Delaware | 1-44 | 41-0129150 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
77 West Wacker Drive, Suite 4600 Chicago, Illinois | 60601 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (312) 634-8100 |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits | The following exhibits are furnished or filed, as applicable, herewith: |
99.1 |
ARCHER-DANIELS-MIDLAND COMPANY |
Date: | February 6, 2018 | By | /s/ D. Cameron Findlay | |
D. Cameron Findlay | ||||
Senior Vice President, General Counsel, and Secretary |
2017 | 2016 | |||||||
(Amounts in millions except per share data) | ||||||||
Earnings per share (as reported) | $ | 1.39 | $ | 0.73 | ||||
Adjusted earnings per share1 | $ | 0.82 | $ | 0.75 | ||||
Segment operating profit | $ | 733 | $ | 806 | ||||
Adjusted segment operating profit1 | $ | 793 | $ | 827 | ||||
Agricultural Services | 301 | 245 | ||||||
Corn Processing | 261 | 255 | ||||||
Oilseeds Processing | 202 | 239 | ||||||
WFSI | 56 | 38 | ||||||
Other | (27 | ) | 50 |
• | EPS as reported of $1.39 includes a $0.08 per share charge related to asset impairments and restructuring activities and a positive $0.65 per share net tax adjustment primarily related to U.S. tax reform. Adjusted EPS, which excludes these items, was $0.82.1 |
• | During 2017, the company returned $1.5 billion to shareholders through dividends and share repurchases. |
Quarter ended December 31 | Year ended December 31 | ||||||||||||||||||
(In millions) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||
Segment Operating Profit | $ | 733 | $ | 806 | $ | (73 | ) | $ | 2,536 | $ | 2,704 | $ | (168 | ) | |||||
Less specified items: | |||||||||||||||||||
(Gains) losses on sales of assets and businesses | (2 | ) | — | (2 | ) | (22 | ) | (114 | ) | 92 | |||||||||
Impairment, restructuring, and settlement charges | 62 | 16 | 46 | 160 | 32 | 128 | |||||||||||||
Hedge timing effects | — | 5 | (5 | ) | (4 | ) | 1 | (5 | ) | ||||||||||
Adjusted Segment Operating Profit | $ | 793 | $ | 827 | $ | (34 | ) | $ | 2,670 | $ | 2,623 | $ | 47 | ||||||
Agricultural Services | $ | 301 | $ | 245 | $ | 56 | $ | 585 | $ | 573 | $ | 12 | |||||||
Merchandising and handling | 221 | 126 | 95 | 300 | 228 | 72 | |||||||||||||
Milling and other | 43 | 62 | (19 | ) | 199 | 226 | (27 | ) | |||||||||||
Transportation | 37 | 57 | (20 | ) | 86 | 119 | (33 | ) | |||||||||||
Corn Processing | $ | 261 | $ | 255 | $ | 6 | $ | 909 | $ | 761 | $ | 148 | |||||||
Sweeteners and starches | 185 | 156 | 29 | 746 | 655 | 91 | |||||||||||||
Bioproducts | 76 | 99 | (23 | ) | 163 | 106 | 57 | ||||||||||||
Oilseeds Processing | $ | 202 | $ | 239 | $ | (37 | ) | $ | 841 | $ | 880 | $ | (39 | ) | |||||
Crushing and origination | 44 | 55 | (11 | ) | 241 | 386 | (145 | ) | |||||||||||
Refining, packaging, biodiesel, and other | 64 | 93 | (29 | ) | 272 | 344 | (72 | ) | |||||||||||
Asia | 94 | 91 | 3 | 328 | 150 | 178 | |||||||||||||
Wild Flavors & Specialty Ingredients (WFSI) | $ | 56 | $ | 38 | $ | 18 | $ | 284 | $ | 275 | $ | 9 | |||||||
Other | $ | (27 | ) | $ | 50 | $ | (77 | ) | $ | 51 | $ | 134 | $ | (83 | ) | ||||
Segment Operating Profit | $ | 733 | $ | 806 | $ | (73 | ) | $ | 2,536 | $ | 2,704 | $ | (168 | ) | |||||
Corporate Results | $ | (190 | ) | $ | (177 | ) | $ | (13 | ) | $ | (927 | ) | $ | (882 | ) | $ | (45 | ) | |
LIFO credit (charge) | (2 | ) | (2 | ) | — | 2 | (19 | ) | 21 | ||||||||||
Interest expense - net | (78 | ) | (77 | ) | (1 | ) | (310 | ) | (282 | ) | (28 | ) | |||||||
Unallocated corporate costs | (94 | ) | (132 | ) | 38 | (470 | ) | (457 | ) | (13 | ) | ||||||||
Minority interest and other charges | (16 | ) | 34 | (50 | ) | (149 | ) | (124 | ) | (25 | ) | ||||||||
Earnings Before Income Taxes | $ | 543 | $ | 629 | $ | (86 | ) | $ | 1,609 | $ | 1,822 | $ | (213 | ) |
Quarter ended December 31 | Year ended December 31 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Revenues | $ | 16,070 | $ | 16,501 | $ | 60,828 | $ | 62,346 | |||||||
Cost of products sold | 15,131 | 15,490 | 57,322 | 58,727 | |||||||||||
Gross profit | 939 | 1,011 | 3,506 | 3,619 | |||||||||||
Selling, general, and administrative expenses | 463 | 455 | 1,993 | 1,980 | |||||||||||
Asset impairment, exit, and restructuring costs | 33 | 19 | 173 | 55 | |||||||||||
Equity in (earnings) losses of unconsolidated affiliates | (129 | ) | (139 | ) | (456 | ) | (292 | ) | |||||||
Interest income | (31 | ) | (24 | ) | (106 | ) | (92 | ) | |||||||
Interest expense | 84 | 80 | 330 | 293 | |||||||||||
Other (income) expense - net | (24 | ) | (9 | ) | (37 | ) | (147 | ) | |||||||
Earnings before income taxes | 543 | 629 | 1,609 | 1,822 | |||||||||||
Income tax benefit (expense) | 249 | (203 | ) | (7 | ) | (534 | ) | ||||||||
Net earnings including noncontrolling interests | 792 | 426 | 1,602 | 1,288 | |||||||||||
Less: Net earnings (losses) attributable to noncontrolling interests | 4 | 2 | 7 | 9 | |||||||||||
Net earnings attributable to ADM | $ | 788 | $ | 424 | $ | 1,595 | $ | 1,279 | |||||||
Diluted earnings per common share | $ | 1.39 | $ | 0.73 | $ | 2.79 | $ | 2.16 | |||||||
Average number of shares outstanding | 565 | 583 | 572 | 591 | |||||||||||
Other (income) expense - net consists of: | |||||||||||||||
(Gains) losses on sales of assets (a) | $ | (14 | ) | $ | (13 | ) | $ | (80 | ) | $ | (130 | ) | |||
Loss on debt extinguishment (b) | — | — | 11 | — | |||||||||||
Other - net (c) | (10 | ) | 4 | 32 | (17 | ) | |||||||||
$ | (24 | ) | $ | (9 | ) | $ | (37 | ) | $ | (147 | ) |
December 31, 2017 | December 31, 2016 | |||||||
(in millions) | ||||||||
Net Investment In | ||||||||
Cash and cash equivalents (b) | $ | 804 | $ | 619 | ||||
Short-term marketable securities (b) | — | 296 | ||||||
Operating working capital (a) | 7,421 | 7,384 | ||||||
Property, plant, and equipment | 10,138 | 9,758 | ||||||
Investments in and advances to affiliates | 5,088 | 4,497 | ||||||
Long-term marketable securities | 92 | 187 | ||||||
Goodwill and other intangibles | 3,918 | 3,703 | ||||||
Other non-current assets | 802 | 579 | ||||||
$ | 28,263 | $ | 27,023 | |||||
Financed By | ||||||||
Short-term debt (b) | $ | 857 | $ | 154 | ||||
Long-term debt, including current maturities (b) | 6,636 | 6,777 | ||||||
Deferred liabilities | 2,395 | 2,887 | ||||||
Temporary equity | 53 | 24 | ||||||
Shareholders’ equity | 18,322 | 17,181 | ||||||
$ | 28,263 | $ | 27,023 |
(a) | 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). |
(b) | Net debt is calculated as short-term debt plus long-term debt, including current maturities less cash and cash equivalents and short-term marketable securities. |
Year ended December 31 | ||||||||
2017 | 2016 | |||||||
(in millions) | ||||||||
Operating Activities | ||||||||
Net earnings | $ | 1,602 | $ | 1,288 | ||||
Depreciation and amortization | 924 | 900 | ||||||
Asset impairment charges | 101 | 34 | ||||||
Gains on sales of assets | (80 | ) | (130 | ) | ||||
Other - net | (652 | ) | (32 | ) | ||||
Changes in operating assets and liabilities | 316 | (505 | ) | |||||
Total Operating Activities | 2,211 | 1,555 | ||||||
Investing Activities | ||||||||
Purchases of property, plant and equipment | (1,049 | ) | (882 | ) | ||||
Net assets of businesses acquired | (187 | ) | (130 | ) | ||||
Proceeds from sale of business/assets | 195 | 195 | ||||||
Marketable securities - net | 447 | 258 | ||||||
Other investing activities | (292 | ) | (652 | ) | ||||
Total Investing Activities | (886 | ) | (1,211 | ) | ||||
Financing Activities | ||||||||
Long-term debt borrowings | 532 | 1,041 | ||||||
Long-term debt payments | (846 | ) | (14 | ) | ||||
Net borrowings (payments) under lines of credit | 685 | 61 | ||||||
Share repurchases | (750 | ) | (1,000 | ) | ||||
Cash dividends | (730 | ) | (701 | ) | ||||
Other | 81 | 34 | ||||||
Total Financing Activities | (1,028 | ) | (579 | ) | ||||
Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | 297 | (235 | ) | |||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period | 1,561 | 1,796 | ||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period | $ | 1,858 | $ | 1,561 |
Quarter ended December 31 | Year ended December 31 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in ‘000s metric tons) | ||||||||||||||||
Processed volumes | ||||||||||||||||
Oilseeds Processing | 9,131 | 8,651 | 34,733 | 33,788 | ||||||||||||
Corn Processing | 5,849 | 5,650 | 22,700 | 22,273 | ||||||||||||
Total processed volumes | 14,980 | 14,301 | 57,433 | 56,061 | ||||||||||||
Quarter ended December 31 | Year ended December 31 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Agricultural Services | $ | 7,517 | $ | 8,066 | $ | 26,246 | $ | 27,893 | ||||||||
Corn Processing | 2,509 | 2,516 | 9,352 | 9,466 | ||||||||||||
Oilseeds Processing | 5,424 | 5,281 | 22,530 | 22,152 | ||||||||||||
Wild Flavors and Specialty Ingredients | 526 | 544 | 2,313 | 2,427 | ||||||||||||
Other | 94 | 94 | 387 | 408 | ||||||||||||
Total revenues | $ | 16,070 | $ | 16,501 | $ | 60,828 | $ | 62,346 |
Quarter ended December 31 | Year ended December 31 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
EPS (fully diluted) as reported | $ | 1.39 | $ | 0.73 | $ | 2.79 | $ | 2.16 | |||||||
Adjustments: | |||||||||||||||
LIFO charge (credit) (a) | — | — | — | 0.02 | |||||||||||
(Gains) losses on sales of assets and businesses (b) | — | — | 0.02 | (0.15 | ) | ||||||||||
Asset impairment, restructuring, and settlement charges (c) | 0.08 | 0.03 | 0.25 | 0.13 | |||||||||||
Loss on debt extinguishment (d) | — | — | 0.01 | — | |||||||||||
Post-retirement benefit adjustment (e) | — | (0.04 | ) | — | (0.04 | ) | |||||||||
Tax adjustments (f) | (0.65 | ) | 0.03 | (0.64 | ) | 0.04 | |||||||||
Sub-total adjustments | (0.57 | ) | 0.02 | (0.36 | ) | — | |||||||||
Adjusted earnings per share | $ | 0.82 | $ | 0.75 | $ | 2.43 | $ | 2.16 | |||||||
(a) | Current quarter and year to date changes in the Company’s LIFO reserves of $2 million pretax ($1 million after tax) and $2 million pretax ($1 million after tax), respectively, tax effected using the Company’s U.S. income tax rate. Prior quarter and year to date changes in the Company’s LIFO reserves of $2 million pretax ($1 million after tax), and $19 million pretax, ($12 million after tax), respectively, tax effected using the Company’s U.S. income tax rate. |
(b) | Current year to date gain of $22 million pretax ($10 million loss after tax) primarily related to the sale of the crop risk services business partially offset by an adjustment of the proceeds of the 2015 sale of the cocoa business, tax effected using the applicable tax rates. Prior year to date gain of $109 million pretax ($92 million after tax), primarily related to recovery of loss provisions and gain related to the sale of the Company’s Brazilian sugar ethanol facilities, realized contingent consideration on the sale of the Company’s equity investment in Gruma S.A. de C.V. in December 2012, and revaluation of the remaining interest to settlement value in conjunction with the acquisition of the remaining interest in Amazon Flavors, partially offset by a loss on sale of assets and a loss on sale of an equity investment, tax effected using the applicable tax rates. |
(c) | Current quarter charges of $69 million pretax ($46 million after tax) primarily consisted of a settlement charge and several individually insignificant asset impairments and restructuring charges, tax effected using the applicable tax rates. Current year to date charges of $214 million pretax ($144 million after tax) primarily consisted of the reconfiguration of the Company’s Peoria, Illinois ethanol complex, restructuring charges related to the reduction of certain positions within the Company’s global workforce, settlement charges, and several individually insignificant asset impairments and restructuring charges, tax effected using the applicable tax rates. Prior quarter charges of $19 million pretax ($13 million after tax) related to impairment of certain long-lived assets and restructuring charges, tax effected using the applicable tax rates. Prior year to date charges of $117 million pretax ($77 million after tax), primarily related to legal fees and settlement, impairment of certain long-lived assets and investments, and restructuring charges, tax effected using the applicable tax rates. |
(d) | Debt extinguishment charge of $11 million pretax ($7 million after tax) related to the early redemption of the Company’s $559 million notes due on March 15, 2018. |
(e) | U.S. retiree medical benefit curtailment gain of $38 million pretax ($24 million after tax), tax effected using the Company’s U.S. effective income tax rate. |
(f) | Tax adjustments related to the enactment of the Tax Cuts and Jobs Act totaling $379 million in the current quarter and year to date and certain out of period discrete items consisting of valuation allowances, deferred tax re-rates, and changes in assertion totaling $9 million and $13 million in the current quarter and year to date, respectively. Certain out of period discrete tax adjustments totaling $21 million and $24 million, related to valuation allowances, deferred tax re-rates, and changes in assertion in the prior quarter and year to date, respectively. |
Adjusted ROIC Earnings (in millions) | |||||||||||||||||||
Four Quarters | |||||||||||||||||||
Quarter Ended | Ended | ||||||||||||||||||
Mar. 31, 2017 | June 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | |||||||||||||||
Net earnings attributable to ADM | $ | 339 | $ | 276 | $ | 192 | $ | 788 | $ | 1,595 | |||||||||
Adjustments: | |||||||||||||||||||
Interest expense | 81 | 86 | 79 | 84 | 330 | ||||||||||||||
LIFO | (13 | ) | 9 | — | 2 | (2 | ) | ||||||||||||
Other adjustments (3) | 14 | 20 | 106 | (303 | ) | (163 | ) | ||||||||||||
Total adjustments | 82 | 115 | 185 | (217 | ) | 165 | |||||||||||||
Tax on adjustments | (28 | ) | (13 | ) | (70 | ) | (55 | ) | (166 | ) | |||||||||
Net adjustments | 54 | 102 | 115 | (272 | ) | (1 | ) | ||||||||||||
Total Adjusted ROIC Earnings | $ | 393 | $ | 378 | $ | 307 | $ | 516 | $ | 1,594 | |||||||||
Adjusted Invested Capital (in millions) | |||||||||||||||||||
Quarter Ended | Trailing Four | ||||||||||||||||||
Mar. 31, 2017 | June 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Quarter Average | |||||||||||||||
Equity (1) | $ | 17,121 | $ | 17,411 | $ | 17,570 | $ | 18,313 | $ | 17,604 | |||||||||
+ Interest-bearing liabilities (2) | 7,207 | 6,980 | 7,336 | 7,493 | 7,254 | ||||||||||||||
+ LIFO adjustment (net of tax) | 39 | 44 | 44 | 46 | 43 | ||||||||||||||
Other adjustments (3) | 12 | 43 | 66 | (326 | ) | (51 | ) | ||||||||||||
Total Adjusted Invested Capital | $ | 24,379 | $ | 24,478 | $ | 25,016 | $ | 25,526 | $ | 24,850 | |||||||||
Adjusted Return on Invested Capital | 6.4 | % |