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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 March 31, 1995
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--516,072,234 shares
(March 31, 1995)
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PART I - FINANCIAL INFORMATION
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
1995 1994
(In thousands, except
per share amounts)
Net sales and other operating income $3,299,66 $3,010,0
2 01
Cost of products sold and other 2,874,149 2,724,34
operating costs 3
_________ ________
_
Gross Profit 425,513 285,658
Selling, general and administrative 98,726 92,548
expenses
_________ ________
_
Earnings From Operations 326,787 193,110
Other income (expense) (30,270) 5,260
_________ ________
_
Earnings Before Income Taxes 296,517 198,370
Income taxes 100,816 67,101
_________ ________
_
Net Earnings $ $
195,701 131,269
========= ========
=
Average number of shares outstanding 516,143 514,876
Net earnings per common share $.38 $ .25
Dividends per common share $.025 $.016
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
NINE MONTHS ENDED
MARCH 31,
1995 1994
(In thousands, except
per share amounts)
Net sales and other operating income $9,536,6 $8,445,1
89 90
Cost of products sold and other 8,288,73 7,614,05
operating costs 2 8
________ ________
_ _
Gross Profit 1,247,95 831,132
7
Selling, general and administrative 321,129 266,586
expenses
________ ________
_ _
Earnings From Operations 926,828 564,546
Other income (expense) (75,285) (18,870)
________ ________
_ _
Earnings Before Income Taxes 851,543 545,676
Income taxes 281,200 199,285
________ ________
_ _
Net Earnings $ $
570,343 346,391
======== ========
= =
Average number of shares outstanding 515,917 521,779
Net earnings per common share $1.11 $.66
Dividends per common share $.066 $.047
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
MARCH 31, JUNE 30,
1995 1994
(In thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 457,410 $
316,394
Marketable securities 634,778 1,019,059
Receivables 1,100,735 1,041,769
Inventories 1,768,800 1,422,147
Prepaid expenses 115,786 111,426
_________ _________
Total Current Assets 4,077,509 3,910,795
Investments and Other Assets
Investments in and advances to 497,434 297,147
affiliates
Long-term marketable securities 1,574,286 891,073
Other assets 71,627 109,263
_________ _________
2,143,347 1,297,483
Property, Plant and Equipment
Land 108,163 101,854
Buildings 1,064,825 1,029,817
Machinery and equipment 5,369,088 5,073,631
Construction in progress 596,726 455,729
Less allowance for depreciation (3,419,804) (3,122,456)
_________ _________
3,718,998 3,538,575
_________ _________
$9,939,854 $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)
MARCH 31, JUNE 30,
1995 1994
_________________________
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 111,020 $ -
Accounts payable 734,625 690,824
Accrued expenses 553,840 412,438
Current maturities of long-term debt 17,146 23,716
_________ ________
Total Current Liabilities 1,416,631 1,126,978
Long-Term Debt 2,058,834 2,021,417
Deferred Credits
Income taxes 535,584 432,396
Others 120,882 120,641
_________ _________
656,466 553,037
Shareholders' Equity
Common stock 3,427,218 3,415,955
Reinvested earnings 2,380,705 1,629,466
_________ _________
5,807,923 5,045,421
_________ _________
$9,939,854 $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)
NINE MONTHS ENDED
MARCH 31,
1995 1994
(In thousands)
Operating Activities
Net earnings $ 570,343 $ 346,391
Adjustments to reconcile to net cash provided
by operations
Depreciation and amortization 289,951 261,272
Deferred income taxes 22,932 30,785
Amortization of long-term debt discount 16,278 14,436
Other 42,068 (32,375)
Changes in operating assets and liabilities
Receivables (62,930) (31,001)
Inventories (340,832) (523,844)
Prepaid expenses (4,663) (27,276)
Accounts payable, accrued expenses 177,304 193,558
_________ _________
Total Operating Activities 710,451 231,946
Investing Activities
Purchases of property, plant and equipment(451,108)(354,545)
Business acquisitions (50,097) (218,370)
Investments in and advances to affiliates(102,078) 5,806
Purchases of marketable securities (1,749,708)(1,573,776)
Proceeds from sales of marketable securities1,723,4212,112,661
_________ _________
Total Investing Activities (629,570) (28,224)
Financing Activities
Long-term debt borrowings 20,922 11,715
Long-term debt payments (29,553) (62,372)
Net borrowings under line of credit agreements111,020 64,247
Purchases of treasury stock (9,207) (355,225)
Cash dividends and other (33,047) (24,663)
_________ _________
Total Financing Activities 60,135 (366,298)
_________ _________
Increase (Decrease) In Cash and Cash Equivalents141,016(162,5
76)
Cash and Cash Equivalents Beginning of Period316,394 386,483
_________ _________
Cash and Cash Equivalents End of Period$ 457,410 $ 223,907
========= =========
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 and nine months ended March 31, 1995 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 ENDEDNINE MONTHS ENDED
MARCH 31, MARCH 31,
1995 1994 1995 1994
_____________________________________
(In thousands) (In thousands)
Investment income $ 37,933 $ 23,511$ 99,869$ 77,845
Interest expense (43,594) (45,568)(130,086)(131,790)
Gain (loss) on marketable
securities transactions (17,702) 19,862(29,643) 21,466
Other, including equity in
earnings of affiliates (6,907) 7,455(15,425) 13,609
______ ______ ______ ______
$(30,270) $ 5,260$ (75,285)$ (18,8
70)
====== ====== ====== ======
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 for the 50 percent stock dividend
in the form of a three-for-two stock split paid 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 CONDITION
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 $290 million to
$3.3 billion for the quarter and increased $1.1 billion to $9.5
billion for the nine months. Substantially all of the increase
for the quarter and $865 million of the increase for the nine
months are due to volume increases, including sales attributable
to recently acquired operations. The remaining increase for the
nine months is attributable to average selling price increases
of approximately 3 percent. A summary of net sales and other
operating income by classes of products and services is as
follows:
THREE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1995 1994 1995 1994
_______________ ______________
___ ___
(In millions) (In millions)
Oilseed products $ 2,107 $ $ $
1,742 5,706 5,014
Corn products 568 568 1,850 1,678
Wheat and other milled 340 381 1,053 1,053
products
Other products 285 319 928 700
______ ______ ______ ______
$ 3,300 $ $ $
3,010 9,537 8,445
====== ====== ====== ======
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Sales of oilseed products increased 21 percent for the quarter
and 14 percent for the nine months due primarily to increased
volume as strong export demand for vegetable oils and good
domestic demand for meal products contributed to favorable
oilseed processing market conditions. Sales of corn products
increased 10 percent for the nine months due primarily to
increased average selling prices resulting from strong demand
from the food and beverage industry for sweetener products and
an increased demand for ethanol. Sales of corn products for the
quarter were at levels comparable to the prior year. Sales of
wheat and other milled products for the quarter decreased 11
percent due primarily to weaker export demand for flour and to
the Company's second quarter contribution of its rice milling
operations to a joint venture. Sales of wheat and other milled
products for the nine months were at levels comparable to the
prior year as sales attributable to recently acquired wheat
flour operations were offset by the aforementioned contribution
of the Company's rice milling operations to a joint venture.
The increase in sales of other products for the nine months is
due primarily from sales attributable to recently acquired feed
operations. Sales of other products decreased for the quarter
principally due to the Company's second quarter contribution of
a portion of the Company's feed operations to a joint venture.
Cost of products sold increased $150 million to $2.9 billion for
the quarter and increased $675 million to $8.3 billion for the
nine months due principally to the increased volume of products
sold, including costs of recently acquired operations. These
volume related increases were partially offset in both the
quarter and nine months by declines in average raw material
commodity prices of 8 percent and 4 percent, respectively.
The combined effect of increased sales volumes, higher average
selling prices and lower raw material commodity prices resulted
in gross profits increasing $140 million to $426 million for the
quarter and increasing $417 million to $1.2 billion for the nine
months. Approximately $110 million of the increase for the
quarter and $315 million of the increase for the nine months can
be attributed to improved gross profits resulting from the net
price effect of higher average selling prices and lower raw
material commodity prices. The remaining increase is due to
sales volume increases. Fiscal 1994 gross profit included the
negative impact of the widespread Midwest flooding on procuring,
transporting, and merchandising operations. We estimate that
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 20
percent to $321 million for the nine months due principally to
$23 million of expenses attributable to recently acquired
operations and to general cost increases, including increased
bad debt and charitable contribution expense. Selling, general
and administrative expense increased 7 percent to $99 million
for the quarter due primarily to general cost increases,
including increased charitable contribution expense.
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The decrease in other income (expense) for the quarter and nine
months resulted primarily from losses on marketable securities
transactions and decreased equity in earnings of non-
consolidated affiliates. These decreases were partially offset
by increased investment income due to higher interest rates.
Income taxes for the quarter and nine months increased due to
higher pretax earnings. The Company's effective income tax rate
of 34 percent for the quarter and 33 percent for the nine months
compares to rates of 34 and 37 percent for the comparable
periods of a year ago. 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 for last year's
nine month period would have been 34 percent.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended March 31, 1995, the Company's
liquidity continued to improve as cash and marketable securities
net of short-term debt increased $329 million to $2.6 billion
and its capital resources were strengthened by a $763 million
increase in net worth to $5.8 billion. The Company's ratio of
long-term liabilities to total capital at March 31, 1995 was
approximately 24 percent.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) A Form 8-K was not filed during the
quarter ended March 31, 1995.
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: May 12, 1995
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