Archer Daniels Midland 2006 Annual Report Download - page 48

46 Archer Daniels Midland Company
September 2005. The Company will recognize the $7 million
after-tax gain in the statement of earnings over the term of the
debentures. At June 30, 2006, other comprehensive income (loss) also
included $6 million in after-tax gains representing the Company’s
share of derivative gains reported by unconsolidated affiliates of
the Company.
Note 4-Investments in and Advances
to Affiliates
The Company has ownership interests in non-majority-owned affiliates
accounted for under the equity method. The Company had 89 and
83 unconsolidated affiliates as of June 30, 2006 and 2005,
respectively, located in North and South America, Africa, Europe,
and Asia. During fiscal 2006, the Company made initial investments
in 14 unconsolidated affiliates and disposed of its investments in 8
affiliates. The following table summarizes the combined balance
sheets and the combined statements of earnings of the Company’s
unconsolidated affiliates as of and for each of the three years ended
June 30, 2006, 2005, and 2004.
2006 2005 2004
(In thousands)
Current assets ..................... $ 6,715,264 $ 6,240,670
Non-current assets . . . . . . . . . . . . . . . . . 8,778,336 7,384,141
Current liabilities . . . . . . . . . . . . . . . . . . 4,963,803 4,746,450
Non-current liabilities . . . . . . . . . . . . . . 2,309,241 1,912,285
Minority interests . . . . . . . . . . . . . . . . . . 935,193 430,530
Net assets ......................... $ 7,285,363 $ 6,535,546
Net sales ......................... $20,303,534 $20,214,914 $17,744,217
Gross profit ....................... 2,327,844 2,310,413 1,991,947
Net income (loss) . . . . . . . . . . . . . . . . . . 793,094 757,539 819,201
Undistributed earnings of the Company’s unconsolidated affiliates as of
June 30, 2006, are $501 million.
Two foreign affiliates for which the Company has a carrying value of
$374 million have a market value of $433 million based on quoted
market prices and exchange rates at June 30, 2006.
Note 5-Goodwill
The Company accounts for its goodwill and other intangible assets in
accordance with SFAS Number 142, Goodwill and Other Intangible
Assets. Under this standard, goodwill and intangible assets deemed
to have indefinite lives are not amortized but are subject to annual
impairment tests. The Company recorded a $10 million goodwill
impairment charge during 2006 based on the annual impairment
tests. The carrying value of the Company’s other intangible assets is
not material.
Goodwill balances attributable to consolidated businesses
and investments in affiliates, by segment, are set forth in the
following table.
Consolidated Investments
Businesses in Affiliates Total
2006 (In thousands)
Oilseeds Processing ................. $ 11,363 $ 9,144 $ 20,507
Corn Processing ..................... 76,961 7,074 84,035
Agricultural Services ................. 8,567 15,683 24,250
Other ................................ 126,380 67,120 193,500
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $223,271 $99,021 $322,292
Consolidated Investments
Businesses in Affiliates Total
2005 (In thousands)
Oilseeds Processing . . . . . . . . . . . . . . . . . . . . . . $ 12,279 $ 9,141 $ 21,420
Corn Processing . . . . . . . . . . . . . . . . . . . . . . . . 76,961 7,074 84,035
Agricultural Services . . . . . . . . . . . . . . . . . . . . . 6,771 8,670 15,441
Other ................................. 137,151 67,120 204,271
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 233,162 $ 92,005 $ 325,167
The changes in goodwill during 2006 are related to acquisitions, the
disposal of a subsidiary, goodwill impairments, and foreign currency
translation adjustments.
Note 6-Debt and Financing Arrangements
2006 2005
(In thousands)
5.375% Debentures $600 million face amount,
due in 2035 ................................... $ 584,802 $ —
5.935% Debentures $500 million face amount,
due in 2032 ................................... 493,729 493,491
7.0% Debentures $400 million face amount,
due in 2031 ................................... 397,664 397,569
7.5% Debentures $343 million face amount
($350 million in 2005), due in 2027 . . . . . . . . . . . . . . . 341,151 348,076
8.125% Debentures $300 million face amount,
due in 2012 ................................... 298,959 298,827
8.875% Debentures $298 million face amount
($300 million in 2005), due in 2011 . . . . . . . . . . . . . . . 297,191 299,053
6.625% Debentures $298 million face amount
($300 million in 2005), due in 2029 . . . . . . . . . . . . . . . 296,212 298,677
8.375% Debentures $295 million face amount
($300 million in 2005), due in 2017 . . . . . . . . . . . . . . . 291,166 295,568
7.125% Debentures $250 million face amount,
due in 2013 ................................... 249,673 249,636
6.95% Debentures $250 million face amount,
due in 2097 ................................... 246,300 246,270
6.75% Debentures $200 million face amount,
due in 2027 ................................... 196,346 196,222
Other ........................................... 436,898 629,689
Total long-term debt ............................... 4,130,091 3,753,078
Current maturities ................................ (79,768) (222,938)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,050,323 $3,530,140
During 2006, the Company issued $600 million of debentures that
are due in 2035 and bear interest at 5.375 %. At June 30, 2006,
the fair value of the Company’s long-term debt exceeded
the carrying value by $257 million, as estimated by using quoted
market prices or discounted future cash flows based on the
Company’s current incremental borrowing rates for similar types of
borrowing arrangements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)