ADM Investor Presentation

Vital to the World
August, 2014
Safe Harbor Statement
Some of our statements constitute forward-looking statements that
reflect management’s current views and estimates of future economic
circumstances, industry conditions, Company performance and
financial results.
These statements are based on many assumptions and factors that are
subject to risk and uncertainties. ADM has provided additional
information in its reports on file with the SEC concerning assumptions
and factors that could cause actual results to differ materially from
those in this presentation, and you should carefully review the
assumptions and factors in our SEC reports.
To the extent permitted under applicable law, ADM assumes no
obligation to update any forward-looking statements as a result of new
information or future events.
ARCHER DANIELS MIDLAND COMPANY 2
Premier Player in Global Agribusiness
Serving Vital Needs Throughout the World
Key Financial Statistics
CY13 revenues
Facilities
Market cap (7/31/2014)
NYSE:
CY13 Segment Operating Profit
$3.0 Billion1
$90B
745+
~$30B
ADM
Corn Processing1
31%
Oilseeds
Processing
50%
18%
Ag Services1
1% Other
1Excludes
specified items
ARCHER DANIELS MIDLAND COMPANY 3
ADM’s Proven Core Model
• Expand the Size and Global Reach of our Core Model
Corn
Source
Transport
Oilseeds
Process
Transform Distribute
Market
& Sell
Food
Feed
Wheat
Fuel
Cocoa
Industrial
Financial strength and industry acumen underpin the chain and drive value
• Expand Volumes
and Diversify
Crops
• Expand Volumes
and Diversify
Product Portfolios
ARCHER DANIELS MIDLAND COMPANY 4
Our Assets and Strategies Support Growth
Sourcing distribution
Processing distribution
Sourcing facilities
Oilseeds processing
Corn processing
Cocoa and wheat processing
W Wilmar
ARCHER DANIELS MIDLAND COMPANY 5
Strong, Diversified Business Portfolio
Diverse segment and product mix performs as market conditions change
Adjusted Operating Profit
4,400
4,083
3,900
2,728
$ Million
2,900
2,400
3,447
3,441
3,400
2,515
2,833
2,962
CY12
CY13
1,900
1,400
900
400
-100
FY07
FY08
Oilseeds Processing
FY09
FY10
Corn Processing
FY11
Agricultural Services
Other
Prior periods have been restated to conform to current year presentation, except for the elimination of the allocation of
working capital interest in fiscal 2007, 2008, and 2009.
See appendix page 36
In January 2013, ADM converted to a calendar year ending fiscal year. CY12 represents 12-months ending December 31, 2012.
Prior FY’s represent 12-months ending June 30th.
ARCHER DANIELS MIDLAND COMPANY 6
Population Continues to Grow, Led by Asia
Global Population Growth 2010 – 2030: +1.4 Billion (21%)
0%
4%
54%
41%
7%
Land Suitability for Crop Production
Very Highly
Highly
Source: FAO, Land suitability maps for rain-fed cropping, 2000
ARCHER DANIELS MIDLAND COMPANY 7
Tailored Strategies by Business and Region
North
America
South
America
Western
Europe
Eastern
Europe
Asia &
Australia
Grow
Exports
Grow
Optimize
Grow
Grow
Oilseeds
Optimize
Processing
Grow
Optimize
Grow
Wilmar
Partnership
Corn
Optimize
Processing
Assess
--
EastStarch
JV
Grow
Origination and
Transportation
ARCHER DANIELS MIDLAND COMPANY 8
Ag Services Links Crops to Global Markets
Efficiently buy, store, clean and transport agricultural commodities
• Extensive U.S. elevator
network
Agricultural Services Adjusted Operating Profit
1500
$ Million
1,196
• Trucks, railcars, barges,
ports and ocean-going
vessels
1,002
1000
500
1,245
1,230
858
535
491
0
FY07
FY08
FY09
Merchandising & Handling
FY10
FY11
Transportation
CY12
• Fundamental factors:
size of global harvest;
relative sizes of regional
harvests; demand for
U.S. crops
CY13
Milling & Other
Prior periods have been restated to conform to current year presentation, except for the elimination of the allocation of
working capital interest in fiscal 2007, 2008, and 2009.
See appendix page 36
In January 2013, ADM converted to a calendar year ending fiscal year. CY12 represents 12-months ending December 31, 2012.
Prior FY’s represent 12-months ending June 30th.
ARCHER DANIELS MIDLAND COMPANY 9
Global Origination and Transportation Assets
Includes both Ag Services and Oilseeds assets
ARCHER DANIELS MIDLAND COMPANY 10
Origination and Transportation Strategies
by Region
North America
• Expand crop origination
and export networks
• Grow inputs business
South America
• Expand crop
origination and export
networks
• Grow inputs business
Eastern Europe
• Expand crop origination and
export networks
Asia
• Grow deliveries
• Leverage Wilmar
partnership
Africa
• Grow deliveries
ARCHER DANIELS MIDLAND COMPANY 11
Execution of Origination and Transportation
Strategies
Port of Constanţa, Romania
• Grow network along
Danube River to strengthen
origination base in Eastern
Europe
• Purchased nine elevators in
Wisconsin
• Established partnerships
with Wilmar in ocean
freight and fertilizer
ARCHER DANIELS MIDLAND COMPANY 12
Oilseeds is Largest Source of Operating Profit
Assets concentrated in North and South America and Europe
Oilseeds Processing Adjusted Operating Profit
1900
$ Million
1,554
1,619
1,620
1,350
1400
1,486
1,065
900
• Fundamental factors:
availability of crops;
demand for animal
feed, refined oils and
biodiesel
760
400
-100
FY07
FY08
• Oilseeds are processed
into meal and oil –
refined into highermargin products
FY09
FY10
FY11
CY12
CY13
Crushing & Origination
Asia
Refining, Packaging, Biodiesel & Other
Cocoa & Other
Prior periods have been restated to conform to current year presentation, except for the elimination of the allocation of
working capital interest in fiscal 2007, 2008, and 2009.
See appendix page 36
In January 2013, ADM converted to a calendar year ending fiscal year. CY12 represents 12-months ending December 31, 2012.
Prior FY’s represent 12-months ending June 30th.
ARCHER DANIELS MIDLAND COMPANY 13
Oilseeds Diverse Product Portfolio
Lecithin
Soybean
Gums
Crude Oil
Refine
Vitamin E
Refine
Canola/Rapeseed
Oil
Sunflower
Sterols
Transesterify
Biodiesel/Glycerin
Interesterify
Shortening
Hydrogenate
Margarine
Oil
Flax
Protein Meal
Protein Meal
Soy Flour/Cotton Flour
Cottonseed
Peanut
Cotton Lint
Refine
Soy Concentrate
Soy Isolate
Texturize
TVP/TVC
Refine
Cellulose
Palm
ARCHER DANIELS MIDLAND COMPANY 14
Oilseeds Strategies by Region
North America
• Optimize existing assets
• Seek opportunities to
rationalize assets
• Grow higher margin
businesses
South America
• Acquire capacity
• Increase existing
capacity
Eastern Europe
• Acquire capacity
• Increase existing capacity
Western Europe
• Opportunistic consolidation
• Strengthen base business
• Improve flexibility of existing assets
India
• Acquire processing assets
• Add capacity to existing
facilities
China
• Grow through Wilmar
partnership
ARCHER DANIELS MIDLAND COMPANY 15
Execution of Oilseeds Regional Strategies
Czernin, Poland
• Acquired Elstar Oils in
Poland
• Formed partnership with
Wilmar
• Bought two crushing
facilities and remaining
ownership of JV in India
• Closed soybean
processing plant in
Galesburg, Illinois
• Recently completed a
soybean crush plant in
Paraguay
ARCHER DANIELS MIDLAND COMPANY 16
Largest Corn Processor in the U.S.
Wet and dry processing mills located in the U.S.
• Wet mills produce 20+
different products
Corn Processing Adjusted Operating Profit
1500
1,173
1,105
961
$ Million
1000
900
845
297
179
500
0
-500
FY07
FY08
FY09
FY10
Sweeteners & Starches
FY11
CY12
CY13
• Dry mills produce
ethanol, oils, DDGs
• Fundamental factors:
availability of corn in
U.S.; demand for
sweeteners and
starches; S&D balance
for ethanol
Bioproducts
Prior periods have been restated to conform to current year presentation, except for the elimination of the allocation of
working capital interest in fiscal 2007, 2008, and 2009.
See appendix page 36
In January 2013, ADM converted to a calendar year ending fiscal year. CY12 represents 12-months ending December 31, 2012.
Prior FY’s represent 12-months ending June 30th.
ARCHER DANIELS MIDLAND COMPANY 17
Fight for Grind Maximizes Corn Margins
Corn Syrup, High Fructose Corn Syrup
Starch
Dextrose (Liquid and Crystalline), Maltodextrin
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
Additional Products
ARCHER DANIELS MIDLAND COMPANY 18
Optimizing Corn Processing Assets
• Optimize wet mill portfolio
• Grow through
EastStarch JV
• Drive cost reductions in
processing plants and
distribution networks
• Closed small ethanol plant
in North Dakota
Corn Processing, Decatur, IL
ARCHER DANIELS MIDLAND COMPANY 19
Operational Improvements to Drive Returns
•
•
•
•
•
•
Earnings trend
Capital allocation
Cost reduction
Cash conversion
Balance sheet strength
Returning capital to
shareholders
Commercial Operations, Decatur, IL
ARCHER DANIELS MIDLAND COMPANY 20
Solid Decade of Earnings Growth
Adjusted EPS
$4.00
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 CY12 CY13
YOY EPS (adj)
2Y Moving Avg.(adj)
Earnings and EPS net of specified items (including LIFO) – see appendix page 36.
In January 2013, ADM converted to a calendar year ending fiscal year. CY12 represents 12-months ending
December 31, 2012. Prior FY’s represent 12-months ending June 30th.
ARCHER DANIELS MIDLAND COMPANY 21
Historical ROIC and WACC Trend
ROIC Objective: 200 BPS over WACC
Trailing 4Q Average Adjusted EVA
Trailing 4Q Average Adjusted ROIC(1)(2)
Annual WACC
Trailing 4Q Average ROIC (1)(3)
14%
12%
Q2 CY14
$345M
7.7%
6.4%
6.6%
10%
8%
6%
4%
2%
0%
Q2 FY09
Q2 FY10
Trailing 4Q Average ROIC
Q2 FY11
(1)(3)
Q2 FY12
Trailing 4Q Average Adjusted ROIC
Q2 CY13
(1)(2)
Q2 CY14
Long Term WACC
(1) Non-GAAP
measure - see notes on page 36
for LIFO - see notes on page 36
(3) Adjusted for LIFO and specified items - see notes on page 36
(2) Adjusted
ARCHER DANIELS MIDLAND COMPANY 22
Capital Spending and Acquisition Update
FY2012
Growth capital distributed globally; concentrated in Oilseeds and Ag Services
• About half of growth spending outside of U.S.
• ~80% of growth spending in Ag Services and Oilseeds
• Focused on strengthening international origination and
processing footprint and U.S. export infrastructure
• Major growth projects include:
Elstar Oils in Poland
Paraguay crush plant
Wisconsin grain elevators
Slovakia grain storage assets
Barges for Mississippi River
ARCHER DANIELS MIDLAND COMPANY 23
Implementing Cost Reductions
Driving productivity and operating leverage
Global workforce restructure
• $150 million in run rate savings
• Flattened organization and increased average span
of control
Improving processing efficiencies
• Reducing costs in ethanol production
• Lowering energy and maintenance costs
• Streamlining and standardizing across divisions
• Closing or consolidating lower-return plants
ARCHER DANIELS MIDLAND COMPANY 24
Cash Conversion Management
Opportunity for cash conversion cycle improvement
70.0
60.0
50.0
Days
40.0
30.0
20.0
10.0
0.0
FY'08
ADM
FY'09
FY'10
Company X
FY'11
Company Y
FY'12
LTM
Company Z
ARCHER DANIELS MIDLAND COMPANY 25
Enhancing Information for Investors
• Mitigating GAAP timing effects in operational results
• More use of hedge accounting in corn segment
• Introduction of “Adjusted Earnings” to describe results
• Additional clarity in segment results
• Moving fiscal year to calendar year
ARCHER DANIELS MIDLAND COMPANY 26
Balance Sheet Highlights
Strong balance sheet provides significant financial flexibility
(Amounts in millions)
Cash(1)
Net property, plant and equipment
June 30, 2014
$ 1,996
June 30, 2013
$ 2,029
10,110
10,091
Operating working capital(2)
- Total Inventories
$ 11,024
$ 12,042
9,024
10,194
Total debt
$ 5,622
$ 7,524
-
150
$ 20,219
$ 19,013
- CP
$
4.0 bil
$
5.9 bil
- Other
$
3.9 bil
$
2.0 bil
$
5.3 bil
$
6.1 bil
- CP outstanding
Shareholders' equity
Note: Available credit capacity
Memo: Readily marketable inventory
(1)Cash
= cash and cash equivalents and short-term marketable securities
(excluding cash and cash equivalents and short-term marketable securities) less
current liabilities (excluding short-term debt and current maturities of long-term debt)
(2)Current assets
ARCHER DANIELS MIDLAND COMPANY 27
Focus on Shareholder Returns
Consistent dividend rate growth
96¢
46¢
CY07
52¢
CY08
56¢
CY09
60¢
CY10
65.5¢ 70¢
CY11
CY12
76¢
• Balancing investment
opportunities against
returning capital to
shareholders
• Steady dividend growth,
including a 26% increase
announced in December
2013
CY13
CY14
• Share repurchase
commitment of 18 million
shares in 2014
ARCHER DANIELS MIDLAND COMPANY 28
Our Assets and Strategies Support Growth
Sourcing distribution
Processing distribution
Sourcing facilities
Oilseeds processing
Corn processing
Cocoa and wheat processing
W Wilmar
ARCHER DANIELS MIDLAND COMPANY 29
Appendix
ARCHER DANIELS MIDLAND COMPANY 30
Segment Operating Profit and Corporate Results
(Amounts in millions)
Oilseeds Processing
Crushing & Origination
Refining, Packaging, Biodiesel
Cocoa & Other (excluding timing effects)
Cocoa hedge timing effects (2)
Asia
Corn Processing
Sweeteners & Starches (excluding timing effects)
Bioproducts (excluding timing effects)
Corn hedge timing effects (2)
Agricultural Services
Merchandising & Handling
Transportation
Milling & Other
Financial
Quarter Ended June 30
2014
2013
$
327
$
321
163
185
119
93
20
(17)
$
(1)
26
347
136
141
$
70
203
115
27
61
11
Total Segment Operating Profit(1)
$
Memo: Adjusted Segment Operating Profit(1)(2)
Corporate
LIFO credit (charge)
Interest expense - net
Unallocated corporate costs
Other charges
Minority interest and other
Earnings Before Income Taxes
$
11
49
223
111
97
$
15
81
14
3
64
22
888
$
$
819
$
(153)
73
(78)
(109)
(31)
(8)
735
$
$
Change
$
6
(22)
26
37
$
(12)
(23)
124
25
44
$
55
122
101
24
(3)
(11)
647
$
241
$
621
$
198
$
(330)
(39)
(104)
(71)
(80)
(36)
317
$
177
112
26
(38)
49
28
418
$
$
$
$
(1) Non-GAAP
(2)Adjusted
measure - see notes on page 36
segment operating profit equals total segment operating profit adjusted for specified items and timing effects
ARCHER DANIELS MIDLAND COMPANY 31
GAAP Statement of Earnings Summary
(Amounts in millions, except per share data and percentages)
Quarter Ended
June 30
2014
2013
Revenues
Change
$ 21,494
$ 22,541
1,172
807
365
(452)
26
Gross profit
Selling, general, and administrative expenses
(426)
Asset impairment, exit, and restructuring costs
(31)
$ (1,047)
-
(31)
Equity in earnings of unconsolidated affiliates
78
62
16
Investment income
24
29
(5)
(79)
(107)
28
(3)
(22)
19
Interest expense
Other income (expense) - net
Earnings before taxes
735
Income taxes
317
(203)
Net earnings including noncontrolling interests
(91)
532
Less: Net earnings (losses) attributable
to noncontrolling interests
418
(112)
226
(1)
306
3
(4)
Net earnings attributable to ADM
$
533
$
223
$
310
Earnings per share (fully diluted)
$
0.81
$
0.34
$
0.47
ARCHER DANIELS MIDLAND COMPANY 32
Cash Flow Summary
Remain committed to returning $1.4 billion to shareholders in 2014
(Amounts in millions)
Cash from operations before working capital changes
Changes in working capital
Purchases of property, plant and equipment
Net assets of businesses acquired
Sub-Total
Six Months Ended
June 30
2014
2013
$ 1,052
$ 707
(69)
1,641
(398)
(442)
-
(16)
585
1,890
Marketable securities investment
50
324
Other investing activities
91
192
Debt increase/(decrease) - net
(1,290)
(2,027)
Dividends
(315)
(250)
Stock buyback
(493)
(11)
Other
(119)
16
Increase/(decrease) in cash and cash equivalents
$ (1,491)
$
134
ARCHER DANIELS MIDLAND COMPANY 33
Historical Segment Operating Profit(1)
FY 2007
Segment Operating Profit
As
Reported Adj
Oilseeds Processing
FY 2008
As
Refining, Packaging, Biodiesel, & Other
Cocoa & Other
407
As
FY 2010
As
As
FY 2011
As
As
FY 2012
As
760
1,065
1,065
1,350
1,350
407
685
685
733
733
1,551 110
834
1,554
1,690 (71)
As
CY 2012
As
As
CY 2013
As
As
Adjusted
Reported
1,619
1,302
1,302
1,620
1,620
1,473
As
Adjuste
d
Adj
13
1,486
834
925
925
641
641
931
931
835
835
271
295
295
241
241
454
454
240
183
183
276
276
(33)
183
183
183
172
172
217
261 349
610
278 19
297
814
86
900
202
202
181
181
265
265
300
300
(71)
342 (f)
68
68
67
67
104
104
3
126 (d)
129
240
(440)
523 (a)
Asia
FY 2009
As
Adjusted Reported Adj Adjusted Reported Adj Adjusted Reported Adj Adjusted Reported Adj Adjusted Reported Adj Adjusted Reported Adj
1,200 (440)
Crushing & Origination
As
13(h)
(20)
83
132
132
248
248
291
291
183
1,105
1,105
961
961
179
179
738
845
1,079
Sweeteners & Starches
509
509
557
557
500
500
538
538
330
330
335
335
421 9(h)
430
492 28(b, h)
520
Bioproducts
596
596
404
404
(321)
(321)
107
200 (d)
307
94
749 (d)
843
349
(74) (b)
275
10
(143) (b)
(133)
322 58(b, h)
380
697 (206)
491
1,196
1,196
1,245
947
947
779 79
858
380
155
535
Merchandising & Handling
(153)
362 (a)
209
829
829
155(b)
188
Transportation
156
156
144
144
Milling and Other
(53)
179 (a)
126
223
223
271
344
344
159
159
219
219
(31)
(31)
46
46
39
(11)
(11)
13
13
26
26
0
0
0
Corn Processing
Agricultural Services
Other
Processing
Financial
Total
(a)
(b)
(c)
(d)
(e)
170
3,161 (646)
Gain on asset and business disposal
Loss on asset and business disposal
Gruma foreign exchange losses
Start-up costs
Gain on sale of Gruma assets
(1) Non-GAAP
170
206
2,515
3,441
206
0
3,441
955 275
94
217
1,230
1,002
1,002
797
797
562
562
807
807
493
493
(62)
477 (a)
415
33
162
162
96
96
117
117
125
125
111
111
77
77
332
270
270
58
41
41
0
0
0
275
(4) (c)
(57)
2,453 275
(57)
2,728
46
3,337 110
1,323 (78)
1,173
(78)
399 (e)
7
141
(a, b)
321
329
329
46
15
15
0
0
0
46
39 7 (g)
46
3,447
4,131 (48)
4,083
15
2,525 349
191
91 (33)
0
15
(33)
91 (a)
58
41
2,874
2,768 65
2,833
2,708
41
254
2,962
f) Gain on Golden Peanut acquisition
g) Debt buyback costs
h) Timing effects
measure - see notes on page 36
ARCHER DANIELS MIDLAND COMPANY 34
Summary of Specified Items Excluded in
Adjusted Earnings
All amounts in millions except EPS
Earnings as Reported
Specified Items (after-tax):
LIFO Credit/(Charge)
Start-up Costs
FY00
301
FY01
383
1
FY02
511
FY03
451
FY04
495
FY05
1,044
FY06
1,312
FY07
2,154
FY08
1,780
FY09
1,684
FY10
1,930
FY11
2,036
FY12
1,223
CY12
1,375
CY13
1,342
(1)
(9)
(74)
71
7
(129)
(354)
322
26
(68)
(229)
(59)
6
2
140
(47)
(9)
(4)
(161)
(88)
Debt Buyback/Exchange Costs
Golden Peanut Gain
Gruma Bank Disposal
Gain/(Loss) on Interest Rate
Swaps
Asset abandonment/ impairment
and exit costs
Gain on sale of exchange
membership interests
Brazil income tax
remeasurement
Pension settlements
44
49
(37)
19
(274)
24
(14)
(44)
GrainCorp-related charges/gains
Interest exp adj related to
If-converted method
Wilmar Tax
Gruma Derivatives
Wilmar Restructure
Tyson/OSG shares
Agricore/Arkady Disposals
T& L Shares
Vitamin Settlement
CIP Gain
HFCS Litigation
FCPA
Tax – valuation allowance
Tax – U.S. biodiesel credits
Total Specified Items
Earnings Excluding Specified Items
Adjusted EPS (1)
(1) Non-GAAP
49
(189)
(144)
1,519
2.30
(37)
(82)
55
(201)
1,543
2.33
(13)
(158)
(171)
286
225
132
119
91
18
59
(252)
1
300
0.45
59
324
0.49
90
421
0.64
8
443
0.68
(326)
821
1.26
190
854
1.30
7
1,305
1.99
514
1,640
2.50
(354)
2,134
3.30
(7)
1,691
2.63
(126)
2,056
3.19
(198)
2,234
3.45
(272)
1,495
2.25
measure - see notes on page 36
ARCHER DANIELS MIDLAND COMPANY 35
Notes: Non-GAAP Reconciliation
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.
(1) Adjusted earnings per share (EPS) and adjusted EPS excluding timing effects
Adjusted EPS and adjusted EPS excluding timing effects reflect ADM’s fully diluted EPS after removal of the effect on Reported EPS of certain specified items and timing
effects as more fully described above. Management believes that these are useful measures of ADM’s performance because they provide investors additional
information about ADM’s operations allowing better evaluation of ongoing business performance. These non-GAAP financial measures are not intended to replace or be
an alternative to Reported EPS, the most directly comparable GAAP financial measure, or any other measures of operating results under GAAP. Earnings amounts in the
tables above have been divided by the company’s diluted shares outstanding for each respective quarter in order to arrive at an adjusted EPS amount for each specified
item and timing effect.
(2) Segment operating profit and adjusted segment operating profit
Segment operating profit is ADM’s consolidated income from operations before income tax excluding corporate items. Adjusted segment operating profit is segment
operating profit adjusted, where applicable, for specified items and timing effects. Timing effects relate to hedge ineffectiveness and mark-to-market hedge timing
effects. Management believes that segment operating profit and adjusted segment operating profit are useful measures of ADM’s performance because they provide
investors information about ADM’s business unit performance excluding corporate overhead costs, and specified items and timing effects. Segment operating profit and
adjusted segment operating profit are non-GAAP financial measures and are not intended to replace earnings before income tax, the most directly comparable GAAP
financial measure. Segment operating profit and adjusted segment operating profit are not measures of consolidated operating results under U.S. GAAP and should not
be considered as alternatives to income before income taxes or any other measure of consolidated operating results under U.S. GAAP.
(3) Adjusted Return on Invested Capital (ROIC)
Adjusted ROIC is Adjusted ROIC earnings divided by adjusted invested capital. Adjusted ROIC earnings is ADM’s net earnings adjusted for the after tax effects of interest
expense, changes in the LIFO reserve and other specified items. Adjusted ROIC invested capital is the sum of ADM’s equity (excluding noncontrolling interests) and
interest-bearing liabilities adjusted for the after tax effect of the LIFO reserve, and other specified items. Management believes Adjusted ROIC is a useful financial
measure because it provides investors information about ADM’s returns excluding the impacts of LIFO inventory reserves and other specified items. Management uses
Adjusted ROIC to measure ADM’s performance by comparing Adjusted ROIC to its weighted average cost of capital (WACC). Adjusted ROIC, Adjusted ROIC earnings and
Adjusted invested capital are non-GAAP financial measures and are not intended to replace or be alternatives to GAAP financial measures.
(4) Average ROIC
Average ROIC is ADM’s trailing 4-quarter net earnings adjusted for the after-tax effects of interest expense and changes in the LIFO reserve divided by the sum of ADM’s
equity (excluding non-controlling interests) and interest-bearing liabilities adjusted for the after-tax effect of the LIFO reserve. Management uses average ROIC for
investors as additional information about ADM’s returns. Average ROIC is a non-GAAP financial measure and is not intended to replace or be an alternative to GAAP
financial measures.
(5) Adjusted Economic Value Added
Adjusted economic value added is ADM’s trailing 4-quarter economic value added adjusted for LIFO and other specified items. The Company calculates economic value
added by comparing ADM’s trailing 4-quarter adjusted returns to its Annual WACC multiplied by adjusted invested capital. Adjusted economic value added is a non-GAAP
financial measure and is not intended to replace or be an alternative to GAAP financial measures.
ARCHER DANIELS MIDLAND COMPANY 36