PAGE 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-44
ARCHER-DANIELS-MIDLAND COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-0129150
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
4666 Faries Parkway Box 1470 Decatur, Illinois 62525
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code217-424-5200
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___.
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common Stock, no par value--516,028,960 shares
(December 31, 1994)
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PART I - FINANCIAL INFORMATION
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
1994 1993
-------------------------
(In thousands, except
per share amounts)
<S> <C>
<C>
Net sales and other operating income $3,221,804 $2,821,561
Cost of products sold and other
operating
costs 2,744,179 2,499,224
_________ _________
Gross Profit 477,625 322,337
Selling, general and administrative 122,094 90,793
expenses
_________ _________
Earnings From Operations 355,531 231,544
Other income (expense) (29,459) (9,131)
_________ _________
Earnings Before Income Taxes 326,072 222,413
Income taxes 105,974 76,354
_________ _________
Net Earnings $ 220,098 $ 146,059
========= =========
Average number of shares outstanding 516,058 520,381
Net earnings per common share $.43 $.28
Dividends per common share $.025 $.016
</TABLE>
See notes to consolidated financial statements.
2
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1994 1993
----------------------
(In thousands, except
per share amounts)
<S> <C>
<C>
Net sales and other operating income $6,237,02 $5,435,18
7 9
Cost of products sold and other
operating costs 5,414,583 4,889,715
_________ _________
Gross Profit 822,444 545,474
Selling, general and administrative 222,403 174,038
expenses
_________ _________
Earnings From Operations 600,041 371,436
Other income (expense) (45,015) (24,130)
_________ _________
Earnings Before Income Taxes 555,026 347,306
Income taxes 180,384 132,184
_________ _________
Net Earnings $ $
374,642 215,122
========= =========
Average number of shares outstanding 515,807 524,714
Net earnings per common share $.73 $.41
Dividends per common share $.041 $.031
</TABLE>
See notes to consolidated financial statements.
3
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1994 1994
-----------------------
(In thousands)
<S> <C>
<C>
ASSETS
Current Assets
Cash and cash equivalents $ $
278,403 316,394
Marketable securities 882,416 1,019,05
9
Receivables 1,042,537 1,041,76
9
Inventories 1,881,413 1,422,14
7
Prepaid expenses 126,490 111,426
_________ ________
_
Total Current Assets 4,211,259 3,910,79
5
Investments and Other Assets
Investments in and advances to 463,144 297,147
affiliates
Long-term marketable securities 1,271,813 891,073
Other assets 72,993 109,263
_________ ________
_
1,807,950 1,297,48
3
Property, Plant and Equipment
Land 104,363 101,854
Buildings 1,043,478 1,029,81
7
Machinery and equipment 5,228,667 5,073,63
1
Construction in progress 518,368 455,729
Less allowances for depreciation (3,289,09 (3,122,45
3) 6)
_________ ________
_
3,605,783 3,538,57
5
_________ ________
_
$9,624,99 $8,746,8
2 53
========= ========
==
</TABLE>
See notes to consolidated financial statements.
4
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1994 1994
--------------------------
(In thousands)
<S> <C>
<C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 78,844 $ -
Accounts payable 955,913 690,824
Accrued expenses 427,609 412,438
Current maturities of long-term debt 17,128 23,716
__________ _________
Total Current Liabilities 1,479,494 1,126,978
Long-Term Debt 2,036,804 2,021,417
Deferred Credits
Income taxes 501,310 432,396
Other 118,337 120,641
_________ _________
619,647 553,037
Shareholders' Equity
Common stock 3,426,524 3,415,955
Reinvested earnings 2,062,523 1,629,466
_________ _________
5,489,047 5,045,421
_________ _________
$ 9,624,992 $8,746,853
========= =========
</TABLE>
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1994 1993
--------------------------
(In
thousands)
<S> <C>
<C>
Operating Activities
Net earnings $374,642$ 215,122
Adjustments to reconcile to net cash
provided by operations
Depreciation and amortization 191,975 171,050
Deferred income taxes 13,774 28,210
Amortization of long-term debt discount 10,830 9,480
Other 18,212 (11,473)
Changes in operating assets and liabilities
Receivables (4,733) (9,290)
Inventories (453,444) (540,325)
Prepaid expenses (15,366) (4,684)
Accounts payable and accrued expenses272,362 303,121
_________ _________
Total Operating Activities 408,252 161,211
Investing Activities
Purchases of property, plant and equipment(318,608)(232,626)
Business acquisitions (11,000) (63,550)
Investments in and advances to affiliates(91,478) 5,578
Purchases of marketable securities (1,346,294)(1,337,594)
Proceeds from sales of marketable securities1,271,3501,685,157
_________ _________
Total Investing Activities (496,030) 56,965
Financing Activities
Long-term debt borrowings 18,465 5,155
Long-term debt payments (22,820) (53,703)
Net borrowings under line of credit agreements78,844 73,638
Purchases of treasury stock (3,928) (355,223)
Cash dividends and other (20,774) (16,753)
_________ _________
Total Financing Activities 49,787 (346,886)
_________ _________
Decrease In Cash and Cash Equivalents (37,991) (128,710)
Cash and Cash Equivalents Beginning of Period316,394 386,483
_________ _________
Cash and Cash Equivalents End of Period$ 278,403 $ 257,773
========= =========
</TABLE>
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.The accompanying unaudited consolidated financial
statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes
required by generally accepted accounting principles for
complete financial statements. In the opinion of
management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair
presentation have been included. Operating results for
the quarter and six months ended December 31, 1994 are
not necessarily indicative of the results that may be
expected for the year ending June 30, 1995. For further
information, refer to the consolidated financial
statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended
June 30, 1994.
Note 2. Inventories
Inventories, consisting primarily of merchandisable
agricultural commodities and related value-added
products, are carried at cost, which is not in excess of
market prices. Inventory cost methods include the last-
in, first-out (LIFO) method, the first-in,
first-out (FIFO) method and the hedging procedure method.
The hedging procedure method approximates FIFO cost.
The Company follows a policy of hedging substantially all
inventory and related purchase and sale contracts. In
addition, the Company from time to time will hedge
anticipated production, generally not exceeding six
months requirements. These hedges are made to reduce
price risk of market fluctuations and risk of crop
failure. The instruments used are principally readily
marketable exchange traded futures contracts which are
designated as hedges. The changes in market value of
such contracts have a high correlation to the price
changes of the hedged commodity. Also, the underlying
commodity can be delivered against such contracts. To
obtain a proper matching of revenue and expense, gains
or losses arising from open and closed hedging
transactions are included in inventory as a cost of the
commodities and reflected in the income statement when
the product is sold.
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Note 3. Other Income (Expense)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
-------------------------------------
(In thousands) (In thousands)
<S> <C> <C> <C>
<C>
Investment income $ 29,674 $ 27,396$ 61,936 $ 54,334
Interest expense (43,723) (42,821)(86,492) (86,222)
Gain (loss) on marketable
securities transactions (7,117) 334(11,941) 1,604
Other, including equity in
earnings of affiliates (8,293) 5,960 (8,518) 6,154
_______ _______ _______ _______
$(29,459) $ (9,131)$(45,015)$(24,130)
======= ======= ======= =======
</TABLE>
Note 4. Per Share Data
All references to share and per share information have
been adjusted for the 5 percent stock dividend paid
September 19, 1994 and for the 50 percent stock dividend
in the form of a
three-for-two stock split paid December 5, 1994.
Note 5. Accounting Change
Effective July 1, 1994, the Company adopted FASB
Statement No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." The effect of adopting
Statement 115 increased the opening balance of
shareholders' equity by $51 million (net of $25 million
in deferred income taxes) to reflect the net unrealized
gain on marketable securities classified as available-
for-sale which were previously carried at cost.
8
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION
The Company is in one business segment - procuring,
transporting, storing, processing and merchandising
agricultural commodities. The availability and price of
agricultural commodities are subject to wide fluctuations due
to unpredictable factors such as: weather; plantings;
government (domestic and foreign) farm programs and policies;
changes in global demand created by population growth and
higher standards of living; and global production of similar
and competitive crops. Generally, changes in the price of
agricultural commodities can be passed through to the price of
processed products. Ethanol is one of a limited few of the
Company's processed products which must be priced to compete
with products produced from other raw materials. The Company
follows a policy of hedging substantially all inventory and
related purchase and sale contracts. In addition, the Company
from time to time will hedge anticipated production, generally
not exceeding six months requirements. These hedges are made
to reduce price risk of market fluctuations and risk of crop
failure. The instruments used are principally readily
marketable exchange traded futures contracts which are
designated as hedges. The changes in market value of such
contracts have a high correlation to the price changes of the
hedged commodity. Also, the underlying commodity can be
delivered against such contracts. To obtain a proper matching
of revenue and expense, gains or losses arising from open and
closed hedging transactions are included in inventory as a cost
of the commodities and reflected in the income statement when
the product is sold.
OPERATIONS
Net sales and other operating income increased $400 million to
$3.2 billion for the quarter and increased $802 million to $6.2
billion for the six months. Approximately $319 million of the
increase for the quarter and $592 million of the increase for
the six months are due to volume increases, including sales
attributable to recently acquired operations. The remaining
increase is attributable to average selling price increases of
approximately 3 percent for the quarter and 4 percent for the
six months. A summary of net sales and other operating income
by classes of products and services is as follows:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
_______________ ______________
___ ___
(In millions) (In millions)
<S> <C> <C> <C>
<C>
Oilseed products $ 1,922 $ $ $
1,680 3,599 3,272
Corn products 607 561 1,282 1,110
Wheat and other milled 360 373 713 672
products
Other products 333 208 643 381
______ ______ ______ ______
$ 3,222 $ $ $
2,822 6,237 5,435
====== ====== ====== ======
</TABLE>
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Sales of oilseed products increased 14 percent for the quarter
and 10 percent for the six months due primarily to increased
volume as strong export demand for vegetable oils and good
domestic demand for meal products contributed to favorable
oilseed processing market conditions. Sales of corn products
increased 8 percent for the quarter and 16 percent for the six
months due primarily to increased average selling prices
resulting from strong demand from the food and beverage industry
for sweetener products and increased demand for ethanol. The
increase in sales of wheat and other milled products for the six
months resulted primarily from sales attributable to recently
acquired wheat flour operations, partially offset by the
Company's second quarter contribution of its rice milling
operations to a joint venture. The increases in sales of other
products for both the quarter and six months are due primarily
from sales attributable to recently acquired feed operations.
Cost of products sold increased $245 million to $2.7 billion for
the quarter and increased $525 million to $5.4 billion for the
six months due principally to the increased volume of products
sold, including costs of recently acquired operations. These
volume related increases were partially offset in both the
quarter and six months by an approximate 2 percent decline for
the quarter and 1 percent decline for the six months in average
raw material commodity prices.
The combined effect of increased sales volumes, higher average
selling prices and lower raw material commodity prices resulted
in gross profits increasing $155 million to $478 million for the
quarter and increasing $277 million to $822 million for the six
months. Approximately $120 million of the increase for the
quarter and $220 million of the increase for the six months can
be attributed to improved gross profits resulting from the net
price effect of higher average selling prices and lower raw
material commodity prices. The remaining increase is due to
sales volume increases. Fiscal 1994 gross profit included the
negative impact of the widespread Midwest flooding on procuring,
transporting, and merchandising operations. We estimate that
costs of approximately $40 million were incurred in the first
quarter of fiscal 1994 due to transportation and plant operation
interruptions.
Selling, general and administrative expenses increased 34
percent to $122 million for the quarter and increased 28 percent
to $222 million for the six months due principally to $11
million and $26 million, respectively, of expenses attributable
to recently acquired operations and to general cost increases,
including increased bad debt, advertising and charitable
contribution expense.
The decrease in other income (expense) for the quarter and six
months resulted primarily from decreased equity in earnings of
non-consolidated affiliates and losses on marketable securities
transactions. These decreases were partially offset by
increased investment income due to higher interest rates.
Income taxes for the quarter and six months increased due to
higher pretax earnings. The Company's effective income tax rate
of 33 percent for both the quarter and six months compares to
rates of 34 and 38 percent for the comparable periods of a year
ago. Excluding the effect of the $14 million non-recurring
income tax charge due to the increase in the statutory federal
income tax rate to 35 percent in the first quarter of fiscal
1994, the effective tax rate for last year's six month period
would have been 34 percent.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended December 31, 1994, the Company's
liquidity continued to improve as cash and marketable securities
net of short-term debt increased $127 million to $2.4 billion
and its capital resources were strengthened by a $444 million
increase in net worth to $5.5 billion. The Company's ratio of
long-term liabilities to total capital at December 31, 1994 was
approximately 25 percent.
10
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PART II - OTHER INFORMATION
Item 4. Submission of matters to a vote of Security
Holders:
The information required in response to this
item is contained in the Company's proxy
statement dated September 14, 1994 previously
filed with the Commission and is incorporated
herein by reference.
Proxies for the Annual Meeting were solicited
pursuant to Regulation 14. There was no
solicitation in opposition to the Board of
Director nominees as listed in the proxy
statement and all of such nominees were
elected.
Item 6. Exhibits and Reports on Form 8-K
a)Notice of annual meeting and proxy statement
dated September 14, 1994 incorporated as an
exhibit herein by reference.
b)A Form 8-K was not filed during the quarter
ended December 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ARCHER-DANIELS-MIDLAND
COMPANY
/s/ D. J. Schmalz
D. J. Schmalz
Vice President
and Chief Financial Officer
/s/ R. P. Reising
R. P. Reising
Vice President, Secretary and
General Counsel
Dated: February 13, 1995
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 278,403
<SECURITIES> 882,416
<RECEIVABLES> 1,042,537
<ALLOWANCES> 0
<INVENTORY> 1,881,413
<CURRENT-ASSETS> 4,211,259
<PP&E> 6,894,876
<DEPRECIATION> 3,289,093
<TOTAL-ASSETS> 9,624,992
<CURRENT-LIABILITIES> 1,479,494
<BONDS> 2,036,804
<COMMON> 3,426,524
0
0
<OTHER-SE> 2,062,523
<TOTAL-LIABILITY-AND-EQUITY> 9,624,992
<SALES> 6,237,027
<TOTAL-REVENUES> 6,237,027
<CGS> 5,414,583
<TOTAL-COSTS> 5,414,583
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 86,492
<INCOME-PRETAX> 555,026
<INCOME-TAX> 180,384
<INCOME-CONTINUING> 374,642
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 374,642
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
