Financial Statements 2007 Adm Cocoa - PDF

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Financial Statements 2007 Adm Cocoa - PDF Powered By Docstoc
					             Vital to the World



                            Citi’s Annual Food Fest
                               December 1, 2010


Steve Mills           John Rice                               Ray Young   Dwight Grimestad
Senior Executive VP   Vice Chairman, Office of the Chairman   SVP & CFO   VP, Investor Relations
Safe Harbor Statement

 Some of our comments constitute forward-looking statements that
 reflect management’s current views and estimates of future
 economic circumstances, industry conditions, Company
 performance and financial results.

 The statements are based on many assumptions and factors,
 including availability and prices of raw materials, market
 conditions, operating efficiencies, access to capital and actions of
 governments. Any changes in such assumptions or factors could
 produce significantly different results. To the extent permitted
 under applicable law, the Company assumes no obligation to
 update any forward-looking statements as a result of new
 information or future events.



                                                                        2
Table of Contents
                                   Slide

 Global Trends                      5

 ADM’s Value Chain and Strategy     6

 ADM Assets                         7

 Origination and Transportation   8 – 11

Oilseeds                          12 – 19

 Corn Processing                  20 – 28

 Cocoa and Wheat                  29 – 30

 Profitable Growth                31 – 38

 Appendix                         39 – 51


                                             3
4
Global Trends Signal Growth Opportunity


                   Population Growth



              Need for Energy Security
              and Diversity

                   Growing Interest
                   in Environmental
                     Improvement



                                          5
We are Expanding Volumes and Diversifying our
Product Portfolio
              Expand the Size and Global Reach of our Core Model

CROPS                                                                                      VALUE-ADDED
            SOURCE      TRANSPORT      PROCESS      TRANSFORM     DISTRIBUTE    MARKET &    PRODUCTS
                                                                                  SELL
Oilseeds
  Corn                                                                                         Food
 Cocoa                                                                                         Feed
 Wheat                                                                                         Fuel
 Palm                                                                                       Industrials
 Sugar



           Our Financial Strength and Industry Acumen Underpin the Chain and Drive Value

    Expand Volumes and                    Expand Size and                       Expand Volumes
    Diversify Crops                       Geographic Reach                      and Diversify
                                                                                Product Portfolio




                                                                                                      6
ADM’s Assets are Positioned for Global Growth




        Sourcing facilities
        Oilseed processing
        Corn processing
        Cocoa & wheat processing
        Wilmar
        Sourcing distribution
        Processing distribution



                                                7
  Growing Origination and
Transportation Capabilities




                              8
Our People use Industry Acumen and our Asset
Network to Create Value




                                               9
                                               9
Our Strategy is to Expand our Crop Origination and
Transportation Network; Grow Destination Business

• Build on leadership position in the U.S. and South America
   • Selectively add elevators
   • Improve elevator throughput
   • Enhance port and river capabilities
• Grow origination footprint in Canada and Europe
• Expand destination market opportunities in Middle East,
  Asia and Africa




                                                            10
We are Executing our Origination and
Transportation Strategy
 • Purchased
   oceangoing vessels
 • Modernizing North
   American barge fleet
 • Adding barges
   and tugboats in
   South America
 • Expanding South
   American origination


                                       11
          Oilseeds:
Growing Processing
       Capabilities




                      12
Our Oilseeds Asset Base is Positioned to Meet
Growing Global Demand




             Fertilizer
             Origination
             Biodiesel
             Refining/Packing
             Processing
             Wilmar




                                                13
                                                 13
In North America, Diverse Inputs and a Broad
Product Portfolio Create Value
                                                               Lecithin
   Raw
 Material                        Gums      Refine              Sterols
 Soybean                                                      Vitamin E
Sunflower
  Canola     Crude                      Transesterification   Biodiesel
   Flax               Refine
              Oil                       Interesterification   Shortening
Cottonseed
  Peanut                                 Hydrogenation        Margarine
 Palm Oil               Oil

                                                              Oil

                       Protein                                Protein

 Process                                                       Soy Flour/
                       Refine
                                                              Cotton Flour
                                                                 Soy
                                                              Concentrate
                                                              Soy Isolate
                      Texturize                               TVP / TVC
             Cotton
                        Refine                                Cellulose
              Lint
                                                                             14
                                                                              14
We serve Europe using Local Softseeds as well as
Imported Soybeans and Processed Products

                      Gums              Refine              Lecithin

   Raw
 Material                    Transesterification            Biodiesel
            Refine
Sunflower                                                   Glycerin
Rapeseed              Oil
 Soybean    Crude
 Palm Oil                    Interesterification            Shortening
             Oil
                              Hydrogenation                 Margarine


            Process                                         Oil


                                                             Protein

                                                   Refine

                                                               Soy
                                                            Concentrate


                                                                          15
                                                                           15
Using South American Harvests, we serve
both Local and Global Markets

Crop Origination/
 Merchandising



                               Refine                              Oil
     Crop
 Prefinancing
     Seed
Crop Nutrients
Crop Protection               Crude Oil   Transesterification   Biodiesel



  Raw Material
    Soybean         Process                                     Protein
   Sunflower




                                                                            16
                                                                             16
We Participate in Growing Asian Markets
through our Strategic Partner




                    • 16% equity stake in Asia’s
                      largest agricultural processor
                    • Seat on board of directors
                    • Supply and sales agreements




                                                       17
Our Oilseeds Strategies are Regionally Focused
 • North America
    - Grow value-added business
    - Increase plant efficiencies
 • South America
    - Grow origination and logistics capabilities
    - Expand processing capacities
 • Europe and India
    - Grow origination and logistics capabilities
    - Increase processing capacities and flexibility



                                                       18
We are Increasing Processing Capacity and
Efficiency for Long-Term Demand
• North America
   - Expanding crushing capacities,
     refining, low-trans production
• South America
   - Added fertilizer blending capacity
   - Acquired vegetable oil bottling facility
   - Expanding biodiesel capacity
• Europe
   - Acquired processing plants in Czech
     Republic and southern Germany
   - Added processing flexibility

                                                19
        Corn Processing:
    Growing Processing/
Transforming Capabilities




                            20
ADM has a Competitive Advantage in Corn Processing




                Dry Mill
                Wet Mill
                Sugarcane Ethanol
                Corn Joint Ventures




                                                 21
                                                  21
Corn Processing Production Flexibility Enhances Value
                     CORN SYRUP, HIGH FRUCTOSE CORN SYRUP

                     Dextrose (Liquid and Crystalline), Maltodextrin
     Starch
                     Xanthan Gum, Citric Acid, Lactic Acid, Yeast
                     Sorbitol (Liquid and Crystalline)

                              Propylene Glycol, Ethylene Glycol
                              Isosorbide – Pilot Scale
                     Lysine, Threonine, Astaxanthin
     Corn Oil
                     FUEL ALCOHOL
     Gluten Feed
                     Food and Industrial Starches
     Gluten Meal     Ethyl Lactate

                     PHA (Bioplastic)


                     Additional Products


                                                                       22
Our Broad Product Line Serves a Wide
Range of Markets




                                       23
                                        23
We are Well-Positioned to Serve the Growing Ethanol Market




                                              ADM Plants
                                              Terminals




                                                           24
                                                            24
Ethanol Demand Exceeds RFS Requirements
                  16


                  14
                              Actual
                  12
                              RFS

                  10
Billion Gallons




                   8


                   6


                   4


                   2


                   0
                       2H07      1H08   2H08   1H09      2H09   1H10   2H10   2015

                                               Calendar Year

Source: EIA


                                                                                     25
HFCS Remains an Important Product and an
Attractive Alternative to Sugar

  • HFCS has broader functionality than sucrose
  • Relative to sugar, HFCS saves the food industry
    billions of dollars each year
  • Nutritionally, HFCS is the same as sugar or honey*
  • Positive HFCS volume growth on strong
    exports to Mexico




*Appendix Slide 48 compares HFCS with other sweeteners


                                                         26
Our Strategy is to Leverage our Processing Expertise
and Diversify Feedstocks/Product Portfolio

• Increase the diversity of our product portfolio

   ‐ Industrial chemicals

   ‐ Advanced biofuels

• Optimize the flexibility of our processing        Dextrose

  operations

• Build or acquire carbohydrate processing in
  key regions around the world


                                                               27
We are Increasing Processing Capacity
and Efficiency
 Corn
 • Operating Columbus and
   Cedar Rapids dry mill
 • Expanded Decatur swing capacity
   between ethanol and corn syrups
 • Completed construction of Clinton
   and Columbus co-gen plants
 • Growing product portfolio
 • Reducing plant production costs
 Sugar
 • Producing ethanol at first Brazilian mill

                                               28
       Cocoa and Wheat:
    Growing Processing /
Transforming Capabilities




                            29
We are a Leader in Cocoa Processing




                                 Processing Plant
                                 Buying Station




                                                    30
                                                     30
We are the Leading Flour Miller in North America,
and a Leader in the UK




                              Wheat & Durum Milling
                              Dry Corn Milling
                              Milo & Sorghum Milling
                              Bulgur Milling
                              Rice Milling
                              Dry Sweeteners




                                                       31
                                                        31
Cocoa and Milling Strategies Target Profit Growth

 • Cocoa: Gain efficiencies from the integration of
   Schokinag, Ghana and Hazelton, PA.

 • Milling: Improve efficiencies of existing facilities




                                                          32
Focusing on Profitable Growth




                                33
Our Diversified Portfolio Drives Earnings Growth

           FY08                                     FY09*                    FY10




         Oilseed Processing                  Corn Processing   Ag Services      Other




* Other results in FY09 were a loss of $6M



                                                                                        34
A Decade of Earnings Growth
(Amounts in millions)

                                                                                            $2,500



                                                                                            $2,000



                                                                                            $1,500


                                                            2,283
                                                                    2,134
                                                                                            $1,000
                                                                                    1,904

                                                    1,305                   1,362
                                             973                                            $500

                        512           569
                 383           460
    301
                                                                                            $0
   2000         2001    2002   2003   2004   2005   2006    2007    2008    2009    2010




Adjusted for LIFO



                                                                                                     35
Historical ROIC and WACC Trend
                                                                                                                     Q111
    18%                                                         Trailing 4Q LIFO Adjusted ROIC Earnings               $2.1B
                                                                Trailing 4Q LIFO Adjusted Average Invested Capital   $22.7B
    16%
                                                                Trailing 4Q Average   ROIC(1)                         9.4%
                                                                Trailing 4Q Average WACC                              7.2%
    14%

    12%

    10%

      8%

      6%

      4%

      2%

      0%
               Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111




                                                          (1)
                               Trailing 4Q Average ROIC              Trailing 4Q Average WACC

(1)Adjusted   for LIFO



                                                                                                                              36
ADM: Vital to the World

• Global trends offer
  opportunity for growth

• Our global asset base is
  positioned to capture value

• Our people enhance the
  value of our global assets

• Our business portfolio is
  diverse and strong


                                37
Vital to the World
Appendix




           39
Financial Highlights
(Amounts in millions, except per share data and percentages)

                                                                             Quarter Ended
                                                                              September 30
                                                                            2010              2009          Change
 Segment operating profit(1)                                            $      765        $      774       $          (9)
 Net earnings attributable to ADM                                       $      345        $      496       $       (151)
 Earnings per share                                                     $     0.54        $     0.77       $      (0.23)
 Effective income tax rate                                                   26.0%             30.7%


 LIFO impact per share (net of tax) (1)                                $     (0.12)       $     0.07       $      (0.19)

                                    Q1FY11 Net Earnings and Earnings Per Share Analysis

                                                       $77                  $20                           $442
                    $345




                 As reported                          LIFO             Start-up costs                 Adjusted for
                                                                                                     specified items (1)
 EPS                $0.54                             $0.12                 $0.03                         $0.69

(1)Non-GAAP   measure - see notes on page 54


                                                                                                                            40
Statement of Earnings Summary
(Amounts in millions, except per share data and percentages)
                                                                      Quarter Ended
                                                                      September 30
                                                                   2010          2009  Change
     Net sales and other
                                                           $   16,799  $    14,921   $    1,878
        operating income
   ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
     Gross profit                                                 808          973         (165)

     Selling, general and
                                                                      381               354          27
        administrative expenses

     Other (income) expense - net                                      (35)             (98)         63


     Earnings before taxes                                            462               717        (255)


     Income taxes                                                     120               220        (100)


     Net earnings including noncontrolling interests                  342               497        (155)

     Less: Net earnings/(losses) attributable to
                                                                        (3)               1           (4)
        noncontrolling interests

     Net earnings attributable
                                                               $      345     $         496    $   (151)
        to ADM

     Earnings per share                                        $      0.54    $     0.77       $   (0.23)




                                                                                                            41
Segment Operating Profit Summary
 (Amounts in millions)                               Quarter Ended
                                                      September 30
                                                   2010          2009      Change
    Oilseeds Processing
      Crushing & Origination                   $      176      $    135
      Refining, Packaging, Biodiesel & Other           76            70
      Asia                                             56            79
                                                      308           284    $    24

    Corn Processing
      Sweeteners & Starches                           146           194
      Bioproducts                                     195            (6)
                                                      341           188        153

    Agricultural Services
      Merchandising & Handling                        103           157
      Transportation                                   29            18
                                                      132           175         (43)

    Other
      Wheat, Cocoa & Gruma                             26           107
      Financial                                       (42)           20
                                                      (16)          127        (143)

    Total Segment Operating Profit (1)         $      765     $     774    $     (9)


(1)Non-GAAP   measure - see notes on page 54



                                                                                       42
Balance Sheet
  (Amounts in millions)


                                                                             September 30                         June 30
                                                                                 2010                              2010
                (1)
      Cash                                                                     $          1,370               $       1,440
      Net property, plant and equipment                                                   8,908                       8,712

      Operating working capital (2)                                                     10,550                        8,839
          - Total inventories                                                                8,718                      7,611


      Total debt                                                                          8,903                       7,548
          - CP outstanding                                                                   1,225                          -


      Shareholders' equity                                                              15,387                       14,631


(1)Cash   = cash and cash equivalents and short-term marketable securities
(2)Current   assets (excluding cash and cash equivalents and short-term marketable securities) less current
  liabilities (excluding short-term debt and current maturities of long-term debt)




                                                                                                                                43
Cash Flow Summary
 (Amounts in millions)
                                                       Three Months Ended
                                                          September 30
                                                           2010         2009
 Cash from operations before working capital changes   $     510    $     730
 Changes in working capital                             (1,381)         1,262
 Purchases of property, plant and equipment                 (335)        (497)
 Marketable securities                                      (214)          57
 Debt increase/(decrease) - net                            1,312         (141)
 Dividends                                                   (96)         (90)
 Stock buyback                                               (31)              -
 Other                                                        51           14


 Increase/(decrease) in cash and cash equivalents      $ (184)      $ 1,335




                                                                                   44
  Summary of Specified Items
       (Amounts in millions)




                                Oilseeds       Corn         Ag                                            Impact       Impact
                               Processing   Processing    Services           Other         Corporate    Before Tax    After Tax

Quarter ended
September 30, 2010
  LIFO charge                  $        -   $        -    $          -   $            -    $    (123)   $     (123)   $      (77)
  Start-up costs               $        -   $      (32)   $          -   $            -    $       -    $      (32)   $      (20)

Quarter ended
September 30, 2009
  LIFO credit                  $        -   $        -    $          -   $            -    $      76    $       76    $      47
  Start-up costs               $        -   $      (10)   $          -   $           (1)   $       -    $      (11)   $      (7)




                                                                                                                           45
Oilseeds Processing Global Balance

 • 93,000 MT/day oilseeds capacity
    - 52% North America (78% soybean, 22% softseed)

    - 34% Europe (54% soybean, 46% softseed)

    - 14% South America (96% soybean)

 • Asia-Wilmar ownership (16% equity ownership)
 • 22 MM MT/yr protein meal capacity
 • 7.7 MM MT/yr vegetable oil capacity
 • 1.6 MM MT/yr biodiesel capacity

                                                      46
Corn Processing Product Portfolio

 • 60,000 MT/day capacity in North America
    - 5 wet mills, 3 dry mills

 • Leading positions in
    - corn sweeteners
    - ethanol
    - starches and amino acids

 • JV growth opportunities
    - Eastern Europe
    - Mexican HFCS
                                             47
Typical Sweeteners and their Compositions

   Sweetener                                   % Fructose*           % Glucose*

   Corn Syrup                                   Less than 0.5           99.5

   HFCS – 42                                           42                58

   Honey                                               48                52

   Sucrose                                             50                50

   Grape Juice Concentrate                             53                47

   HFCS – 55                                           55                45

   Apple Juice Concentrate                             65                35

   Pear Juice Concentrate                              74                26

   *After metabolism by the body
   Source: John S. White, Changing the Conversation about HFCS Ten
   Truths in Ten Minutes, July 2009


                                                                                  48
Flour Milling and Cocoa Processing

 • 27,000 MT/day Flour Milling capacity

    - North America/Caribbean

    - Europe

 • 3,000 MT/day Chocolate and Cocoa Bean
   Processing capacity

    - NA, SA, Europe, Africa, and Asia




                                           49
           Return on Invested Capital
            (Amounts in millions)
        LIFO Adjusted ROIC Earnings                                                                                                        Four Quarters
                                                                                    Quarter Ended                                             Ended
                                                         Dec 31, 2009        Mar 30, 2010    Jun 30, 2010            Sep 30, 2010           Sep 30, 2010

        Net earnings attributable to ADM                 $          567      $          421      $          446      $          345        $      1,779
        Adjustments
              Interest expense                                      105                 101                 118                 117                 441
              Finance interest expense (3)                           (3)                 (3)                 (5)                 (5)                (16)
              LIFO                                                   54                 (43)                 23                 123                 157
                   Total adjustments                                156                  55                 136                 235                 582
              Tax on adjustments                                    (59)                (21)                (51)                (89)               (220)
                   Net adjustments                                   97                  34                  85                 146                 362
        Total LIFO Adjusted ROIC Earnings                $          664      $          455      $          531      $          491        $      2,141

        ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
        LIFO Adjusted Invested Capital                                                                                                       Trailing
                                                                                    Quarter Ended                                          Four Quarter
                                                         Dec 31, 2009        Mar 30, 2010    Jun 30, 2010            Sep 30, 2010            Average

        Equity (1)                                       $       14,765      $       14,744      $       14,609      $      15,368         $     14,872
        + Interest-bearing liabilities (2)                        7,865               7,421               7,548              8,903                7,934
        - Finance interest-bearing liabilities (2) (3)             (242)               (272)               (215)              (242)                (243)
        + LIFO adjustment (net of tax)                              153                 126                 140                217                  159
        Total LIFO Adjusted Invested Capital             $       22,541      $       22,019      $       22,082      $      24,246         $     22,722

(1)   Excludes noncontrolling interests
(2)   Includes short-term debt, current maturities of long-term debt and long-term debt
(3)   Certain interest expense and interest-bearing liabilities of ADM’s financial business units are excluded from the ROIC calculation




                                                                                                                                                           50
Notes: Non-GAAP Reconciliation and
Restatement Information
(1) The Company uses certain “Non-GAAP” financial measures as defined by the Securities and Exchange Commission. These are
    measures of performance not defined by accounting principles generally accepted in the United States, and should be considered
    in addition to, not in lieu of, GAAP reported measures.


    Earnings adjusted for specified items
    Earnings adjusted for specified items is ADM’s net earnings after removal of the effect on earnings of certain specified items.
    Management believes that earnings adjusted for specified items represents a useful measure of ADM’s performance. Earnings
    adjusted for specified items is a non-GAAP financial measure and is not intended to replace net earnings, the most directly
    comparable GAAP financial measure, and should not be considered as an alternative to net earnings or any other measure of
    operating results under GAAP.


    Total segment operating profit
    Total segment operating profit, which is the consolidated segment operating profit of all of ADM’s operating segments, is ADM’s
    consolidated income from operations before income tax that includes interest income and expense of each segment relating to
    financing operating working capital. Total segment operating profit is a non-GAAP financial measure and is not intended to
    replace earnings before income tax, the most directly comparable GAAP financial measure. Total segment operating profit is not
    a measure of consolidated operating results under U.S. GAAP and should not be considered as an alternative to income from
    operations before income tax or any other measure of consolidated operating results under U.S. GAAP.


    LIFO impact per share (net of tax)
    The Company values certain inventories using the lower of cost, determined by either the first-in, first-out (FIFO) or last-in, first-
    out (LIFO) methods, or market. This document contains non-GAAP financial measures, including the after tax impact of LIFO on
    diluted earnings per share and LIFO adjusted return on net assets. We believe the inclusion of the impact of changes in the LIFO
    reserve, net of tax, in this document helps investors gain a meaningful understanding of operating results, and is consistent with
    how management measures the Company's performance, especially when comparing such results to prior periods.



                                                                                                                                      51

				
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