Event Brief of Q2 2004 Archer Daniels Midland Company Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Allen Andreas, Archer Daniels Midland Company, Chairman & CEO . Doug Schmalz, Archer Daniels Midland Company, CFO . Brian Peterson, Archer Daniels Midland Company, SVP, Corporate Affairs

OVERVIEW

Net earnings for 2Q04 were $220.821m or $0.34 a share vs. net earnings last year of $131.245m or $0.20 a share. 2Q04 net sales and other operating income increased 18% to $9.2b. Q&A Focus: Ag Services, HFCS costs, Avian flu impact, Brazil situation, and biodiesel.

FINANCIAL DATA

A. Key Data From Call 1. 2Q04 net earnings = $220.821m. 2. 2Q04 net sales and other operating income = $9.2b. 3. 2Q04 gross profits = $604m. 4. 2Q04 company wide SG&A expenses = $265m. 5. 2Q04 interest expense = $90m. 6. 2Q04 investment income = $25m. 7. 2Q04 effective tax rate = 31%.

PRESENTATION SUMMARY

S1. 2Q04 Financials (D.S.) 1. Earnings: 1. Net earnings for 2Q04 were $220.821m or $0.34 a share vs. net earnings last year of $131.245m or $0.20 a share. 2. 2Q04 includes a loss on abandonment of various assets of $29m, $18m after-tax or $0.03 a share.

3. 1Q04 earnings included a gain from partial settlement of

vitamin antitrust litigation of $25m, $15m after-tax or $0.02

a share, and loss from security transactions of $3m, $2m

after-tax. 2. QoverQ Changes: 1. 2Q04 net sales and other operating income increased 18% to $9.2b, due primarily to higher commodity values and increased sales volume of Agricultural Services Marketing operations, and to higher selling prices in volumes in Oilseed and Corn operations. 1. To a lesser extent, sales of recently acquired businesses contributed approx. $200m to the sales increase. 2. Gross profits increased 23% to $604m, due principally to improved operating profits in all major operating segments. 1. The effect of rising corn and soybean oil prices on LIFO inventory valuations resulted in a charge in 2Q04 of $53m, which is $33m after-tax or $0.05 a share. 3. Company wide SG&A expenses increased $19m to $265m for 2Q04. 1. The increase includes $8m of cost related to recently acquired businesses. 4. Interest expense declined $5m to $90m for 2Q04. 5. Investment income declined $4m to $25m for 2Q04, due principally to lower interest rates. 6. Equity and earnings of affiliates for 2Q04 increased to $53m from $9m last year, primarily due to $47m improvement in valuations of the co.'s private equity investments. 1. Earnings from those investments were $20m in 2Q04 vs. a loss of $27m in 2Q03. 7. Effective tax rate for 2Q04 was 31% vs. 30.5% in 2Q03. 1. The increase in rate for 2Q04 and in relation also to FY03 rate of 28.5% last year can be attributed primarily to the

increase in pretax earnings and a shift in the pretax earnings mix within different tax jurisdictions.

S2. Operating Segments (D.S.) 1. Highlights: 1. Operating profit for 2Q04 increased $198m or 66% to $495m from $297m in 2Q03, as operating profit improvements were realized in all major segments. 2. Oilseed Processing 2Q04 profit of $121m increased $18m from $103m in 2Q03, reflecting improved operating results in North America and Asia. 3. Results in South America and European operations declined from prior year levels. 4. Corn Processing 2Q04 profits of $138m increased $66m from prior year levels of $71m. The improved results are attributable to:

1. Increased selling price of alcohol and sweetener products.

2. Increased ethanol volumes. 3. Lower net corn cost due to lower gross corn cost. 4. Improved bioproduct values. 5. Wheat Processing results increased to $24m in FY04 from $19m

in FY03, as improved crop conditions in North America resulted

in improved operating volumes and margins over prior year

levels. 6. Agricultural Services' 2Q04 profits improved to $106m from $35m in 2Q03, due to strong performance of co.'s balanced global grain origination and marketing systems.

1. 2Q04 included $5m asset abandonment charge. 2. 2Q03 results were negatively impacted by poor North American crop conditions.

7. With the much improved North American crop conditions this

year and with solid worldwide demand for grains and feedstuffs, which can be partially attributable to poor crop and drought conditions in the EU, co.'s Global Marketing operations has performed well as it efficiently moves crops from areas of surplus to areas of deficits. 1. In addition, strong demand for transportation also contributed to improved earnings. 8. 2Q04 results of the Other segment increased to $106m in from $70m in 2Q03. 1. 2Q04 includes a $10m asset abandonment charge and 2Q03 included income of $25m from vitamin litigation settlements. 2. Excluding abandonment charge and the vitamin settlements, Other segment operating results increased $71m to $116m for 2Q04. 1. The increase was due primarily to a $47m improvement in valuations of co.'s private equity fund investments and to improved results in co.'s specialty feed ingredients and cocoa operations. 9. Specialty Feed Ingredient results improved over prior year levels, as increased licensing demand resulted in higher selling prices and volumes for that product. 10. Cocoa processing results also improved over prior year levels, as solid demand for butter and powder continued.

11. Corporate expense category increased $67m to $175m from $108m

last year, due to the LIFO valuation charge of $53m and an

asset abandonment charge of $14m. 2. Factors Affecting Financial Condition & Cash Flow: 1. 1H04 trade working capital increased $1.3b to $5.9b at Dec. 31. 1. This increase reflects a seasonal build-up of working capital and the effects of the increased commodity price levels. 2. The increase was financed primarily with cash flow from operations, short-term borrowings, and cash received from dividends and the return of capital from some of co.'s investments in affiliates. 2. At Dec. 31, total debt as a percent of invested capital was 40.5%; an increase of 1.7% from June 30 levels of 38.8%, but at the decline of 2% from comparable December 2002 levels of 42.5%. 3. Cash flow from operations for FY04 equaled net earnings of $371m, plus D&A and asset abandonment charges of $370m, was a total of $741m for the six months. 1. This cash flow was used to support increased working capital, in addition to CAPEX of $226m, acquisitions of $54m, stock repurchases of 4m, and dividends of $78m. .

S3. Business Fundamentals (B.P.) 1. Oilseed: 1. Operating profits were $121m vs. $103m in the year-ago quarter, an increase of 17%. 2. Strong results in North America and Asia in 2Q04, but earnings

were down in South American and Europe. 3. Crushing margins were inadequate in South America. 4. Large imports of meal into Europe put pressure on margins there. 5. The US: 1. In the US, the soybean supply will remain tight until new crop is available in the fall. 2. Strong demand for soybeans from China continues to put upward pressure on prices. 3. Product demand in North America remains steady. 4. Capacity utilization is approx. 85% in North America with acceptable crush margins. 1. Co. has recently slowed its North American operations for the purposes of extending bean supplies here. 2. The recent …