 | | | (23 | ) |
| Gain on security transactions | | 9 | | | - | | | 11 | | | 29 | |
| Brazilian transactional tax credit | | - | | | - | | | - | | | 19 | |
| Corporate costs | | (51 | ) | | (51 | ) | | (169 | ) | | (178 | ) |
| Other | | 6 | | | (1 | ) | | 4 | | | (11 | ) |
| Total Corporate | $ | (37 | ) | $ | (57 | ) | $ | (248 | ) | $ | (151 | ) |
Results for the nine months ended March 31, 2006 included a $ 36 million tax credit related to the adjustment of state and federal income taxes.Archer Daniels Midland Company Page 3
Conference Call Information
Archer Daniels Midland will host a conference call and audio Web cast to discuss third quarter results and provide a Company update at 8:00 a.m. Central Daylight Time (CDT) on Tuesday, May 1, 2007. To listen by phone, dial 866-543-6403 or 617-213-8896; the access code is 45110940. Digital replay of the call will be available beginning on May 1, 2007 from 10:00 a.m. CDT and ending on May 8, 2007. To access this replay, dial 888-286-8010 or 617-801-6888 and enter access code: 35594026. In addition, a financial summary slide presentation will be available to download approximately 60 minutes prior to the start of the call. To listen to the call and to download the financial summary presentation via the Internet, go to: http://www.admworld.com/webcast/. A replay of the Web cast will be available on the ADM World Website.
Archer Daniels Midland Company (ADM) is the world leader in BioEnergy and has a premier position in the agricultural processing value chain. ADM is one of the world’s largest processors of soybeans, corn, wheat and cocoa. ADM is a leading manufacturer of biodiesel, ethanol, soybean oil and meal, corn sweeteners, flour and other value-added food and feed ingredients. Headquartered in Decatur, Illinois, ADM has over 26,000 employees, more than 240 processing plants and net sales for the fiscal year ended June 30, 2006 of $37 billion. Additional information can be found on ADM’s Web site at http://www.admworld.com/.
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Contacts: | |
| Dwight Grimestad |
Vice President - Corporate Communications | Vice President - Investor Relations |
| 217/424-5413 | 217/424-4586 |
(Financial Tables Follow)
May 1, 2007
ARCHER DANIELS MIDLAND COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
| | Three months ended | Nine months ended |
| | March 31, | | March 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| | (in thousands, except per share amounts) |
| | | | | | | | | | | | | |
| Net sales and other operating income | $ | 11,381,150 | | $ | 9,122,841 | | $ | 31,804,111 | | $ | 27,048,775 | |
| Cost of products sold | | 10,635,240 | | | 8,352,109 | | | 29,284,703 | | | 24,911,864 | |
| Gross profit | | 745,910 | | | 770,732 | | | 2,519,408 | | | 2,136,911 | |
| Selling, general and administrative expenses | | 294,037 | | | 297,295 | | | 902,083 | | | 896,142 | |
| Other (income) expense - net | | (104,331 | ) | | (19,526 | ) | | (142,859 | ) | | (32,630 | ) |
| Earnings before income taxes | | 556,204 | | | 492,963 | | | 1,760,184 | | | 1,273,399 | |
| Income taxes | | 193,313 | | | 145,167 | | | 553,280 | | | 371,588 | |
| Net earnings | $ | 362,891 | | $ | 347,796 | | $ | 1,206,904 | | $ | 901,811 | |
| Diluted earnings per common share | $ | .56 | | $ | .53 | | $ | 1.83 | | $ | 1.38 | |
| Average number of shares outstanding | | 653,177 | | | 657,130 | | | 658,232 | | | 655,469 | |
| | | | | | | | | | | | | |
Other (income) expense - net consists of: | | | | | | | | | | | | |
| Interest expense | $ | 115,467 | | $ | 90,446 | | $ | 323,589 | | $ | 263,344 | |
| Investment income | | (66,352 | ) | | (48,295 | ) | | (191,683 | ) | | (146,143 | ) |
Net (gain) loss on marketable securities transactions | | (13,484 | ) | | 282 | | | (24,244 | ) | | (27,952 | ) |
Equity in earnings of unconsolidated affiliates | | (84,975 | ) | | (54,930 | ) | | (207,576 | ) | | (113,604 | ) |
| Other - net | | (54,987 | ) | | (7,029 | ) | | (42,945 | ) | | (8,275 | ) |
| | $ | (104,331 | ) | $ | (19,526 | ) | $ | (142,859 | ) | $ | (32,630 | ) |
| | | | | | | | | | | | | |
Operating profit by segment is as follows: | | | | | | | | | | | | |
| Oilseeds Processing (1) | $ | 168,516 | | $ | 176,550 | | $ | 530,166 | | $ | 403,742 | |
| Corn Processing | | | | | | | | | | | | |
| Sweeteners and Starches | | 126,636 | | | 113,223 | | | 385,738 | | | 319,747 | |
| Bioproducts (2) | | 125,176 | | | 105,469 | | | 492,032 | | | 271,735 | |
| Total Corn Processing (2) | | 251,812 | | | 218,692 | | | 877,770 | | | 591,482 | |
| Agricultural Services | | 40,540 | | | 78,601 | | | 274,675 | | | 192,216 | |
| Other | | | | | | | | | | | | |
| Food, Feed & Industrial (1) (3) | | 97,328 | | | 34,764 | | | 188,706 | | | 138,895 | |
| Financial | | 34,939 | | | 40,885 | | | 136,789 | | | 97,570 | |
| Total Other (1) (3) | | 132,267 | | | 75,649 | | | 325,495 | | | 236,465 | |
| Total segment operating profit | | 593,135 | | | 549,492 | | | 2,008,106 | | | 1,423,905 | |
| Corporate (4) | | (36,931 | ) | | (56,529 | ) | | (247,922 | ) | | (150,506 | ) |
| Earnings before income taxes | $ | 556,204 | | $ | 492,963 | | $ | 1,760,184 | | $ | 1,273,399 | |
| (1) | 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, Feed and Industrial. |
| (2) | Fiscal 2006 included a gain of $ 8 million in the quarter and a $ 14 million net charge for the nine months related to a closure and sale of a citric acid plant. |
| (3) | Fiscal 2007 third quarter and nine months results includes a gain of $ 53 million realized upon the sale of the Company’s Arkady food ingredient business. Fiscal 2006 third quarter and nine months included $ 15 million of cost related to the sale and discontinuance of the Irish feed business. |
| (4) | Includes LIFO charge of $ 23 million for the quarter and $ 146 million for the nine months ended March 31, 2007. Includes LIFO income of $ 1 million for the quarter and $ 13 million for the nine months ended March 31, 2006. |
ARCHER DANIELS MIDLAND COMPANY
SUMMARY OF FINANCIAL CONDITION
(unaudited)
| | | March 31, 2007 | | | June 30, 2006 | |
| | (in thousands) |
| | | | | | | |
| NET INVESTMENT IN | | | | | | |
| Working capital | $ | 8,156,443 | | $ | 6,290,697 | |
| Property, plant and equipment | | 5,822,959 | | | 5,293,032 | |
| Investments in and advances to affiliates | | 2,050,740 | | | 1,985,662 | |
| Long-term marketable securities | | 1,175,227 | | | 1,110,177 | |
| Other non-current assets | | 1,059,132 | | | 1,053,882 | |
| | $ | 18,264,501 | | $ | 15,733,450 | |
| | | | | | | |
| FINANCED BY | | | | | | |
| Short-term debt | $ | 1,142,765 | | $ | 549,419 | |
| Long-term debt, including current maturities | | 5,229,147 | | | 4,130,091 | |
| Deferred liabilities | | 1,213,240 | | | 1,247,060 | |
| Shareholders' equity | | 10,679,349 | | | 9,806,880 | |
| | $ | 18,264,501 | | $ | 15,733,450 | |
| | | | | | | |
| | | | | | | |
SUMMARY OF CASH FLOWS | | | | | | |
| (unaudited) | | | | | | |
| | Nine Months Ended |
| March 31, |
| | | 2007 | | | 2006 | |
| | (in thousands) |
| Operating activities | | | | | | |
| Net earnings | $ | 1,206,904 | | $ | 901,811 | |
| Depreciation | | 519,776 | | | 490,780 | |
| Asset abandonments | | 1,393 | | | 27,013 | |
| Other - net | | 4,014 | | | (268,700 | ) |
| Changes in operating assets and liabilities | | (1,766,382 | ) | | (251,224 | ) |
| Total Operating Activities | | (34,295 | ) | | 899,680 | |
| Investing Activities | | | | | | |
| Purchases of property, plant and equipment | | (843,592 | ) | | (533,494 | ) |
| Net assets of businesses acquired | | (92,372 | ) | | (168,520 | ) |
| Other investing activities | | (14,475 | ) | | (182,293 | ) |
| Total Investing Activities | | (950,439 | ) | | (884,307 | ) |
| Financing Activities | | | | | | |
| Long-term borrowings | | 1,165,633 | | | 603,874 | |
| Long-term debt payments | | (131,360 | ) | | (262,042 | ) |
| Net borrowings under lines of credit | | 570,315 | | | 196,982 | |
| Purchases of treasury stock | | (532,851 | ) | | (74 | ) |
| Purchase of convertible note hedge | | (299,460 | ) | | - | |
| Sale of stock warrants | | 170,085 | | | - | |
| Cash dividends | | (206,543 | ) | | (176,433 | ) |
| Other - net | | 32,588 | | | 18,128 | |
| Total Financing Activities | | 768,407 | | | 380,435 | |
| Increase (decrease) in cash and cash equivalents | | (216,327 | ) | | 395,808 | |
| Cash and cash equivalents beginning of period | | 1,112,853 | | | 522,420 | |
| Cash and cash equivalents end of period | $ | 896,526 | | $ | 918,228 | |
