ARCHER-DANIELS-MIDLAND CO
10-Ks and 10-Qs
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UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D. C. 20549
FORM
10-Q
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x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended December 31, 2009
OR
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from __________ to __________
Commission
file number 1-44
ARCHER-DANIELS-MIDLAND
COMPANY
(Exact
name of registrant as specified in its charter)
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Delaware
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41-0129150
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(State
or other jurisdiction of
incorporation
or organization)
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(I.
R. S. Employer
Identification
No.)
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4666
Faries Parkway Box 1470
Decatur,
Illinois
(Address
of principal executive offices)
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62525
(Zip
Code)
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(
217)
424-5200
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|
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(Registrant's
telephone number, including area
code)
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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
by check mark whether the registrant has submitted electronically and posted on
its corporate web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes
x
No
¨
.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer, or a smaller reporting
company. See definition of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large
Accelerated Filer
x
Accelerated
Filer
o
Non-accelerated
Filer
o
Smaller
reporting Company
o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
o
No
x
.
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 – 642,591,084 shares
(January
31, 2010)
PART
I - FINANCIAL INFORMATION
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ITEM
1.
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FINANCIAL
STATEMENTS
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Archer-Daniels-Midland
Company
(Unaudited)
|
Three
Months Ended
|
||||||||
|
December
31,
|
||||||||
|
2009
|
2008
(1)
|
|||||||
|
(In
millions, except
|
||||||||
|
per
share amounts)
|
||||||||
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Net
sales and other operating income
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$ | 15,913 | $ | 16,673 | ||||
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Cost
of products sold
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14,860 | 15,461 | ||||||
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Gross
Profit
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1,053 | 1,212 | ||||||
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Selling,
general and administrative expenses
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358 | 337 | ||||||
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Other
(income) expense – net
|
(89 | ) | 58 | |||||
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Earnings
Before Income Taxes
|
784 | 817 | ||||||
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Income
taxes
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223 | 238 | ||||||
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Net
Earnings including Noncontrolling Interests
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561 | 579 | ||||||
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Less:
Net earnings (losses) attributable to noncontrolling
interests
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(6 | ) | 1 | |||||
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Net
Earnings Attributable to Controlling Interests
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$ | 567 | $ | 578 | ||||
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Average
number of shares outstanding – basic
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643 | 642 | ||||||
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Average
number of shares outstanding – diluted
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645 | 643 | ||||||
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Basic
and diluted earnings per common share
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$ | 0.88 | $ | 0.90 | ||||
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Dividends
per common share
|
$ | 0.14 | $ | 0.13 | ||||
See notes
to consolidated financial statements.
(1)
As adjusted for Accounting Standards Codification (ASC) Topics 470-20 and
810.
Archer-Daniels-Midland
Company
Consolidated
Statements of Earnings
(Unaudited)
|
Six
Months Ended
|
||||||||
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December
31,
|
||||||||
|
2009
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2008
(1)
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|||||||
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(In
millions, except
|
||||||||
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per
share amounts)
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||||||||
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Net
sales and other operating income
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$ | 30,834 | $ | 37,833 | ||||
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Cost
of products sold
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28,808 | 34,754 | ||||||
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Gross
Profit
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2,026 | 3,079 | ||||||
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Selling,
general and administrative expenses
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712 | 746 | ||||||
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Other
(income) expense – net
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(187 | ) | 30 | |||||
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Earnings
Before Income Taxes
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1,501 | 2,303 | ||||||
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Income
taxes
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443 | 678 | ||||||
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Net
Earnings including Noncontrolling Interests
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1,058 | 1,625 | ||||||
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Less:
Net earnings (losses) attributable to noncontrolling
interests
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(5 | ) | 2 | |||||
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Net
Earnings Attributable to Controlling Interests
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$ | 1,063 | $ | 1,623 | ||||
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Average
number of shares outstanding – basic
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643 | 643 | ||||||
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Average
number of shares outstanding – diluted
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644 | 644 | ||||||
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Basic
and diluted earnings per common share
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$ | 1.65 | $ | 2.52 | ||||
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Dividends
per common share
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$ | 0.28 | $ | 0.26 | ||||
See notes
to consolidated financial statements.
(1)
As adjusted for ASC Topics 470-20 and 810.
Archer-Daniels-Midland
Company
|
(Unaudited)
|
||||||||
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December
31,
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June
30,
|
|||||||
|
2009
|
2009
(1)
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|||||||
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(In
millions)
|
||||||||
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Assets
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||||||||
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Current
Assets
|
||||||||
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Cash
and cash equivalents
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$ | 1,317 | $ | 1,055 | ||||
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Short-term
marketable securities
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317 | 500 | ||||||
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Segregated
cash and investments
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2,187 | 2,430 | ||||||
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Receivables
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7,075 | 7,311 | ||||||
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Inventories
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9,126 | 7,782 | ||||||
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Other
assets
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366 | 330 | ||||||
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Total
Current Assets
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20,388 | 19,408 | ||||||
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Investments
and Other Assets
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||||||||
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Investments
in and advances to affiliates
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2,693 | 2,459 | ||||||
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Long-term
marketable securities
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651 | 626 | ||||||
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Goodwill
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524 | 532 | ||||||
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Other
assets
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637 | 607 | ||||||
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Total
Investments and Other Assets
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4,505 | 4,224 | ||||||
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Property,
Plant, and Equipment
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||||||||
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Land
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261 | 240 | ||||||
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Buildings
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3,667 | 3,304 | ||||||
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Machinery
and equipment
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14,186 | 13,052 | ||||||
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Construction
in progress
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1,845 | 2,245 | ||||||
| 19,959 | 18,841 | |||||||
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Accumulated
depreciation
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(11,323 | ) | (10,891 | ) | ||||
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Net
Property, Plant, and Equipment
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8,636 | 7,950 | ||||||
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Total
Assets
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$ | 33,529 | $ | 31,582 | ||||
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Liabilities
and Shareholders’ Equity
|
||||||||
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Current
Liabilities
|
||||||||
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Short-term
debt
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$ | 221 | $ | 356 | ||||
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Accounts
payable
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6,832 | 5,786 | ||||||
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Accrued
expenses
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2,301 | 2,695 | ||||||
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Current
maturities of long-term debt
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246 | 48 | ||||||
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Total
Current Liabilities
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9,600 | 8,885 | ||||||
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Long-Term
Liabilities
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||||||||
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Long-term
debt
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7,398 | 7,592 | ||||||
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Deferred
income taxes
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553 | 308 | ||||||
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Other
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1,183 | 1,144 | ||||||
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Total
Long-Term Liabilities
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9,134 | 9,044 | ||||||
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Shareholders’
Equity
|
||||||||
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Common
stock
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5,234 | 5,204 | ||||||
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Reinvested
earnings
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9,686 | 8,778 | ||||||
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Accumulated
other comprehensive income (loss)
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(155 | ) | (355 | ) | ||||
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Noncontrolling
interests
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30 | 26 | ||||||
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Total
Shareholders’ Equity
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14,795 | 13,653 | ||||||
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Total
Liabilities and Shareholders’ Equity
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$ | 33,529 | $ | 31,582 | ||||
See notes to consolidated financial statements.
(1)
As
adjusted for ASC Topics 470-20 and 810.
Archer-Daniels-Midland
Company
(Unaudited)
|
Six
Months Ended
|
||||||||
|
December
31,
|
||||||||
|
2009
|
2008
(1)
|
|||||||
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(In
millions)
|
||||||||
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Operating
Activities
|
||||||||
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Net
earnings including noncontrolling interests
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$ | 1,058 | $ | 1,625 | ||||
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Adjustments
to reconcile net earnings to net cash provided by
|
||||||||
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(used
in) operating activities
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||||||||
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Depreciation
and amortization
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431 | 381 | ||||||
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Deferred
income taxes
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202 | 160 | ||||||
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Equity
in earnings of affiliates, net of dividends
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(207 | ) | (128 | ) | ||||
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Pension
and postretirement accruals (contributions), net
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45 | (101 | ) | |||||
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Deferred
cash flow hedges
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84 | (475 | ) | |||||
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Other
– net
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47 | 110 | ||||||
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Changes
in operating assets and liabilities
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||||||||
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Segregated
cash and investments
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239 | 118 | ||||||
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Receivables
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214 | 2,143 | ||||||
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Inventories
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(1,274 | ) | 1,855 | |||||
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Other
assets
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(35 | ) | 92 | |||||
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Accounts
payable and accrued expenses
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576 | 85 | ||||||
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Total
Operating Activities
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1,380 | 5,865 | ||||||
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Investing
Activities
|
||||||||
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Purchases
of property, plant, and equipment
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(939 | ) | (1,069 | ) | ||||
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Proceeds
from sales of property, plant, and equipment
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22 | 54 | ||||||
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Proceeds
from sales of businesses
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– | 237 | ||||||
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Net
assets of businesses acquired
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(57 | ) | (24 | ) | ||||
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Purchases
of marketable securities
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(569 | ) | (1,644 | ) | ||||
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Proceeds
from sales of marketable securities
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767 | 907 | ||||||
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Other
– net
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(4 | ) | (18 | ) | ||||
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Total
Investing Activities
|
(780 | ) | (1,557 | ) | ||||
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Financing
Activities
|
||||||||
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Long-term
debt borrowings
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10 | 102 | ||||||
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Long-term
debt payments
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(36 | ) | (16 | ) | ||||
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Net
payments under lines of credit agreements
|
(140 | ) | (2,698 | ) | ||||
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Purchases
of treasury stock
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– | (100 | ) | |||||
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Cash
dividends
|
(180 | ) | (167 | ) | ||||
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Other
– net
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8 | 9 | ||||||
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Total
Financing Activities
|
(338 | ) | (2,870 | ) | ||||
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Increase
in cash and cash equivalents
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262 | 1,438 | ||||||
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Cash
and cash equivalents beginning of period
|
1,055 | 810 | ||||||
|
Cash
and cash equivalents end of period
|
$ | 1,317 | $ | 2,248 | ||||
See notes
to consolidated financial statements.
(1)
As
adjusted for ASC Topics 470-20 and 810.
Archer-Daniels-Midland-Company
Consolidated
Statement of Shareholders’ Equity
(Unaudited)
|
Accumulated
|
||||||||||||||||||||||
|
Other
|
Total
|
|||||||||||||||||||||
|
Common
Stock
|
Reinvested
|
Comprehensive
|
Noncontrolling
|
Shareholders’
|
||||||||||||||||||
|
Shares
|
Amount
|
Earnings
|
Income
(Loss)
|
Interests
|
Equity
|
|||||||||||||||||
|
(In
millions)
|
||||||||||||||||||||||
|
Balance
June 30, 2009
(1)
|
642 | $ | 5,204 | $ | 8,778 | $ | (355 | ) | $ | 26 | $ | 13,653 | ||||||||||
|
Comprehensive
income
|
||||||||||||||||||||||
|
Net
earnings
|
1,063 | (5 | ) | |||||||||||||||||||
|
Other
comprehensive
income
|
200 | |||||||||||||||||||||
|
Total
comprehensive
income
|
1,258 | |||||||||||||||||||||
|
Cash
dividends paid-$.28
per share
|
(180 | ) | (180 | ) | ||||||||||||||||||
|
Other
|
1 | 30 | 25 | 9 | 64 | |||||||||||||||||
|
Balance
December 31, 2009
|
643 | $ | 5,234 | $ | 9,686 | $ | (155 | ) | $ | 30 | $ | 14,795 | ||||||||||
See notes
to consolidated financial statements.
(1)
As
adjusted for ASC Topics 470-20 and 810.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements
(Unaudited)
|
Note
1.
|
Basis
of Presentation
|
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, these statements 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 six months ended December
31, 2009 are not necessarily indicative of the results that may be expected for
the year ending June 30, 2010. 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,
2009.
Subsequent
Events
The
Company has performed a review of subsequent events through the date the
financial statements were filed with the Securities and Exchange Commission
(SEC), and concluded there were no events or transactions occurring during this
period that required recognition or disclosure in our financial
statements.
Adoption
of New Accounting Standards
On July
1, 2009, the Company adopted Financial Accounting Standards Board (FASB) amended
guidance in Accounting Standards Codification (ASC) Topic 805,
Business Combinations,
which
changes the financial accounting and reporting of business combination
transactions. The guidance is to be applied prospectively to business
combinations completed on or after the adoption date. This amended guidance
requires recognizing, with certain exceptions, 100 percent of the fair values of
assets acquired, liabilities assumed, and noncontrolling interests in
acquisitions of less than a 100 percent controlling interest when the
acquisition constitutes a change in control of the acquired entity; measuring
acquirer shares issued and contingent consideration arrangements in connection
with a business combination at fair value on the acquisition date with
subsequent changes in fair value reflected in earnings; and expensing as
incurred acquisition-related transaction costs. The amended guidance also
includes requirements relating to the accounting for assets
acquired and
liabilities assumed in a business combination that arise from contingencies
and
establishes a model to
account for certain pre-acquisition contingencies. Under the amended guidance,
an acquirer is required to recognize at fair value an asset acquired or a
liability assumed in a business combination that arises from a contingency if
the acquisition-date fair value of that asset or liability can be determined
during the measurement period. If the acquisition-date fair value cannot be
determined, the acquirer should follow the recognition criteria in ASC Topic
450,
Contingencies
.
There was no material effect on the Company’s consolidated financial statements
as a result of the adoption of this amended guidance.
On July
1, 2009, the Company adopted the amended guidance in ASC Topic 470-20,
Debt with Conversion and Other
Options
, which specifies that issuers of convertible debt instruments
that may settle in cash upon conversion must bifurcate the proceeds from the
debt issuance between the debt and equity components in a manner that reflects
the entity’s nonconvertible debt borrowing rate when interest cost is recognized
in subsequent periods. The equity component reflects the value of the
conversion feature of the notes. The amended guidance requires
retrospective application to all periods presented. See Note 6 for
further information regarding the impact of adoption.
A
rcher-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
1.
|
Basis
of Presentation (Continued)
|
On July
1, 2009, the Company adopted amended guidance in ASC Topic 810,
Consolidation,
pertaining to
the accounting and reporting of noncontrolling interests in financial
statements. The amended guidance establishes accounting and reporting standards
for the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. As required by the amended guidance, the Company reclassified $26
million attributable to noncontrolling interests from other long-term
liabilities to a separate component of shareholders’ equity and the net earnings
attributable to noncontrolling interests is now presented as a
separate line item on the consolidated statements of
earnings. Presentation and disclosure requirements are to be applied
retrospectively for all periods presented and accordingly, the Company’s
consolidated financial statements have been restated for the impact of the
amended guidance. In addition, the Company consolidates certain
noncontrolling interests which are associated with mandatorily redeemable
instruments outside of the Company’s control. In accordance with
guidance contained in SEC Accounting Series Release 268,
Redeemable Preferred Stock
and ASC Topic 480,
Distinguishing Liabilities from
Equity
, noncontrolling interests which are associated with mandatorily
redeemable instruments outside of the Company’s control have not been
reclassified as a separate component of shareholders’ equity.
On July
1, 2009 the Company adopted the amended guidance in ASC Topic 260,
Earnings per
Share,
which addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting
and, therefore, need to be included in the earnings allocation in computing
earnings per share (EPS) under the two-class method. It also clarifies that all
outstanding unvested share-based payment awards that contain rights to
nonforfeitable dividends participate in undistributed earnings with common
shareholders and are considered to be participating securities, thus requiring
the issuing entity to apply the two-class method of computing basic and diluted
EPS. There was no material effect on the Company’s consolidated financial
statements as a result of the adoption of this amended guidance.
On July
1, 2009, the Company adopted the guidance in ASC Topic 820,
Fair Value Measurements and
Disclosures
, for its nonfinancial assets and liabilities that are
recognized at fair value on a nonrecurring basis, including goodwill, other
intangible assets, and asset retirement obligations. The Company recorded no
significant new or remeasured fair values during the period for its nonfinancial
assets and liabilities that are recognized on a nonrecurring basis.
On
October 1, 2009, the Company adopted the amended guidance in ASC Topic 820,
Fair Value Measurements and
Disclosures.
The amendment permits certain entities to use Net Asset
Value (NAV) as a practical expedient to estimate the fair value of investments
within its scope provided the NAV is calculated as of the Company’s reporting
date. The amendment also indicates how investments within its scope would be
classified in the fair value hierarchy and requires enhanced disclosures about
the nature and risks of investments. The disclosure requirements apply to all
investments within the scope of the amendment, regardless of whether the Company
elects to measure the investment using NAV as a practical expedient. The
adoption of this amendment requires expanded disclosure in the notes to the
Company’s consolidated financial statements but will not materially impact
financial results.
Effective
December 31, 2009, the Company adopted the amendment to ASC Topic 820 which
provides guidance for the fair value measurement of liabilities. It clarifies
that in circumstances in which a quoted price in an active market for the
identical liability is not available, fair value must be measured using
specified valuation techniques. It further clarifies that both (a) a quoted
price in an active market for the identical liability at the measurement date,
and (b) the quoted price for the identical liability when traded as an asset in
an active market (such as bonds), when no adjustments to the quoted price of the
asset are required, are Level 1 fair value measurements. There was no material
effect on the Company’s consolidated financial statements as a result of the
adoption of this amended guidance.
A
rcher-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
1.
|
Basis
of Presentation (Continued)
|
Reclassifications
Certain
items in prior year’s consolidated statements of cash flows have been
reclassified to conform to the current year’s presentation with no impact to
total cash provided by (used in) operating, investing, or financing
activities.
Last-in,
First-out (LIFO) Inventories
Interim
period LIFO calculations are based on interim period costs and management’s
estimates of year-end inventory levels. Because the availability and
price of agricultural commodity-based LIFO inventories are unpredictable due to
factors such as weather, government farm programs and policies, and changes in
global demand, quantities of LIFO-based inventories at interim periods may vary
significantly from management’s estimates of year-end inventory
levels.
|
Note
2.
|
New
Accounting Standards
|
Effective
June 30, 2010, the Company will be required to adopt the amended guidance in ASC
Topic 715,
Compensation –
Retirement Benefits,
which expands disclosure requirements and requires
entities to disclose investment policies and strategies, major categories of
plan assets, fair value measurements for each major category of plan assets
segregated by fair value hierarchy level as defined in ASC Topic 820, the effect
of fair value measurements using Level 3 inputs on changes in plan assets for
the period, and significant concentrations of risk within plan
assets. The adoption of this amended guidance will require expanded
disclosure in the notes to the Company’s consolidated financial statements but
will not impact financial results.
Effective
July 1, 2010, the Company will be required to adopt the amended guidance in ASC
Topic 810,
Consolidations
, which will
change how a reporting entity determines when an entity that is insufficiently
capitalized or is not controlled through voting or similar rights (known as
variable interest entities or VIEs) should be consolidated. The determination of
whether a reporting entity is required to consolidate another entity is based
on, among other things, the other entity’s purpose and design and the reporting
entity’s ability to direct the activities of the other entity that most
significantly impact the other entity’s economic performance. This amended
guidance will require a number of new disclosures including disclosures about
the reporting entity’s involvement with VIEs, how its involvement with VIEs
affects the reporting entity’s financial statements, and any significant changes
in risk exposure due to that involvement. The Company has not yet
assessed the impact of the adoption of this amended guidance on the Company’s
financial statements.
A
rcher-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
2.
|
New
Accounting Standards (Continued)
|
Effective
January 1, 2010 the Company will be required to adopt a portion of the amended
guidance in ASC Topic 820,
Fair Value Measurements and
Disclosures
, which requires a number of additional disclosures regarding
fair value measurements. The Company will be required to disclose the amounts of
significant transfers between Level 1 and Level 2 and the reasons for the
transfers; the reasons for any transfers in or out of Level 3; and information
in the reconciliation of recurring Level 3 measurements about purchases, sales,
issuances and settlements on a gross basis. ASC 820 is also amended to clarify
that the Company is required to provide fair value measurement disclosures for
each class of assets and liabilities and disclose information about both the
valuation techniques and inputs used in estimating Level 2 and Level 3 fair
value measurements. The Company will adopt these disclosure
requirements for its quarter ending March 31, 2010 with the exception of the
requirement to disclose information about purchases, sales, issuances and
settlement in the reconciliation of recurring Level 3 measurements on a gross
basis, which is effective for the Company on July 1, 2011. The adoption of this
amended guidance will require expanded disclosure in the notes to the Company’s
consolidated financial statements but will not impact financial
results.
|
Note
3.
|
Fair
Value Measurements
|
The
Company determines the fair market value of certain of its inventories of
agricultural commodities, derivative contracts, and marketable securities based
on the fair value definition and hierarchy levels established in the guidance of
ASC Topic 820,
Fair Value
Measurements and Disclosures
. Three levels are established
within the hierarchy that may be used to measure fair value:
Level
1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities. Level 1 assets and liabilities include
exchange-traded derivative contracts, U.S. treasury securities and certain
publicly traded equity securities.
Level
2: Observable inputs, including Level 1 prices that have been
adjusted; quoted prices for similar assets or liabilities; quoted prices in
markets that are less active than traded exchanges; and other inputs that are
observable or can be substantially corroborated by observable market
data.
Level
3: Unobservable inputs that are supported by little or no market
activity and that are a significant component of the fair value of the assets or
liabilities. In evaluating the significance of fair value inputs, the
Company generally classifies assets or liabilities as Level 3 when their fair
value is determined using unobservable inputs that individually or when
aggregated with other unobservable inputs, represent more than 10% of the fair
value of the assets or liabilities. Judgment is required in
evaluating both quantitative and qualitative factors in the determination of
significance for purposes of fair value level classification. Level 3
amounts can include assets and liabilities whose value is determined using
pricing models, discounted cash flow methodologies, or similar techniques, as
well as assets and liabilities for which the determination of fair value
requires significant management judgment or estimation.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
3.
|
Fair
Value Measurements (Continued)
|
The
following table sets forth, by level, the Company’s assets and liabilities that
were accounted for at fair value on a recurring basis as of December 31,
2009. In many cases, a valuation technique used to measure fair value
includes inputs from multiple levels of the fair value hierarchy. The lowest
level of input that is a significant component of the fair value measurement
determines the placement of the entire fair value measurement in the
hierarchy. The Company’s assessment of the significance of a
particular input to the fair value measurement requires judgment, and may affect
the classification of fair value assets and liabilities within the fair value
hierarchy levels.
|
Fair
Value Measurements at December 31, 2009
|
||||||||||||||||
|
Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level
1)
|
Significant
Other
Observable
Inputs
(Level
2)
|
Significant
Unobservable
Inputs
(Level
3)
|
Total
|
|||||||||||||
|
(In
millions)
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Inventories
carried at market
|
$ | - | $ | 3,972 | $ | 609 | $ | 4,581 | ||||||||
|
Unrealized
gains on derivative
contracts
|
847 | 916 | 143 | 1,906 | ||||||||||||
|
Marketable
securities
|
902 | 594 | - | 1,496 | ||||||||||||
|
Total
Assets
|
$ | 1,749 | $ | 5,482 | $ | 752 | $ | 7,983 | ||||||||
|
Liabilities:
|
||||||||||||||||
|
Unrealized
losses on derivative
contracts
|
$ | 1,010 | $ | 785 | $ | 66 | $ | 1,861 | ||||||||
|
Inventory-related
liabilities
|
- | 485 | 9 | 494 | ||||||||||||
|
Total
Liabilities
|
$ | 1,010 | $ | 1,270 | $ | 75 | $ | 2,355 | ||||||||
The
Company uses the market approach valuation technique to measure the majority of
its assets and liabilities carried at fair value. Estimated fair
market values for inventories carried at market are based on exchange-quoted
prices, adjusted for differences in local markets, broker or dealer quotations,
or market transactions in either listed or over-the-counter (OTC)
markets. In such cases, the inventory is classified in Level
2. Certain inventories may require management judgment or estimation
for a significant component of the fair value amount. In such cases,
the inventory is classified as Level 3. Changes in the fair market value of
inventories are recognized in the consolidated statements of earnings as a
component of cost of products sold.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
3.
|
Fair
Value Measurements (Continued)
|
The
Company’s derivative contracts that are measured at fair value include forward
commodity purchase and sale contracts, exchange-traded commodity futures and
option contracts, and OTC instruments related primarily to agricultural
commodities, energy, and foreign currencies. Exchange-traded futures
and options contracts are valued based on unadjusted quoted prices in active
markets and are classified in Level 1. The majority of the Company’s
exchange-traded futures and options contracts are cash settled on a daily basis
and, therefore, are not included in this table. Fair value for
forward commodity purchase and sale contracts is estimated based on
exchange-quoted prices adjusted for differences in local
markets. These differences are generally determined using inputs from
broker or dealer quotations or market transactions in either the listed or OTC
markets. When observable inputs are available for substantially the
full term of the asset or liability, the derivative contracts are classified in
Level 2. When unobservable inputs have a significant impact on the
measurement of fair value, the contract’s fair value is classified in Level 3.
Based on historical experience with the Company’s suppliers and customers, the
Company’s own credit risk, and the Company’s knowledge of current market
conditions, the Company does not view nonperformance risk to be a significant
input to fair value for the majority of its forward commodity purchase and sale
contracts. However, in situations when the Company believes the
nonperformance risk to be a significant input, the Company records estimated
fair value adjustments, and classifies the contracts in Level 3 in the fair
value hierarchy. Changes in the fair market value of commodity-related
derivatives are recognized in the consolidated statements of earnings as a
component of cost of products sold. Changes in the fair market value
of foreign currency-related derivatives are recognized in the consolidated
statements of earnings as a component of net sales and other operating income,
cost of products sold, and other (income) expense – net. The effective portions
of changes in the fair market value of derivatives designated as cash flow
hedges are recognized in the consolidated balance sheets as a component of
accumulated other comprehensive income (loss) until the hedged items are
recorded in earnings.
The
Company’s marketable securities are comprised of U.S. Treasury securities,
obligations of U.S. government agencies, corporate and municipal debt
securities, and equity investments. U.S. Treasury securities and
certain publicly traded equity investments are valued using quoted market prices
and are classified in Level 1. U.S. government agency obligations,
corporate and municipal debt securities and certain equity investments are
valued using third-party pricing services and substantially all are classified
as Level 2. Security values that are determined using pricing models
are classified in Level 3. Unrealized changes in the fair market
value of available-for-sale marketable securities are recognized in the
consolidated balance sheets as a component of accumulated other comprehensive
income (loss) unless a decline in value is deemed to be other than temporary at
which point the decline is recorded in earnings.
.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
3.
|
Fair
Value Measurements (Continued)
|
The
following table presents a reconciliation of all assets and liabilities measured
at fair value on a recurring basis using significant unobservable inputs (Level
3) during the quarter ended December 31, 2009.
|
Level
3 Fair Value Measurements
|
||||||||||||
|
Inventories
Carried
at
Market,
Net
|
Derivative
Contracts,
Net
|
Total
|
||||||||||
|
(In
millions)
|
||||||||||||
|
Balance,
September 30, 2009
|
$ | 530 | $ | (45 | ) | $ | 485 | |||||
|
Total
gains (losses), realized or
unrealized,
included in earnings
before
income taxes*
|
(49 | ) | 74 | 25 | ||||||||
|
Purchases,
issuances and settlements
|
14 | (8 | ) | 6 | ||||||||
|
Transfers
in and/or out of Level 3
|
105 | 56 | 161 | |||||||||
|
Ending
balance, December 31, 2009
|
$ | 600 | $ | 77 | $ | 677 | ||||||
*Includes
gains of $98 million that are attributable to the change in unrealized gains or
losses relating to Level 3 assets and liabilities still held at December 31,
2009.
The
following table presents a reconciliation of all assets and liabilities measured
at fair value on a recurring basis using significant unobservable inputs (Level
3) during the six months ended December 31, 2009.
|
Level
3 Fair Value Measurements
|
||||||||||||
|
Inventories
Carried
at
Market,
Net
|
Derivative
Contracts,
Net
|
Total
|
||||||||||
|
(In
millions)
|
||||||||||||
|
Balance,
June 30, 2009
|
$ | 468 | $ | (2 | ) | $ | 466 | |||||
|
Total
gains (losses), realized or
unrealized,
included in earnings
before
income taxes*
|
(42 | ) | 44 | 2 | ||||||||
|
Purchases,
issuances and settlements
|
(28 | ) | (17 | ) | (45 | ) | ||||||
|
Transfers
in and/or out of Level 3
|
202 | 52 | 254 | |||||||||
|
Ending
balance, December 31, 2009
|
$ | 600 | $ | 77 | $ | 677 | ||||||
*Includes
gains of $96 million that are attributable to the change in unrealized gains or
losses relating to Level 3 assets and liabilities still held at December 31,
2009.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
4.
|
Derivative
Instruments and Hedging Activities
|
ASC Topic
815,
Derivatives and
Hedging,
requires the Company to recognize all of its derivative
instruments as either assets or liabilities in its consolidated balance sheet at
fair value. The accounting for changes in the fair value (i.e., gains
or losses) of a derivative instrument depends on whether it has been designated
and qualifies as part of a hedging relationship and further, on the type of
hedging relationship. For those derivative instruments that are
designated and qualify as hedging instruments, a reporting entity must designate
the hedging instrument, based upon the exposure being hedged, as a fair value
hedge, a cash flow hedge, or a hedge of a net investment in a foreign
operation. The Company does not currently have any derivatives
designated as hedges of net investment in foreign operations or fair value
hedges. The Company has certain derivatives designated as cash flow
hedges; however, the majority of the Company’s derivatives have not been
designated as hedging instruments.
Derivatives
Not Designated as Hedging Instruments
To reduce
price risk caused by market fluctuations in agricultural commodities and foreign
currencies, the Company generally follows a policy of using exchange-traded
futures and exchange-traded and OTC options contracts to minimize its net
position of merchandisable agricultural commodity inventories and forward cash
purchase and sales contracts. The Company also uses exchange-traded
futures and exchange-traded and OTC options contracts as components of
merchandising strategies designed to enhance margins. The results of
these strategies can be significantly impacted by factors such as the volatility
of the relationship between the value of exchange-traded commodities futures
contracts and the cash prices of the underlying commodities, counterparty
contract defaults, and volatility of freight markets. Exchange-traded
futures and exchange-traded and OTC options contracts, and forward cash purchase
and sales contracts of certain merchandisable agricultural commodities are
valued at fair value. Inventories of certain merchandisable
agricultural commodities, which include amounts acquired under deferred pricing
contracts, are stated at market value. Inventory is not a derivative
and therefore is not included in the tables below. Changes in the
market value of inventories of merchandisable agricultural commodities, forward
cash purchase and sales contracts, and exchange-traded futures and
exchange-traded and OTC options contracts are recognized in earnings
immediately, resulting in cost of products sold approximating first-in,
first-out (FIFO) cost. Unrealized gains and unrealized losses on
forward cash purchase contracts, forward foreign currency exchange (FX)
contracts, forward cash sales contracts, and exchange-traded and OTC options
contracts represent the fair value of such instruments and are classified on the
Company’s consolidated balance sheet as receivables and accrued expenses,
respectively.
The
following table sets forth the fair value of derivatives not designated as
hedging instruments as of December 31, 2009.
|
Assets
|
Liabilities
|
|||||||
|
(In
millions)
|
||||||||
|
FX
Contracts
|
$ | 67 | $ | 98 | ||||
|
Commodity
Contracts
|
1,797 | 1,758 | ||||||
|
Total
|
$ | 1,864 | $ | 1,856 | ||||
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
4.
|
Derivative
Instruments and Hedging Activities
(Continued)
|
The
following table sets forth the pre-tax gains (losses) on derivatives not
designated as hedging instruments that have been included in the consolidated
statement of earnings for the three months and six months ended December 31,
2009.
|
Three
months ended
|
Six
months ended
|
|||||||
|
December
31, 2009
|
||||||||
|
(In
millions)
|
||||||||
|
Interest
Contracts
|
||||||||
|
Other
(income) expense – net
|
$ | 1 | $ | 2 | ||||
|
FX
Contracts
|
||||||||
|
Net
sales and other operating income
|
$ | (5 | ) | $ | (20 | ) | ||
|
Cost
of products sold
|
18 | 25 | ||||||
|
Other
(income) expense - net
|
20 | 28 | ||||||
|
Commodity
Contracts
|
||||||||
|
Cost
of products sold
|
$ | (584 | ) | $ | (409 | ) | ||
|
Total
loss recognized in earnings
|
$ | (550 | ) | $ | (374 | ) | ||
Derivatives
Designated as Cash Flow Hedging Strategies
For
derivative instruments that are designated and qualify as cash flow hedges
(i.e., hedging the exposure to variability in expected future cash flows that is
attributable to a particular risk), the effective portion of the gain or loss on
the derivative instrument is reported as a component of other comprehensive
income (OCI) and reclassified into earnings in the same line item affected by
the hedged transaction and in the same period or periods during which the hedged
transaction affects earnings. The remaining gain or loss on the
derivative instrument that is in excess of the cumulative change in the cash
flows of the hedged item, if any (i.e., the ineffective portion), hedge
components excluded from the assessment of effectiveness, and gains and losses
related to discontinued hedges are recognized in the consolidated statement of
earnings during the current period.
For each
of the commodity hedge programs described below, the derivatives are designated
as cash flow hedges. The changes in the market value of such
derivative contracts have historically been, and are expected to continue to be,
highly effective at offsetting changes in price movements of the hedged
item. Once the hedged item is recognized in earnings, the
gains/losses arising from the hedge will be reclassified from accumulated other
comprehensive income (AOCI) to either net sales and other operating income, or
cost of products sold. As of December 31, 2009, the Company has $26
million of after-tax gains in AOCI related to gains and losses from commodity
cash flow hedge transactions. The Company expects to recognize all of
these after-tax gains in the statement of earnings during the next 14
months. During the current period, the Company had no amounts
recognized in earnings from cash flow hedges that were
discontinued.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
4.
|
Derivative
Instruments and Hedging Activities
(Continued)
|
The
Company, from time to time, uses futures or options contracts to fix the
purchase price of anticipated volumes of corn to be purchased and processed in a
future month. The objective of this hedging program is to reduce the
variability of cash flows associated with the Company’s forecasted purchases of
corn. The Company’s corn processing plants currently grind
approximately 67 million bushels of corn per month which is expected to increase
to approximately 75 million bushels per month when the Company’s second new
dry-grind ethanol plant in the U.S. is completed. Most of the
finished goods produced from this corn grind are sold at fixed prices and many
of these finished goods are unable to be hedged. The Company will fix
the purchase price of the corn that will be used, thereby economically
protecting the margin on these finished goods sales. During the past
12 months, the Company hedged between 35% and 95% of its monthly anticipated
grind. At December 31, 2009, the Company has hedged portions of its
anticipated monthly purchases of corn over the next 14 months, ranging from 1%
to 100% of its anticipated monthly grind.
The
Company, from time to time, also uses futures, options, and swaps to fix the
purchase price of the Company’s anticipated natural gas requirements for certain
production facilities. The objective of this hedging program is to
reduce the variability of cash flows associated with the Company’s forecasted
purchases of natural gas. These production facilities use
approximately 3.5 million MMbtus of natural gas per month. During the
past 12 months, the Company hedged between 18% and 60% of the quantity of its
anticipated monthly natural gas purchases. At December 31, 2009, the
Company has hedged portions of its anticipated monthly purchases of natural gas
over the next 12 months, ranging from 16% to 77% of its anticipated monthly
natural gas purchases.
To
protect against fluctuations in cash flows due to foreign currency exchange
rates, the Company from time to time will use forward foreign exchange contracts
with banks as foreign currency cash flow hedge programs. Certain
production facilities have manufacturing expenses and some sales contracts
denominated in non-functional currency. To reduce the risk of
fluctuations in cash flows due to changes in the exchange rate between
functional versus non-functional currency, the Company will hedge some portion
of the forecasted foreign currency expenditures and/or receipts. The
fair value of foreign exchange contracts designated as cash flow hedging
instruments as of December 31, 2009 was immaterial.
At
December 31, 2009, AOCI included $28 million of after-tax gains related to
treasury-lock agreements and interest rate swaps. The instruments
were executed in order to lock in the Company’s interest rate prior to the
issuance or remarketing of debentures. Both the treasury-lock
agreements and interest rate swaps are designated as cash flow hedges of the
risk of changes in the future interest payments attributable to changes in the
benchmark interest rate. The objective of the treasury-lock
agreements is to protect the Company from changes in the benchmark rate from the
date the Company decided to issue the debt to the date when the debt will
actually be issued. The Company will recognize the $28 million of
gains in its consolidated statement of earnings over the terms of the hedged
items.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
4.
|
Derivative
Instruments and Hedging Activities
(Continued)
|
The
following table sets forth the fair value of derivatives designated as hedging
instruments as of December 31, 2009.
|
Assets
|
Liabilities
|
|||||||
|
(In
millions)
|
||||||||
|
Interest
Contracts
|
$ | 38 | $ | - | ||||
|
Commodity
Contracts
|
4 | 5 | ||||||
|
Total
|
$ | 42 | $ | 5 | ||||
The
following tables set forth the pre-tax gains (losses) on derivatives designated
as hedging instruments that have been included in the consolidated statement of
earnings for the three and six months ended December 31, 2009.
|
Three Months ended December 31,
2009
|
Consolidated
Statement of
Earnings
Location
|
Amount
|
||||
|
(In
millions)
|
||||||
|
Commodity
Contracts
|
||||||
|
Effective
amount recognized in earnings
|
Cost
of products sold
|
$ | (8 | ) | ||
|
Ineffective
amount recognized in earnings
|
Cost
of products sold
|
30 | ||||
|
Total
amount recognized in earnings
|
$ | 22 | ||||
|
Six Months ended December 31,
2009
|
Consolidated
Statement of
Earnings
Location
|
Amount
|
||||
|
(In
millions)
|
||||||
|
FX
Contracts
|
||||||
|
Effective
amount recognized in earnings
|
Other
(income) expense – net
|
$ | (1 | ) | ||
|
Commodity
Contracts
|
||||||
|
Effective
amount recognized in earnings
|
Cost
of products sold
|
(50 | ) | |||
|
Ineffective
amount recognized in earnings
|
Cost
of products sold
|
22 | ||||
|
Total
amount recognized in earnings
|
$ | (29 | ) | |||
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
4.
|
Derivative
Instruments and Hedging Activities
(Continued)
|
The
following tables set forth the changes in accumulated other comprehensive income
related to derivatives gains (losses) for the period ended December 31,
2009.
|
Three
months ended
|
||||
|
December
31, 2009
|
||||
|
(In
millions)
|
||||
|
Balance
at September 30, 2009
|
$ | (11 | ) | |
|
Unrealized
gains (losses)
|
81 | |||
|
Losses
reclassified to earnings
|
8 | |||
|
Tax
effect
|
(24 | ) | ||
|
Balance
at December 31, 2009
|
$ | 54 | ||
|
Six
months ended
|
||||
|
December
31, 2009
|
||||
|
(In
millions)
|
||||
|
Balance
at June 30, 2009
|
$ | (13 | ) | |
|
Unrealized
gains (losses)
|
58 | |||
|
Losses
reclassified to earnings
|
51 | |||
|
Tax
effect
|
(42 | ) | ||
|
Balance
at December 31, 2009
|
$ | 54 | ||
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
5.
|
Marketable
Securities and Cash Equivalents
|
|
Unrealized
|
Unrealized
|
Fair
|
||||||||||||||
|
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
|
(In
millions)
|
||||||||||||||||
|
December
31, 2009
|
||||||||||||||||
|
United
States government obligations
|
||||||||||||||||
|
Maturity
less than 1 year
|
$ | 399 | $ | – | $ | – | $ | 399 | ||||||||
|
Maturity
1 to 5 years
|
39 | 1 | – | 40 | ||||||||||||
|
Government–sponsored
enterprise
obligations
|
||||||||||||||||
|
Maturity
less than 1 year
|
52 | – | – | 52 | ||||||||||||
|
Maturity
1 to 5 years
|
56 | 2 | – | 58 | ||||||||||||
|
Maturity
5 to 10 years
|
126 | – | (1 | ) | 125 | |||||||||||
|
Maturity
greater than 10 years
|
250 | 5 | (1 | ) | 254 | |||||||||||
|
Corporate
debt securities
|
||||||||||||||||
|
Maturity
less than 1 year
|
7 | – | – | 7 | ||||||||||||
|
Maturity
1 to 5 years
|
33 | 2 | – | 35 | ||||||||||||
|
Other
debt securities
|
||||||||||||||||
|
Maturity
less than 1 year
|
783 | – | – | 783 | ||||||||||||
|
Maturity
5 to 10 years
|
6 | – | – | 6 | ||||||||||||
|
Maturity
greater than 10 years
|
13 | – | (1 | ) | 12 | |||||||||||
|
Equity
securities
|
||||||||||||||||
|
Available-for-sale
|
70 | 48 | (18 | ) | 100 | |||||||||||
|
Trading
|
22 | – | – | 22 | ||||||||||||
| $ | 1,856 | $ | 58 | $ | (21 | ) | $ | 1,893 | ||||||||
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
5.
|
Marketable
Securities and Cash Equivalents
(Continued)
|
|
Unrealized
|
Unrealized
|
Fair
|
||||||||||||||
|
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
|
(In
millions)
|
||||||||||||||||
|
June
30, 2009
|
||||||||||||||||
|
United
States government obligations
|
||||||||||||||||
|
Maturity
less than 1 year
|
$ | 645 | $ | – | $ | – | $ | 645 | ||||||||
|
Maturity
1 to 5 years
|
29 | 1 | – | 30 | ||||||||||||
|
Government–sponsored
enterprise
obligations
|
||||||||||||||||
|
Maturity
less than 1 year
|
8 | – | – | 8 | ||||||||||||
|
Maturity
1 to 5 years
|
59 | 2 | – | 61 | ||||||||||||
|
Maturity
5 to 10 years
|
104 | 1 | (1 | ) | 104 | |||||||||||
|
Maturity
greater than 10 years
|
268 | 6 | – | 274 | ||||||||||||
|
Corporate
debt securities
|
||||||||||||||||
|
Maturity
less than 1 year
|
10 | – | – | 10 | ||||||||||||
|
Maturity
1 to 5 years
|
37 | 1 | – | 38 | ||||||||||||
|
Other
debt securities
|
||||||||||||||||
|
Maturity
less than 1 year
|
463 | – | – | 463 | ||||||||||||
|
Maturity
5 to 10 years
|
6 | – | – | 6 | ||||||||||||
|
Maturity
greater than 10 years
|
16 | – | (3 | ) | 13 | |||||||||||
|
Equity
securities
|
||||||||||||||||
|
Available-for-sale
|
69 | 33 | (29 | ) | 73 | |||||||||||
|
Trading
|
19 | – | – | 19 | ||||||||||||
| $ | 1,733 | $ | 44 | $ | (33 | ) | $ | 1,744 | ||||||||
Of the
$21 million in unrealized losses at December 31, 2009, $2 million arose within
the last 12 months. The market value of the investments that have
been in an unrealized loss position for less than 12 months and for 12 months
and longer is $337 million and $38 million, respectively. The market
value of United States government obligations, government-sponsored enterprise
obligations, and other debt securities with unrealized losses as of December 31,
2009, is $348 million. The $3 million of unrealized losses associated
with United States government obligations, government sponsored enterprise
obligations and other debt securities are not considered to be
other-than-temporary because the present value of expected cash flows to be
collected is equivalent to or exceeds the amortized cost basis of the
securities. The market value of available-for-sale equity securities
with unrealized losses as of December 31, 2009, is $27 million. All
of the $18 million in unrealized losses associated with available-for-sale
equity securities is related to the Company’s investment in one
security. The Company does not intend to sell any of its impaired
debt and equity securities, and, based upon its evaluation, the Company does not
believe it is likely that the Company will be required to sell the investments
before recovery of their amortized cost bases which is expected in the
foreseeable future.
|
Note
6.
|
|
The
Company has outstanding $1.15 billion principal amount of convertible senior
notes (the Notes) due in 2014. As of December 31, 2009, none of the conditions
permitting conversion of the Notes had been satisfied. Therefore, no
share amounts related to the conversion of the Notes or exercise of the warrants
sold in connection with the issuance of the Notes were included in diluted
average shares outstanding.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
6.
|
Debt
and Financing Arrangements
(Continued)
|
On July
1, 2009, the Company began accounting for the Notes in accordance with the
amended guidance in ASC Topic 470-20,
Debt with Conversion and Other
Options,
pertaining to convertible debt instruments with cash settlement
features. The amendment addresses the accounting for convertible debt securities
that, upon conversion, may be settled by the issuer fully or partially in cash.
Previously, most forms of convertible debt securities were treated solely as
debt. Under the new guidance, issuers of convertible debt securities within its
scope must separate these securities into two accounting components; a debt
component, representing the issuer’s contractual obligation to pay principal and
interest; and an equity component, representing the holder’s option to convert
the debt security into equity of the issuer or, if the issuer so elects, an
equivalent amount of cash.
The
amended guidance required retrospective application to all periods
presented. The following tables reflect the Company’s previously
reported amounts, along with adjustments required by the amended
guidance:
|
Consolidated
Statement of Earnings Impact
|
||||||||||||
|
Three
Months Ended December 31, 2008
|
||||||||||||
|
As
Originally
|
Adjustment
due to
|
|||||||||||
|
Reported
|
Topic
470-20
|
As
Adjusted
|
||||||||||
|
(In
millions, except per share amounts)
|
||||||||||||
|
Interest
expense reported in
|
||||||||||||
|
Other
(income) expense – net
|
$ | 120 | $ | 10 | $ | 130 | ||||||
|
Income
taxes
|
241 | (3 | ) | 238 | ||||||||
|
Net
earnings
|
585 | (7 | ) | 578 | (1) | |||||||
|
Basic
and diluted earnings per
|
||||||||||||
|
common
share
|
0.91 | (0.01 | ) | 0.90 | ||||||||
|
Six
Months Ended December 31, 2008
|
||||||||||||
|
As
Originally
|
Adjustment
due to
|
|||||||||||
|
Reported
|
Topic
470-20
|
As
Adjusted
|
||||||||||
|
(In
millions, except per share amounts)
|
||||||||||||
|
Interest
expense reported in
|
||||||||||||
|
Other
(income) expense – net
|
$ | 249 | $ | 19 | $ | 268 | ||||||
|
Income
taxes
|
685 | (7 | ) | 678 | ||||||||
|
Net
earnings
|
1,635 | (12 | ) | 1,623 | (1) | |||||||
|
Basic
and diluted earnings per
|
||||||||||||
|
common
share
|
2.54 | (0.02 | ) | 2.52 | ||||||||
|
(1)
|
Currently
presented as “net earnings attributable to controlling interests” in the
consolidated statements of earnings as a result of the adoption of ASC
Topic 810 on July 1, 2009.
|
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
6.
|
Debt
and Financing Arrangements
(Continued)
|
|
Consolidated
Balance Sheet Impact
|
||||||||||||
|
June
30, 2009
|
||||||||||||
|
As
Originally
|
Adjustment
due to
|
|||||||||||
|
Reported
|
Topic
470-20
|
As
Adjusted
|
||||||||||
|
(In
millions)
|
||||||||||||
|
Other
assets
|
$ | 610 | $ | (3 | ) | $ | 607 | |||||
|
Long-term
debt
|
7,800 | (208 | ) | 7,592 | ||||||||
|
Deferred
income taxes
|
230 | 78 | 308 | |||||||||
|
Common
stock
|
5,022 | 182 | 5,204 | |||||||||
|
Reinvested
earnings
|
8,832 | (54 | ) | 8,778 | ||||||||
The
Company also has outstanding $1.75 billion principal amount of Equity Units (the
Units) due in 2011. The Units are a combination of (a) debt and (b)
forward purchase contracts for the holder to purchase the Company’s common
stock. The forward purchase contracts issued in connection with the
Units will be settled for the Company’s common stock no later than June 1,
2011. Until settlement of the forward purchase contracts, the shares
of stock underlying each forward purchase contract are not
outstanding. The forward purchase contracts will only be included in
the computation of diluted earnings per share to the extent they are
dilutive. As of December 31, 2009, the forward purchase contracts
were not considered dilutive and therefore were not included in the computation
of diluted earnings per share.
At
December 31, 2009, the fair value of the Company’s long-term debt exceeded the
carrying value by $511 million, as estimated using quoted market prices or
discounted future cash flows based on the Company’s current incremental
borrowing rates for similar types of borrowing arrangements.
For
further information on the Notes and Units and additional information on the
impact of ASC Topic 470-20 (formerly FSP APB 14-1), refer to Note 1 “Summary of
Significant Accounting Policies” and Note 8 “Debt and Financing Arrangements” in
the consolidated financial statements and footnotes thereto included in the
Company’s annual report on Form 10-K for the year ended June 30,
2009.
|
Note
7.
|
Income
Taxes
|
The
Company’s effective tax rate for the quarter and six months ended December 31,
2009, was 28.4% and 29.5%, respectively, compared to 29.1% and 29.4% for the
quarter and six months ended December 31, 2008. The decrease in the
Company’s effective tax rate for the quarter is primarily due to changes in the
geographic mix of pretax earnings.
The
Company has an investment in Wilmar International Holdings, Limited (WIHL), a
subsidiary of ADM Asia Pacific, Limited (ADMAP), a wholly-owned subsidiary of
the Company. Through WIHL, ADMAP holds an indirect ownership interest
in Wilmar International Ltd. (WIL). Historically, the Company
considered the retained earnings of its investment in ADMAP to be permanently
reinvested outside the U.S. and did not provide a deferred income tax liability
associated with the undistributed earnings of this investment. In
February, 2009, the shareholders of WIHL approved a plan of voluntary
liquidation which was followed by a partial liquidating distribution in April,
2009. Pursuant to this distribution, ADMAP received publicly traded
shares of WIL that represented approximately 40% of the WIL shares indirectly
held
by
WIHL. The liquidation caused the difference between the market value
of the WIL shares received and the tax basis of ADMAP’s investment in WIHL
to be subject to U.S. income tax as a deemed distribution from ADMAP to the
Company. Consequently, the Company concluded that a portion of its
investment in ADMAP related to its investment in WIHL was not permanently
reinvested.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
7.
|
Income
Taxes (Continued)
|
The
finalization of the liquidation process is expected to occur during calendar
year 2010 and is contingent on certain regulatory approvals. While
the ultimate impact of the transaction is uncertain, based on the February 5,
2010 market value of WIL shares and certain other assumptions, including the
applicable foreign currency exchange rate and the U.S. income tax rate, the
finalization of the liquidation could result in additional income tax expense
for the Company of approximately $530 million in the period(s) that the
liquidation occurs.
The
Company is subject to income taxation in many jurisdictions around the world.
The Company is subject to routine examination by domestic and foreign tax
authorities and frequently faces challenges regarding the amount of taxes
due. These challenges include questions regarding the timing, nature
and amount of deductions and the allocation of income among various tax
jurisdictions. Resolution of the related tax positions through
negotiation with relevant tax authorities or through litigation may take years
to complete. Therefore, it is difficult to predict the timing for resolution of
tax positions. In its routine evaluations of the exposure associated with
various tax filing positions, the Company recognizes a liability, when
necessary, for estimated potential additional tax owed by the Company in
accordance with ASC 740,
Income
Taxes
. However, the Company cannot accurately predict or
provide assurance as to the ultimate outcome of these ongoing or future
examinations.
In
December 2009, the Company’s wholly-owned subsidiary, ADM do Brasil Ltda. (“ADM
do Brasil”), received a tax assessment in the amount of $457 million (subject to
variation in currency exchange rates) consisting of tax, penalty, and interest,
from the Brazilian Federal Revenue Service
challenging the tax
deductibility of commodity hedging losses incurred by ADM do Brasil in
2004. Commodity hedging transactions can result in gains, which are
included in ADM do Brasil’s calculations of taxable income in Brazil, and
losses, which ADM do Brasil deducts from its taxable income in
Brazil. If the Brazilian Federal Revenue Service were to challenge
similar deductions in all tax years still open to assessment
(2005-2009), the Company estimates it could receive further assessments totaling
approximately $150 million in addition to the $457 million assessment
related to 2004 (as at December 31, 2009 and subject to variation in currency
exchange rates).
The
Company has evaluated its tax position regarding these hedging transactions and
concluded, based in part upon advice from Brazilian legal counsel, that it was
appropriate to recognize both gains and losses resulting from hedging
transactions when determining its Brazilian income tax
expense. Therefore, the Company has continued to recognize the tax
benefit from hedging losses in its financial statements and has not recorded any
tax liability for the amounts assessed by the Brazilian Federal Revenue
Service. The Company intends to vigorously defend its position
against the current assessment and any similar assessments that may be issued
for future years.
In
January 2010, ADM do Brasil filed an appeal with the Brazilian Federal Revenue
Service. If ADM do Brasil is unsuccessful in the administrative
appellate process, further appeals are available in the Brazilian federal
courts. While the Company believes that its consolidated financial
statements properly reflect the tax deductibility of these hedging losses, the
ultimate resolution of this matter could result in the future recognition of
significant additional payments of and expense for income tax and the associated
interest and penalties.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
8.
|
Comprehensive
Income
|
The
components of comprehensive income, net of related tax, are as
follows:
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(In
millions)
|
||||||||||||||||
|
Net
earnings including noncontrolling
interests
|
$ | 561 | $ | 579 | $ | 1,058 | $ | 1,625 | ||||||||
|
Unrealized
gain (loss) on investments
|
1 | (8 | ) | 16 | (27 | ) | ||||||||||
|
Deferred
gain (loss) on hedging
activities
|
65 | (22 | ) | 67 | (254 | ) | ||||||||||
|
Pension
liability adjustment
|
3 | 9 | (5 | ) | 14 | |||||||||||
|
Foreign
currency translation adjustment
|
(27 | ) | (317 | ) | 122 | (942 | ) | |||||||||
|
Comprehensive
income
|
603 | 241 | 1,258 | 416 | ||||||||||||
|
Less: Comprehensive
income
attributable
to noncontrolling interests
|
(6 | ) | 1 | (5 | ) | 2 | ||||||||||
|
Comprehensive
income attributable
to
controlling interests
|
$ | 609 | $ | 240 | $ | 1,263 | $ | 414 | ||||||||
|
Note
9.
|
Other
(Income) Expense - Net
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(In
millions)
|
||||||||||||||||
|
Interest
expense
|
$ | 105 | $ | 130 | $ | 203 | $ | 268 | ||||||||
|
Investment
income
|
(36 | ) | (48 | ) | (66 | ) | (102 | ) | ||||||||
|
Net
(gain) loss on marketable
|
||||||||||||||||
|
securities
transactions
|
(6 | ) | – | (7 | ) | (9 | ) | |||||||||
|
Equity
in earnings of affiliates
|
(139 | ) | (93 | ) | (291 | ) | (216 | ) | ||||||||
|
Other
– net
|
(13 | ) | 69 | (26 | ) | 89 | ||||||||||
| $ | (89 | ) | $ | 58 | $ | (187 | ) | $ | 30 | |||||||
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
10.
|
Segment
Information
|
The
Company is principally engaged in procuring, transporting, storing, processing,
and merchandising agricultural commodities and products. The
Company’s operations are classified into three reportable business
segments: Oilseeds Processing, Corn Processing and Agricultural
Services. Each of these segments is organized based upon the nature
of products and services offered. The Company’s remaining operations
are aggregated and classified as Other.
The
Oilseeds Processing segment includes activities related to the crushing and
origination of oilseeds such as soybeans, cottonseed, sunflower seeds, canola,
rapeseed, peanuts, and flaxseed into vegetable oils and protein meals
principally for the food and feed industries. In addition, oilseeds
and oilseed products may be processed internally or resold into the marketplace
as raw materials for other processing. Crude vegetable oil is sold
"as is" or is further processed by refining, bleaching, and deodorizing into
salad oils. Salad oils can be further processed by hydrogenating
and/or interesterifying into margarine, shortening, and other food products.
Partially refined oil is sold for use in paints and other industrial
products. Refined oil can be further processed for use in the
production of biodiesel. Oilseed meals are primary ingredients used
in the manufacture of commercial livestock and poultry
feeds. Oilseeds Processing includes activities related to the
production of natural health and nutrition products and the production of other
specialty food and feed ingredients. This segment also includes
activities related to the Company’s interest in its unconsolidated affiliate in
Asia, Wilmar International Limited.
The Corn
Processing segment includes activities related to the production of sweeteners,
starches, dextrose, and syrups primarily for the food and beverage industry as
well as activities related to the production by fermentation of bioproducts such
as ethanol, amino acids, and other food, feed and industrial
products. The Corn Processing segment also includes activities
related to the processing of sugarcane into ethanol.
The
Agricultural Services segment utilizes the Company’s extensive grain elevator
and transportation network to buy, store, clean, and transport agricultural
commodities, such as oilseeds, corn, wheat, milo, oats, rice, and barley, and
resells these commodities primarily as food and feed ingredients for the
agricultural processing industry. In addition, the Agricultural
Services segment includes activities related to edible bean procurement, rice
milling, formula feed, and animal health and nutrition. Agricultural
Services’ grain sourcing and transportation network also provides reliable and
efficient services to the Company’s agricultural processing operations. Also
included in Agricultural Services are the activities of A.C. Toepfer
International, a global merchant of agricultural commodities and processed
products.
Other
includes the Company’s remaining processing operations, consisting of activities
related to processing agricultural commodities into food ingredient products
such as wheat into wheat flour, cocoa into chocolate and cocoa products, and
barley into malt. The Company sold its malt operations on July 31,
2008. Other also includes financial activities related to banking,
captive insurance, private equity fund investments, and futures commission
merchant activities.
Intersegment
sales have been recorded at amounts approximating market. Operating
profit for each segment is based on net sales less identifiable operating
expenses, including an interest charge related to working capital
usage. Also included in segment operating profit are equity in
earnings of affiliates based on the equity method of
accounting. Unallocated corporate expenses, investment income,
unallocated interest expense, marketable securities transactions, FIFO to LIFO
inventory adjustments, and noncontrolling interests have been excluded from
segment operations and classified as Corporate.
For
detailed information regarding the Company’s reportable segments, see Note 15 to
the consolidated financial statements included in the Company’s annual report on
Form 10-K for the year ended June 30, 2009.
Archer-Daniels-Midland
Company
Notes
to Consolidated Financial Statements (Continued)
(Unaudited)
|
Note
10.
|
Segment
Information (Continued)
|
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
December
31,
|
December
31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(In
millions)
|
||||||||||||||||
|
Sales
to external customers
|
||||||||||||||||
|
Oilseeds
Processing
|
$ | 4,880 | $ | 5,296 | $ | 11,238 | $ | 13,068 | ||||||||
|
Corn
Processing
|
2,029 | 1,853 | 3,945 | 4,094 | ||||||||||||
|
Agricultural
Services
|
7,640 | 8,141 | 12,962 | 17,710 | ||||||||||||
|
Other
|
1,364 | 1,383 | 2,689 | 2,961 | ||||||||||||
|
Total
|
$ | 15,913 | $ | 16,673 | $ | 30,834 | $ | 37,833 | ||||||||
|
Intersegment
sales
|
||||||||||||||||
|
Oilseeds
Processing
|
$ | 18 | $ | 16 | $ | 37 | $ | 68 | ||||||||
|
Corn
Processing
|
8 | 19 | 17 | 59 | ||||||||||||
|
Agricultural
Services
|
703 | 800 | 1,148 | 1,612 | ||||||||||||
|
Other
|
37 | 39 | 74 | 78 | ||||||||||||
|
Total
|
$ | 766 | $ | 874 | $ | 1,276 | $ | 1,817 | ||||||||
|
Net
sales
|
||||||||||||||||
|
Oilseeds
Processing
|
$ | 4,898 | $ | 5,312 | $ | 11,275 | $ | 13,136 | ||||||||
|
Corn
Processing
|
2,037 | 1,872 | 3,962 | 4,153 | ||||||||||||
|
Agricultural
Services
|
8,343 | 8,941 | 14,110 | 19,322 | ||||||||||||
|
Other
|
1,401 | 1,422 | 2,763 | 3,039 | ||||||||||||
|
Intersegment
elimination
|
(766 | ) | (874 | ) | (1,276 | ) | (1,817 | ) | ||||||||
|
Total
|
$ | 15,913 | $ | 16,673 | $ | 30,834 | $ | 37,833 | ||||||||
|
Segment
operating profit
|
||||||||||||||||
|
Oilseeds
Processing
|
$ | 352 | $ | 319 | $ | 636 | $ | 829 | ||||||||
|
Corn
Processing
|
290 | 29 | 478 | 147 | ||||||||||||
|
Agricultural
Services
|
150 | 462 | 325 | 890 | ||||||||||||
|
Other
|
178 | 5 | 305 | 125 | ||||||||||||
|
Total
segment operating profit
|
970 | 815 | 1,744 | 1,991 | ||||||||||||
|
Corporate
|
(186 | ) | 2 | (243 | ) | 312 | ||||||||||
|
Earnings
before income taxes
|
$ | 784 | $ | 817 | $ | 1,501 | $ | 2,303 | ||||||||
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Company
Overview
The
Company is principally engaged in procuring, transporting, storing, processing,
and merchandising agricultural commodities and products. The
Company’s operations are classified into three reportable business segments:
Oilseeds Processing, Corn Processing and Agricultural Services. Each
of these segments is organized based upon the nature of products and services
offered. The Company’s remaining operations are aggregated and
classified as Other.
The
Oilseeds Processing segment includes activities related to the origination and
crushing of oilseeds such as soybeans, cottonseed, sunflower seeds, canola,
rapeseed, peanuts, and flaxseed into vegetable oils and protein meals
principally for the food and feed industries. In addition, oilseeds
and oilseed products may be processed internally or resold into the marketplace
as raw materials for other processing. Crude vegetable oil is sold
"as is" or is further processed by refining, bleaching, and deodorizing into
salad oils. Salad oils can be further processed by hydrogenating
and/or interesterifying into margarine, shortening, and other food products.
Partially refined oil is sold for use in paints and other industrial
products. Refined oil can be further processed for use in the
production of biodiesel. Oilseed protein meals are primary
ingredients used in the manufacture of commercial livestock and poultry
feeds. Oilseeds Processing includes activities related to the
production of natural health and nutrition products and the production of other
specialty food and feed ingredients. This segment also includes
activities related to the Company’s unconsolidated affiliate in Asia, Wilmar
International Limited.
The Corn
Processing segment includes activities related to the production of sweeteners,
starches, dextrose, and syrups primarily for the food and beverage industry as
well as activities related to the production by fermentation of bioproducts such
as ethanol, amino acids, and other food, feed and industrial
products. The Corn Processing segment also includes activities
related to the processing of sugarcane into ethanol.
The
Agricultural Services segment utilizes the Company’s extensive grain elevator
and transportation network to buy, store, clean, and transport agricultural
commodities, such as oilseeds, corn, wheat, milo, oats, rice, and barley, and
resells these commodities primarily as food and feed ingredients for the
agricultural processing industry. In addition, the Agricultural
Services segment includes activities related to edible bean procurement, rice
milling, formula feed, and animal health and nutrition. Agricultural
Services’ grain sourcing and transportation network also provides reliable and
efficient services to the Company’s agricultural processing operations. Also
included in Agricultural Services are the activities of A.C. Toepfer
International, a global merchant of agricultural commodities and processed
products.
Other
includes the Company’s remaining processing operations, consisting of activities
related to processing agricultural commodities into food ingredient products
such as wheat into wheat flour, cocoa into chocolate and cocoa products, and
barley into malt. The Company sold its malt operations on July 31,
2008. Other also includes financial activities related to banking,
captive insurance, private equity fund investments, and futures commission
merchant activities.
Operating
Performance Indicators
The
Company is exposed to certain risks inherent to an agricultural-based commodity
business. These risks are further described in Item 1A, “Risk
Factors” included in the Company’s annual report on Form 10-K for the year ended
June 30, 2009.
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
The
Company’s Oilseeds Processing, Agricultural Services, and wheat processing
operations are principally agricultural commodity-based businesses where changes
in selling prices move in relationship to changes in prices of the
commodity-based agricultural raw materials. Therefore, changes in
agricultural commodity prices have relatively equal impacts on both net sales
and other operating income and cost of products sold and minimal impact on the
gross profit of underlying transactions. As a result, changes in
gross profit of these businesses do not necessarily correspond to the changes in
net sales and other operating income amounts.
The
Company’s Corn Processing operations and certain other food and animal feed
processing operations also utilize agricultural commodities (or products derived
from agricultural commodities) as raw materials. In these operations,
agricultural commodity market price changes can result in significant
fluctuations in cost of products sold, and such price changes cannot necessarily
be passed directly through to the selling price of the finished
products.
The
Company conducts its business in many countries. For the majority of
the Company’s subsidiaries located outside the United States, the local currency
is the functional currency. Revenues and expenses denominated in
foreign currencies are translated into U.S. dollars at the weighted average
exchange rates for the applicable periods. Fluctuations in the
exchange rates of foreign currencies, primarily the Euro, British pound, and
Canadian dollar, as compared to the U.S. dollar will result in corresponding
fluctuations in the U.S. dollar value of revenues and expenses reported by the
Company. The impact of these currency exchange rate changes, where
significant, is discussed below.
The
Company measures the performance of its business segments using key financial
metrics such as segment operating profit, return on fixed capital investment,
return on net assets, and return on equity. The Company’s operating
results can vary significantly due to changes in factors such as fluctuations in
energy prices, weather conditions, crop plantings, government
programs and policies, changes in global demand resulting from population
growth, general global economic conditions, and changes in standards of living,
and global production of similar and competitive crops. Due to these
unpredictable factors, the Company does not provide forward-looking information
in “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
Three
Months Ended December 31, 2009 Compared to Three Months Ended December 31,
2008
Net
earnings attributable to controlling interests decreased 2% to $567 million
primarily due to a $177 million pre-tax decline in Corporate results related to
the change in LIFO inventory valuations partially offset by increased segment
operating profit.
As an
agricultural commodity-based business, the Company is subject to a variety of
market factors which affect the Company’s operating results. The
global supply chain for soybeans was challenged by lower 2009 South American
production. The current improved global crop outlook, coupled with
uncertainty about short-term demand resulting from the pace of the global
economic recovery, led to lower agricultural commodity market prices and less
volatile commodity market conditions. The late, extended U.S. harvest
also reduced profit opportunities this quarter. Regional biodiesel
markets continued to develop in North America, South America and Europe and
increase overall demand for refined and crude vegetable
oils. Compared to last year, net corn costs decreased resulting in
lower raw material costs for Corn Processing. Lower energy, fuel and
chemical costs positively impacted the Company’s manufacturing
costs. Ethanol selling prices and volumes increased due to improved
gasoline blending economics and higher gasoline prices.
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
Analysis
of Statements of Earnings
Net sales
and other operating income decreased 5% to $15.9 billion primarily due to lower
average selling prices, in line with lower underlying commodity
prices. Increased sales quantities and the impact of foreign currency
translation partially offset the impact from lower average selling
prices
Net sales
and other operating income by segment for the quarter are as
follows:
|
Three
Months Ended
|
||||||||||||
|
December
31,
|
||||||||||||
|
2009
|
2008
|
Change
|
||||||||||
|
(In
millions)
|
||||||||||||
|
Oilseeds
Processing
|
||||||||||||
|
Crushing
& Origination
|
$ | 3,008 | $ | 2,982 | $ | 26 | ||||||
|
Refining,
Packaging, Biodiesel & Other
|
1,828 | 2,264 | (436 | ) | ||||||||
|
Asia
|
44 | 50 | (6 | ) | ||||||||
|
Total
Oilseeds Processing
|
4,880 | 5,296 | (416 | ) | ||||||||
|
Corn
Processing
|
||||||||||||
|
Sweeteners
& Starches
|
818 | 944 | (126 | ) | ||||||||
|
Bioproducts
|
1,211 | 909 | 302 | |||||||||
|
Total
Corn Processing
|
2,029 | 1,853 | 176 | |||||||||
|
Agricultural
Services
|
||||||||||||
|
Merchandising
& Handling
|
7,597 | 8,062 | (465 | ) | ||||||||
|
Transportation
|
43 | 79 | (36 | ) | ||||||||
|
Total
Agricultural Services
|
7,640 | 8,141 | (501 | ) | ||||||||
|
Other
|
||||||||||||
|
Wheat,
Cocoa & Malt
|
1,341 | 1,353 | (12 | ) | ||||||||
|
Financial
|
23 | 30 | (7 | ) | ||||||||
|
Total
Other
|
1,364 | 1,383 | (19 | ) | ||||||||
|
Total
|
$ | 15,913 | $ | 16,673 | $ | (760 | ) | |||||
Oilseeds
Processing sales decreased 8% to $4.9 billion primarily due to lower average
selling prices of vegetable oils and biodiesel partially offset by higher sales
volumes and higher average selling prices of protein meal. Corn
Processing sales increased 9% to $2.0 billion, due principally to higher average
selling prices and higher sales volumes of ethanol. Agricultural
Services sales decreased 6% to $7.6 billion, due to lower average selling prices
of grain partially offset by higher soybean sales volumes. Other
sales were relatively unchanged at $1.4 billion.
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
Cost of
products sold decreased 4% to $14.9 billion reflecting decreased agricultural
commodity costs partially offset by a $0.6 billion increase from foreign
currency translation effects. Manufacturing expenses decreased $57
million due to lower energy, chemical and fuel costs.
Selling,
general and administrative expenses increased 6% to $358
million. Higher employee-related costs, increased expenses for
commercial services, and an $11 million impact from foreign currency translation
were partially offset by decreased provisions for doubtful
accounts.
Other
(income) expense – net decreased $147 million primarily due to decreased
minority interest eliminations, lower interest expense and higher income from
equity affiliates, partially offset by decreased interest income.
Operating
profit by segment for the quarter is as follows:
|
Three
Months Ended
|
||||||||||||
|
December
31,
|
||||||||||||
|
2009
|
2008
|
Change
|
||||||||||
|
(In
millions)
|
||||||||||||
|
Oilseeds
Processing
|
||||||||||||
|
Crushing
& Origination
|
$ | 193 | $ | 187 | $ | 6 | ||||||
|
Refining,
Packaging, Biodiesel & Other
|
76 | 86 | (10 | ) | ||||||||
|
Asia
|
83 | 46 | 37 | |||||||||
|
Total
Oilseeds Processing
|
352 | 319 | 33 | |||||||||
|
Corn
Processing
|
||||||||||||
|
Sweeteners
and Starches
|
171 | 140 | 31 | |||||||||
|
Bioproducts
|
119 | (111 | ) | 230 | ||||||||
|
Total
Corn Processing
|
290 | 29 | 261 | |||||||||
|
Agricultural
Services
|
||||||||||||
|
Merchandising
& Handling
|
103 | 385 | (282 | ) | ||||||||
|
Transportation
|
47 | 77 | (30 | ) | ||||||||
|
Total
Agricultural Services
|
150 | 462 | (312 | ) | ||||||||
|
Other
|
||||||||||||
|
Wheat,
Cocoa & Malt
|
159 | 51 | 108 | |||||||||
|
Financial
|
19 | (46 | ) | 65 | ||||||||
|
Total
Other
|
178 | 5 | 173 | |||||||||
|
Total
Segment Operating Profit
|
970 | 815 | 155 | |||||||||
|
Corporate
|
(186 | ) | 2 | (188 | ) | |||||||
|
Earnings
Before Income Taxes
|
$ | 784 | $ | 817 | $ | (33 | ) | |||||
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
Corporate
Results
|
Three
Months Ended
|
||||||||||||
|
December
31,
|
||||||||||||
|
2009
|
2008
|
Change
|
||||||||||
|
(In
millions)
|
||||||||||||
|
LIFO
credit (charge)
|
$ | (54 | ) | $ | 123 | $ | (177 | ) | ||||
|
Interest
expense - net
|
(71 | ) | (42 | ) | (29 | ) | ||||||
|
Corporate
costs
|
(70 | ) | (35 | ) | (35 | ) | ||||||
|
Other
|
9 | (44 | ) | 53 | ||||||||
|
Total
Corporate
|
$ | (186 | ) | $ | 2 | $ | (188 | ) | ||||
Oilseeds
Processing operating profit increased 10% to $352 million. Crushing
and origination results increased $6 million as stronger crush margins in North
America and the absence of fertilizer inventory write-downs recognized last year
were partially offset by weaker year-over-year European
results. Refining, packaging, biodiesel and other operating profit
decreased $10 million as lower European biodiesel margins were only partially
offset by improved South American refining and biodiesel
results. North American sales volumes and margins decreased due to
lower demand for vegetable oil. Oilseeds results in Asia increased
$37 million as the Company’s investments, principally its equity interest in
Wilmar International Limited, continued to perform well.
Corn
Processing operating profit increased $261 million to $290
million. Sweeteners and starches operating profit increased $31
million due to lower net corn and manufacturing costs partially offset by lower
sales volumes. Bioproducts operating profit increased $230 million
due to improved ethanol margins and higher sales volumes resulting from lower
net corn costs, decreased manufacturing costs, and favorable gasoline blending
economics. Bioproducts operating profit also reflected increased
sales volumes and margins for lysine, increased citric acid margins, and
increased startup costs related to the Company’s new industrial chemical plants,
ethanol dry grind mills, sugarcane processing plant, and co-generation
facilities.
Agricultural
Services operating profit decreased 68% to $150
million. Merchandising and handling results decreased $282
million. While demand for exports of U.S. soybeans was strong during
the quarter, enhanced volume and margin opportunities created by last year’s
volatile commodity markets and tight credit markets did not recur during the
current quarter. Transportation results decreased $30 million due to
lower barge freight rates and decreased barge utilization levels resulting from
the late, extended North American harvest.
Other
operating profit increased $173 million to $178 million. Wheat, cocoa
and malt operating profit increased $108 million due to increased equity
earnings from the Company’s investment in Gruma S.A.B. de C.V., improved global
wheat milling margins, and increased cocoa processing
earnings. Wheat, cocoa and malt earnings include mark-to-market gains
of $46 million related to certain forward sales commitments accounted for as
derivatives. Other financial operating profit increased $65 million
due to the absence of losses experienced last year by the Company’s captive
insurance operations and improved results of the Company’s brokerage services
business.
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
Corporate
results decreased $188 million. Market prices for LIFO-based
inventories generally increased this quarter resulting in a $54 million increase
in LIFO inventory valuations compared to a $123 million decrease in last year’s
quarter. Corporate unallocated interest increased $29 million
reflecting a reduction in interest income caused by lower short-term interest
rates and lower working capital requirements of the operating
segments. Corporate costs increased $35 million due to higher
employee-related costs and commercial services expenses. Other
principally represents the elimination of after-tax earnings of mandatorily
redeemable interests in consolidated subsidiaries.
Income
taxes decreased $15 million due principally to lower pretax
earnings. The Company’s effective tax rate for the quarter is 28.4%
as compared to 29.1% in the prior year’s quarter. The decrease in the
Company’s effective tax rate is primarily due to changes in the geographic mix
of pretax earnings.
Six
Months Ended December 31, 2009 Compared to Six Months Ended December 31,
2008
Net
earnings attributable to controlling interests decreased 35% to $1.06 billion
for the six months due to lower segment operating profit and lower corporate
results arising from a $554 million pre-tax change in LIFO inventory
valuations.
As an
agricultural commodity-based business, the Company is subject to a variety of
market factors which affect the Company’s operating results. The
global supply chain for soybeans was challenged by lower 2009 South American
production. The current improved global crop outlook, coupled with
uncertainty about short-term demand resulting from the pace of the global
economic recovery, led to lower agricultural commodity market prices and less
volatile commodity market conditions. The late, extended U.S. harvest
also reduced profit opportunities this year. Regional biodiesel
markets continued to develop in North America, South America and Europe and
increase overall demand for refined and crude vegetable
oils. Compared to last year, net corn costs decreased resulting in
lower raw material costs for Corn Processing. Lower energy, fuel and
chemical costs positively impacted the Company’s manufacturing
costs. Ethanol selling prices and volumes increased due to improved
gasoline blending economics.
Analysis
of Statements of Earnings
Net sales
and other operating income decreased 18% to $30.8 billion for the six months due
principally to lower average selling prices in line with year-over-year declines
in underlying commodity costs. Sales volumes were comparable
overall.
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
Net sales
and other operating income by segment for the six months are as
follows:
| Six Months Ended | ||||||||||||
| December 31, | ||||||||||||
| 2009 | 2008 | Change | ||||||||||
| (In millions) | ||||||||||||
|
Oilseeds
Processing
|
||||||||||||
|
Crushing
& Origination
|
$ | 7,512 | $ | 7,865 | $ | (353 | ) | |||||
|
Refining,
Packaging, Biodiesel & Other
|
3,642 | 5,108 | (1,466 | ) | ||||||||
|
Asia
|
84 | 95 | (11 | ) | ||||||||
|
Total
Oilseeds Processing
|
11,238 | 13,068 | (1,830 | ) | ||||||||
|
Corn
Processing
|
||||||||||||
|
Sweeteners
and Starches
|
1,704 | 1,983 | (279 | ) | ||||||||
|
Bioproducts
|
2,241 | 2,111 | 130 | |||||||||
|
Total
Corn Processing
|
3,945 | 4,094 | (149 | ) | ||||||||
|
Agricultural
Services
|
||||||||||||
|
Merchandising
& Handling
|
12,878 | 17,558 | (4,680 | ) | ||||||||
|
Transportation
|
84 | 152 | (68 | ) | ||||||||
|
Total
Agricultural Services
|
12,962 | 17,710 | (4,748 | ) | ||||||||
|
Other
|
||||||||||||
|
Wheat,
Cocoa & Malt
|
2,643 | 2,903 | (260 | ) | ||||||||
|
Financial
|
46 | 58 | (12 | ) | ||||||||
|
Total
Other
|
2,689 | 2,961 | (272 | ) | ||||||||
|
Total
|
$ | 30,834 | $ | 37,833 | $ | (6,999 | ) | |||||
Oilseeds
Processing sales decreased 14% to $11.2 billion due principally to lower average
selling prices partially offset by higher sales volumes. Corn
Processing sales decreased 4% to $3.9 billion. Sweeteners and
starches sales decreased primarily due to lower sales
volumes. Bioproducts sales increased primarily as a result of
increased sales volumes of ethanol and lysine partially offset by lower average
selling prices. Agricultural Services sales decreased 27% to $13.0
billion, due primarily to lower average selling prices of grain and decreased
sales volumes. Other sales decreased 9% to $2.7 billion, primarily
due to lower average selling prices of wheat flour partially offset by increased
wheat flour sales volumes.
Cost of
products sold decreased 17% to $28.8 billion due principally to decreased
agricultural commodity costs and decreased LIFO inventory
reserves. Manufacturing expenses decreased $252 million primarily due
to lower energy, chemical and fuel costs.
Selling,
general and administrative expenses decreased 5% to $712 million due principally
to decreased provisions for doubtful accounts.
Other
(income) expense-net decreased $217 million due principally to higher earnings
from equity affiliates, lower interest expense and decreased minority interest
eliminations, partially offset by reduced interest income.
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
Operating
profit by segment for the six months is as follows:
| Six Months Ended | ||||||||||||
| December 31, | ||||||||||||
| 2009 | 2008 | Change | ||||||||||
| (In millions) | ||||||||||||
|
Oilseeds
Processing
|
||||||||||||
|
Crushing
& Origination
|
$ | 328 | $ | 526 | $ | (198 | ) | |||||
|
Refining,
Packaging, Biodiesel & Other
|
146 | 192 | (46 | ) | ||||||||
|
Asia
|
162 | 111 | 51 | |||||||||
|
Total
Oilseeds Processing
|
636 | 829 | (193 | ) | ||||||||
|
Corn
Processing
|
||||||||||||
|
Sweeteners
and Starches
|
365 | 205 | 160 | |||||||||
|
Bioproducts
|
113 | (58 | ) | 171 | ||||||||
|
Total
Corn Processing
|
478 | 147 | 331 | |||||||||
|
Agricultural
Services
|
||||||||||||
|
Merchandising
& Handling
|
260 | 770 | (510 | ) | ||||||||
|
Transportation
|
65 | 120 | (55 | ) | ||||||||
|
Total
Agricultural Services
|
325 | 890 | (565 | ) | ||||||||
|
Other
|
||||||||||||
|
Wheat,
Cocoa & Malt
|
266 | 154 | 112 | |||||||||
|
Financial
|
39 | (29 | ) | 68 | ||||||||
|
Total
Other
|
305 | 125 | 180 | |||||||||
|
Total
Segment Operating Profit
|
1,744 | 1,991 | (247 | ) | ||||||||
|
Corporate
|
(243 | ) | 312 | (555 | ) | |||||||
|
Earnings
Before Income Taxes
|
$ | 1,501 | $ | 2,303 | $ | (802 | ) | |||||
Corporate
Results
|
Six
Months Ended
|
||||||||||||
|
December
31,
|
||||||||||||
|
2009
|
2008
|
Change
|
||||||||||
|
(In
millions)
|
||||||||||||
|
LIFO
credit (charge)
|
$ | 22 | $ | 576 | $ | (554 | ) | |||||
|
Interest
expense - net
|
(136 | ) | (70 | ) | (66 | ) | ||||||
|
Corporate
costs
|
(139 | ) | (129 | ) | (10 | ) | ||||||
|
Other
|
10 | (65 | ) | 75 | ||||||||
|
Total
Corporate
|
$ | (243 | ) | $ | 312 | $ | (555 | ) | ||||
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
Oilseeds
Processing operating profit decreased 23% to $636 million. Crushing
and origination results decreased $198 million as margins declined from high
prior-year levels, as favorable impacts from raw material positioning and risk
management results in the prior year did not recur. Global soybean
supply shortages resulted in lower production volumes in the early part of this
fiscal year. Refining, packaging, biodiesel and other operating
profit decreased $46 million. Lower European biodiesel margins were
only partially offset by improved South American refining and biodiesel
results. North American sales volumes and margins
decreased. Oilseeds results in Asia increased $51 million to $162
million as the Company’s investments, principally its equity interest in Wilmar
International Limited, continued to perform well.
Corn
Processing operating profit increased $331 million to $478 million. Sweetener
and starches operating profit increased $160 million due to lower net corn and
manufacturing costs partially offset by lower sales
volumes. Bioproducts operating profit increased $171 million due to
improved sales volumes and improved ethanol margins resulting from lower net
corn costs, decreased manufacturing costs, and favorable gasoline blending
economics.
Agricultural
Services operating profit decreased $565 million to $325
million. Merchandising and handling results decreased $510
million. Enhanced volume and margin opportunities created by last
year’s volatile commodity markets and tight credit markets did not
recur. Transportation results decreased $55 million due to lower
barge freight rates and decreased barge utilization levels resulting from the
late, extended North American harvest.
Other
operating profit increased $180 million to $305 million. Wheat, cocoa
and malt operating profit increased $112 million due to increased equity
earnings from the Company’s investment in Gruma S.A.B. de C.V., improved global
wheat milling margins, and increased cocoa processing
earnings. Wheat, cocoa and malt earnings include mark-to-market gains
of $63 million related to certain forward sales commitments accounted for as
derivative. Other financial operating profit increased $68 million
due to the absence of losses experienced last year by the Company’s captive
insurance operations and improved results from the Company’s brokerage services
business.
Corporate
results decreased $555 million. LIFO inventory valuations decreased
$22 million for the six months ended December 31, 2009 compared to a $576
million decrease in the same period last year. Interest expense – net
increased $66 million reflecting a reduction in corporate interest income caused
by lower short-term rates and lower working capital requirements of the
operating segments. Corporate costs increased primarily due to higher
commercial services expenses. Other principally represents the elimination of
after-tax earnings of mandatorily redeemable interests in consolidated
subsidiaries.
Income
taxes decreased $235 million due to lower pretax earnings. The
Company’s effective tax rate for the six months is 29.5% as compared to 29.4% in
the prior year’s six months.
Liquidity
and Capital Resources
The
Company’s key financial objectives include having sufficient liquidity, balance
sheet strength, and financial flexibility to fund the operating and capital
requirements of a capital intensive agricultural-based commodity
business.
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
|
At
December 31, 2009, the Company had $1.6 billion of cash, cash equivalents, and
short-term marketable securities and a current ratio, defined as current assets
divided by current liabilities, of 2.1 to 1. Included in working
capital is $6.0 billion of readily marketable commodity
inventories. Cash provided by operating activities totaled $1.4
billion for the six months compared to $5.9 billion the same period last
year. Cash provided by operating activities in the prior year
benefited from a reduction in working capital requirements principally related
to decreasing agricultural commodity market prices. Cash used in investing
activities was $780 million for the six months compared to $1.6 billion the same
period last year due principally to a decrease in purchases of marketable
securities. Cash used in financing activities was $338 million for
the six months compared to $2.9 billion the same period last year due
principally to a decrease in repayments of commercial paper borrowings. Net
short-term borrowings decreased primarily as a result of decreased working
capital requirements.
At
December 31, 2009, the Company had lines of credit totaling $6.3 billion, of
which $6.2 billion was unused. Of the Company’s total lines of
credit, $4.2 billion support a commercial paper borrowing facility, against
which there were no borrowings at December 31, 2009.
Capital
resources remained strong as reflected by the Company’s net worth of $14.8
billion. The Company’s ratio of long-term debt to total capital (the
sum of the Company’s long-term debt and shareholders’ equity) was 33% at
December 31, 2009 and 36% at June 30, 2009. This ratio is a measure
of the Company’s long-term liquidity and is an indicator of financial
flexibility.
Contractual
Obligations and Commercial Commitments
The
Company’s purchase obligations as of December 31, 2009 were $12.6
billion. As of December 31, 2009, the Company expects to make
payments related to purchase obligations of $11.2 billion within the next twelve
months, principally related to obligations to purchase agricultural commodity
inventories. There were no other material changes in the Company’s
contractual obligations and off balance sheet arrangements during the three
months ended December 31, 2009.
Critical
Accounting Policies
There
were no material changes in the Company’s critical accounting policies during
the six months ended December 31, 2009.
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
The
market risk inherent in the Company’s market risk sensitive instruments and
positions is the potential loss arising from adverse changes in: commodity
prices as they relate to the Company’s net commodity position; marketable equity
security prices; foreign currency exchange rates; and interest
rates. Significant changes in market risk sensitive instruments and
positions for the quarter ended December 31, 2009 are described
below. There were no material changes during the quarter in the
Company’s potential loss arising from changes in marketable equity securities,
foreign currency exchange rates, and interest rates.
For
detailed information regarding the Company’s market risk sensitive instruments
and positions, see Item 7A, “Quantitative and Qualitative disclosures About
Market Risk” included in the Company’s annual report on Form 10-K for the year
ended June 30, 2009.
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(Continued)
|
Commodities
The
availability and price of agricultural commodities are subject to wide
fluctuations due to unpredictable factors such as weather, plantings, global
government farm programs and policies, changes in global demand resulting from
population growth and changes in standards of living, and global production of
similar and competitive crops. A sensitivity analysis has been
prepared to estimate the Company’s exposure to market risk of its commodity
position. The Company’s daily net commodity position consists of inventories,
related purchase and sale contracts, and exchange-traded futures and
exchange-traded and over-the-counter option contracts, including those used to
hedge portions of production requirements. The fair value of such position is a
summation of the fair values calculated for each commodity by valuing each net
position based on quoted futures prices. Market risk is estimated as the
potential loss in fair value resulting from a hypothetical ten percent adverse
change in such prices. Actual results may differ.
|
Six
months ended
|
Year
ended
|
|||||||||||||||
|
December
31, 2009
|
June
30, 2009
|
|||||||||||||||
|
Long/(Short)
|
Fair
Value
|
Market
Risk
|
Fair
Value
|
Market
Risk
|
||||||||||||
|
(In
millions)
|
||||||||||||||||
|
Highest
position
|
$ | 216 | $ | 22 | $ | 845 | $ | 85 | ||||||||
|
Lowest
position
|
(667 | ) | (67 | ) | (1,342 | ) | (134 | ) | ||||||||
|
Average
position
|
(226 | ) | (23 | ) | (392 | ) | (39 | ) | ||||||||
The
change in fair value of the average position was principally the result of an
increase in quantities underlying the daily net commodity position.
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
As of
December 31, 2009, an evaluation was performed under the supervision and with
the participation of the Company’s management, including the Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Company’s “disclosure controls and procedures” (as defined in
Rules 13a – 15(e) and 15d – 15(e) under the Securities Exchange Act of 1934 (the
“Exchange Act”)). Based on that evaluation, the Company’s management, including
the Chief Executive Officer and Chief Financial Officer, concluded the Company’s
disclosure controls and procedures were effective to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is (a) recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms and (b) accumulated and communicated to the Company’s management,
including the Chief Executive Officer and the Chief Financial Officer, to allow
timely decisions regarding required disclosure. There was no change in the
Company’s internal controls over financial reporting during the Company’s most
recently completed fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company’s internal controls over financial
reporting.
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
None.
|
ITEM
1A.
|
RISK
FACTORS
|
There
were no significant changes in the Company’s risk factors during the three
months ended December 31, 2009.
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
Issuer
Purchases of Equity Securities
|
Total
Number of
|
Number
of Shares
|
|||||||||||||||
|
Total
Number
|
Average
|
Shares
Purchased as
|
Remaining
that May be
|
|||||||||||||
|
of
Shares
|
Price
Paid
|
Part
of Publicly
|
Purchased
Under the
|
|||||||||||||
|
Period
|
Purchased
(1)
|
per
Share
|
Announced
Program
(2)
|
Program
(2)
|
||||||||||||
|
October
1, 2009 to
|
||||||||||||||||
|
October
31, 2009
|
19,704 | $ | 30.308 | 262 | 71,345,455 | |||||||||||
|
November
1, 2009 to
|
||||||||||||||||
|
November
30, 2009
|
33,197 | 32.360 | 308 | 71,345,147 | ||||||||||||
|
December
1, 2009 to
|
||||||||||||||||
|
December
31, 2009
|
864 | 31.318 | 84 | 71,345,063 | ||||||||||||
|
Total
|
53,765 | $ | 31.591 | 654 | 71,345,063 | |||||||||||
|
(1)
|
Total
shares purchased represents those shares purchased as part of the
Company’s publicly announced share repurchase program described below,
shares received as payment of the exercise price for stock option
exercises, and shares received as payment of the withholding taxes on
vested restricted stock grants.
|
|
(2)
|
On
November 4, 2004, the Company’s Board of Directors approved a stock
repurchase program authorizing the Company to repurchase up to 100,000,000
shares of the Company’s common stock during the period commencing January
1, 2005 and ending December 31, 2009. This program expired on
December 31, 2009. On November 5, 2009, the Company’s Board of
Directors approved a stock repurchase program authorizing the Company to
repurchase up to 100,000,000 shares of the Company’s common stock during
the period commencing January 1, 2010 and ending December 31,
2014.
|
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
The
Annual Meeting of Stockholders was held on November 5, 2009. Proxies
for the Annual Meeting were solicited pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended. There was no
solicitation in opposition to the Board of Director nominees as listed in the
proxy statement and all nominees were elected as follows:
|
Nominee
|
Shares Cast For
|
Shares Withheld
|
|
|
G.
W. Buckley
|
509,051,181
|
30,339,261
|
|
|
M.
H. Carter
|
490,131,478
|
49,258,964
|
|
|
D.
E. Felsinger
|
507,276,098
|
32,114,344
|
|
|
V.
F. Haynes
|
529,499,455
|
9,890,987
|
|
|
A.
Maciel
|
528,518,155
|
10,872,287
|
|
|
P.
J. Moore
|
507,898,159
|
31,492,283
|
|
|
T.
F. O’Neill
|
532,925,151
|
6,465,291
|
|
|
K.
R. Westbrook
|
511,724,223
|
27,666,219
|
|
|
P.
A. Woertz
|
518,888,693
|
20,501,749
|
The
adoption of the Archer-Daniels-Midland Company 2009 Incentive Compensation Plan
was approved as follows:
|
For
|
Against
|
Abstain
|
|
428,514,338
|
43,327,347
|
2,361,098
|
The
appointment of Ernst & Young LLP as independent accountants was ratified at
the meeting by the following votes:
|
For
|
Against
|
Abstain
|
|
527,151,235
|
10,679,453
|
1,559,754
|
The
Stockholder’s Proposal No. 1 (Code of Conduct Regarding Global Human Rights
Standards) was defeated as follows:
|
For
|
Against
|
Abstain
|
|
118,741,562
|
298,837,225
|
56,623,996
|
|
ITEM
6.
|
EXHIBITS
|
|
(3)(i)
|
Composite
Certificate of Incorporation, as amended, filed on November 13, 2001 as
Exhibit 3(i) to Form 10-Q for the quarter ended September 30, 2001 (File
No. 1-44), is incorporated herein by
reference.
|
|
(ii)
|
Bylaws,
as amended, filed on February 9, 2009 as Exhibit 3(ii) to Form 10-Q for
the quarter ended December 31, 2008 (File No. 1-44), is incorporated
herein by reference.
|
|
(10)(i)
|
The
Archer-Daniels-Midland Company 2009 Incentive Compensation Plan, filed on
September 25, 2009 as Exhibit A to the Company’s Definitive Proxy
Statement (File No. 1-44) is incorporated herein by
reference.
|
|
(31.1)
|
Certification
of Chief Executive Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a)
of the Securities Exchange Act, as
amended.
|
|
(31.2)
|
Certification
of Chief Financial Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a)
of the Securities Exchange Act, as
amended.
|
|
(32.1)
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
(32.2)
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
(101)
|
Interactive
Data File
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange 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/
S. R. Mills
S.
R. Mills
Executive
Vice President and
Chief
Financial Officer
/s/
D. J. Smith
D.
J. Smith
Executive
Vice President, Secretary and
General
Counsel
|
Dated: February 5, 2010
TABLE OF CONTENTS
Part I - Financial InformationItem 1. Financial StatementsNote 1. Basis Of PresentationNote 1. Basis Of Presentation (continued)Note 2. New Accounting StandardsNote 2. New Accounting Standards (continued)Note 3. Fair Value MeasurementsNote 3. Fair Value Measurements (continued)Note 4. Derivative Instruments and Hedging ActivitiesNote 4. Derivative Instruments and Hedging Activities (continued)Note 5. Marketable Securities and Cash EquivalentsNote 5. Marketable Securities and Cash Equivalents (continued)Note 6. Debt and Financing ArrangementsNote 6. Debt and Financing Arrangements (continued)Note 7. Income TaxesNote 7. Income Taxes (continued)Note 8. Comprehensive IncomeNote 9. Other (income) Expense - NetNote 10. Segment InformationNote 10. Segment Information (continued)Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations (continued)Item 3. Quantitative and Qualitative Disclosures About Market RiskItem 3. Quantitative and Qualitative Disclosures About Market Risk (continued)Item 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 4. Submission Of Matters To A Vote Of Security HoldersItem 6. Exhibits