Archer Daniels Midland 2006 Annual Report Download - page 51

2006 Annual Report 49
Note 9-Other Expense (Income) – Net
2006 2005 2004
(In thousands)
Interest expense ........................ $ 365,180 $ 326,580 $ 341,991
Investment income . . . . . . . . . . . . . . . . . . . . . . (204,083) (135,346) (116,352)
Net (gain) loss on marketable
securities transactions . . . . . . . . . . . . . . . . . (39,803) (113,299) (23,968)
Equity in (earnings) losses of
unconsolidated affiliates . . . . . . . . . . . . . . . (174,339) (228,865) (180,716)
Other – net ............................ (29,074) (14,917) 7,525
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (82,119) $(165,847) $ 28,480
Interest expense is net of interest capitalized of $11 million,
$11 million, and $7 million in 2006, 2005, and 2004, respectively.
The Company made interest payments of $365 million, $326 million,
and $361 million in 2006, 2005, and 2004, respectively.
Realized gains on sales of available-for-sale marketable securities
totaled $41 million, $114 million, and $24 million in 2006, 2005,
and 2004, respectively. Realized losses totaled $1 million in both 2006
and 2005. There were no realized losses in 2004.
Note 10-Income Taxes
For financial reporting purposes, earnings before income taxes
include the following components:
2006 2005 2004
(In thousands)
United States ......................... $1,321,325 $ 977,966 $369,153
Foreign ............................. 533,925 538,409 348,858
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,855,250 $1,516,375 $718,011
Significant components of income taxes are as follows:
2006 2005 2004
(In thousands)
Current
Federal ........................... $ 490,062 $ 188,456 $159,450
State ............................. 33,583 39,752 19,770
Foreign ........................... 121,322 2,111 141,985
Deferred
Federal ........................... (105,147) 135,806 (50,601)
State ............................. 27 5,576 (3,312)
Foreign ........................... 3,333 100,289 (43,991)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 543,180 $ 471,990 $223,301
Significant components of the Company’s deferred tax liabilities and
assets are as follows:
2006 2005
(In thousands)
Deferred tax liabilities
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $633,484 $ 674,927
Bond discount amortization . . . . . . . . . . . . . . . . . . . . . . . . . 20,236 22,760
Unrealized gain on marketable securities . . . . . . . . . . . . . . 106,664 137,025
Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . 46,141 95,777
Other ........................................... 84,859 72,333
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 891,384 1,002,822
Deferred tax assets
Pension and postretirement benefits . . . . . . . . . . . . . . . . . . . 29,687 148,728
Reserves and other accruals . . . . . . . . . . . . . . . . . . . . . . . . . 18,632 20,155
Tax credit carryforwards, net . . . . . . . . . . . . . . . . . . . . . . . . . 47,944 20,852
Other ........................................... 84,832 38,516
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181,095 228,251
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710,289 774,571
Current net deferred tax assets included in other assets . . . . . . 46,311 4,856
Non-current net deferred tax liabilities . . . . . . . . . . . . . . . . . . . $756,600 $ 779,427
Reconciliation of the statutory federal income tax rate to the
Company’s effective tax rate on earnings is as follows:
2006 2005 2004
Statutory rate ............................... 35.0% 35.0% 35.0%
Export tax incentives . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) (2.6) (5.0)
State income taxes, net of federal tax benefit . . . . . . 1.9 1.4 1.9
Foreign earnings taxed at rates other than
the U.S. statutory rate . . . . . . . . . . . . . . . . . . . . . . (4.7) (4.0) (3.8)
Adjustment of income taxes to filed tax returns . . . . (2.2) _ _
Other ...................................... 1.1 1.3 3.0
Effective rate ................................ 29.3% 31.1% 31.1%
The Company made income tax payments of $508 million,
$238 million, and $273 million in 2006, 2005, and 2004,
respectively.
The Company has $85 million and $105 million of tax assets
for net operating loss carryforwards related to certain international
subsidiaries at June 30, 2006 and 2005, respectively. As of
June 30, 2006, approximately $73 million of these assets have no
expiration date, and the remaining $12 million expire at various
times through fiscal 2011. The annual usage of certain of these assets
is limited to a percentage of the taxable income of the respective
international subsidiary for the year. The Company has recorded a
valuation allowance of $59 million and $83 million against these tax
assets at June 30, 2006 and 2005, respectively, due to the uncertainty
of their realization. The Company also has $36 million of tax assets
related to excess foreign tax credits which expire in fiscal 2014 and
$26 million of tax assets related to state income tax incentive credits