Archer-Daniels-Midland Company (ADM) Q4 2011 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to Archer Daniels Midland Fourth Quarter Conference Call. My name is Carmen. I'll be your coordinator for today. [Operator Instructions] I would now like to turn the call over to your host for today, Mr. Dwight Grimestad, Vice President of Investor Relations. Please proceed.

Thank you, Carmen. Good morning. Welcome to ADM's Fourth Quarter Earnings Conference Call. Before we begin, I would like to remind you that we are webcasting this presentation on our website, on adm.com. The replay will also be available at that address. For those following the presentation, please turn to Slide 2, the company's Safe Harbor statement, it says that some of the comments constitute forward-looking statements that reflect management's current views and estimates for economic circumstances, industry conditions, company performance and financial results. Statements are based on many assumptions and factors, availability and prices of raw materials, market conditions, operating efficiencies, access to capital and actions of government. Any changes in such assumptions or factors could produce significantly different results. To the extent permitted under applicable law, the company assumes no obligation to update any forward-looking statements as a result of new information or future events. On Slide 3 is a list of matters we will discuss on the conference call today. And now please turn to Slide 4 as I turn the call over to our Chairman and Chief Executive Officer, Pat Woertz.

Thank you, Dwight and welcome and good morning, everyone to our fourth quarter conference call. I will begin, as always, with safety. During our fiscal year 2011, we reduced our lost workday injury rate by almost 7% and our total recordable incident rate by 17% compared to fiscal 2010. However, we're still not at 0 incidents, 0 injuries, or even fatalities so we must, and we will, continue to make meaningful progress on safety. Turning to our financial results. This morning, we reported fourth quarter net earnings of $381 million or $0.58 per share on a fully diluted basis. Segments operating profits were $888 million, up 11%, excluding LIFO and other specified items, particularly some tax items, which Ray will discuss in a moment. ADM earned $0.69 per share. Despite a challenging environment in several key markets, ADM delivered solid operating results across all of our businesses for the quarter. We earned a record operating profit for the fiscal year with our growing global asset base, diversified product portfolio and the acumen of the ADM team. Since our last call, we've continued to execute on our strategy to drive profitable growth and shareholder return. I'd like to recap 7 expansions, acquisitions or projects from the quarter. In North America, we announced expansion of our lysine and threonine production capacity to meet animal producers' growing demand for amino acids. Second, we acquired Cattleman's Choice Loomix, a liquid animal feed supplements business, making our entrance into the business and complementing our broad line of dry feed offerings. And we are adding 2 joint ventures, shuttle train loading elevators in the Dakotas, as well as an ADM-owned facility in Minnesota. These will primarily serve the export market to Asia. In South America, we announced plans to construct a port facility in Nueva Palmira, Uruguay to enhance our ability to connect South American crops with the global market. In Asia, we opened our feed premix plant in Tianjin, China, to serve the growing Chinese market for animal nutrition products. And 2, in Europe. We acquired a grain elevator on the Elba River, in Riesa, Germany extending the reach of our origination capability. And today, we are pleased to announce this morning with a later press release, a network project we've been working on for some time. It will increase our origination and transportation capabilities along the Danube River. We're adding 12 river elevators, one inland elevator, an export elevator on the Black Sea port of Constanta. And this seamless origination and export link is similar to our other networks, those along the Paraguay River or in fact, in the North America along the Mississippi. We've also continued to work to strengthen the ADM organization to drive this profitable growth. This is the first call this morning in which Juan is joining us. Since he came to ADM in April, Juan's been learning our business and perhaps the best way visiting our operations around the world, meeting with people and working with his team to develop our fiscal year 2012 business plan. For today's call, I've asked him to highlight a few of the key areas of focus for this new fiscal year. Those areas are driving operational excellence, accelerating growth and sustaining ADM's outstanding risk management performance. So after Ray reviews our financial results for the quarter and the year, Juan will provide an update on current market conditions and discuss those fiscal 2012 focus areas. Looking ahead, we are confident in our people, our assets and our financial strengths to deliver profitable growth and value for our shareholders as we serve the vital needs of the growing world. Now I'll turn the call over to Ray.

Thanks, Pat, and hello to everyone on the call today. Let me share with you our fourth quarter and fiscal year results. Slide 5 lists our financial highlights for the quarter and the full fiscal year. For the full fiscal year, segment operating profit, was $4 billion, a 24% increase from fiscal year 2010. And our return on invested capital, on a 4-quarter trailing average basis, was 9%, representing a 30 point year-over-year increase over our 4-quarter moving average flag. This quarter, financial results were good despite the weak underlying margin environment in many of our businesses. Segment operating profit was $888 million, up 11% from a year ago. And in a moment, I'll review those results on a segment-by-segment basis. As you'll see on this slide, in the fourth quarter, we recorded additional tax expenses to bring our cumulative effective tax rate for the full fiscal year to 33%. This additional tax expense caused our quarterly net earnings to decline 15% to $381 million. This resulted in quarterly earnings per share of $0.58, on a fully diluted basis, compared to last year's $0.69. During the first 3 quarters of our fiscal year, we estimate our full year tax rate. In the fourth quarter, we determine the actual tax rate for the year and we adjust the fourth quarter tax rate accordingly. As you know, we generate earnings in multiple jurisdictions around the world. Our geographic mix of earnings varies quarter-to-quarter and year-to-year. And our effective tax rates vary by jurisdiction. Last year's fourth quarter tax rate was reduced after the reconciliation, while this year's fourth quarter tax rate increased significantly. This fiscal year's rate was atypical and was impacted by: one, the geographic mix of earnings more tilted to the U.S. including, as you'll hear later in our fourth quarter earnings; two, a higher U.S. effective tax rate as a result of type of earnings generated and the availability of various deductions and credits; three, higher tax expenses due to a stronger-than-estimated Brazilian real currency on June 30, generating remeasurement gains that our tax affected.; and four, true-ups of various deferred taxes that resulted in higher tax expenses in the current period. For fiscal year 2012, based on current estimates, we expect our effective tax rate to be in the 28% to 30% range. Slide 6 is a chart that we've added to highlight adjusted earnings per share where we have called out certain unique items we believe will help you better understand our results. First, let me walk you through the fourth quarter column. We recorded a LIFO credit of $32 million after tax or approximately $0.05 per share compared to a $0.02 charge in the same period last year. We incurred some small amounts of start costs, about $0.02 a share related to our PGEG and PHA plants. We would expect these startup costs to go away in the first quarter of this fiscal year. We benefited from a $78 million gain related to our equity investee Gruma, S.A.B. de C.V., disposing of its holdings of GFNorte Bank worth $0.07 per share. We discussed the book tax effects earlier. To better reflect the underlying earnings performance of the fourth quarter, if we adjusted the actual fourth quarter effective tax rate of 50%, to the fiscal year tax rate of 33%, there would be a $0.20 per share benefit to earnings for the fourth quarter. In last year's fourth quarter, we showed an adjustment of negative $0.06 per share to reflect the favorable fourth quarter tax adjustment to bring the cumulative tax rate in line with the fiscal year rate of 26%. Therefore, there are adjustments of $0.11 per share positive for the fourth quarter 2011, resulting in adjusted earnings of $0.69 for the fourth quarter compared to $0.75 in the fourth quarter of 2010. For the full fiscal year, we see a similar walk that put some of the items that we've called out in prior quarter earnings calls. LIFO turned out to be a $0.35 charge for the fiscal year due to rising commodity prices. We've talked in the past about the gain on Golden Peanut in our second quarter. We also highlighted the diluted impact of if-converted accounting for the equity units that we had discussed in the third quarter earnings call. The result is an approximately $0.04 per share additional dilution for the 2011 fiscal year. Taking the above into account, fiscal year 2011's adjusted earnings were $3.45 per share or 8% higher than adjusted earnings for 2010 despite the 7 points of higher effective tax rate in 2011. Slide 7 shows the breakdown of our segment operating profit. Let's turn to Slide 8 to begin a review of each segment in greater detail. Slide 8, Oilseed's operating profit in the fourth quarter increased $20 million to $379 million. Crushing and origination operating profit increased $14 million to $232 million for the quarter. North American results increased across the Oilseed portfolio, particularly in soft seeds, despite a weak margin environment. European and South American results were lower and were partially offset by positive mark-to-market timing effects of slightly less than $100 million, which we called out on our last earnings call. Refining, packaging, biodiesel and other generated a profit of $86 million for the quarter, up $7 million from last year as improved results from North America offset lower results from Europe and South America. Oilseed results in Asia for the quarter were in-line with last year, principally reflecting our share of the results from equity investee Wilmar International Limited. For the fiscal year, Oilseed's operating profit of $1.52 billion represented a 9% increase from 2010, set an all-time record. Crushing and origination results of over $1 billion demonstrated strength across all Oilseed categories including soy, cottonseed, canola and sun. And our share of Wilmar earnings declined about $100 million to $178 million in 2011 compared to $280 million in 2010. Moving to Slide 9, Corn Processing. For the quarter, Corn Processing operating profit was $118 million, a decline of $22 million from the same quarter last year. While processed volumes were up 15%, net corn cost increased significantly from last year's fourth quarter. Sweeteners and starches operating profit of $9 million was down $110 million, as higher average selling prices and sales volumes were more than offset by a higher net corn cost. Export demand for sweeteners remained strong. We want to remind listeners that we generally run a hedge book for our Corn Processing business, and with higher pricing, we hedge favorable margins for the 2011 contract year for our sweeteners business. However, we recognize a lot of the benefit of our economic hedges when marking to market in the prior quarters. In addition, we allocate the gains on these hedges between the sweeteners and starches business and the Bioproducts business based upon grind volume. Bioproducts profit in the quarter rose $88 million to $109 million, driven by higher ethanol prices, favorable ownership positions, strong demand for value-added food and feed ingredients, particularly lysine and other amino acids. For the 2011 fiscal year, Corn Processing profits of $1.1 billion represented a 47% increase from 2010 levels. Again, it's important to be cautious about making any direct conclusions about the magnitude of the changes between bioproducts and sweeteners and starches, year-over-year, because of the varying impact of hedge allocation. This year, bioproducts benefited disproportionately from the allocation of hedging gains on corn. Going forward, we are looking at various approaches to better align the accounting results and the economic results within this segment. Now let's turn to Slide 10 and review the operating performance of our Ag Services business segment where a profit of $193 million was an increase of $15 million from last year's results. Merchandising and handling earnings increased primarily due to stronger results from a North American interior elevators and export operations, which were partially offset by weaker international merchandising results. Earnings from transportation operations were essentially flat compared to the fourth quarter of last year. For the 2011 fiscal year, Ag Services operating profit of $922 million represented a 38% improvement from 2010 levels, strengths across both merchandising and handling in our transportation businesses. Slide 11 is an operating profit analysis of our other business units. In the fourth quarter, profits increased $76 million to $198 million. In other processing, which includes wheat milling, cocoa and ADM share of Gruma, profits were $192 million, an increase of $64 million from the year-ago quarter. ADM's portion of Gruma's results included a $78 million gain on the disposal of the bank assets I mentioned earlier. Other financial increased $12 million mainly due to improved results of ADM's captive insurance subsidiaries and ADM Investor Services. For the 2011 fiscal year, other business units improved to $513 million. Gruma's results benefit from the gain on the sale of the GFNorte bank assets which offset declines in Gruma's operating performance. Slide 12 shows the major components of our corporate line. I just want to highlight the LIFO line. Market prices for our LIFO-based inventories declined in the fourth quarter, resulting in a credit of $52 million compared to a charge of $23 million last year. For the fiscal year, market prices for our LIFO-based inventories increased, resulting in a pretax charge of $368 million, which was $410 million unfavorable to the prior year. Other items in the fourth quarter were more or less in line with the prior year with the exception of last year's loss on interest rate swaps. On Slide 13, we're comparing selected balance sheet highlights at June 30, 2011 against our June 30, 2010 balance sheet. I'll walk through the major changes to various asset and liability categories in the following cash flow statement. However, I do want to highlight here that despite rising commodity prices during the year, we have maintained a strong balance sheet and access to liquidity. Inventory includes approximately $7 billion of readily marketable commodities as of June 30, 2011 compared to $4.9 billion at the end of June 2010. At the end of the quarter, we had in place a $4.6 billion U.S. commercial paper program, of which $4 billion was unused. In addition, we had $2.3 billion of other global credit lines, of which $1.7 billion was available. Slide 14 shows the significant items impacting our cash flows for the past 12 months compared to the prior year's 12-month period. Cash generated from operations, before working capital movements,was $2.9 billion compared to $2.7 billion in the prior year. Higher commodity prices drove the use of $5 billion in cash in our working capital accounts. This is a sizable outflow of cash over a-12-month period. However, in the fourth quarter, we saw a net inflow of working capital of almost $2 billion. Investments in property, plant and equipment were at $1.2 billion for the past 12 months. Including acquisitions, we spent $1.5 billion on CapEx and M&A activities in 2011. The increase in working capital and capital expenditures in investments were funded by a net increase of debt of $2.5 billion. In addition, on June 1, we received $1.75 billion related to the conversion of the equity units. Also, in the 12 month period, we bought back 9.4 million shares for a total spend of approximately $300 million. As I've indicated in our second and third quarter earnings calls, our intent is to mitigate the impact of the dilutive impact of the equity unit conversion over a 2-year period from June 1. We've already bought back 12 million shares since the original equity unit issuance in 2008 and the benefit plan linked issuances, leaving 32 million shares to buy back. Of course, we want to ensure our balance sheet remains strong enough to help drive strong business result in a period of elevated commodity prices. And to undertake significant strategic investments that could have an impact on the timing and the number of shares we repurchase. Turning to Slide 15, which depicts our financial return measure comparing our historical 4-quarter trailing ROIC against our trailing 4-quarter WACC. As you see, our ROIC was 9.0% and our WACC is currently running around 6.5% for a 250-point positive return over our cost of capital. As you know, our ROIC objective is to earn 200 basis points above WACC over the long-term. For the fourth quarter, our return on equity, on a trailing 4-quarter LIFO adjusted basis, was 13.3%. Our long-term ROE target is the range of 12% to 14% .

Ray, let me interrupt you here before you turn the call over to Juan. We understand from our conference call service that there was a stock or a hold on our call for the first few slides. So what I'd like to do is summarize briefly my opening comments on Slide 4, and also ask Ray to cover the highlights from Slide 5 and 6. And then we'll go back to the order of Juan covering the current market conditions and then some looks ahead to our 2012 focus areas. I began with safety, covered that, turned to the financial results, which were in the press release, and noted that despite a challenging environment in several of our key markets, ADM delivered solid operating results across all our businesses for the quarter. We earned a record operating profit for the fiscal year with our growing global asset base, our diversified portfolio and the acumen of the ADM team. Since our last call, I covered 7 projects that were part of executing our strategy to drive profitable growth and shareholder returns. These were either project expansions or acquisition. If you would do review the script, you'll see that there were 3 in North America: our expansion of our lysine and threonine production; our acquisition of Cattleman's Choice Loomix; and adding joint venture shuttle train loading elevators as well as ADM facilities to expand our export capability to Asia. In South America, our port facility in Nueva Palmira in Uruguay to, again, connect the South American crops with global markets. In Asia, the premix feed plant in Tianjin, China. In Europe, the grain elevator in the Elbe River in Riesa, Germany. And then this morning, we will announce, with a further press release this morning, a network project we've been working on for some time. It will increase our origination and transportation capabilities along the Danube River. We are adding 12 river elevators, an inland elevator and export elevator on the Black Sea port of Constanta. And this seamless origination in export link is very similar to our networks along the Paraguay River and South America or even along the Mississippi River here in North America. We've also continued to work to strengthen the ADM organization to drive this profitable growth. And since this is the first call where Juan is joining us, I thought I'd mentioned that since he came to ADM in April, he's been learning our business in perhaps the best way, visiting our operations around the world, meeting with our people, working with the team to develop our fiscal 2012 business plan. So after Ray finishes the financial results, which he just concluded here, I'd like Juan to talk a bit about, not only the current market conditions, but the focus areas for 2012, which include driving operational excellence, accelerating growth and sustaining ADM's outstanding risk management performance. So looking ahead, we are confident in our people, our assets and our financial strength to deliver profitable growth and value for our shareholders as we serve the vital needs of a growing world. So Ray, perhaps you could summarize your comments associated with Slide 5 and 6. I believe they were able to join the call from our indications at Slide 7.

Okay. Well thanks, Pat. Again, on Slide 5, to give an overview of the financial highlights for the order and also for the fiscal year. You'll see the segment operating profit for the quarter, 11% growth to $888 million. But that was offset, on a net income basis, by higher tax expenses, with our effective tax rate for the quarter going up to 50% in order to get our fiscal year rate in line at a 33% rate. I just want to kind of highlight that when we estimate tax rates, we do these estimations over the course of the quarter. And then in the fourth quarter, we actually term the actual rate and we effectively true up in the fourth quarter. As you know, we're a global operations. We generate earnings in multiple jurisdictions around the world. Our mix of earnings varies quarter-to-quarter and year-to-year. And our effective tax rates vary significantly by jurisdiction. And so, in last year's, we did the similar type of reconciliation and we had a reduction in terms of our effective tax rate, with a fourth quarter reconciliation. This year, when we did the fourth quarter reconciliation, our tax rate increased. For 2011, our fiscal year rate was atypical, and was impacted by the geographic mix of earnings, more tilted to the U.S. Again, I talked about the segment trends earlier in this call. And secondly, our higher U.S. effective tax rate, as a result of the type of earnings that we generate and the availability of various deductions in credits in any given year. And thirdly, a higher tax expenses due to a stronger-than-estimated Brazilian real currency, at the end of the fiscal year on June 30, generating remeasurement gains that get tax-affected for book tax expense for business. And lastly, we had various true-ups of deferred taxes that result in higher tax expenses in the current period. I also indicate that, for fiscal year 2012, based on current estimates, we do expect our effective tax rate to be in the 28% to 30% range. On Slide 6, we actually, in order to help understand earnings for the quarter and for the fiscal year better, we actually have a slide showing adjusted earnings per share. You can see the various line items in this particularly walk including the LIFO credit we had in the quarter. There was a LIFO charge for the fiscal year. We had some startup cost in the quarter, which we expect to go away in the first quarter. We had a gain on -- from our share of Gruma related to their disposal of shares in the bank that generated a gain that we will result for adjusted earnings per share, and then most significantly, just because of the high effective tax rate for the fourth quarter, if we adjust the 50% effective tax rate for Q4 to the actual 33% fiscal year average rate, there would be a 27% per share of favorable adjustment for our adjusted earnings per share purposes. This is in contrast to last year, where we actually had a favorable fourth quarter adjustment to the tax rate. So for adjusted EPS, we backed that off and that would be a negative $0.06 adjustment. So after -- considering all these different adjustments, our adjusted EPS for the fourth quarter 2011 would be about $0.69 a share compared to $0.75 on the fourth quarter of 2010. And then similarly, we do the similar exercise for the fiscal year. We estimate adjusted EPS, for fiscal year 2011, to be about $3.45 a share in contrast to 2010 at $3.20 per share. Basically, 8% higher for the fiscal year despite the 7 points of higher effective tax rate in fiscal 2011 compared to 2010. So with that, let me turn it over to Juan who'll provide a overview of the current market conditions as well as insights in 2012. Juan?

Thank you, Ray. Good morning. Could you please turn to Slide 16? I'll try to speak slowly today so you can get to my -- used to my South American accent, I guess. First, I will provide an update about the market conditions as we see them today. On the supply side, U.S. corn and soybean supplies are tight. Overall global crop supplies remain adequate following a good world wheat harvest and a record soybean harvest in South America. And we continue to monitor crop progress and harvest in Europe, North America and China. In the core markets, the USDA projects the U.S. all crop corn carryout at 880 billion bushels, which is tight. The USDA projects the current U.S. corn crop at 13.5 billion bushels with a carryout of 870 million bushels for the crop year '11 and '12. Oilseeds. Projected oil crop U.S. soybean carryout remains at 200 million bushels, also relatively tight. The current U.S. soybean crop is projected to be 3.2 billion bushels, a carryout of 370 million bushels. In South America, soybean crop was a record 136 million metric tons as farmers have been reluctant sellers of all crop beans. The global grapeseed crop is projected to be 58.8 million metric tons, down from 59.2 million metric tons last year. Wheat. World wheat production for the '11, '12 crop year is projected at 662 million metric tons. Global wheat ending stocks are projected to be 182 million metric tons. An adequate global supply although we have seen some quality issues. In cocoa, conditions in the Côte d’Ivoire are substantially stabilized, and we have resumed our resourcing and processing operation. On the demand side, we see continuing good global demand for grain. We are continuing to adjust oilseed crushing rates between regions to meet our customer demand in the most margin-effective way. Global oilseed processing capacity is more than sufficient to meet current market requirements, which is the breadth in spot crush margin. Incapacity additions have slowed and the industry will grow into this capacity over time. The U.S. biodiesel industry is running to meet market needs and is helping produce U.S. vegetable oil inventories from record levels. Biodiesel demand remains strong in South America and Europe. There has been a little forward buying by protein meal customers. Global demand for all protein meal is projected to grow by 4% for the '11-'12 crop year. Ethanol spot prices are similar to unleaded gasoline while the excise tax credit at a $0.45 per gallon benefit to the volume. These are directive economics, customers are blending ethanol to the maximum allowable levels. Spot ethanol margins are positive. Our regional margin challenges and dislocation in the U.S. corn supply have caused some plants to reduce production. ADMs unsurpassed logistical capabilities have assured consistent supplies of corn to our processing facility. The EPA has finalized the labeling requirements for E15. We expect to see implementation on a regional basis as early as this fall, led by the farm states. The implementation of E15 will help improve capacity utilization and should be positive for industry margin starcher. Adoption of E15 will be driven by blender economics. By the way, studies show that 10% ethanol blending is reducing U.S. gasoline prices. But blender's rate of 15% has the chance to mitigate gas prices to an even greater extent. U.S. corn-based ethanol remains the cheapest ethanol in the world. Industry exports, which do not receive an excise tax credit, are at 400 million gallons for the first half of this calendar year. Rising demand and margins remain strong. Corn sweetener demand, driven by exports to Mexico and Canada, remains strong as well. Industry sweetener export volumes are in place to grow by 15% or more in 2011. Cornstarch, corn sweetener capacity utilization is high and supplies are tight. Good demand for our corn and wheat meal products, we're optimistic about sweetener and starch pricing for the 2012 contract year. Wheat milling is a good capacity utilization in the U.S. and Canada with softer conditions in the U.K. Cocoa powder demand is strong, and spot cocoa processing margins remain strong as well. As this is our first conversation of the new fiscal year, I thought I'd give you a sense of our focus areas for fiscal year 2012. Please turn to Slide 17. Last month, we completed our annual business planning process. In addition to developing specific plans to grow our business, we reviewed our existing operations and identified the opportunities for improvement. We will drive operational excellence through our core model. We have room to meaningfully improve our safety, energy efficiency, procurement, logistics and maintenance. We will drive results in this area by focusing on clear accountability and rigorous measurement. We will accelerate growth. We will grow our core model outside the U.S. by executing region-specific growth plans and by enhancing the ability of our regional leaders to identify and pursue opportunity. We'll work with customers to explore opportunities to expand our value-added businesses and this growth will all be supported by our enhanced capital allocation processes that Ray has detailed in prior investor presentation. During the annual planning process, we reviewed about $3 billion of CapEx projects, and we decided to target our fiscal year 2012 CapEx at about $2 billion. Approximately half of that will be non-U.S. investments, and a significant portion of the U.S. investment will be to serve export markets. Of course, as we grow, vital that we do not lose a beat on risk management, one of the core competencies of ADM. And this remains an essential capability going forward. To ensure continued performance in this area, I have appointed a 35-year veteran of ADM and the President of our Agricultural Services business, Craig Huss, chair ADM's Risk Management Committee. The committee meets regularly to coordinate ADM's overall positioning strategies, comprised of our business units presidents, the merchandiser, John Rice, and me. We have an exciting opportunity to grow our company, and I believe we have the right priorities to drive results for our shareholders. Now I turn the call back over to Pat.

Thank you, Juan. I think the work that you and your team are doing to ensure operational excellence, drive growth and sustain our risk management success, will accelerate our progress in 2012 and strengthen our performance in the long-term. Now John will join Juan, Ray and me for the question and answers. And operator, please open the line for questions.

[Operator Instructions] First question comes from the line of Robert Moskow from Crédit Suisse. Robert Moskow - Crédit Suisse AG: Juan, I was curious about your slide when you pointed out the focus areas for fiscal '12 for driving growth. And I know you don't give guidance but if you looked at the areas of the business that you think are poised for growth in fiscal '12, what areas would you point to?

Sure, Robert. Yes. Thanks for your question. Listen, we see the international expansion of Oilseeds and that has continued. It's going on in Paraguay with our processing facility that will be on the stream mid-2012. We continue to make investments in India as we have announced, and we are looking at more opportunities in Eastern Europe as we announced early on today. Ag Services is also expanding a global footprint. We highlighted the port in Nueva Palmira in Uruguay. This is, again, around the infrastructure we're building around Paraguay and Uruguay, we're aiming to capture all the origination in that area. Obviously, in South America, we report our services within the Oilseed divisions so you might see these inside the Oilseed highlights. And then you see in all this Black Sea activity that we have, you see the announcement this morning about Ag Services building some elevators to create our network around the Danube River as we have it again reproducing what we did over the years in the Mississippi River and in the Paraguay River. I think those are the highlights, if you will. Obviously, all the businesses have their respective growth plans but I will consider those the highlights of them. Robert Moskow - Crédit Suisse AG: And then the CapEx budget is higher than I expected at $2 billion. Is there going to be a return on that capital investment as early as fiscal '12? Because I think Ray laid out that some of these projects have a pretty quick return. Maybe it's a question for Ray. What percent of the CapEx do you think has a positive return in '12, and is it consistent with historical rates of return or is it kind of pushed out?

Rob, let me start this and then we'll go around here. I think we'd all have something to contribution here. I think the strength of thinking about having $3 billion or even a little more than $3 billion, in a possible pipeline for the year, is good news. That means there are positive-return projects that well exceed our cost of capital that whether they be longer-term projects or even acquisitions or incremental expansion, we have quite a pipeline. So then, we might look at our scenario associated with the cash that we're willing to spend outside of maybe major acquisition or something like that. We'd be willing to spend in this arena that has not only positive returns for the short-term. We actually prioritize a fair number of them that would have shorter payout period -- in a shorter payout timeframe than longer. So our $2 billion is a combination of the priorities that associate with that. Some are actually -- we've talked about pillars of organic, some are new construction, some are acquisitions. And the timing of the profit certainly will vary but our pipeline is full enough that we can prioritize along those lines.

Yes. Let me build on Pat's point. I've mentioned in prior Investor Presentations that we want to really look at this as a portfolio approach. So when you look at our portfolio approach, you're going to have a combination of a lot of investments that generate short-term returns. I've highlighted, in different presentations, that we've done a lot. We're good at doing a lot of these smaller projects with paybacks that are fairly short, generating good returns. We do not intend to slow down on those. And we have a good pipeline of those smaller investments that generate good returns in the short-term so we'll continue to do that. But as Juan indicated, we do want to also focus on some investments strategically outside of North America or to drive growth. And so, from our perspective, the nice thing is with $3 billion worth of opportunities, we can actually do a sort prioritization in order to come up with a portfolio that balances our short-term considerations and long-term growth.

Yes. Robert, let me give you some granularity. As I said, when we went through the 2012 planning process, we wanted to highlight all the opportunities available to us and then we highlighted this $3 billion. As Ray was describing as part of our balanced approach, certainly, low cash selection and prioritization of these opportunities based on the immediacy of the returns and balancing ROC with operating profits forecast. To give you a flavor for it, of the different projects we have in the fourth quarter, we implemented 60 of these small projects that Ray were referring to. These are projects that maybe are in the range of $10 million each but this gave us very quick returns. But in the same quarter, we executed 6 M&A projects that are larger for us and can maybe, they have a little bit longer payback. But we, constantly, are looking at that with a lot of discipline to make sure that we are allocating the capital in a balanced approach. Robert Moskow - Crédit Suisse AG: Is there any way you can give us some clarity on at least the $2 billion or even the $3 billion, what percent are these smaller projects with high returns and what percent are kind of longer term?

Yes, Rob. We really can't give you any guidance on that. I think the guidance that we want to convey in this conference call is that there is going to be more of a priority in terms of the international investments as we just kind of drive growth there. And even on the international side, there are a lot of smaller investments, which basically generate near-term returns. So the model that we've applied here in North America, we want to also apply that model in our international operations. And we've got like, good operations in South America, they're well-established. So again, they are looking at these organic growth opportunities to drive incremental earnings in the long-term as well.

The next question comes from the line of David Driscoll from Citi Investment Research.

Yes, I'm having a tough time with this conference call this morning. So just curious. Pat, just a quick statement here, and then maybe you'd respond to it. But I mean I've covered this thing for more than a decade. I don't recall a period of profit variance in corn and sweeteners quarter-by-quarter that's been this extreme. Because it seems to be a mark-to-market issue, it seems like the company should have known that this was likely to be an issue this quarter. I mean, $9 million of profit is almost 0. That's quite a surprise, I think to the market and all of us on the outside today. But there was really no guidance given on this particular issue. I mean, I realize you guys have difficulties on some of these topics. But it does seem like giving some guidance on very specific and large-magnitude items does not seem to be unreasonable. ADM stock has gotten killed in the last 3 months and I would argue that some of it is going to be related to these issues. And I hear just an enormous number of comments from people talking about visibility, and it's on days like today that people say, "Well, you see, you can't predict it." And sure , I can't predict it if there's big mark-to-market corn gains that are taken in fiscal Q1 and Q2, but they're not called out so that we then, are almost by definition, going to get our forecast wrong. So honestly, it's a little frustration on this side of the fence and would really appreciate it if you guys would consider it, plus I believe it would be in your interest to do so given your stocks performance. So that's a statement. I don't know if you want to respond to it at all.

Sure, David. I think your comment about visibility into a volatile area, whether it's Corn Processing or you kind of made some comments that are quite broad. I'd refer to some of Ray's comments earlier on the Corn Processing operating profit segment itself and the subsegments related to sweeteners and starches and bioproducts. And that we have reminded listeners before that we generally run a hedged book for our Corn Processing business and how the -- and with higher pricing, we had favorable margins in the 2011 contractor year for our Sweetener business. However, sometimes we recognize a lot of the benefits of our economic hedges in -- when marking to market in prior quarters and when we allocate those gains on our accounting basis between sweeteners and starches and the bioproducts business based on grind, it doesn't always align the accounting results with the economic results. We not only acknowledge that, that thinking about going forward, having a way to look at various approaches that do align better with economics -- with those economic results and the accounting results. I think we're making an effort, as well, each quarter, to provide more transparency to what we can and where we can. And I know that's one of the efforts that Ray has undertaken both with our returns, both on looking at segments, looking at GAAP adjustments, which we've added several slides and papers and primers associated with our GAAP adjustments. It's not an area that is even as transparent as it could be to us sometimes, as obviously markets move. And particularly, as you get to quarter-end of particular markets, there are adjustments in the crop prices, et cetera. And those things can swing quite a bit. We can have quite a bit of variability.

Right. I'll say one more comment and then, I'll just move to my quick question. It would just be that if in Q1 and Q2 of this fiscal year, you had very large mark-to-market gains on corn that was to be used in a future period, I think you should've called that out, whether you know the allocation between sweeteners or bioproducts, I understand that maybe you don't. But if you knew that you had roughly $750 million of operating profits in Corn Processing in Q1 and Q2 and yet, a significant portion of it was due to mark-to-market corn that would be used in later quarters, that information is extremely helpful. And those of us on the outside really can use that and that was not apparent to us. And I believe I can say that for consensus. So I would ask you to consider that. In terms of just going forward, my question then on this business is, since we saw relatively, no profitability in corn sweeteners because of mark-to-market, your high-fructose contract year is a calendar year and doesn't, of course, correspond to your fiscal year. Since I'm seeing like no profitability in that business right now, does that mean that in the next 2 quarters, I should continue to see no profitability because all the profits were booked earlier in fiscal Q1 and fiscal Q2 of '11 because of the corn mark-to-market? So we should -- I'm thinking than what we need to then is to go to, basically, 0 to $10 million in profits on corn sweeteners for the next 2 quarters until you get in the next contract -- real contracts on the calendar basis. Hopefully that question was clear.

Yes. I'm going to ask John to comment about 2 things here.

David, your assumptions are going to be correct there just because of how the hedges were executed with the company. So the next 2 quarters, you'll still have some mark-to-market with our corn positions. And as you know, at the end of June, and just how the market closes on one -- at the end of one quarter to the next quarter, can have a material effect on how that is brought on the sweeteners. But yes, you should see that same effect for quarter 3 and 4 -- some of that effect, I'm sorry, for quarters 1 and 2.

Of the next -- of fiscal '12?

Yes.

And the next question comes from the line of Christine McCracken from Cleveland Research.

You hadn't talked much about the outlook for ethanol policy aside from your E15 comments. It looks like now, with the ethanol tax credit kind of out of the current legislation and pushed out until maybe the end of the year, gives you a lot of breathing room. I'm wondering, how are you -- are you doing anything differently to run this business today in light of the fact that, that tax credit, perhaps, could go away at the end of the year? And then what is your outlook for biodiesel going into next year in light of that political uncertainty?

Maybe I'll start and Juan may want to juild on this. We are -- kind of you're right, the debt still [ph] in agreement does not include a provision, which alters the V-tax so it was due to expire at the end of the year. I think that -- we'll continue to educate Congress about the importance of ethanol, et cetera. But I think the opportunity to -- as you know, margins are a bit up at the current period. So I think this will be an important time to think about E15 as being the more important of the public-policy issues and implementation, I should say, of public policy issues related to getting more fuel into the system. We do see that the Midwestern Governors Association and farm states, so to speak, are looking at quicker ways or a way to be the leaders in implementing E15 and it will take some of that leadership to get it into this network. And maybe I'll let Juan comment on the biodiesel question.

Sure, Christine, yes. Biodiesel, at the moment, is -- we have a strong demand. The mandate requires 800 million gallons in 2011. That's helping to reduce veg oil inventories. And we're seeing good demand from South America and Europe in that sense, too, so that is helping our Oilseeds business.

And essentially, no change in the mandate as you see it, going into next year, at least at this point?

The number of gallons increases for the next year so that's obviously not this point in time.

And The next question comes from the line of Ken Zaslow from Banc of Montréal.

In the spirit of greater transparency, can you tell us how much mark-to-market was in the Oilseed business? I know last quarter you told us that it was going to be roughly about $100 million. Is that still the case for this quarter, and what about going forward?

In the Oilseeds business, it's probably less mark-to-market effects there. And we actually see the results in the Oilseeds for this quarter -- we actually, as I indicated, we had strong results in North America. And so, that really helped in terms of our results. And then I also highlighted that there was a GAAP timing reversal, which we had called out in our last call. And if you recall, I called it out saying that it would be similar to what we saw in the second quarter and as it turned out, we were actually fairly accurate, actually, in terms of our estimation here. So it was slightly less than $100 million in terms of favorable GAAP timing adjustment. Going forward, in the spirit of transparency, in going forward, we still have some to reverse out in the Oilseeds division. It's not as significant as what we've reversed out in the third quarter. And this would probably reverse out over the course of the first 2 fiscal quarters in 2012.

So would it be relatively fair to say that somewhere between the about $50 million benefit for the next 2 -- over the next 2 quarters? Just to kind of -- and then we can model based on what we think's in front of them?

Probably, it's the order of magnitude, I think for your purposes, you can go with for the purchase [ph] of modeling.

And the next question comes from the line of Horst Hueniken from Stifel Nicolaus. Horst Hueniken - Stifel, Nicolaus & Co., Inc.: The fourth quarter results show that margins in the oilseeds industry remain under pressure. You're saying now, and have said in the past, that this industry segments' supply-demand balance should eventually improve driven by a demand growth exceeding capacity additions. That said, we're not yet seeing evidence of improvement in ADM's numbers, which leaves me wondering if Oilseed margins may compress further first, before expanding later. Are you able to comment on when the Oilseed industry margins might begin to consistently expand?

Yes, good morning, this is Juan. Obviously, as you described, the margins in the Oilseed industry remain challenged. Demand continues to grow into capacity but there is overcapacity, and we're going to have to see how demand evolves, first, before we call in for a recovery on this. So our forecast is that margin will remain challenged for the foreseeable future. Horst Hueniken - Stifel, Nicolaus & Co., Inc.: Do you see them compressing even further?

I think -- as I said, it all depends on how the demand evolves. At this point in time, yield supply is light, I mean, demand is light especially for export, and biodiesel is the positive side. As I said, I would say, within the range, it continues to be challenged. I won't call it one way or the other.

The next question comes from the line of Ken Zaslow from Banc of Montréal.

Juan, I have a question for you. What are the key findings, so far, that you're finding when you're going through the operations and how much operational improvements, excluding whatever the change in the market conditions are, do you expect to actually see as a result in the next, call it, 12 months, 18 months? How do you see the operational improvement? And then can you put some sort of quantification on it?

No, I won't. But I can qualify some of my findings. Listen, I think you see there is margin compression both in oilseeds and in ethanol and I think it's critically important that we keep a very good cost position. These are very complex facilities, highly integrated, and where efficiencies are needed to be pursued every day. So I think that the team is very cost-conscious but I think there's always opportunities, as I described in my remarks, to improve in energy efficiency,in maintenance and everything a little bit better, our global scaling procurement. So we're working at all that. I think, again, we are confident that we have, probably, the best cost position and we want to maintain that position.

And the next question comes from the line of John Roberts from Buckingham Research.

I thought one of the other accounting issues that we had in prior quarters where some of the Ag Services activity is showing up in the processing segment, stuff out of Latin America not being, maybe, like allocated to the right segments. Do we have any of that in the current quarter? And I ask that because China's had a lot of, call it at least, rumored ordering activities recently. Did that benefit you at all in the current quarter or do we have some of that coming in the quarter coming up?

John, this is Ray Young here. First of all, we didn't have a problem in terms of the allocation of Ag Services profits. We've been very transparent that when we look at our Ag Services segment in South America, the result of Ag Services are booked in to Oilseeds division. So therefore, I mean, we've been very, very transparent about that point. On Ag Services, I think, maybe what you're referring to is the fact that when you're -- we're looking at the Ag Services result in the prior quarters, we indicated that our run rates are really about $150 million to $200 million per quarter but we emphasized that separately, any of the Ag Services profitability related to South America, that's over and beyond the $150 million and $200 million, and that's really booked in the Oilseeds division of South America. And secondly, in terms of Ag Services, the reason why we have the Ag Services operations in the Oilseeds division in South America is the fact that we run and integrate the operations in South America. So really, the team that runs the Oilseeds group in South America also runs the Ag Services. And that's the reason why we include that in that particular segment.

So did we have any strength in that Ag Services activity that was helping Oilseeds, I guess, in the quarter just reported? And in the current quarter, will we see strength in either Oilseeds or Corn related to China activity?

I guess, that means in terms of -- are you referring to South America here, John or?

Well, I was referring to the issue that we had last quarter. So were -- was anything stronger? Did we have strength in merchandising activity out of South America that would have helped your reported results in Oilseeds? And then, second part of that question is with the strong ordering in Corn, at least, in China in the last quarter doing -- in the current quarter coming up, this is a separate issue, will we see some strength here in Ag Services this quarter because of that activity that China's reportedly had?

Well, first of all, again, I just want to emphasize, John, that we didn't have any issue in terms of how we walk Ag Services' profitability. In this particular quarter in South America, I did mention we had some weaker results in South America compared to last year's fourth quarter. That was really driven primarily due to a weak crush margin environment in South America. So we've been under margin pressure. As Juan indicated, the farmers have been reluctant sellers of beans. So that kind of hurts our crush margins in the South American operations. In addition, we've had some start up issues related to our barge operations in Paraguay. I mean those things are going to go away. So therefore, in terms of our South American results, I have to say that really, the weakness really is primarily driven by the weaker crush margin environment that we'd call.

And the next question comes from the line of Bryan Spillane from Bank of America.

Just a couple of follow-ups. Just on -- first Ray, I guess, on the tax rate for the full year in 2011, just how much of the I guess, the variance relative to what you were budgeting was just -- was geographic mix? And how much of -- what effect did the tax rate in the full year was just a few discreet items, I guess, some settlements of deferred tax issues in the past? I'm just trying to sort out how much of it was just the natural course of the business and how much of it was more of just one-off events?

I mean, I think it means -- there's a multitude of factors. I mean, I listed like 4 of them but within each of these, there's a bunch of other factors. It actually was a complicated reconciliation process that we had here. And clearly, the geographic mix was one of the factors. Fourth quarter of this year turned out to be significantly, gets surprisingly strong for North America. I mean, I think I mentioned the margin environment in North America is somewhat challenged in oilseeds but it seemed to do extremely well in North America. And one thing I do want to emphasize is oftentimes we focus a lot on soy crush but we had strengths, really, with this entire portfolio. And I just want to emphasize that point, is where that soft seeds portfolio really performed well in the fourth quarter and the fiscal year. So that really kind of exceeded our expectations in terms of how North America performed. In a similar vein, I mentioned that we had some weakness in South America due to, really, a tough margin environment there. We also had weakness in our European crush operations. Again, the grapeseed margins are somewhat challenged in Europe right now, in the fourth quarter. And lastly, international merchandising was not as strong as we had thought. So, I think, I could say geographic mix, I would say, was the largest contributor in terms of the tax-rate variance. The other factors, like I mentioned, the Brazilian currency movement, the deferred tax issues, and there is also a number of U.S. effective tax-rate issues. These are like permanent items that showed up during the reconciliation process and these items came up as we kind of closed our fourth quarter books, so we're in the process of finalizing our 2010 U.S. tax returns right now. And so, I mean, we discovered a lot of information when we actually went through the fourth quarter close process that results in our U.S. effective tax rate also being higher due to some of these unique items, permanent items. So after we've considered all that and then we thought about 2012, that's the reason why considering the business plan that we're working through right now for 2012, considering a lot of these unique items that will not replicate itself in 2012, that's the reason why we provide a guidance of a 28% to 30% range in order to help you, guys, with your modeling.

So that partially reflects some band of where you think, geographically, where your profits will come from? And then whatever you've discovered in terms of more permanent changes in taxes, that's all reflected in that figure?

Okay. That's our best estimate considering the adjustments we made in the fourth quarter, considering what we know regarding our business plan for 2012. And so, it's everything that we know is what -- how we arrived at a range. And frankly, that's the reason why we came up with a range as opposed to a point estimate because it is difficult to forecast.

Yes. You're -- just given the geographic mix that you have, it would be surprising if your tax rate wasn't volatile.

Yes, exactly. Exactly.

And then on the capital spending plan, the $2 billion, is that all pure CapEx or does that also assume some acquisitions? I just want to make sure that I was -- I thought I'd caught somewhere in you comments that, that also includes maybe making some acquisitions or would acquisitions be on top of that?

That would include acquisitions as well. And it would include our normal course of acquisition. Actually, we look at a major strategic acquisition that's a different story altogether, right? And so by -- on $2 billion, which is our normal course of capital spending and normal acquisition that we will be making.

Okay. And then if I understood your response, I guess, to Rob Moscow's question in terms of trying to understand earnings accretion and/or kind of return profile for that mix. Based on the mix, being roughly 50-50, it may be neutral this year to returns but then, begin to add or be accretive to returns in earnings for 2013. Is that roughly right?

It's hard to estimate that. I mean, I'd really be cautious on giving guidance on this particular issue. I mean, we're still evaluating the projects right now. So we're working through it ourselves in terms of how we want to set up the portfolio, the balance to short term and the long term.

Okay. And then just one last one. I guess for Juan, I just -- I do understand the fourth quarter came in a little bit differently than, maybe, what people were thinking but if you look at the whole year, and ADM had a pretty good year. And I guess if you look today at all of the variables in the market, kind of where crop conditions are and supplies of certain crops, and just is the environment any different as you look out over the next 12 months as it would've been sort of standing where, a year ago? I mean, it seems like there's always some moving part but the overall operating environment is actually pretty good. Is that fair?

Bryan, let me tell you because I've been studying this and obviously, the environment changes daily and it's probably different today, the scenario, than when we put together the 2012 plan 3 years ago but I would say that what I noticed is that regardless of the scenario, the ADM team has been able to deliver. So as we look at the path of earnings growth over the last 4 or 5 years, all those years have the different crops, different scenario, different volatilities. And then in the way those profits were created were always different but the team was able to deliver. So I would say, yes, it's volatile. I think we put together a plan that keep us in our path so I'm comfortable about it. I'm confident about the plan.

And the next question comes from the line of Diane Geissler from CLSA. Diane Geissler - Credit Agricole Securities (USA) Inc.: Hey, I just -- I was one of the ones who sort of missed your first section of the call. So I'm just -- in Corn Processing, I guess I look at the quarter and your commentary to Dave's question about what you expect over the next couple of quarters. And I guess I'm just questioning -- I mean, you talked about exports to Mexico are strong. I think you got pretty good pricing this year. I guess my question is, if profitability on a spot basis is so low in Corn Processing, why don't you dial back what you're -- how you're operating your plants? Because wouldn't -- if you dialed it back, wouldn't that drop the price of corn? I guess I'm just -- I'm like, why are you shipping so much to Mexico if you're not making that much margin, is I guess, my question and how can -- what can you do to improve it on a spot basis?

I'll ask John to comment here, he looks anxious.

It's how the corn was brought to market. We have bought -- when we made our sweeteners contracts, we bought our corn and then, as the market was rising, we were bringing a lot of those profits to market. And as I mentioned with David, you saw the futures market close down limit due to a government crop report, so it also has an effect to how we bring our corn to market. When you look at a spot margin on new sales to Mexico or to Canada, we have very good margins. But we have commitments on our fructose that we are shipping against corn already hedged and bought. So on an absolute spot basis, when we're making sales, we do have very good margins. But if you take a look at what your -- our forward contracts are and our commitments, and relating that to spot corn, the margins are not as good. When you look at the rest of the portfolio, lysine, all of our bioproducts have good margins in that business and that -- we tend to sell lysine 3 to 6 months out forward, that corn is also hedged. When you take a look at ethanol, we have, as you've probably seen in the last 30 to 40 days, we've had very good margins in the ethanol business. So -- but your original comment was correct. If we did very bad spot margins, yes, we would look at shutting down operations. But we have commitments that we have to do on any new business we are doing, we have very good margins. I'd just say, does that answer your question? Diane Geissler - Credit Agricole Securities (USA) Inc.: Yes, I think pretty clear. And then I guess, on the ethanol side. Do you have any intelligence on how much you think blenders are kind of blending ahead of the expiration of the credit? What that might do in terms of as we move out of 2011 and the credit is not renewed, what it would do to your expectation on margins in calendar 2012?

I don't think we could...

It's going to be a capacity issue again. The mandate goes up but we still have excess capacity. The reasons we're seeing good margins nearby is we're seeing a lot that capacity shut down due to the availability of corn supply. Diane Geissler - Credit Agricole Securities (USA) Inc.: Okay. So how much do you think has been taken off line in the last 3 months because of tight corn into, say, the eastern part of the belt?

Yes, Diane. I think it's about 400 million to 600 million gallons on an annualized basis. Diane Geissler - Credit Agricole Securities (USA) Inc.: Okay. Do you think that, that stays off if the crop is not so hot? And as we move into 2012, we are just at a lower level of total production on ethanol?

I think some of that could come up with the harvest and some of that may stay down. Diane Geissler - Credit Agricole Securities (USA) Inc.: Okay. But it's still too early because we don't really know what the corn crop will look like. Is that your message?

Got you.

The next question comes from the line of Ann Gurkin from Davenport. Ann Gurkin - Davenport & Company, LLC: I wanted to return to the discussion about demand globally and with continued challenges in many markets and a continued challenge to consumer also in many markets, have you made any changes to what you're thinking about for demand, globally, for products for fiscal '12?

I think we assume that -- well, as you know, global protein demand is projected to grow at about a rate of 4% and it is a global business. So we look at the opportunity to balance by region and we have the flexibility to do that going forward. So I think our plans, our scenario plans, so to speak, that allow flexibility by region depending on how demand continues to progress. Ann Gurkin - Davenport & Company, LLC: And how should we think about Europe? The weakness that's been persistent in Europe, how should we think about that in '12?

We really haven't seen any reductions in demand for our products right now. I mean, clearly, we're monitoring the situation. I mean, I think that like all of us -- any business in the world right now is monitoring the economic developments over in Europe. But basically, when you look at a lot of the products that we're shipping, we haven't seen any reductions in our business. Ann Gurkin - Davenport & Company, LLC: Okay. And then so one more question on the Corn segment. Fiscal '11 benefited from solid volume and pricing. Do you think those dynamics can continue in fiscal '12?

Anne, I think that on the sweeteners side, I think, that we see that continue and we see that tightening continue. We see the export to Mexico continue to grow. We expect sugar prices to be high. That provides an advantage, and also, you not only have the cost advantage but you have the handling advantage of high fructose corn syrup. So we expect that to continue. And if E15 is going to be implemented, it started in the fall, we see that as a positive too to balance sales growth.

And the next question comes from the line of Vincent Andrews from Morgan Stanley.

I just have a sort of consolidating question on some of the earlier questions and it relates to the way that where growth has been used in the slides and then in the call and in the Q&A. Maybe Pat, when you guys put your fiscal '12 plan together, is it fair to say that you anticipate operating profit growth and EPS growth off of that sort of adjusted base that you guys used in the slide?

Well, it's always a trick question to ask about guidances and so we won't provide guidance. But I will say that our expectations over the long term, when I use the term growth, I am talking about profitable growth or earnings growth. So our longer-term objectives are for staying on a gliding path of earnings growth and I think it's important to note that, that's both the objective because we believe it drives shareholder value as well as returns that are strong over our WACC. So earnings growth plus those strong returns over WACC and a compelling strategy in this international area that we've been talking about growing out our footprint, those 3 factors are what drive shareholder growth. So in the short-term environment, one can -- that's always the reason why a company like ours doesn't provide guidance but our objective is for that earnings growth, yes.

So you're not willing to commit to that's what's in your plan for '12 but you're obviously willing to say that, that's what you're going to try to do and one could read that to say that you believe it's possible?

Exactly, yes.

And then secondly, just some question on oilseeds particularly in Europe. There's some stuff in the press about the EU maybe changing the emission standards on biodiesel in a way that would not favor rapeseed. Could you comment, at all about what you think that might do to European margins?

There's always new legislation coming out of Europe when it comes to a lot of these biodiesel programs, whether it's sustainable, how you define sustainability. At the current time, we don't see that to be an issue right now. But when you talk about different legislations, Europe is, and has had, a long-term policy of trying to find more renewables and with the farmers there, it's been such a big issue. I, personally, don't think that they will change out of that.

Okay. And then just lastly, on biodiesel in the U.S. John, I think you said earlier that the -- or someone said earlier that the view was that the mandate next year is enough to sort of keep the demand from biodiesel on the Oilseeds side status quo and I just want to clarify that if the tax credit associated with biodiesel expires as well, at the end of the year, you don't believe there will be a change in margins due to that. Is that fair?

Well, it is. But you also have other variables in there. You have how many rins are carried over. So I think that will come into the equation as the tax credit goes away but as long as you have the mandate, you still see the demand should be coming.

Okay. And John, maybe I can ask you one more on exports to Brazil. I've seen some people writing about the potential that Brazil might need to actually import a substantial amount of U.S. ethanol in the coming years based on sort of where their balance of ethanol and sugar is. Is that a view that you think is realistic?

Brazil tends to change their blending rates a lot. So any time that they tend to get a little short at ethanol, which we're seeing right now, they tend to reduce their blending rates. Now, if they keep their blending rates, high, yes, I could see them importing a lot. But the infrastructure, really, isn't set up for them to be importing very much so it would make it a little tougher. But as long as you keep the blend rates high and with their shorter crop and the demand, yes, that could happen.

Okay. And then, just a last question on the Corn Processing side. I guess the thing that I'm just trying to reconcile in my own head is that if I go back to '07 or '08 when we had high and volatile corn prices, I just don't remember the -- I guess, my question is, has something changed about the way the accounting treatment that you're using in the Corn Processing segment today versus, let's say, '07, '08 in terms of how you're booking things? Just because I don't remember there being such huge swings in where the hedge gains, or what have you, were being reported or is there something else different, entirely, between those 2 time periods?

I hate to say, I don't totally recall back how the operating profits were broken off back then. But how we really look at things, as we've mentioned in the past, it's a global book on how we want to look and how we want to run our business. Now if we think ownership is better in something else as opposed to one other -- a commodity is over another, we'll take a look at that.

But we've certainly had more grind since 2007, 2008 when -- more bioproducts grind so that's one aspect of it that would have changed in the allocation of the hedged against the grind. So that would be different. But the process would have been.

Is that just also because the bioproduct tends to be more spot oriented relative to the sweeteners and starches, which tends to be more forward sold?

Yes. Exactly.

The next question comes from the line of Christina McGlone from Deutsche Bank.

I guess Pat, when you're talking about the CapEx that is a little bit higher than what I was projecting, and I'm thinking about other investments that you noted like you're biodiesel facility in Santa Catarina in Brazil. And I guess my question is this quarter, Ray noted that in the biodiesel area, profits were lower in South America. So I'm just curious whether if the market can handle that capacity. I think it increases your capacity 50%. What are the dynamics like in biodiesel there? I think we're at B5, and if the market doesn't go to B7 next year, are margins in biodiesel still going to be strong enough to basically handle that capacity?

Yes. I'll start here, Christina, that I think the biodiesel business in Brazil is a good one longer-term. We feel very comfortable with that even if there are few -- if we go through a few bumps to get to the higher blend levels. I think both our locations of our plants as well as our investment and what we've seen in the regional demands should be good for the foreseeable future. Anything anybody wants to add to that?

I think long term, Brazil has been working at increasing their biodiesel blend rates all the way up to 10%. So even if they wait maybe a year just because of crop supplies or something like that, I'd be surprised if they don't eventually increase at 7% up to 10%.

Okay. And then I guess just a last question, because I know we're late. Following up on Christine's line of questioning. So if the tax credit does expire at the end of this year, which does look very likely, and I think it does put a lot of importance on E15 especially with ethanol trading in line with gasoline. Pat, what sort of incremental investments need to be made? It seems like it may not be necessarily an easy adoption and now I'm seeing a lot of legislation come out to prevent any sort of federal funding for E15 infrastructure, so I'd just appreciate your take on that.

Well there's a couple of things that would support, continue to support E15. I mentioned that the state is expected to be early adopters in the farm states. There is registration associated with the actual health effects of the fuel. There's state regulatory issues to get through, there is some octane certification, there is some fire code issues,et cetera. The actual investments that blenders need to make or at the retail site is actually conversion of whatever tankage they might have and then the actual labeling, which, I think, the labels have now been approved and they have the appropriate language on it, et cetera. So I think there's as much administrative push even more so than investment push to get the states in line and get the leadership going. We expect that to begin some time in the fall so it's something that we should see start to happen even before the year end.

The next question comes from the line of Tom Graves from Standard & Poor's. Thomas Graves - S&P Equity Research: Yes. Equity analyst at Standard & Poor's. Just to clarify on the ethanol situation, would it be your anticipation that if the tax credit goes away, you would potentially have a larger net impact in the first half of the new fiscal year with possibly some offset from E15 coming favorably into the mix in the second half of the year?

Well, it's actually blender economics that drive the full blending rate. So the expiration of the tax credit, probably, would have little impact where you would see E15 having the more beneficial impact. And again, the farther through the year you go, the more states that adopt it, the more it gets into the market, so better that will be. So to argue that would be for a continued improvement.

The next question comes from the line Amon Wilkes from Gabelli & Company. Amon Wilkes - Gabelli & Company, Inc.: This is Amon Wilkes from Gabelli & Company. I had a question, a few questions, I guess, first just a follow-up on the ethanol. Is there any fear that there -- beyond the tax credit that they can remove the tariff on ethanol and potentially get imports from Brazil. And I guess, at what price do you think ethanol needs to be at before that's economical?

If the tariff comes off currently, in Brazil, Brazilian ethanol, on an FOB port basis, is so much higher than the ethanol. So it will not come into the United States. As a matter of fact, like I mentioned earlier, we're seeing exports from the United States down to Brazil. That's why in the thoughts of free trade, we like to see Brazil keep their blending rates high. So in terms of years like this, we would be exporting a lot more ethanol and really make it a more of a free trade in the ethanol business, instead of them lowering and raising their blend rates accordingly. Amon Wilkes - Gabelli & Company, Inc.: Okay. And I guess the real question, the crux of the question was, do you see -- at what price does the U.S. ethanol need to be at before it's economical for Brazilian? Do you have an estimate of that or do you...

Currently, I do not, right now. But as the market's constantly moving all the time since our ethanol prices have gone up here, $0.45 compared to gasoline here in the last month, we're not as economical as we were 30 days ago. Now as that starts to -- if it comes down as more plants comes on, it would be economical. It could actually happen within the next 30 days. I'm sorry were you talking about Brazilian ethanol coming to United States? Amon Wilkes - Gabelli & Company, Inc.: Yes, I was.

Okay, I'm sorry. I do not see that happening this year as tight as the balance sheet for ethanol is in Brazil. Amon Wilkes - Gabelli & Company, Inc.: Okay. The question really goes around if -- at what price it would happen what U.S. ethanol need to be at for that to happen? I've heard estimates of anywhere from $3.25 to $3.65.

Well, it depends on what the price of unleaded gasoline is, it depends on what the government sets the price of gasoline in Brazil, it depends on what the harvest is and the supply situation is in Brazil at any given time. It's not -- it's a very fluid market. It changes every day. Amon Wilkes - Gabelli & Company, Inc.: Okay, fair enough. I guess, my next question centers around the tax increase for this year. So I just wanted to get a sense of what -- at the end of fiscal year 2010, what did you expect your tax rate to be and how did that, I guess, progress from quarter to quarter? And why was this last quarter, I guess, a shock to what your estimates were?

During the course of the year, we had estimated tax rate of approximately 27% for the fiscal year based upon the available information that we had at the beginning of the year. I think, again, in the fourth quarter, that's when we normally do the reconciliation and true-up process, looking at a multitude of different issues. And again, I think geographic mix in the fourth quarter turned out to be a lot more tilted towards U.S. than international. We also, again, true up our U.S. effective tax rates based upon the information that we have from our U.S. tax returns. And then, again, I outlined that the pension adjustment was based upon June 30 exchange rates. And then lastly, deferred tax true-ups which is something that we were doing -- going through the validation process in the fourth quarter. So there was a multitude of different factors that entered into our fourth quarter reconciliation and true-up process. Frankly, I'd have to say this is atypical in terms of the type of adjustments because normally, when we go through these adjustments there' pluses and there are minuses, and oftentimes they kind of wash themselves out. But for this particular quarter, as it turns out, the reconciliation true-up process has results in the factors basically going on the other direction here. So -- and that's the reason why we want to make sure that we provided guidance to you for 2012 fiscal year is after we factored in, analyzed these factors, and considering where our plan is going for next year, that's the reason why we wanted to provide some guidance to you at a 28% to 30% effective tax rate for fiscal 2012. Amon Wilkes - Gabelli & Company, Inc.: Okay, that's fair. And I guess my last question just goes around these current corn, I guess, increased gross corn prices. Is that just that you're notching the sales of coal products at where you thought they would be? Or is it not trading with the price of corn or is it? I just want to get a sense of where the -- I know, obviously, corns are increasing but are coal products not offsetting that increase?

Coal products tend to follow the price of corn and if the -- they are coming up in relationship, they tend to follow a little slower. But we're not seeing any major difference between this year or any other normal year. It just partially offsets it.

And the next question comes from the line of David Driscoll from Citi investment research.

Just a quick one. This $2 billion CapEx number, when you say that part of it, I was a little thrown off, when you said that the capital spending, also, has in it acquisition moneys. When you say normal, Ray, I've always thought normal for the business was not the last few years. The last few years were like an abnormal rate of capital spending on greenfield project. And that normal was something less than $1 billion, maybe something around $800 million. Is that what you mean when you say normal and that would mean therefore, that something in excess of $1 billion is what you're putting into the acquisition line on the statement of cash flows?

No, I won't say that. I mean, when you say -- when I use the term normal growth for acquisition, that's possible like non, non-large strategic acquisitions, right? So therefore, I mean, when you take a look at our cash flow statement for this year, you see that our acquisitions this year amount to a little over $200 million, right? So -- but again, in our 2012 plan, there is a quite a few of these opportunities that we're analyzing right now. So I'd be cautious when I make the comment of what normal is. I'm just referring to fact that nonsignificant strategic investments.

I was going to add to that, David that I think it's fair to say our, what you call our targets, that are included in this $2 billion opportunities that include a higher level of acquisitions. And not a strategic large one that might be of a special nature.

I think it's fair to say, though, that maybe from where you guys were 6 months ago, the spending on greenfield projects or brownfield projects is fundamentally higher than it used to be. And maybe, I think, that's one of your messages is that you found opportunities out there that are attractive. Is that the right message?

I think we are evaluating opportunities, yes, that are attractive. And I think when you think sometimes one of the best things that ADM can do is buy a plant, which you'd call an acquisition, and then dip [ph] it and then get into to our system and it becomes a synergistic opportunity. So with that, is a little bit of a brownfield upgrade -- or a greenfield upgrade or upgrade that is capital in nature but it came from the acquisition.

[Operator Instructions] And the next question comes from the line of John Roberts from Buckingham Research.

Ray, you made a comment on the remaining share repurchase program that had some caveats depending on crop prices and no major acquisitions. But if crop prices are stable and if you don't make any major acquisitions, do you have a timeframe for using up the rest of the share repurchase authorization?

Again, we indicate that over a 2-year period. I mean, we like to mitigate impact over a 2-year period. But again, subject to us ensuring that we have a strong balance sheet to handle investments, working capital and other factors. So I've been fairly consistent over the past several calls, that this is the timeframe that we'd like to work through. In the month of May, in the fourth quarter, we found, for example, the fare price attractive. And so that's the reason why we increased our share repurchase in the fourth quarter of fiscal year 2011. [Audio Gap] I just want to emphasize, I mean, it's not our authorization to offset the equity. This is basically our intent of managements to mitigate the impact of the equity unit dilution.

Well Operator, I think we'll call the call here. Thank you very much, for all of your questions and interest and we'll talk to you again in November.

This concludes the presentation for today, ladies and gentlemen. You may now disconnect. Have a wonderful day.