Some notables from the recent 10-K filed by Archer Daniels Midland (ADM)
Cap Ex for Expansion:
During the past five years, the Company has experienced significant growth, spending approximately $5.3 billion for construction of new plants, maintenance and expansions of existing plants, and the acquisitions of plants and transportation equipment. The Company is constructing two dry corn milling plants which will increase the Company’s annual ethanol production capacity by 550 million gallons to 1.7 billion gallons. In addition, the Company is currently constructing a polyhydroxy alkanoate (PHA) natural plastics production facility, a propylene/ethylene glycol production facility, two cocoa processing facilities, and two coal cogeneration facilities. Construction of these plants is expected to be completed during the next two fiscal years. The Company expects to spend approximately $2.5 billion to complete construction of these facilities and other approved capital projects over the next five years. There have been no significant dispositions during the last five years.
Sales by Product:
Soybeans= 16%
Corn = 14%
Soybean Meal = 11%
Wheat = 10%
Hedges
The Company uses futures and options to fix the sales price of anticipated volumes of these ethanol sales in future months. These 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. The amounts representing the ineffectiveness of these cash flow hedges are immaterial. Gains and losses arising from open and closed hedging transactions are deferred in other comprehensive income, net of applicable income taxes, and recognized as a component of cost of products sold in the statement of earnings when the hedged item is recognized. As of June 30, 2008, the Company has recorded $81 million of after-tax gains in accumulated other comprehensive income related to gains and losses from cash flow hedge transactions. The Company expects to recognize these after-tax gains in the statement of earnings principally during fiscal year 2009.
Status of New Products
The Company continues to expand its business through the development of new products to meet the growing demands for food, animal feed, chemicals and energy.
The Company’s researchers continue to develop custom low-trans fats and oils for bakery and quick-service restaurants that utilize the Company’s Novalipid portfolio of low-trans fats and oils. These products have enabled customers to comply with various municipal trans fat bans.
The Company’s cooked, dried edible bean products are finding a number of new applications due to the increased interest among our customers in improving nutrition, especially in the area of foods designed for children.
The Company’s alliance with Metabolix for production of PHA, a biodegradable plastic, is proceeding. Semi-works production of PHA is being used for market development by Telles, a joint-venture company between the Company and Metabolix. The construction of the Company’s 50,000 metric ton per year commercial manufacturing facility is scheduled for completion in fiscal 2009.
The Company is proceeding with construction of a 100,000 metric ton per year commercial propylene/ethylene glycol facility. These products are principally used in industrial applications such as antifreeze and coolants, the manufacture of certain plastics, and paints and coatings.
The Company has entered into a joint development agreement with ConocoPhillips (COP) that will develop renewable transportation fuels from agriculture, forestry, and crops grown specifically for energy. This development effort is focused on the production of bio-crude oil that can be used by conventional petroleum refineries to produce transportation fuels.
FULL FILING
Disclosure (“none” means no position):
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