Archer Daniels Midland 2009 Annual Report Download - page 35

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Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Capital resources remained strong as reflected in the Company’s net worth of $13.5 billion. The Company’s ratio
of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was 37% at
June 30, 2009 and 36% at June 30, 2008. This ratio is a measure of the Company’s long-term liquidity and is an
indicator of financial flexibility. At June 30, 2009, the Company had lines of credit totaling $6.6 billion, of which
$6.5 billion was unused. Of the Company’s total lines of credit, $4.2 billion support a commercial paper borrowing
facility, against which there were no borrowings at June 30, 2009. Standard & Poor’s, Moody’s, and Fitch rate the
Company’s commercial paper as A-1, P-1, and F1, respectively, and rate the Company’s long-term debt as A, A2,
and A, respectively. In addition to the cash flow generated from operations, the Company has access to equity and
debt capital from public and private sources in both domestic and international markets.
The Company has outstanding $1.15 billion principal amount of convertible senior notes. As of June 30, 2009,
none of the conditions permitting conversion of the notes had been satisfied. The Company has purchased call
options and warrants intended to reduce the potential shareholder dilution upon future conversion of the notes. As
of June 30, 2009, the market price of the Company’s common stock was not greater than the exercise price of the
purchased call options or warrants related to the convertible senior notes.
In June 2008, the Company issued $1.75 billion of debentures as a component of Equity Units (see Note 8 in Item
8). The Equity Units are a combination of debt and forward contracts for the holder to purchase the Company’s
common stock. Each purchase contract obligates the holder to purchase from the Company, no later than June 1,
2011, for a price of $50 in cash, a certain number of shares, ranging from 1.0453 shares to 1.2544 shares, of the
Company’s common stock, based on a formula established in the contract.
Contractual Obligations and Off-Balance Sheet Arrangements
In the normal course of business, the Company enters into contracts and commitments which obligate the Company
to make payments in the future. The following table sets forth the Company’s significant future obligations by time
period. Purchases include commodity-based contracts entered into in the normal course of business, which are
further described in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” energy-related
purchase contracts entered into in the normal course of business, and other purchase obligations related to the
Company’s normal business activities. The following table does not include unrecognized income tax benefits of
$54 million as at June 30, 2009, due to uncertainty of the timing of deductibility. Where applicable, information
included in the Company’s consolidated financial statements and notes is cross-referenced in this table.
Payments Due by Period
Contractual
Item 8
Note
Less
than
1 - 3
3 – 5
More
than
Obligations
Reference
Total
1 Year
Years
Years
5 Years
(In millions)
Purchases
Inventories
$ 9,821
$ 9,536
$ 285
$ -
$ -
Energy
631
339
223
22
47
Other
468
124
212
130
2
Total purchases
10,920
9,999
720
152
49
Short-term debt
Note 8
356
356
-
-
-
Long-term debt
Note 8
7,901
47
499
1,481
5,874
Estimated interest payments
9,158
424
793
734
7,207
Operating leases
Note 13
1,274
224
440
337
273
Estimated pension and other
postretirement plan payments (1)
Note 14
1,276
96
211
239
730
Total
$30,885
$11,146
$2,663
$2,943
$14,133
(1) Represents expected future benefit payments up to and including fiscal year 2019. The projected payments beyond fiscal year 2019 are not
currently determinable.