Archer Daniels Midland 2006 Annual Report Download - page 40

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38 Archer Daniels Midland Company
value recognition provisions of SFAS Number 123(R), Share-Based
Payment, using the modified prospective transition method. Under
the modified prospective transition method, compensation expense
recognized during 2006 include (a) compensation expense for
all share-based payments granted prior to, but not yet vested as of,
July 1, 2005 based on the grant date fair value estimated in
accordance with the original provisions of SFAS Number 123, and
(b) compensation expense for all share-based payments granted
subsequent to July 1, 2005 based on the grant date fair value estimated
in accordance with the provisions of SFAS Number 123(R). Results of
prior periods have not been restated.
As a result of adopting SFAS Number 123(R), the Company’s earnings
before income taxes and net earnings for 2006, were $24 million and
$15 million lower, respectively, than if the Company had continued
to account for share-based compensation under SFAS Number 123.
Basic and diluted earnings per share for 2006 were $.02 lower as a
result of adopting SFAS Number 123(R).
The following table illustrates the effect on net earnings and
earnings per share as if the fair value method had been applied to all
outstanding and unvested employee stock options and restricted stock
awards in each year.
2006 2005 2004
(In thousands,
except per share amounts)
Net earnings, as reported . . . . . . . . . . . . . . . . $1,312,070 $1,044,385 $494,710
Add: stock-based compensation expense
reported in net earnings,
net of related tax . . . . . . . . . . . . . . . . . . . . 41,834 18,101 4,566
Deduct: stock-based compensation expense
determined under fair value method,
net of related tax . . . . . . . . . . . . . . . . . . . . 41,834 18,101 8,748
Pro forma net earnings . . . . . . . . . . . . . . . . . $1,312,070 $1,044,385 $490,528
Basic earnings per common share:
As reported ......................... $2.01 $1.60 $.76
Pro forma .......................... $2.01 $1.60 $.76
Diluted earnings per common share:
As reported ......................... $2.00 $1.59 $.76
Pro forma .......................... $2.00 $1.59 $.75