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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-44
ARCHER-DANIELS-MIDLAND COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-0129150
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
4666 Faries Parkway Box 1470 Decatur, Illinois 62525
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code217-424-5200
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___.
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock, no par value--343,920,070 shares
(September 30, 1994)
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PART I - FINANCIAL INFORMATION
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
THREE MONTHS ENDED
SEPTEMBER 30,
1994 1993
________________________
(In thousands, except
per share amounts)
Net sales and other operating income $3,015,22 $2,613,62
3 8
Cost of products sold and other
operating
costs 2,670,404 2,390,491
_________ _________
Gross Profit 344,819 223,137
Selling, general and administrative 100,309 83,245
expenses
_________ _________
Earnings From Operations 244,510 139,892
Other income (expense) (15,556) (14,999)
_________ _________
Earnings Before Income Taxes 228,954 124,893
Income taxes 74,410 55,830
_________ _________
Net Earnings $ $
154,544 69,063
========= =========
Average number of shares outstanding 515,556 529,142
Net earnings per common share $.30 $.13
Dividends per common share $.016 $.015
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
SEPTEMBER 30, JUNE 30,
1994 1994
(In thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 310,553 $
316,394
Marketable securities 1,289,852 1,019,059
Receivables 1,070,345 1,041,769
Inventories 1,322,042 1,422,147
Prepaid expenses 132,496 111,426
_________ _________
Total Current Assets 4,125,288 3,910,795
Investments and Other Assets
Investments in and advances to 316,170 297,147
affiliates
Long-term marketable securities 1,116,595 891,073
Other assets 108,582 109,263
_________ _________
1,541,347 1,297,483
Property, Plant and Equipment
Land 103,286 101,854
Buildings 1,049,163 1,029,817
Machinery and equipment 5,166,161 5,073,631
Construction in progress 506,184 455,729
Less allowances for depreciation (3,223,704 (3,122,45
) 6)
_________ _________
3,601,090 3,538,575
_________ _________
$9,267,725 $8,746,85
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========= =========
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
SEPTEMBER 30,JUNE 30,
1994 1994
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 76,287 $ -
Accounts payable 757,260 690,824
Accrued expenses 455,097 412,438
Current maturities of long-term debt 20,384 23,716
_________ ________
Total Current Liabilities 1,309,028 1,126,978
Long-Term Debt 2,015,499 2,021,417
Deferred Credits
Income taxes 488,309 432,396
Other 120,951 120,641
_________ _________
609,260 553,037
Shareholders' Equity
Common stock 3,424,611 3,415,955
Reinvested earnings 1,909,327 1,629,466
_________ _________
5,333,938 5,045,421
_________ _________
$9,267,725 $8,746,853
========= =========
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED
SEPTEMBER 30,
1994 1993
______________________
(In thousands)
Operating Activities
Net earnings $ 154,544 $ 69,063
Adjustments to reconcile to net cash
provided by operations
Depreciation and amortization 95,069 84,541
Deferred income taxes 3,501 13,251
Amortization of long-term debt discount 5,297 4,636
Other 9,872 290
Changes in operating assets and liabilities
Receivables (28,580) (62,399)
Inventories 100,104 184,958
Prepaid expenses (21,070) (20,462)
Accounts payable and accrued expenses109,103 38,048
_______ _______
Total Operating Activities 427,840 311,926
Investing Activities
Purchases of property, plant and equipment(146,352) (116,057)
Business acquisitions - (62,222)
Investments in and advances to affiliates(20,819) 9,296
Purchases of marketable securities (778,761) (935,902)
Proceeds from sales of marketable securities462,376 1,014,373
_______ _______
Total Investing Activities (483,556) (90,512)
Financing Activities
Long-term debt borrowings - 3,348
Long-term debt payments (17,986) (5,764)
Net borrowings under line of credit agreements76,287 61,617
Purchases of treasury stock (1) (204,251)
Cash dividends and other (8,425) (8,509)
_______ _______
Total Financing Activities 49,875 (153,559)
_______ _______
Increase (Decrease) In Cash and Cash Equivalents(5,841)67,855
Cash and Cash Equivalents Beginning of Period316,394 386,483
_______ _______
Cash and Cash Equivalents End of Period 310,553 $ 454,338
======= =======
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.The accompanying unaudited consolidated financial
statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes
required by generally accepted accounting principles for
complete financial statements. In the opinion of
management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair
presentation have been included. Operating results for
the quarter ended September 30, 1994 are not necessarily
indicative of the results that may be expected for the
year ending June 30, 1995. For further information,
refer to the consolidated financial statements and
footnotes thereto included in the Company's annual
report on Form 10-K for the year ended June 30, 1994.
Note 2. Inventories
Inventories, consisting primarily of merchandisable
agricultural commodities and related value-added
products, are carried at cost, which is not in excess of
market prices. Inventory cost methods include the last-
in, first-out (LIFO) method, the first-in, first-out
(FIFO) method and the hedging procedure method. The
hedging procedure method approximates FIFO cost.
The Company follows a policy of hedging substantially all
inventory and related purchase and sale contracts. In
addition, the Company from time to time will hedge
anticipated production, generally not exceeding six
months requirements. These hedges are made to reduce
price risk of market fluctuations and risk of crop
failure. The instruments used are principally readily
marketable exchange traded futures contracts which are
designated as hedges. The changes in market value of
such contracts have a high correlation to the price
changes of the hedged commodity. Also, the underlying
commodity can be delivered against such contracts. To
obtain a proper matching of revenue and expense, gains
or losses arising from open and closed hedging
transactions are included in inventory as a cost of the
commodities and reflected in the income statement when
the product is sold.
Note 3. Other Income (Expense)
THREE MONTHS ENDED
SEPTEMBER 30,
1994 1993
____________________
(In thousands)
Investment income $ 32,262 $ 26,938
Interest expense (42,769) (43,401)
Gain (loss) on marketable
securities transactions (4,824) 1,270
Other, including equity in earnings
of affiliates (225) 194
______ ______
$(15,556) $(14,999)
====== ======
Note 4. Per Share Data
All references to share and per share information have
been adjusted for the 5 percent stock dividend paid
September 19, 1994 and the 50 percent stock dividend in
the form of a three-for-two stock split declared October
20, 1994 and payable December 5, 1994.
Note 5. Accounting Change
Effective July 1, 1994, the Company adopted FASB
Statement No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." The effect of adopting
Statement 115 increased the opening balance of
shareholders' equity by $51 million (net of $25 million
in deferred income taxes) to reflect the net unrealized
gain on marketable securities classified as available-
for-sale which were previously carried at cost.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL CONDITIONS
The Company is in one business segment - procuring,
transporting, storing, processing and merchandising agricultural
commodities. The availability and price of agricultural
commodities are subject to wide fluctuations due to
unpredictable factors such as: weather; plantings; government
(domestic and foreign) farm programs and policies; changes in
global demand created by population growth and higher standards
of living; and global production of similar and competitive
crops. Generally, changes in the price of agricultural
commodities can be passed through to the price of processed
products. Ethanol is one of a limited few of the Company's
processed products which must be priced to compete with products
produced from other raw materials. The Company follows a policy
of hedging substantially all inventory and related purchase and
sale contracts. In addition, the Company from time to time will
hedge anticipated production, generally not exceeding six
months requirements. These hedges are made to reduce price risk
of market fluctuations and risk of crop failure. The
instruments used are principally readily marketable exchange
traded futures contracts which are designated as hedges. The
changes in market value of such contracts have a high
correlation to the price changes of the hedged commodity. Also,
the underlying commodity can be delivered against such
contracts. To obtain a proper matching of revenue and expense,
gains or losses arising from open and closed hedging
transactions are included in inventory as a cost of the
commodities and reflected in the income statement when the
product is sold.
OPERATIONS
Net sales and other operating income increased to $3 billion in
the quarter from $2.6 billion last year due primarily to a 6
percent increase in average selling prices and a 10 percent
increase in the volume of products sold, including sales
attributable to recently acquired operations. A summary of net
sales and other operating income by classes of products and
services is as follows:
THREE MONTHS ENDED
SEPTEMBER 30,
1994 1993
(In millions)
Oilseed products $ 1,497 $ 1,431
Corn products 783 666
Wheat and other milled products 353 299
Other products 382 218
_____ _____
$ 3,015 $ 2,614
===== =====
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Sales of oilseed products increased 5 percent due primarily to
increased volume, and to a lesser extent price increases, as
good domestic demand for meal products and strong export demand
for vegetable oils contributed to favorable oilseed processing
market conditions. Sales of corn products increased 18 percent
due primarily to increased selling prices as strong soft drink
demand resulted in increased demand for sweetener products and
average selling prices of ethanol increased due to increased
demand and the rising price of gasoline. The increase in sales
of wheat and other milled products and the increase in sales of
other products results primarily from sales of recently
acquired operations.
Cost of products sold increased to $2.7 billion in the
quarter from $2.4 billion last year due principally to the
increased volume of products sold, including costs of
recently acquired operations.
The combined effect in the first quarter of fiscal 1995 of the
higher selling prices and increased volume of products sold
resulted in an increase in gross profit to $345 million from
$223 million last year. Fiscal 1994 gross profit included the
negative impact of the widespread Midwest flooding on procuring,
transporting and merchandising operations. We estimate that
higher corn costs of about $10 million could not be passed on to
ethanol buyers and costs of approximately $40 million were
incurred in the first quarter of fiscal 1994 due to
transportation and plant operation interruptions.
Selling, general and administrative expenses increased $17
million to $100 million due primarily to $15 million of expense
attributable to recently acquired operations.
Other income (expense) for the quarter was comparable to the
same quarter a year ago as increased investment income due to
higher interest rates were offset by losses on marketable
securities transactions.
Income taxes for the quarter increased due to higher pretax
earnings. The Company's effective income tax rate for the
quarter was 33 percent compared to 45 percent last year.
Excluding the effect of the $14 million non-recurring income tax
charge due to the increase in the statutory federal income tax
rate to 35 percent in the first quarter of fiscal 1994, the
effective tax rate in the first quarter of last year would have
been 34 percent.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended September 30, 1994, the Company's
liquidity continued to improve as cash and marketable securities
net of short-term debt increased $414 million to $2.6 billion
and working capital increased $32 million to $2.8 billion.
Capital resources were strengthened as shown by the $289 million
increase in net worth to $5.3 billion. The Company's ratio of
long-term liabilities to total capital at September 30, 1994 was
approximately 25 percent.
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PART II - OTHER INFORMATION
Item 2. Changes in Securities
a) In July, 1994 the Board of Directors
declared a 5 percent stock dividend which
was paid on September 19, 1994, to
shareholders of record on August 22, 1994.
b) In October, 1994 the Board of Directors
declared a 50 percent stock dividend in the
form of a three-for-two stock split payable
December 5, 1994 to shareholders of record
November 4, 1994.
Item 6. Exhibits and Reports on Form 8-K
a) A Form 8-K was not filed during the quarter
ended September 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ARCHER-DANIELS-MIDLAND COMPANY
/s/ D. J. Schmalz
D. J. Schmalz
Vice President
and Chief Financial Officer
/s/ R. P. Reising
R. P. Reising
Vice President, Secretary and
General Counsel
Dated: November 14, 1994
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