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ADM Reports First Quarter 2012.5 Results

(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
September 30
2012     2011
(In millions, except per share amounts)
   
Net sales and other operating income $ 21,808 $ 21,902
Cost of products sold   21,002     20,868  
Gross profit 806 1,034
Selling, general and administrative expenses (390 ) (407 )
Asset impairment charge (146 ) -

Equity in earnings of unconsolidated affiliates

113 124
Investment income 30 40
Interest expense (106 ) (113 )
Other income (expense) – net   (12 )   (18 )
Earnings before income taxes 295 660
Income taxes   (111 )   (199 )
Net earnings including noncontrolling interests 184 461
Less: Net earnings (losses) attributable to noncontrolling interests   2     1  
Net earnings attributable to ADM $ 182   $ 460  
 
Diluted earnings per common share $ 0.28   $ 0.68  
 
Average number of shares outstanding   661     674  
 
 

Other income (expense) - net consists of:

Net gain on marketable securities transactions

$ 2 $ 5
Debt buyback/exchange costs - (12 )
Other – net   (14 )   (11 )
$ (12 ) $ (18 )
 
 
Summary of Financial Condition

(unaudited)

 
September 30,         June 30,
2012           2012
(in millions)
NET INVESTMENT IN
Working capital $ 16,538 $ 16,113
Property, plant, and equipment 9,883 9,812
Investments in and advances to affiliates 3,379 3,388
Long-term marketable securities 246 262
Other non-current assets   1,098       1,137
$ 31,144 $     30,712
 
FINANCED BY
Short-term debt $ 3,678 $ 2,108
Long-term debt, including current maturities 6,815 8,212
Deferred liabilities 2,210 2,223
Shareholders’ equity   18,441       18,169
$ 31,144 $     30,712
 
 
Summary of Cash Flows
(unaudited)
   
Three Months Ended
September 30
2012       2011
(in millions)
Operating Activities    
Net earnings $ 184 $ 461
Depreciation and amortization 217 207
Asset impairment charge 146 -
Other – net 111 114
Changes in operating assets and liabilities   (175 )   1,305  
Total Operating Activities 483 2,087
 

Investing Activities

Purchases of property, plant and equipment (252 ) (443 )
Net assets of businesses acquired (21 ) (12 )
Marketable securities – net (319 ) 300
Cash held in a deconsolidated entity - (130 )
Other investing activities   30     36  
Total Investing Activities (562 ) (249 )
 

Financing Activities

Long-term debt borrowings 3 2
Long-term debt payments (1,412 ) (85 )
Net borrowings (repayments) under lines of credit 1,547 (663 )
Debt repayment premium and costs - (32 )
Purchases of treasury stock - (240 )
Cash dividends (115 ) (107 )
Other   -     (8 )
Total Financing Activities   23     (1,133 )
 

Increase (decrease) in cash and cash equivalents

(56 ) 705
Cash and cash equivalents - beginning of period   1,291     615  
Cash and cash equivalents - end of period $ 1,235   $ 1,320  
 
 
Segment Operating Analysis

(unaudited)

 
    Quarter Ended
  September 30
  2012     2011

 

('000s of metric tons)

Processed volumes

 
Oilseeds 7,462 7,018
Corn 6,281 6,111
Milling and Cocoa   1,790 1,881
Total processed volumes   15,533 15,010
 
Quarter Ended
  September 30
  2012     2011

 

(in millions)

Net sales and other operating income

Oilseeds Processing $ 9,688 $ 9,071
Corn Processing 3,126 3,293
Agricultural Services 8,956 9,510
Other   38   28
Total net sales and other
operating income $ 21,808 $ 21,902
 
 
Adjusted Earnings Per Share
A non-GAAP financial measure

(unaudited)

 
        Quarter Ended
    September 30
    2012       2011  
Reported Earnings Per Share (fully-diluted) $0.28       $0.68
Adjustments:
LIFO charge/(credit) (a) 0.05 (0.11 )
Asset impairment charge (b) 0.16 -
Brazil income tax remeasurement (c) 0.01 -
Debt buyback/exchange costs (d)   -   0.01  
Adjusted Earnings Per Share (non-GAAP)   $0.50   $0.58  
 
(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 impairment charge related to the Company’s investments associated with Gruma, tax effected using the applicable U.S. and Mexican tax rates.
(c) The tax impact of foreign-exchange remeasurement of certain Brazilian assets.
(d)

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.

 

Adjusted EPS is ADM’s fully diluted EPS after removal of the effect on Reported EPS of certain specified items as more fully described above. Management believes that Adjusted EPS is a useful measure of ADM’s performance because it provides investors additional information about ADM’s operations allowing better evaluation of ongoing business performance. Adjusted EPS is a non-GAAP financial measure and is not intended to replace or be an alternative to EPS, the most directly comparable GAAP financial measure, or any other measures of operating results under GAAP. Earnings amounts in the tables above have been divided by the company’s diluted shares outstanding for each respective quarter in order to arrive at an adjusted EPS amount for each specified item.

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