EX-99.1 2 adm-ex991_20181231xq4.htm EXHIBIT 99.1
Exhibit 99.1
ADM Reports Fourth Quarter Earnings of $0.55 per Share,
$0.88 per Share on an Adjusted Basis
•Net earnings of $315 million
•Trailing four-quarter adjusted ROIC of 8.3 percent, 200 bps over annual WACC
•Strategic actions positioning company for continued growth in 2019
CHICAGO, February 5, 2019—Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended December 31, 2018.
“Our team executed well, delivering strong year-over-year profit growth in the fourth quarter,” said Chairman and CEO Juan Luciano. “Looking back on the full year, the team did a great job focusing on the items we could control, as we continued innovating to serve customer needs and advancing our strategic priorities. Our effective management through complicated and rapidly changing trade, geopolitical and market conditions helped deliver an impressively strong 2018 that included solid profit growth, improved returns on invested capital and higher cash flows.
“We will continue working to deliver shareholder value in 2019 by vigorously executing our strategy, including aggressively working to improve execution in select businesses, accelerating our Readiness efforts to deliver increasing value, and harvesting the contributions from our acquisitions and organic growth investments. By continuing to pull the levers under our control, we are positioning ourselves to grow profits and returns in 2019 and beyond.”
Fourth Quarter 2018 Highlights

| 2018 |  | 2017 |
| (Amounts in millions except per share data) |
Earnings per share (as reported) | $ | 0.55 |  |  | $ | 1.39 |  |
Adjusted earnings per share 1 | $ | 0.88 |  |  | $ | 0.82 |  |
Segment operating profit | $ | 786 |  |  | $ | 733 |  |
Adjusted segment operating profit 1 | $ | 860 |  |  | $ | 793 |  |
Origination | 183 |  |  | 261 |  |
Oilseeds | 432 |  |  | 201 |  |
Carbohydrate Solutions | 197 |  |  | 285 |  |
Nutrition | 62 |  |  | 73 |  |
Other | (14 | ) |  | (27 | ) |

• | EPS as reported of $0.55 includes a $0.02 per share loss related to the sale of businesses and assets, a $0.35 per share charge related to asset impairment, restructuring and settlement charges, a $0.01 per share charge related to acquisition expenses, and a $0.05 per share tax benefit related to the U.S. tax reform and certain discrete items. Adjusted EPS, which excludes these items, was $0.88.1

1 Non-GAAP financial measures; see pages 4, 9, 10, and 11 for explanations and reconciliations, including after-tax amounts.

Results of Operations
Origination results were down versus the fourth quarter of 2017.

• | Merchandising and Handling results were lower than the prior-year period, which included significant insurance settlements and other income. North American results benefited from wheat basis gains due to strong carries, as well as solid execution that drove improvements in export margins and comparable year-over-year export volumes, despite the extremely small volume of U.S. soybean exports to China. North American exports of corn, and soybeans to markets outside of China, were higher. Global Trade benefited from good execution in origination and destination marketing, as well as an intra-company insurance settlement, offset by timing losses in ocean freight hedges, which are expected to reverse.

• | Transportation results benefited from improved freight rates, offset by increased operating costs.

Oilseeds results were more than double the prior-year period.

• | Crushing and Origination results were up significantly year over year, as the business continued to leverage its global asset footprint to capitalize on solid demand for soybean meal and strong crush margins.

• | Refining, Packaging, Biodiesel and Other was up on strong biodiesel volumes and margins as well as higher year-over-year results from food oils, partially offset by challenging market conditions in nut processing.

• | Asia was higher on strong Wilmar results.

Carbohydrate Solutions results were lower than the year-ago quarter.

• | In Starches and Sweeteners, North American volumes remained solid. Results were driven by lower margins and sales in EMEA; higher costs in North American liquid sweeteners, in part due to lower production rates at the Decatur complex; and lower co-product income.

• | Bioproducts results were lower than the fourth quarter of 2017, when trading results were very strong. Ethanol margins and volumes were down in a continued weak industry pricing and margin environment.

Nutrition results were down versus the prior-year period.

• | WFSI results were higher year over year, with sales up 14 percent versus the prior-year quarter on a constant currency basis. Recent acquisitions in WILD and Health & Wellness, along with strong demand for lecithin, also contributed to higher results.

• | Animal Nutrition results were significantly lower, driven primarily by continued production issues that compressed margins in amino acids, including lysine.

Other results were negative, but improved versus the prior-year period, which included significant insurance settlements.

• | Current-quarter results were driven by an intra-company insurance settlement relating to sorghum shipments in early 2018, as well as other underwriting losses.

• | ADM Investor Services results were up year over year.

Other Items of Note
ADM made changes to its segment reporting in the first quarter of 2018 to reflect the company’s new operating structure. To assist in reconciling the new segment results to the prior presentation, the table on page 11 provides financial information under the historical segmentation.
Page 2

As additional information to help clarify underlying business performance, the table on page nine includes reported earnings and EPS as well as adjusted earnings and EPS.
Segment operating profit of $786 million for the quarter includes losses of $8 million ($0.02 per share) related to the sale of businesses and assets, as well as a $66 million charge ($0.10 per share) related to asset impairment, restructuring, and settlement charges.
In Corporate results, unallocated corporate costs for the quarter increased principally due to performance-related compensation accruals and Readiness-related costs. Other charges for the quarter in Corporate improved due to better results from the company’s investment in Compagnie Industrielle et Financiere des Produits Amylaces SA (CIP).
Corporate results also include asset impairment and restructuring charges of $67 million ($0.09 per share), a non-cash pension settlement charge of $117 million ($0.16 per share), and acquisition-related expenses of $12 million ($0.01 per share).
The effective tax rate for the full year 2018 was approximately 12 percent, and includes the effects of U.S. tax reform and the 2017 biodiesel tax credit recorded in the first quarter along with certain discrete tax items netting to a favorable $74 million. The effective tax rate for the fourth quarter of 2018 was a positive 2 percent and reflects a favorable change in the geographic mix of 2018 pretax earnings compared to estimates earlier in the year and certain discrete tax items recorded during the quarter netting to a favorable $35 million. The effective tax rate for the fourth quarter in the prior year reflects the initial implementation of U.S. tax reform.
Conference Call Information
ADM will host a webcast on February 5, 2019, at 8 a.m. Central Time to discuss financial results and provide a company update. A financial summary slide presentation will be available to download approximately 60 minutes prior to the call. To listen to the webcast or to download the slide presentation, go to www.adm.com/webcast. A replay of the webcast will also be available for an extended period of time at www.adm.com/webcast.
Forward-Looking Statements
Some of the above statements constitute forward-looking statements. 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.
About ADM
For more than a century, the people of Archer Daniels Midland Company (NYSE: ADM) have transformed crops into products that serve the vital needs of a growing world. At the end of 2018, we were one of the world’s largest agricultural processors and food ingredient providers, with approximately 32,000 employees serving customers in more than 170 countries. With a global value chain that includes approximately 450 crop procurement locations, 270 food and feed ingredient manufacturing facilities, 46 innovation centers and the world’s premier crop transportation network, we connect the harvest to the home, making products for food, animal feed, industrial and energy uses. Learn more at www.adm.com.
Archer Daniels Midland Company

Media Relations | Investor Relations
Jackie Anderson | Victoria de la Huerga
312-634-8484 | 312-634-8457

Financial Tables Follow
Page 3

Segment Operating Profit, Adjusted Segment Operating Profit (a non-GAAP measure) and Corporate Results
(unaudited)

| Quarter ended December 31 |  |  | Year ended December 31 |
(In millions) | 2018 | 2017 | Change |  | 2018 | 2017 | Change
Segment Operating Profit | $ | 786 |  | $ | 733 |  | $ | 53 |  |  | $ | 3,273 |  | $ | 2,536 |  | $ | 737 |
Specified items: |  |  |  |  |  |  |
(Gains) losses on sales of assets and businesses | 8 |  | (2 | ) | 10 |  |  | (13 | ) | (22 | ) | 9 |
Impairment, restructuring, and settlement charges | 66 |  | 62 |  | 4 |  |  | 102 |  | 160 |  | (58 | )
Hedge timing effects | — |  | — |  | — |  |  | — |  | (4 | ) | 4 |
Adjusted Segment Operating Profit | $ | 860 |  | $ | 793 |  | $ | 67 |  |  | $ | 3,362 |  | $ | 2,670 |  | $ | 692 |
Origination | $ | 183 |  | $ | 261 |  | $ | (78 | ) |  | $ | 546 |  | $ | 404 |  | $ | 142 |
Merchandising and handling | 149 |  | 224 |  | (75 | ) |  | 442 |  | 318 |  | 124 |
Transportation | 34 |  | 37 |  | (3 | ) |  | 104 |  | 86 |  | 18 |
Oilseeds | $ | 432 |  | $ | 201 |  | $ | 231 |  |  | $ | 1,474 |  | $ | 825 |  | $ | 649 |
Crushing and origination | 255 |  | 45 |  | 210 |  |  | 748 |  | 237 |  | 511 |
Refining, packaging, biodiesel, and other | 75 |  | 63 |  | 12 |  |  | 383 |  | 259 |  | 124 |
Asia | 102 |  | 93 |  | 9 |  |  | 343 |  | 329 |  | 14 |
Carbohydrate Solutions | $ | 197 |  | $ | 285 |  | $ | (88 | ) |  | $ | 945 |  | $ | 1,078 |  | $ | (133 | )
Starches and sweeteners | 195 |  | 225 |  | (30 | ) |  | 894 |  | 930 |  | (36 | )
Bioproducts | 2 |  | 60 |  | (58 | ) |  | 51 |  | 148 |  | (97 | )
Nutrition | $ | 62 |  | $ | 73 |  | $ | (11 | ) |  | $ | 339 |  | $ | 312 |  | $ | 27 |
WFSI | 59 |  | 56 |  | 3 |  |  | 318 |  | 279 |  | 39 |
Animal Nutrition | 3 |  | 17 |  | (14 | ) |  | 21 |  | 33 |  | (12 | )
Other | $ | (14 | ) | $ | (27 | ) | $ | 13 |  |  | $ | 58 |  | $ | 51 |  | $ | 7 |
Segment Operating Profit | $ | 786 |  | $ | 733 |  | $ | 53 |  |  | $ | 3,273 |  | $ | 2,536 |  | $ | 737 |
Corporate Results | $ | (474 | ) | $ | (190 | ) | $ | (284 | ) |  | $ | (1,213 | ) | $ | (927 | ) | $ | (286 | )
Interest expense - net | (85 | ) | (78 | ) | (7 | ) |  | (321 | ) | (310 | ) | (11 | )
Unallocated corporate costs | (173 | ) | (94 | ) | (79 | ) |  | (660 | ) | (470 | ) | (190 | )
Other charges | (24 | ) | (9 | ) | (15 | ) |  | (52 | ) | (84 | ) | 32 |
Specified items: |  |  |  |  |  |  |
LIFO credit (charge) | 4 |  | (2 | ) | 6 |  |  | 18 |  | 2 |  | 16 |
Expenses related to acquisitions | (12 | ) | — |  | (12 | ) |  | (8 | ) | — |  | (8 | )
Loss on debt extinguishment | — |  | — |  | — |  |  | — |  | (11 | ) | 11 |
Impairment, restructuring and settlement charges | (184 | ) | (7 | ) | (177 | ) |  | (190 | ) | (54 | ) | (136 | )
Earnings Before Income Taxes | $ | 312 |  | $ | 543 |  | $ | (231 | ) |  | $ | 2,060 |  | $ | 1,609 |  | $ | 451 |

Segment operating profit is ADM’s consolidated income from operations before income tax excluding corporate items. Adjusted segment operating profit, a non-GAAP measure, is segment operating profit excluding 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 as well as specified items and significant timing effects. Segment operating profit and adjusted segment operating profit are not measures of consolidated operating results under U.S. GAAP and should not be considered alternatives to income before income taxes, the most directly comparable GAAP financial measure, or any other measure of consolidated operating results under U.S. GAAP.
Page 4

Consolidated Statements of Earnings
(unaudited)

| Quarter ended December 31 |  | Year ended December 31
| 2018 |  | 2017 |  | 2018 |  | 2017
| (in millions, except per share amounts)
Revenues | $ | 15,947 |  |  | $ | 16,070 |  |  | $ | 64,341 |  |  | $ | 60,828 |
Cost of products sold (1) | 14,894 |  |  | 15,128 |  |  | 60,160 |  |  | 57,310 |
Gross profit | 1,053 |  |  | 942 |  |  | 4,181 |  |  | 3,518 |
Selling, general, and administrative expenses (2) | 558 |  |  | 459 |  |  | 2,165 |  |  | 1,978 |
Asset impairment, exit, and restructuring costs (3) | 130 |  |  | 33 |  |  | 171 |  |  | 173 |
Equity in (earnings) losses of unconsolidated affiliates | (140 | ) |  | (129 | ) |  | (518 | ) |  | (456 | )
Interest income | (47 | ) |  | (31 | ) |  | (162 | ) |  | (106 | )
Interest expense | 97 |  |  | 84 |  |  | 364 |  |  | 330 |
Other (income) expense - net (4,5,6) | 143 |  |  | (17 | ) |  | 101 |  |  | (10 | )
Earnings before income taxes | 312 |  |  | 543 |  |  | 2,060 |  |  | 1,609 |
Income tax expense (7) | (5 | ) |  | (249 | ) |  | 245 |  |  | 7 |
Net earnings including noncontrolling interests | 317 |  |  | 792 |  |  | 1,815 |  |  | 1,602 |
Less: Net earnings (losses) attributable to noncontrolling interests | 2 |  |  | 4 |  |  | 5 |  |  | 7 |
Net earnings attributable to ADM | $ | 315 |  |  | $ | 788 |  |  | $ | 1,810 |  |  | $ | 1,595 |
Diluted earnings per common share | $ | 0.55 |  |  | $ | 1.39 |  |  | $ | 3.19 |  |  | $ | 2.79 |
Average number of shares outstanding | 567 |  |  | 565 |  |  | 567 |  |  | 572 |

(1) Includes a charge (credit) related to changes in the Company’s LIFO reserves of ($4 million) and ($18 million) in the current quarter and YTD, respectively, and $2 million and ($2 million) in the prior quarter and YTD, respectively.
(2) Includes acquisition-related expenses of $4 million in the current quarter and YTD.
(3) Includes charges related to impairment of certain assets and restructuring charges of $130 million and $171 million in the current quarter and YTD, respectively, and $33 million and $173 million in the prior quarter and YTD, respectively.
(4) Includes current quarter losses of $8 million primarily related to the sale of an asset and a business, current YTD net gains of $13 million related to the sale of businesses and assets, prior quarter gains of $2 million related to an adjustment of the proceeds of the 2015 sale of the cocoa business, and prior YTD gains related to the sale of the crop risk services business ($77 million) and the sale of an asset ($6 million), partially offset by an adjustment of the proceeds of the 2015 sale of the cocoa business of $61 million.
(5) Includes settlement charges of $120 million and $121 million primarily related to pension liabilities in the current quarter and YTD, respectively, a settlement charge of $36 million in the prior quarter and a debt extinguishment charge of $11 million related to the early redemption of the Company’s $559 million notes due on March 15, 2018 and a settlement charge of $41 million in the prior YTD.
(6) Includes current quarter and YTD losses on foreign currency derivative contracts to economically hedge certain transactions of $8 million and $4 million, respectively,.
(7) Includes the tax expense (benefit) impact of the above specified items, tax discrete items, and true-up adjustments totaling ($86 million) and ($97 million) in the current quarter and YTD, respectively, and ($15 million) and ($28 million) in the prior quarter and YTD, respectively. The prior quarter and YTD also includes a $379 million tax benefit related to the enactment of the Tax Cuts and Jobs Act.
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Summary of Financial Condition
(unaudited)

|  | December 31, 2018 |  | December 31, 2017
|  | (in millions)
Net Investment In |  |  |  |
Cash and cash equivalents (a) |  | $ | 1,997 |  |  | $ | 804 |
Short-term marketable securities (a) |  | 6 |  |  | — |
Operating working capital (b) |  | 7,499 |  |  | 7,421 |
Property, plant, and equipment |  | 9,953 |  |  | 10,138 |
Investments in and advances to affiliates |  | 5,317 |  |  | 5,088 |
Long-term marketable securities |  | 7 |  |  | 92 |
Goodwill and other intangibles |  | 4,041 |  |  | 3,918 |
Other non-current assets |  | 927 |  |  | 802 |
|  | $ | 29,747 |  |  | $ | 28,263 |
Financed By |  |  |  |  |  |
Short-term debt (b) |  | $ | 108 |  |  | $ | 857 |
Long-term debt, including current maturities (b) |  | 8,280 |  |  | 6,636 |
Deferred liabilities |  | 2,314 |  |  | 2,395 |
Temporary equity |  | 49 |  |  | 53 |
Shareholders’ equity |  | 18,996 |  |  | 18,322 |
|  | $ | 29,747 |  |  | $ | 28,263 |

(a) | Net debt is calculated as short-term debt plus long-term debt, including current maturities less cash and cash equivalents and short-term marketable securities.

(b) | Current assets (excluding cash and cash equivalents and short-term marketable securities) less current liabilities (excluding short-term debt and current maturities of long-term debt).

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Summary of Cash Flows
(unaudited)

|  | Year ended December 31
|  | 2018 |  | 2017
|  | (in millions)
Operating Activities |  |  |  |
Net earnings |  | $ | 1,815 |  |  | $ | 1,602 |
Depreciation and amortization |  | 941 |  |  | 924 |
Asset impairment charges |  | 142 |  |  | 101 |
Gains on sales of assets |  | (43 | ) |  | (80 | )
Other - net |  | (183 | ) |  | (652 | )
Change in deferred consideration in securitized receivables(a) |  | (7,838 | ) |  | (8,177 | )
Other changes in operating assets and liabilities |  | 382 |  |  | 316 |
Total Operating Activities |  | (4,784 | ) |  | (5,966 | )
Investing Activities |  |  |  |  |  |
Purchases of property, plant and equipment |  | (842 | ) |  | (1,049 | )
Net assets of businesses acquired |  | (464 | ) |  | (187 | )
Proceeds from sale of business/assets |  | 191 |  |  | 195 |
Investments in retained interest in securitized receivables(a) |  | (6,957 | ) |  | (4,306 | )
Proceeds from retained interest in securitized receivables(a) |  | 14,795 |  |  | 12,483 |
Marketable securities - net |  | 13 |  |  | 447 |
Investments in and advances to affiliates |  | (157 | ) |  | (280 | )
Other investing activities |  | 3 |  |  | (12 | )
Total Investing Activities |  | 6,582 |  |  | 7,291 |
Financing Activities |  |  |  |  |  |
Long-term debt borrowings |  | 1,762 |  |  | 532 |
Long-term debt payments |  | (30 | ) |  | (835 | )
Net borrowings (payments) under lines of credit |  | (743 | ) |  | 685 |
Share repurchases |  | (77 | ) |  | (750 | )
Cash dividends |  | (758 | ) |  | (730 | )
Other |  | 33 |  |  | 70 |
Total Financing Activities |  | 187 |  |  | (1,028 | )
Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents |  | 1,985 |  |  | 297 |
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period |  | 1,858 |  |  | 1,561 |
Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period |  | $ | 3,843 |  |  | $ | 1,858 |

(a) Cash flows related to the Company’s retained interest in securitized receivables as required by ASU 2016-15 which took effect January 1, 2018. Prior period amounts have been restated to conform to the current presentation.
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Segment Operating Analysis
(unaudited)

|  | Quarter ended December 31 |  | Year ended December 31
|  | 2018 |  | 2017 |  | 2018 |  | 2017
|  | (in ‘000s metric tons)
Processed volumes (by commodity) |  |  |  |  |  |  |  |
Oilseeds |  | 9,005 |  |  | 9,131 |  |  | 36,308 |  |  | 34,733 |
Corn |  | 5,635 |  |  | 5,849 |  |  | 22,343 |  |  | 22,700 |
Total processed volumes |  | 14,640 |  |  | 14,980 |  |  | 58,651 |  |  | 57,433 |
|  | Quarter ended December 31 |  | Year ended December 31
|  | 2018 |  | 2017 |  | 2018 |  | 2017
|  | (in millions)
Revenues |  |  |  |  |  |  |  |  |  |  |  |
Origination |  | $ | 6,389 |  |  | $ | 6,972 |  |  | $ | 25,060 |  |  | $ | 24,124 |
Oilseeds |  | 6,071 |  |  | 5,375 |  |  | 24,831 |  |  | 22,388 |
Carbohydrate Solutions |  | 2,497 |  |  | 2,779 |  |  | 10,279 |  |  | 10,406 |
Nutrition |  | 900 |  |  | 850 |  |  | 3,790 |  |  | 3,523 |
Other |  | 90 |  |  | 94 |  |  | 381 |  |  | 387 |
Total revenues |  | $ | 15,947 |  |  | $ | 16,070 |  |  | $ | 64,341 |  |  | $ | 60,828 |

Page 8

Adjusted Earnings Per Share
A non-GAAP financial measure
(unaudited)

| Quarter ended December 31 |  | Year ended December 31
| 2018 | 2017 |  | 2018 | 2017
| In millions | Per share | In millions | Per share |  | In millions | Per share | In millions | Per share
Net earnings and fully diluted EPS | $ | 315 |  | $ | 0.55 |  | $ | 788 |  | $ | 1.39 |  |  | $ | 1,810 |  | $ | 3.19 |  | $ | 1,595 |  | $ | 2.79 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |
LIFO charge (credit) (a) | (3 | ) | — |  | 1 |  | — |  |  | (14 | ) | (0.02 | ) | (1 | ) | — |
Losses (gains) on sales of assets and businesses (b) | 7 |  | 0.02 |  | (2 | ) | — |  |  | (13 | ) | (0.02 | ) | 10 |  | 0.02 |
Asset impairment, restructuring, and settlement charges (c) | 196 |  | 0.35 |  | 46 |  | 0.08 |  |  | 226 |  | 0.40 |  | 144 |  | 0.25 |
Loss on debt extinguishment (d) | — |  | — |  | — |  | — |  |  | — |  | — |  | 7 |  | 0.01 |
Expenses related to acquisitions (e) | 9 |  | 0.01 |  | — |  | — |  |  | 6 |  | 0.01 |  | — |  | — |
Tax adjustment (f) | (29 | ) | (0.05 | ) | (370 | ) | (0.65 | ) |  | (33 | ) | (0.06 | ) | (366 | ) | (0.64 | )
Sub-total adjustments | 180 |  | 0.33 |  | (325 | ) | (0.57 | ) |  | 172 |  | 0.31 |  | (206 | ) | (0.36 | )
Adjusted net earnings and adjusted EPS | $ | 495 |  | $ | 0.88 |  | $ | 463 |  | $ | 0.82 |  |  | $ | 1,982 |  | $ | 3.50 |  | $ | 1,389 |  | $ | 2.43 |

(a) | Current quarter and YTD changes in the Company’s LIFO reserves of $4 million and $18 million pretax, respectively ($3 million and $14 million after tax, respectively), tax effected using the Company’s U.S. income tax rate. Prior quarter and YTD changes in the Company’s LIFO reserves of $2 million and ($2 million) pretax, respectively ($1 million and ($1 million) after tax, respectively), tax effected using the Company’s U.S. income tax rate.

(b) | Current quarter losses of $8 million pretax ($7 million after tax) primarily related to the sale of an asset and a business and current YTD net gains of $13 million pretax ($13 million after tax) related to the sale of businesses and assets, tax effected using the applicable tax rates. Prior quarter gains of $2 million pretax ($2 million after tax) related to an adjustment of the proceeds of the 2015 sale of the cocoa business and a gain on sale of asset, tax effected using the applicable tax rate. Prior YTD gain of $22 million pretax ($10 million loss after tax) related to the sale of the crop risk services business partially offset by an adjustment of the proceeds of the 2015 sale of the cocoa business, tax effected using the applicable tax rates.

(c) | Current quarter and YTD charges of $250 million pretax ($196 million after tax) and $292 million pretax ($226 million after tax), respectively, related to pension settlement, impairment of certain assets, restructuring, and other settlement charges, tax effected using the applicable tax rates. Prior quarter charges of $69 million pretax ($46 million after tax) primarily consisted of a settlement charge and several individually insignificant asset impairments and restructuring charges, tax effected using the applicable tax rates. Prior year to date charges of $214 million pretax ($144 million after tax) primarily consisted of the reconfiguration of the Company’s Peoria, Illinois ethanol complex, restructuring charges related to the reduction of certain positions within the Company’s global workforce, settlement charges, and several individually insignificant asset impairments and restructuring charges, tax effected using the applicable tax rates.

(d) | Debt extinguishment charge of $11 million pretax ($7 million after tax) related to the early redemption of the Company’s $559 million notes due on March 15, 2018.

(e) | Current quarter and YTD acquisition adjustment of $12 million pretax ($9 million after tax) and $8 million pretax ($6 million after tax), respectively, related to acquisition expenses and net losses on foreign currency derivative contracts to economically hedge certain acquisitions.

(f) | Tax adjustment due to changes in the provisional tax amount related to the enactment of the Tax Cuts and Jobs Act and certain discrete items totaling $29 million in the current quarter and $33 million YTD. Tax adjustments in the prior quarter and YTD related to the enactment of the Tax Cuts and Jobs Act totaling $379 million and certain out of period discrete items consisting of valuation allowances, deferred tax re-rates, and changes in assertion totaling $9 million and $13 million in the current quarter and year to date, respectively.

Adjusted net earnings reflects ADM’s reported net earnings after removal of the effect on net earnings of specified items as more fully described above. Adjusted EPS reflects ADM’s fully diluted EPS after removal of the effect on EPS as reported of specified items as more fully described above. Management believes that Adjusted net earnings and Adjusted EPS are useful measures of ADM’s performance because they provide investors additional information about ADM’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. These non-GAAP financial measures are not intended to replace or be alternatives to net earnings and EPS as reported, the most directly comparable GAAP financial measures, or any other measures of operating results under GAAP. Earnings amounts described above have been divided by the company’s diluted shares outstanding for each respective period in order to arrive at an adjusted EPS amount for each specified item.
Page 9

Adjusted Return on Invested Capital
A non-GAAP financial measure
(unaudited)

Adjusted ROIC Earnings (in millions) |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Four Quarters
| Quarter Ended |  | Ended
| Mar. 31, 2018 |  | June 30, 2018 |  | Sep. 30, 2018 |  | Dec. 31, 2018 |  | Dec. 31, 2018
Net earnings attributable to ADM | $ | 393 |  |  | $ | 566 |  |  | $ | 536 |  |  | $ | 315 |  |  | $ | 1,810 |
Adjustments: |  |  |  |  |  |  |  |  |
Interest expense | 91 |  |  | 89 |  |  | 87 |  |  | 97 |  |  | 364 |
LIFO | (8 | ) |  | (13 | ) |  | 7 |  |  | (4 | ) |  | (18 | )
Other adjustments (3) | 2 |  |  | 31 |  |  | (20 | ) |  | 241 |  |  | 254 |
Total adjustments | 85 |  |  | 107 |  |  | 74 |  |  | 334 |  |  | 600 |
Tax on adjustments | (24 | ) |  | (26 | ) |  | (21 | ) |  | (80 | ) |  | (151 | )
Net adjustments | 61 |  |  | 81 |  |  | 53 |  |  | 254 |  |  | 449 |
Total Adjusted ROIC Earnings | $ | 454 |  |  | $ | 647 |  |  | $ | 589 |  |  | $ | 569 |  |  | $ | 2,259 |

Adjusted Invested Capital (in millions) |  |  |  |  |  |  |  |
| Quarter Ended |  | Trailing Four
| Mar. 31, 2018 |  | June 30, 2018 |  | Sep. 30, 2018 |  | Dec. 31, 2018 |  | Quarter Average
Equity (1) | $ | 18,732 |  |  | $ | 18,710 |  |  | $ | 18,987 |  |  | $ | 18,981 |  |  | $ | 18,853 |
+ Interest-bearing liabilities (2) | 9,000 |  |  | 7,630 |  |  | 7,857 |  |  | 8,392 |  |  | 8,220 |
+ LIFO adjustment (net of tax) | 49 |  |  | 39 |  |  | 44 |  |  | 41 |  |  | 43 |
Other adjustments (3) | (2 | ) |  | 23 |  |  | (18 | ) |  | 183 |  |  | 47 |
Total Adjusted Invested Capital | $ | 27,779 |  |  | $ | 26,402 |  |  | $ | 26,870 |  |  | $ | 27,597 |  |  | $ | 27,163 |
Adjusted Return on Invested Capital |  |  |  |  |  |  |  | 8.3 | %

(1) Excludes noncontrolling interests
(2) Includes short-term debt, current maturities of long-term debt, capital lease obligations, and long-term debt
(3) Includes the impact of U.S. tax reform
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 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 and increases period-to-period comparability of underlying business performance. 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.
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Segment Operating Profit, Adjusted Segment Operating Profit (a non-GAAP measure) as Currently Reported vs Previous Segments
(unaudited)

|  |  | Quarter ended December 31, 2018 |  | Year ended December 31, 2018
As Currently Reported |  | Pro Forma | As Currently Reported | Pro Forma |  | As Currently Reported | Pro Forma
|  |  | (In millions) |  |  |
Segment Operating Profit |  | Segment Operating Profit | $ | 786 |  | $ | 786 |  |  | $ | 3,273 |  | $ | 3,273 |
Specified items: |  | Specified items: |  |  |  |  |
(Gains) losses on sales of assets and businesses |  | (Gains) losses on sales of assets and businesses | 8 |  | 8 |  |  | (13 | ) | (13 | )
Impairment and restructuring charges |  | Impairment and restructuring charges | 66 |  | 66 |  |  | 102 |  | 102 |
Adjusted Segment Operating Profit |  | Adjusted Segment Operating Profit | $ | 860 |  | $ | 860 |  |  | $ | 3,362 |  | $ | 3,362 |
Origination |  | Agricultural Services | $ | 183 |  | $ | 226 |  |  | $ | 546 |  | $ | 743 |
Merchandising and handling |  | Merchandising and handling | 149 |  | 140 |  |  | 442 |  | 414 |
Transportation |  | Transportation | 34 |  | 34 |  |  | 104 |  | 104 |
|  | Milling and Other | — |  | 52 |  |  | — |  | 225 |
Oilseeds |  | Oilseeds | $ | 432 |  | $ | 429 |  |  | $ | 1,474 |  | $ | 1,487 |
Crushing and origination |  | Crushing and origination | 255 |  | 255 |  |  | 748 |  | 751 |
Refining, packaging, biodiesel, & other |  | Refining, packaging, biodiesel, & other | 75 |  | 72 |  |  | 383 |  | 392 |
Asia |  | Asia | 102 |  | 102 |  |  | 343 |  | 344 |
Carbohydrate Solutions |  | Corn Processing | $ | 197 |  | $ | 165 |  |  | $ | 945 |  | $ | 763 |
Starches and sweeteners |  | Sweeteners and Starches | 195 |  | 152 |  |  | 894 |  | 693 |
Bioproducts |  | Bioproducts | 2 |  | 13 |  |  | 51 |  | 70 |
Nutrition |  | Wild Flavors & Specialty Ingredients | $ | 62 |  | $ | 54 |  |  | $ | 339 |  | $ | 311 |
WFSI |  | Wild Flavors & Specialty Ingredients | 59 |  | 54 |  |  | 318 |  | 311 |
Animal Nutrition |  |  | 3 |  | — |  |  | 21 |  | — |
Other |  | Other | $ | (14 | ) | $ | (14 | ) |  | $ | 58 |  | $ | 58 |

Segment operating profit is ADM’s consolidated income from operations before income tax excluding corporate items. Adjusted segment operating profit, a non-GAAP measure, is segment operating profit excluding 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 as well as specified items and significant timing effects. Segment operating profit and adjusted segment operating profit are not measures of consolidated operating results under U.S. GAAP and should not be considered alternatives to income before income taxes, the most directly comparable GAAP financial measure, or any other measure of consolidated operating results under U.S. GAAP.
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