Company Quick10K Filing
Quick10K
Archer Daniels Midland
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$42.56 560 $23,840
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-01 Amend Bylaw, Shareholder Vote, Exhibits
8-K 2019-04-26 Earnings, Exhibits
8-K 2019-03-25 Regulation FD, Exhibits
8-K 2019-02-05 Earnings, Exhibits
8-K 2018-12-03 Exhibits
8-K 2018-11-06 Earnings, Exhibits
8-K 2018-09-12 Exhibits
8-K 2018-07-31 Earnings, Exhibits
8-K 2018-05-03 Shareholder Vote
8-K 2018-02-06 Earnings, Exhibits
VNO Vornado Realty Trust 12,640
KWR Quaker Chemical 2,730
ITRI Itron 2,430
RAD Rite Aid 427
JNCE Jounce Therapeutics 184
ENZ Enzo Biochem 173
DRNG Drone Guarder 0
GLF Gulfmark Offshore 0
VSTR Valuesetters 0
BNKL Bionik Laboratories 0
ADM 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Note 1. Basis of Presentation
Note 2. New Accounting Standards
Note 3. Pending Accounting Standards
Note 4. Revenues
Note 5. Acquisitions
Note 6. Fair Value Measurements
Note 7. Derivative Instruments and Hedging Activities
Note 8. Other Current Assets
Note 9. Accrued Expenses and Other Payables
Note 10. Debt and Financing Arrangements
Note 11. Income Taxes
Note 12. Leases
Note 13. Accumulated Other Comprehensive Income (Aoci)
Note 14. Other (Income) Expense - Net
Note 15. Segment Information
Note 16. Asset Impairment, Exit, and Restructuring Costs
Note 17. Sale of Accounts Receivable
Note 18. Subsequent Event
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 adm-ex3112019331xq1.htm
EX-31.2 adm-ex3122019331xq1.htm
EX-32.1 adm-ex3212019331xq1.htm
EX-32.2 adm-ex3222019331xq1.htm

Archer Daniels Midland Earnings 2019-03-31

ADM 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.  20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-44
admprimarylogoa08.jpg
ARCHER-DANIELS-MIDLAND COMPANY
(Exact name of registrant as specified in its charter)
Delaware
41-0129150
(State or other jurisdiction of
incorporation or organization)
(I. R. S. Employer
Identification No.)
 
 
77 West Wacker Drive, Suite 4600
Chicago, Illinois
(Address of principal executive offices)
 
60601
(Zip Code)
 
 
(312) 634-8100
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes  x  No ¨.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x  No  ¨.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
Accelerated filer  o
Non-accelerated filer     o 
Smaller reporting company  o
Emerging growth company  o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o  No  x.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, no par value – 560,165,196 shares
(April 25, 2019)






PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
Archer-Daniels-Midland Company

Consolidated Statements of Earnings
(Unaudited)
 
Three Months Ended 
 March 31,
 
2019
 
2018
 
(In millions, except per share amounts)
 
 
 
 
Revenues
$
15,304

 
$
15,526

Cost of products sold
14,376

 
14,637

Gross Profit
928

 
889

 
 
 
 
Selling, general, and administrative expenses
659

 
513

Asset impairment, exit, and restructuring costs
11

 
16

Interest expense
101

 
91

Equity in (earnings) losses of unconsolidated affiliates
(101
)
 
(147
)
Interest income
(49
)
 
(33
)
Other (income) expense – net
(8
)
 
(15
)
Earnings Before Income Taxes
315

 
464

 
 
 
 
Income taxes
81

 
68

Net Earnings Including Noncontrolling Interests
234

 
396

 
 
 
 
Less: Net earnings attributable to noncontrolling interests
1

 
3

 
 
 
 
Net Earnings Attributable to Controlling Interests
$
233

 
$
393

 
 
 
 
Average number of shares outstanding – basic
565

 
563

 
 
 
 
Average number of shares outstanding – diluted
566

 
565

 
 
 
 
Basic earnings per common share
$
0.41

 
$
0.70

 
 
 
 
Diluted earnings per common share
$
0.41

 
$
0.70

 
 
 
 
Dividends per common share
$
0.35

 
$
0.335


See notes to consolidated financial statements.




2




Archer-Daniels-Midland Company

Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
 
Three Months Ended 
 March 31,
 
2019
 
2018
 
(In millions)
 
 
 
 
Net earnings including noncontrolling interests
$
234

 
$
396

Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustment
(79
)
 
211

Tax effect
(10
)
 
(3
)
Net of tax amount
(89
)
 
208

 
 
 
 
Pension and other postretirement benefit liabilities adjustment
7

 
2

Tax effect
13

 
(3
)
Net of tax amount
20

 
(1
)
 
 
 
 
Deferred gain (loss) on hedging activities
(77
)
 
(25
)
Tax effect
12

 
6

Net of tax amount
(65
)
 
(19
)
 
 
 
 
Unrealized gain (loss) on investments
(2
)
 
(2
)
Tax effect

 

Net of tax amount
(2
)
 
(2
)
Other comprehensive income (loss)
(136
)
 
186

Comprehensive income (loss) including noncontrolling interests
98

 
582

 
 
 
 
Less: Comprehensive income (loss) attributable to noncontrolling interests
1

 
3

 
 
 
 
Comprehensive income (loss) attributable to controlling interests
$
97

 
$
579


See notes to consolidated financial statements.





3




Archer-Daniels-Midland Company

Consolidated Balance Sheets
(In millions)
March 31, 2019
 
December 31, 2018
 
(Unaudited)
 
 
Assets
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
926

 
$
1,997

Short-term marketable securities
9

 
6

Segregated cash and investments
4,241

 
4,506

Trade receivables
2,515

 
2,233

Inventories
8,946

 
8,813

Other current assets
3,625

 
3,033

Total Current Assets
20,262

 
20,588

 
 
 
 
Investments and Other Assets
 

 
 

Investments in and advances to affiliates
5,332

 
5,317

Long-term marketable securities
22

 
7

Goodwill and other intangible assets
5,459

 
4,041

Other assets
1,777

 
927

Total Investments and Other Assets
12,590

 
10,292

 
 
 
 
Property, Plant, and Equipment
 

 
 

Land and land improvements
586

 
545

Buildings
5,404

 
5,171

Machinery and equipment
18,534

 
18,399

Construction in progress
1,121

 
987

 
25,645

 
25,102

Accumulated depreciation
(15,346
)
 
(15,149
)
Net Property, Plant, and Equipment
10,299

 
9,953

Total Assets
$
43,151

 
$
40,833

 
 
 
 
Liabilities, Temporary Equity, and Shareholders’ Equity
 

 
 

Current Liabilities
 

 
 

Short-term debt
$
1,595

 
$
108

Trade payables
3,538

 
3,545

Payables to brokerage customers
4,616

 
4,628

Accrued expenses and other payables
2,998

 
2,913

Current maturities of long-term debt
614

 
582

Total Current Liabilities
13,361

 
11,776

 
 
 
 
Long-Term Liabilities
 

 
 

Long-term debt
7,675

 
7,698

Deferred income taxes
1,250

 
1,067

Other
1,906

 
1,247

Total Long-Term Liabilities
10,831

 
10,012

 
 
 
 
Temporary Equity - Redeemable noncontrolling interest
49

 
49

 
 
 
 
Shareholders’ Equity
 

 
 

Common stock
2,584

 
2,560

Reinvested earnings
18,553

 
18,527

Accumulated other comprehensive income (loss)
(2,242
)
 
(2,106
)
Noncontrolling interests
15

 
15

Total Shareholders’ Equity
18,910

 
18,996

Total Liabilities, Temporary Equity, and Shareholders’ Equity
$
43,151

 
$
40,833

 
 
 
 
See notes to consolidated financial statements.

4




Archer-Daniels-Midland Company

Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
Three Months Ended 
 March 31,
 
2019
 
2018
Operating Activities
 
 
 
Net earnings including noncontrolling interests
$
234

 
$
396

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
 

 
 

Depreciation and amortization
245

 
235

Asset impairment charges
9

 
12

Deferred income taxes
39

 
(21
)
Equity in earnings of affiliates, net of dividends
(4
)
 
(105
)
Stock compensation expense
43

 
29

Deferred cash flow hedges
(77
)
 
(25
)
Gains on sales of assets and businesses
(15
)
 
(6
)
Other – net
(8
)
 
38

Changes in operating assets and liabilities
 

 
 

Segregated investments
28

 
308

Trade receivables
34

 
(185
)
Inventories
166

 
(600
)
Deferred consideration in securitized receivables
(1,778
)
 
(2,450
)
Other current assets
(495
)
 
(432
)
Trade payables
(260
)
 
(567
)
Payables to brokerage customers
(27
)
 
(432
)
Accrued expenses and other payables
(169
)
 
231

Total Operating Activities
(2,035
)
 
(3,574
)
 
 
 
 
Investing Activities
 

 
 

Purchases of property, plant, and equipment
(198
)
 
(196
)
Proceeds from sales of business and assets
18

 
14

Net assets of businesses acquired
(1,876
)
 

Proceeds from sales of marketable securities
50

 

Investments in and advances to affiliates
(9
)
 

Investments in retained interest in securitized receivables
(1,313
)
 
(1,298
)
Proceeds from retained interest in securitized receivables
3,091

 
3,656

Other – net
(34
)
 
4

Total Investing Activities
(271
)
 
2,180

 
 
 
 
Financing Activities
 

 
 

Long-term debt payments
(4
)
 
(1
)
Net borrowings (payments) under lines of credit agreements
1,309

 
1,474

Cash dividends
(198
)
 
(190
)
Other – net
(42
)
 
(6
)
Total Financing Activities
1,065

 
1,277

 
 
 
 
Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents
(1,241
)
 
(117
)
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period
3,843

 
1,858

Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period
$
2,602

 
$
1,741

 
 
 
 
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated balance sheets
 
 
 
 
 
 
 
Cash and cash equivalents
$
926

 
$
797

Restricted cash and restricted cash equivalents included in segregated cash and investments
1,676

 
944

Total cash, cash equivalents, restricted cash, and restricted cash equivalents
$
2,602

 
$
1,741

 
 
 
 
Supplemental Disclosure of Noncash Investing Activity:
 
 
 
Retained interest in securitized receivables
$
1,831

 
$
2,368


See notes to consolidated financial statements.

5




Archer-Daniels-Midland-Company

Consolidated Statement of Shareholders’ Equity
(Unaudited)
 
Common Stock
 
Reinvested
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interests
 
Total
Shareholders’
Equity
 
Shares
 
Amount
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2017
557

 
$
2,398

 
$
17,552

 
$
(1,637
)
 
$
9

 
$
18,322

Comprehensive income
 

 
 

 
 

 
 

 
 

 
 

Net earnings
 
 
 

 
393

 
 

 
3

 
 

Other comprehensive income (loss)
 

 
 

 
 

 
186

 

 
 

Total comprehensive income
 

 
 

 
 

 
 

 
 

 
582

Dividends paid - $0.335 per share
 

 
 

 
(190
)
 
 

 
 

 
(190
)
Stock compensation expense
2

 
29

 
 

 
 

 
 

 
29

Other

 
1

 

 

 
(7
)
 
(6
)
Balance, March 31, 2018
559

 
$
2,428

 
$
17,755

 
$
(1,451
)
 
$
5

 
$
18,737

 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2018
559

 
$
2,560

 
$
18,527

 
$
(2,106
)
 
$
15

 
$
18,996

Comprehensive income
 

 
 

 
 

 
 

 
 

 
 

Net earnings
 
 
 

 
233

 
 

 
1

 
 

Other comprehensive income (loss)
 

 
 

 
 

 
(136
)
 

 
 

Total comprehensive income
 

 
 

 
 

 
 

 
 

 
98

Dividends paid - $0.35 per share
 

 
 

 
(198
)
 
 

 
 

 
(198
)
Stock compensation expense
1

 
43

 
 

 
 

 
 

 
43

Other

 
(19
)
 
(9
)
 

 
(1
)
 
(29
)
Balance, March 31, 2019
560

 
$
2,584

 
$
18,553

 
$
(2,242
)
 
$
15

 
$
18,910


See notes to consolidated financial statements.

6




Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements
(Unaudited)
Note 1.
Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all of the information and footnotes required by generally accepted accounting principles for audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.  For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries.  All significant intercompany accounts and transactions have been eliminated.  The Company consolidates all entities, including variable interest entities (VIEs), in which it has a controlling financial interest. For VIEs, the Company assesses whether it is the primary beneficiary as defined under the applicable accounting standard. Investments in affiliates, including VIEs through which the Company exercises significant influence but does not control the investee and is not the primary beneficiary of the investee’s activities, are carried at cost plus equity in undistributed earnings since acquisition and are adjusted, where appropriate, for basis differences between the investment balance and the underlying net assets of the investee.  The Company’s portion of the results of certain affiliates and results of certain VIEs are included using the most recent available financial statements.  In each case, the financial statements are within 93 days of the Company’s year end and are consistent from period to period.

Segregated Cash and Investments

The Company segregates certain cash, cash equivalents, and investment balances in accordance with regulatory requirements, commodity exchange requirements, and insurance arrangements. These balances represent deposits received from customers of the Company’s registered futures commission merchant and commodity brokerage services, cash margins and securities pledged to commodity exchange clearinghouses, and cash pledged as security under certain insurance arrangements. Segregated cash and investments also include restricted cash collateral for the various insurance programs of the Company’s captive insurance business. To the degree these segregated balances are comprised of cash and cash equivalents, they are considered restricted cash and cash equivalents on the statement of cash flows.

Last-in, First-out (LIFO) Inventories

Interim period LIFO calculations are based on interim period costs and management’s estimates of year-end inventory levels.  Because the availability and price of agricultural commodity-based LIFO inventories are unpredictable due to factors such as weather, government farm programs and policies, and changes in global demand, quantities of LIFO-based inventories at interim periods may vary significantly from management’s estimates of year-end inventory levels.


7


Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Note 2.
New Accounting Standards

Effective January 1, 2019, the Company adopted the new guidance of ASC Topic 842, Leases (Topic 842), which superseded ASC Topic 840, Leases. Topic 842 requires lessees to recognize assets and liabilities for all leases. The Company adopted Topic 842 using the optional transition method that allows entities to forgo the comparative reporting requirements under the modified retrospective transition method. In addition, the Company elected to apply the package of practical expedients that allows entities to forego reassessing at the transition date: (1) whether any expired or existing contracts are or contain leases; (2) lease classification for any expired or existing leases; and (3) whether unamortized initial direct costs for existing leases meet the definition of initial direct costs under the new guidance. The Company also elected to use the practical expedient that allows the combination of lease and non-lease contract components in all of its underlying asset categories, as well as the optional transition practical expedient that permits entities to continue applying current accounting policy for land easements that existed as of or expired before January 1, 2019. The adoption of Topic 842 resulted in the recording of right-of-use assets and lease liabilities of $793 million and $795 million, respectively, at January 1, 2019. The new guidance did not have a material impact on the Company’s consolidated statement of earnings and had no impact on the consolidated statement of cash flows. For more information about the adoption of Topic 842, see Note 12.

Effective January 1, 2019, the Company adopted the amended guidance of ASC Topic 220, Income Statement - Reporting Comprehensive Income (Topic 220), which allows the reclassification from accumulated other comprehensive income (AOCI) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Act”), eliminating the stranded tax effects resulting from the Act and improving the usefulness of information reported to financial statement users. In addition, the Company is required to disclose: (1) a description of its accounting policy for releasing income tax effects from accumulated other comprehensive income; (2) whether it elects to reclassify the stranded income tax effects from the Act; and (3) information about other income tax effects related to the application of the Act that are reclassified from AOCI to retained earnings, if any. The Company has made a policy election to not release income tax effects from accumulated comprehensive income, including the stranded income tax effects resulting from the Act.

Note 3.
Pending Accounting Standards

Effective January 1, 2020, the Company will be required to adopt the amended guidance of ASC Topic 326, Financial Instruments - Credit Losses, which is intended to improve financial reporting by requiring more timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amended guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating its current accounting policy of recording allowance for doubtful accounts for compliance with the amended guidance. Based on that evaluation, the Company does not expect the adoption of this amended guidance to have a significant impact on the Company’s financial results.

Effective January 1, 2020, the Company will be required to adopt the amended guidance of ASC Topic 820, Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. Early adoption is permitted. The adoption of this amended guidance will not impact the Company’s financial results.

Effective December 31, 2020, the Company will be required to adopt the amended guidance of ASC Subtopic 715-20, Compensation - Retirement Benefits - Defined Benefit Plans - General, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Early adoption is permitted. The adoption of this amended guidance will not impact the Company’s financial results.
 

8


Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Note 4.
Revenues

Revenue Recognition

The Company principally generates revenue from merchandising and transporting agricultural commodities and manufactured products used as ingredients in food, feed, energy, and industrial products. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product or service to a customer. The majority of the Company’s contracts with customers have one performance obligation and a contract duration of one year or less. The Company applies the practical expedient in paragraph 10-50-14 of ASC 606, Revenue from Contracts with Customers (Topic 606) and does not disclose information about remaining performance obligations that have original expected durations of one year or less. For transportation service contracts, the Company recognizes revenue over time as the barge, ocean-going vessel, truck, rail, or container freight moves towards its destination in accordance with the transfer of control guidance of Topic 606. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20).
Shipping and Handling Costs

Shipping and handling costs related to contracts with customers for sale of goods are accounted for as a fulfillment activity and are included in cost of products sold. Accordingly, amounts billed to customers for such costs are included as a component of revenues.
Taxes Collected from Customers and Remitted to Governmental Authorities
 
The Company does not include taxes assessed by governmental authorities that are (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers, in the measurement of transactions prices or as a component of revenues and cost of products sold.
Contract Liabilities

Contract liabilities relate to advance payments from customers for goods and services that the Company has yet to provide. Contract liabilities of $477 million and $501 million as of March 31, 2019 and December 31, 2018, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheet. Contract liabilities recognized as revenues for the three months ended March 31, 2019 and 2018 were $166 million and $326 million, respectively.






















9

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Note 4.
Revenues (Continued)


Disaggregation of Revenues

The following tables present revenue disaggregated by timing of recognition and major product lines for the three months ended March 31, 2019 and 2018.

 
Three Months Ended March 31, 2019
 
Topic 606 Revenue
Topic 815(1)
Total
 
Point in Time
Over Time
Total
Revenue
Revenues
 
(In millions)
Origination
 
 
 
 
 
Merchandising and Handling
$
592

$
49

$
641

$
5,417

$
6,058

Transportation

66

66


66

Total Origination
592

115

707

5,417

6,124

Oilseeds
 
 
 
 
 
Crushing and Origination
171


171

3,085

3,256

Refining, Packaging, Biodiesel, and Other
512


512

1,646

2,158

Total Oilseeds
683


683

4,731

5,414

Carbohydrate Solutions
 
 
 
 
 
Starches and Sweeteners
1,199


1,199

423

1,622

Bioproducts
781


781


781

Total Carbohydrate Solutions
1,980


1,980

423

2,403

Nutrition
 
 
 
 
 
Wild Flavors and Specialty Ingredients
674


674


674

Animal Nutrition
608


608


608

Total Nutrition
1,282


1,282


1,282

 
 
 
 
 
 
Other
81


81


81

Total Revenues
$
4,618

$
115

$
4,733

$
10,571

$
15,304





















10

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Note 4.
Revenues (Continued)


 
Three Months Ended March 31, 2018
 
Topic 606 Revenue
Topic 815(1)
Total
 
Point in Time
Over Time
Total
Revenue
Revenues
 
(In millions)
Origination
 
 
 
 
 
Merchandising and Handling
$
671

$
62

$
733

$
5,479

$
6,212

Transportation

55

55


55

Total Origination
671

117

788

5,479

6,267

Oilseeds
 
 
 
 
 
Crushing and Origination
186


186

3,099

3,285

Refining, Packaging, Biodiesel, and Other
527


527

1,790

2,317

Total Oilseeds
713


713

4,889

5,602

Carbohydrate Solutions
 
 
 
 
 
Starches and Sweeteners
1,157


1,157

481

1,638

Bioproducts
963


963


963

Total Carbohydrate Solutions
2,120


2,120

481

2,601

Nutrition
 
 
 
 
 
Wild Flavors and Specialty Ingredients
636


636


636

Animal Nutrition
314


314


314

Total Nutrition
950


950


950

 
 
 
 
 
 
Other
106


106


106

Total Revenues
$
4,560

$
117

$
4,677

$
10,849

$
15,526


(1) Topic 815 revenue relates to the physical delivery or the settlement of the Company’s sales contracts that are accounted for as derivatives and are outside the scope of Topic 606.
 
 
 
 
 
 
Origination

The Origination segment generates revenue from the sale of commodities and from service fees for the transportation of goods. Revenue is measured based on the consideration specified in the contract and excludes any sales incentives and amounts collected on behalf of third parties. Revenue is recognized when a performance obligation is satisfied by transferring control over a product or providing service to a customer. For transportation service contracts in Transportation, the Company recognizes revenue over time as the barge, ocean-going vessel, truck, rail, or container freight moves towards its destination in accordance with the transfer of control guidance of Topic 606. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20.

Oilseeds

The Oilseeds segment generates revenue primarily from the sale of products manufactured in its global processing facilities.  The segment also generates revenue from the sale of raw commodities in its South American grain origination business and from the sale of peanuts, tree nuts, and peanut-derived ingredients.  Revenue is recognized when a performance obligation is satisfied by transferring control over a product.  The amount of revenue recognized follows the contractually specified price which may include freight or other contractually specified cost components.  For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20.



11

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Note 4.
Revenues (Continued)


Carbohydrate Solutions

The Carbohydrate Solutions segment generates revenue from the sale of products manufactured at the Company’s global corn and milling facilities around the world. Revenue is recognized when control over products is transferred to the customer. Products are shipped to customers from the Company’s various facilities and from its network of storage terminals. The amount of revenue recognized is based on the consideration specified in the contract which could include freight and other costs depending on the specific shipping terms of each contract. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20.

Nutrition

The Nutrition segment sells specialty products including natural flavor ingredients, flavor systems, natural colors, animal nutrition products, and other specialty food and feed ingredients. Revenue is recognized when control over products is transferred to the customer. The amount of revenue recognized follows the contracted price or the mutually agreed price of the product. Freight and shipping are recognized as a component of revenue at the same time control transfers to the customer.

Other

Other includes the Company’s futures commission business whose primary sources of revenue are commissions and brokerage income generated from executing orders and clearing futures contracts and options on futures contracts on behalf of its customers. Commissions and brokerage revenue are recognized on the date the transaction is executed. Other also includes the Company’s captive insurance business which generates third party revenue through its proportionate share of premiums from third-party reinsurance pools. Reinsurance premiums are recognized on a straight-line basis over the period underlying the policy.

Note 5.
Acquisitions

The Company acquired Neovia SAS (Neovia) and Florida Chemical Company (FCC) in January 2019 and March 2019, respectively. Both acquisitions are in line with the Company’s strategy to become one of the world’s leading nutrition companies. The post-acquisition financial results of Neovia and FCC, which were not material, are reported in the Nutrition segment.

During the three months ended March 31, 2019, the Company acquired Neovia, FCC, and the remaining 50% interest in Gleadell Agriculture Ltd (Gleadell), for an aggregate consideration of $1,953 million in cash. The aggregate consideration of these acquisitions, net of $91 million in cash acquired, plus the acquisition-date value of the Company’s previously held equity interest in Gleadell of $14 million, were preliminarily allocated as follows:

In millions
Neovia
FCC
Gleadell
Total
Working capital
$
102

$
40

$
(6
)
$
136

Property, plant, and equipment
409

17

13

439

Goodwill
784

90

10

884

Other intangible assets
583

23


606

Other long-term assets
87



87

Long-term liabilities
(274
)

(2
)
(276
)
Aggregate cash consideration, net of cash acquired, plus acquisition-date fair value of previously held equity interest
$
1,691

$
170

$
15

$
1,876


Goodwill allocated in connection with the acquisitions is primarily attributable to synergies expected to arise after the Company’s acquisition of the businesses. Of the $884 million preliminarily allocated to goodwill, $90 million is expected to be deductible for tax purposes.



12

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Note 5.
Acquisitions (Continued)


The Company recognized pre-tax gains of $3 million on the Gleadell transaction, representing the difference between the carrying value and acquisition-date fair value of the Company’s previously held equity interest. The acquisition-date fair value was determined based on a discounted cash flow analysis using market participant assumptions (a Level 3 measurement under applicable accounting standards).

The following table sets forth the preliminary fair values and the useful lives of the other intangible assets acquired.

 
Useful Life
Neovia
FCC
Total
 
(In years)
(In millions)
Trademarks/brands
5 to 13
$
166

$
7

$
173

Customer lists
10 to 20
289

12

301

Developed technology
6 to 11
128

4

132

Total other intangible assets acquired
 
$
583

$
23

$
606



Note 6.
Fair Value Measurements

The following tables set forth, by level, the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2019 and December 31, 2018.
 
Fair Value Measurements at March 31, 2019
 

Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1)
 
Significant
 Other
 Observable
 Inputs
 (Level 2)
 
Significant 
Unobservable
Inputs
(Level 3)
 
Total
 
(In millions)
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Inventories carried at market
$

 
$
3,000

 
$
1,511

 
$
4,511

Unrealized derivative gains:
 
 
 
 
 
 
 
Commodity contracts

 
257

 
212

 
469

Foreign currency contracts

 
191

 

 
191

Cash equivalents
432

 

 

 
432

Marketable securities
30

 
1

 

 
31

Segregated investments
1,073

 

 

 
1,073

Deferred receivables consideration

 
430

 

 
430

Total Assets
$
1,535

 
$
3,879

 
$
1,723

 
$
7,137

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Unrealized derivative losses:
 
 
 
 
 
 
 
Commodity contracts
$

 
$
291

 
$
143

 
$
434

Foreign currency contracts

 
155

 

 
155

Interest rate contracts

 
32

 

 
32

Inventory-related payables

 
1,123

 
16

 
1,139

Total Liabilities
$

 
$
1,601

 
$
159

 
$
1,760


13

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)
(Unaudited)

Note 6.
Fair Value Measurements (Continued)

 
Fair Value Measurements at December 31, 2018
 
 
Quoted Prices in
 Active Markets
 for Identical
 Assets
 (Level 1)
 
Significant
 Other
 Observable
 Inputs
 (Level 2)
 
Significant 
Unobservable
Inputs
(Level 3)
 
Total
 
(In millions)
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
Inventories carried at market
$

 
$
3,032

 
$
1,515

 
$
4,547

Unrealized derivative gains:
 
 
 
 
 
 
 
Commodity contracts

 
306

 
155

 
461

Foreign currency contracts

 
175

 

 
175

Cash equivalents
1,288

 

 

 
1,288

Marketable securities
12

 
1

 

 
13

Segregated investments
1,044

 

 

 
1,044

Deferred receivables consideration

 
379

 

 
379

Total Assets
$
2,344

 
$
3,893

 
$
1,670

 
$
7,907

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Unrealized derivative losses:
 
 
 
 
 
 
 
Commodity contracts
$

 
$
344

 
$
245

 
$
589

Foreign currency contracts

 
152

 

 
152

Interest rate contracts

 
20

 

 
20

Inventory-related payables

 
579