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ADM Reports Fourth Quarter 2012 Earnings Of $284 Million Or $0.43 Per Share

Stocks in this article: ADM

(1) Beginning fourth quarter fiscal 2012, ADM realigned segment operating profit to reflect a change in how the company manages its businesses. As a result, ADM now reports Cocoa processing results as part of a new category in Oilseeds called “Cocoa and Other” and Milling results in an Agricultural Services category called “Milling and Other”. In addition, beginning fourth quarter fiscal 2012, the company discontinued the allocation of working capital interest to the operating segments. Prior periods have been restated to conform to the current period presentation.

 

Quarterly Segment Operating Profit and Corporate Results (1)

A non-GAAP financial measure (unaudited)

 

        Fiscal         Fiscal
Quarter ended     Year Quarter ended     Year

Sept'11

    Dec'11     Mar'12     June'12     2012 Sept'10     Dec'10     Mar'11     June'11     2011
(in millions)
Oilseeds Processing Operating Profit                        
Crushing and origination $ 106 $ 121 $ 264 $ 150 $ 641 $ 170 $ 127 $ 402 $ 226 $ 925
Refining, packaging, biodiesel, and other 55 77 79 84 295 78 81 93 90 342
Cocoa and other 2 (30 ) 159 52 183 (32 ) 156 45 71 240
Asia   57         41         40         45         183     57         46         18         62         183  
Total Oilseeds Processing $ 220       $ 209       $ 542       $ 331       $ 1,302   $ 273       $ 410       $ 558       $ 449       $ 1,690  
 
Corn Processing Operating Profit
Sweeteners and starches $ 30 $ 75 $ 95 $ 135 $ 335 $ 148 $ 122 $ 49 $ 11 $ 330
Bioproducts   153         (204 )       38         (61 )       (74 )   197         281         160         111         749  
Total Corn Processing $ 183       $ (129 )     $ 133       $ 74       $ 261   $ 345       $ 403       $ 209       $ 122       $ 1,079  
 
Agricultural Services Operating Profit
Merchandising and handling $ 209 $ 106 $ 148 $ 30 $ 493 $ 102 $ 366 $ 157 $ 182 $ 807
Transportation 28 53 27 17 125 33 53 19 12 117
Milling and other   86         81         86         76         329     78         96         74         151         399  
Total Agricultural Services $ 323       $ 240       $ 261       $ 123       $ 947   $ 213       $ 515       $ 250       $ 345       $ 1,323  
 
Other Operating Profit
Financial $ (5 )     $ 22       $ (18 )     $ 16       $ 15   $ (42 )     $ 52       $ 24       $ 5       $ 39  
Total Other $ (5 )     $ 22       $ (18 )     $ 16       $ 15   $ (42 )     $ 52       $ 24       $ 5       $ 39  
 
Segment Operating Profit $ 721 $ 342 $ 918 $ 544 $ 2,525 $ 789 $ 1,380 $ 1,041 $ 921 $ 4,131
 
Corporate Results
LIFO credit (charge) $ 126 $ (59 ) $ (107 ) $ 50 $ 10 $ (123 ) $ (254 ) $ (43 ) $ 52 $ (368 )
Interest expense - net (98 ) (99 ) (114 ) (112 ) (423 ) (113 ) (101 ) (116 ) (115 ) (445 )
Unallocated corporate costs (84 ) (71 ) (138 ) (67 ) (360 ) (73 ) (66 ) (93 ) (94 ) (326 )
Gains (losses) on interest rate swaps - - - - - (31 ) 55 6 - 30
Debt buyback/exchange (4 ) - - - (4 )

 

-

- - (8 ) (8 )
Other   (1 )       8         9         1         17     13         (16 )       (4 )       8         1  
Total Corporate $ (61 )     $ (221 )     $ (350 )     $ (128 )     $ (760 ) $ (327 )     $ (382 )     $ (250 )     $ (157 )     $ (1,116 )
 
Earnings Before Income Taxes $ 660       $ 121       $ 568       $ 416       $ 1,765   $ 462       $ 998       $ 791       $ 764       $ 3,015  
 

(1) Beginning fourth quarter fiscal 2012, ADM realigned segment operating profit to reflect a change in how the company manages its businesses. As a result, ADM now reports Cocoa processing results as part of a new category in Oilseeds called “Cocoa and Other” and Milling results in an Agricultural Services category called “Milling and Other”. In addition, beginning fourth quarter fiscal 2012, the company discontinued the allocation of working capital interest to the operating segments. Prior periods have been restated to conform to the current period presentation.

 
Consolidated Statements of Earnings

(unaudited)

 
    Quarter ended     Year ended
June 30 June 30
2012     2011 2012     2011
(in millions, except per share amounts)
 
Net sales and other operating income $ 22,675 $ 22,870 $ 89,038 $ 80,676
Cost of products sold   21,862     21,772     85,370     76,376  
Gross profit 813 1,098 3,668 4,300
Selling, general and administrative expenses (394 ) (423 ) (1,626 ) (1,611 )
Equity in earnings of unconsolidated

affiliates

106 208 472 542
Investment income 24 39 112 136
Interest expense (116 ) (129 ) (441 ) (482 )
Asset impairment, exit and restructuring

costs

- - (437 ) -
Other income (expense) – net   (17 )   (29 )   17     130  
Earnings before income taxes 416 764 1,765 3,015
Income taxes   (123 )   (385 )   (523 )   (997 )
Net earnings including noncontrolling interests 293 379 1,242 2,018
Less: Net earnings (losses) attributable to noncontrolling interests   9     (2 )   19  

 

(18 )
Net earnings attributable to ADM $ 284   $ 381   $ 1,223   $ 2,036  
 
Diluted earnings per common share $ 0.43   $ 0.58   $ 1.84   $ 3.13  
 
Average number of shares outstanding   661     652     666     654  
 
 

Other income (expense) - net consists of:

 

Net gain on marketable securities

transactions

$ 1 $ 9 $ 25

$

12
Gain on Golden Peanut revaluation - - - 71
Gains on interest rate swaps - - - 30
Debt buyback/exchange costs - (15 ) (12 ) (15 )
Other – net   (18 )   (23 )   4     32  
$ (17 ) $ (29 ) $ 17   $ 130  
 
 
Summary of Financial Condition

(unaudited)

 
    June 30,    

June 30,

2012  

2011

(in millions)
NET INVESTMENT IN
Working capital $ 16,113 $ 16,339
Property, plant, and equipment 9,812 9,500
Investments in and advances to affiliates 3,388 3,240
Long-term marketable securities 262 666
Other non-current assets   1,137   1,283
$ 30,712 $ 31,028
 
FINANCED BY
Short-term debt $ 2,108 $ 1,875
Long-term debt, including current maturities 8,212 8,444
Deferred liabilities 2,223 1,871
Shareholders’ equity   18,169   18,838
$ 30,712 $ 31,028
 
 
Summary of Cash Flows
(unaudited)
    Year Ended
June 30
2012     2011
(in millions)
Operating Activities  
Net earnings $ 1,242 $ 2,018
Depreciation and amortization 848 877
Asset impairment charges 391 2
Other – net 98 (5 )
Changes in operating assets and liabilities   340     (5,232 )
Total Operating Activities 2,919 (2,340 )

Investing Activities

Purchases of property, plant and equipment (1,477 ) (1,247 )
Net assets of businesses acquired (241 ) (218 )
Marketable securities – net 648 (285 )
Cash held in a deconsolidated entity (130 ) -
Other investing activities   78     75  
Total Investing Activities (1,122 ) (1,675 )

Financing Activities

Long-term debt borrowings 97 1,564
Long-term debt payments (358 ) (417 )
Net borrowings under lines of credit 197 1,381
Debt repayment premium and costs (32 ) (21 )
Shares issued related to equity unit conversion - 1,750
Purchases of treasury stock (527 ) (301 )
Cash dividends (455 ) (395 )
Other   (43 )   23  
Total Financing Activities   (1,121 )   3,584  

Increase (decrease) in cash and cash equivalents

676 (431 )
Cash and cash equivalents - beginning of period   615     1,046  
Cash and cash equivalents - end of period $ 1,291   $ 615  
 
 
Segment Operating Analysis

(unaudited)

 
    Quarter Ended     Year Ended
June 30 June 30
2012     2011     2012     2011
(‘000s of metric tons)

Processed volumes

       
Oilseeds 7,793 7,038 31,161 29,630
Corn 6,036 6,039 24,618 23,412
Milling and Cocoa   1,680   1,725   7,156 7,179
Total processed volumes   15,509   14,802   62,935 60,221
 
 
 
Quarter Ended Year Ended
June 30 June 30
2012     2011     2012     2011

 

(In millions)

Net sales and other operating income (1)

Oilseeds Processing $ 9,663 $ 9,259 $ 34,715 $ 29,908
Corn Processing 2,828 2,841 12,114 9,908
Agricultural Services 10,147 10,743 42,082 40,750
Other   37   27   127   110
Total net sales and other
operating income $ 22,675 $ 22,870 $ 89,038 $ 80,676
 

(1) Prior periods have been restated to conform to the current period presentation.

 
Segment Operating Analysis

(unaudited)

 
        Fiscal
Quarter ended     Year
Sept'11     Dec'11     Mar'12     June'12     2012
(In '000 metric tons)

Processed volumes

           
Oilseeds 7,018 8,191 8,159 7,793 31,161
Corn 6,111 6,297 6,174 6,036 24,618
Milling and Cocoa   1,881       1,855       1,740       1,680       7,156
Total processed volumes   15,010       16,343       16,073       15,509       62,935
 
Fiscal
Quarter ended     Year
Sept'10     Dec'10     Mar'11     June'11     2011
(In '000 metric tons)

Processed volumes

Oilseeds 7,075 7,834 7,683 7,038 29,630
Corn 5,834 5,908 5,631 6,039 23,412
Milling and Cocoa   1,885       1,819       1,750       1,725       7,179
Total processed volumes   14,794       15,561       15,064       14,802       60,221
 
Fiscal
Quarter ended     Year
Sept'11     Dec'11     Mar'12     June'12     2012
(In millions)

Net sales and other operating income (1)

Oilseeds Processing $ 9,071 $ 8,266 $ 7,715 $ 9,663 $ 34,715
Corn Processing 3,293 3,158 2,835 2,828 12,114
Agricultural Services 9,510 11,854 10,571 10,147 42,082
Other   28       28       34       37       127
Total net sales and other operating income $ 21,902     $ 23,306     $ 21,155     $ 22,675     $ 89,038
 
Fiscal
Quarter ended     Year
Sept'10     Dec'10     Mar'11     June'11     2011
(In millions)

Net sales and other operating income (1)

Oilseeds Processing $ 7,056 $ 6,608 $ 6,985 $ 9,259 $ 29,908
Corn Processing 2,155 2,449 2,463 2,841 9,908
Agricultural Services 7,561 11,845 10,601 10,743 40,750
Other   27       28       28       27       110
Total net sales and other operating income $ 16,799     $ 20,930     $ 20,077     $ 22,870     $ 80,676
 

(1) Prior periods have been restated to conform to the current period presentation.

 
Adjusted Earnings Per Share
A non-GAAP financial measure

(unaudited)

 
    Quarter Ended     Year Ended
June 30 June 30
2012     2011 2012     2011
Reported Earnings Per Share (fully-diluted) $ 0.43     $ 0.58 $ 1.84     $ 3.13
Adjustments:
LIFO charge/(credit) (a) (0.05 ) (0.05 ) (0.01 ) 0.35
Asset impairment, exit and

restructuring charges (b)

- - 0.41 -
Debt buyback/exchange costs (c) - 0.01 0.01 0.01
Gain on Golden Peanut revaluation (d) - - - (0.07 )
Gain on Gruma assets sale (e) - (0.07 ) - (0.07 )
Gain on interest rate swaps (f) - - - (0.03 )
Start-up costs (g) - 0.02 - 0.09
Adjust quarterly effective tax rate to

fiscal year average (h)

- 0.20 - -
Early debt remarketing dilution

impact (i)

  -     -     -     0.04  
Adjusted Earnings Per Share (non-GAAP) $ 0.38   $ 0.69   $ 2.25   $ 3.45  
 

(a) The Company’s pretax changes in its LIFO reserves during the period, tax effected using the Company’s U.S. effective income tax rate.(b) The exit costs and asset impairment charges related primarily to the PHA business and global workforce reduction program, tax effected using the applicable U.S., European and South American tax rates.(c) The pretax costs incurred to extinguish or modify the Company’s outstanding debt prior to maturity, tax effected using the Company’s U.S effective income tax rate.(d) The gain on the revaluation of the Company’s equity interest in Golden Peanut as a result of the acquisition of the remaining 50% interest, tax effected at the Company’s U.S. effective income tax rate.(e) The Company’s share of the gain related to the sale of Gruma’s assets, tax effected at the company’s U.S. effective income tax rate.(f) The gains on changes in fair value of certain financial instruments that were held as de-designated accounting hedges for long-term debt that was re-marketed in fiscal 2011, tax effected at the Company’s U.S. effective income tax rate.(g) The costs incurred related to the Company’s new bioproducts plants included in Corn Processing, tax effected using the Company’s U.S. effective income tax rate.(h) The impact to fourth-quarter fiscal 2011 EPS if the fiscal year 2011 final effective income tax rate of 33% were used.(i) The impact of applying the if-converted method of calculating diluted EPS to the 44 million shares issued in Q4 fiscal 2011. The if-converted method assumed that the shares were outstanding at the beginning of the third quarter of fiscal 2011.

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