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Operator
Good morning.
My name is Amanda and I'll be your conference facilitator today.
At this time I would like to welcome everyone to the second quarter 2005 earnings conference call.
All lines have been placed on mute to prevent any background noise.
After the speakers' remarks, there will be a question and answer period.
If you would like to ask a question during this time, press star-one on your telephone keypad.
If you want to withdraw your question, press star, then the number two on your telephone keypad.
I would now like to introduce Mr. Allen Andreas, Chairman and Chief Executive.
Sir, you may begin your conference.
Allen Andreas - Chairman & CEO
Thank you, Amanda.
Welcome, everyone, to the second quarter earnings release conference call for fiscal year 2005 for ADM.
Just a couple of observations before I turn the meeting over to Doug Schmalz, our Chief Financial Officer, who will report on the numbers for the last six months and quarterly period.
And Brian Peterson, who will bring us up to date on the review of our operations for the past quarter.
We, this past quarter, I think, again, saw great change in the variables that impact our businesses.
We continued to have volatility in our markets, but at much, much lower price levels than what we had previously in the nine months or a year prior, due to much more ample supplies of raw materials and a much lower pricing environment.
This past first half of our fiscal year, we generated solid cash flows from a diverse number of different areas of our businesses, and we continue here at ADM to adapt our strategies to copy with these changing variables in our business.
I'm quite positive about the fact that we have achieved a very solid result this past quarter, despite some challenging circumstances, and I am confident that we will have ahead of us the real prospects in the coming few quarters to begin to return the Company back to the solid double digit returns on investors' capital and shareholders' equity that we have set out as our goals for this coming year.
So, with that in mind, I'd like to turn over the speaker to Doug Schmalz who will begin our report for the quarter.
Doug Schmalz - SVP & CFO
Thank you, Al.
I would just like to remind everybody that some of today's comments reflect management's current views and estimates of future economic circumstances, industry conditions, company performance and financial results.
Any changes in such such assumptions or factors such as -- oilseed crop crush margins, ethanol prices or crop values could produce significantly different results.
We assume no obligation to update any forward-looking statements as a result of new information or future events.
As reported, results for the quarter ended December 31, 2004, were 313 million 509,000 or $0.48 a share, that compared to net earnings last year of 220 million 821,000, or $0.34 a share.
This year's quarter includes the $45 million $0.07 per share gain, representing the Company's share of the gain reported by our unconsolidated affiliate, CIP, upon the sale of its interest in Tate & Lyle.
ADM still holds its 6 percent direct interest in Tate & Lyle shares, and continues in the structs(ph) joint venture operations with Tate and Lyle in eastern Europe and Mexico.
Last years second quarter results included a loss on abandonment of various assets of 29 million, 18 million after tax, or $0.03 a share.
Declining commodity price levels on LIFO inventory evaluations resulted in an after tax LIFO income of $12 million or $0.02 a share in the current year's second quarter.
Last year, increasing commodity prices result in an after tax LIFO charge of 33 million, or $0.05 a share.
I would now like to discuss changes quarter over quarter and the line items of our consolidated statements of earnings and we'll discuss changes in segment operating results a little later.
Fiscal 2005 second quarter net sales and other operating income declined about 1 percent to 9.1 billion, primarily due to declining commodity values and lower sales volumes.
Our gross profits increased 11 percent to 669 million, due primarily to declining commodity price level changes on LIFO inventory evaluations during the quarter, which resulted in pretax LIFO income of 19 million, compared to a pretax charge of 53 million in last year's second quarter.
Our company-wide selling general and administrative expenses increased $4 million to 270 million for the quarter, due primarily to increased employee wages and benefits, partially offset by decreased legal and bad debt expense.
Our interest expense declined $7 million to 83 million for the quarter, due primarily to the reduced borrowing levels.
Our investment income of 25 million was comparable to last year for the quarter.
Equity and earnings of unconsolidated affiliate increased to 116 million from 53 million last year, primarily due to the Company's $45 million share of the gain reported by CIP, and improved valuations of the Company's private equity fund investments.
Our effective tax rate for the first half of fiscal 2005 has remained at 31 percent as comparable to last year.
This rate reflects an increase due to the change in mix of pretax earnings offset by a reduction due to no taxes provided on the $45 million equity share of the CIP gain, since CIP is a foreign corporate joint venture, and we anticipate that CIP will permanently reinvest the proceeds from the sale.
Looking a little bit forward, we anticipate our effective rates for the third and fourth quarters to be in the 32 to 33 percent range, reflecting changes in our earnings mix, the phaseout of the ETI credit and the implementation of the new manufacturer's credit.
Turning now to results of our operating segments.
Total operating profit for the quarter decreased $10 million to 485 million from 495 million a year ago.
Oilseed processing operating profits decreased 2 million to 119 million for the quarter from 121 million last year.
In Europe, improved crop conditions and good biodiesel demand resulted in improved operating results.
In addition, operating results of our Asian joint ventures improved over prior year level.
However, these improvements were offset by lower operating results in north and south American operations.
Our corn processing operating profits of 132 million for the quarter declined 40 million from 172 million last year, due primarily to higher net corn and energy costs compared to a year ago.
While still higher than year ago levels, net corn costs have continued to decline over the first half of fiscal 2005, and second quarter results improved about 30 percent over first quarter levels.
Our operating profits of sweetener and starch products declined 31 million to 45 million for the quarter as increased net corn and energy costs more than offset improved selling prices.
Operating profits of corn processing bioproducts decreased $9 million to $87 million for the quarter, as increased net corn and energy costs, lower ethanol sales volumes, and lower lysine selling prices more than offset increased average ethanol selling prices.
Our Ag services segment operating profits declined 18 million to 88 million for the quarter from 106 million last year.
As record North American origination and transportation results were offset by a decline in our global merchandising operating results.
Operating profit of the other segment increased to 146 million from 96 million last year, principally due to improved financial results.
Operating profits of our food and feed ingredients of 71 million was down slightly from year ago levels of 73 million, as all operations performed on a comparable basis to last year.
Our operating profits of the financial operations increased 52 million to 75 million for the quarter, due principally to improved valuations of the private equity investment funds and improved results of our captive insurance operations.
As last year's insurance results included losses resulting from a fire and in our Netherlands cocoa operations.
Corporate of 30 million improved by 145 million compared to the second quarter of fiscal 2005, due principally to the $45 million CIP gain, and a 72 million quarter over quarter impact of commodity price level changes on LIFO inventory valuations.
And the fact that last year's results included a $14 million abandonment charge.
I'll now discuss more significant factors effecting our financial condition and cash flows.
During the six months ended December 31, '04, trade working capital decreased about 418 million to 5.1 billion at December 31st, as readily marketable inventories levels decreased 600 million from June 30th levels.
Our readily marketable inventories have a carrying value at December 31 of approximately $2.6 billion.
This decrease reflects the impact of decreased commodity price levels.
Working capital decrease and the positive cash flow from operations were used to reduce short-term debt by $1 billion to 733 million at December 31, 2004.
Our total interest bearing debt, short and long-term, as a percent of invested capital was 31percent at December 31, a decline from June 30th levels of 39 percent.
Our cash flow from operations for the six months ended December 31 equals a net earnings of 580 million plus depreciation and amortization of 337 million, was 917 million.
This cash flow was used principally for capital expenditures of 284 million, dividends of 98 million, and to reduce debt levels.
I'll now turn the discussion over to Brian Peterson, who will review the business fundamentals of our operating segments.
Brian Peterson - SVP, Corporate Affairs
Good morning, everyone.
Thank you, Doug.
Starting with the oilseed sector, here our operating profits were 119 million for the second quarter versus 121 million for the second quarter 2004.
We had improvements in oilseed processing earnings in Europe and Asia.
Our south American results reflected a continued poor crushing environment.
North American results were also lower due to weaker crush margins.
Harvest in the south American soybean crop has started and another record crop is expected.
Projections are for the Brazilian crop to be in a range of 61 to 64 million metric tons, up more than 20 percent from the previous year, and the Argentine crop to be in a range of 35 to 39 million metric tons.
Regionally we see the following.
North American operating results declined as crush margins were lower than last year.
North American soybeans had strong export interests from China, which competed with demands for crushing in North America.
Also, both North American and South American farmers were reluctant sellers in response to sharply lower prices for soybeans.
We saw a good demand for meal and oil in the quarter, with industry crushing capacity utilization well over 90 percent last quarter.
Looking forward, we see a shift in world demand for soybeans to South America.
Our oil refining and packaging business continued to deliver solid performance in the quarter.
Turning to South America, fertilizer results improved, but overall results were down on poor crushing margins.
Industry capacity utilization was around 60 percent for the quarter.
As I said, we are expecting a large south American crop and our Chinese and European soybean crushing operations will be shifting a significant portion of their origination of their soybeans from North America to South America starting in February.
In Europe, crushing operations improved due to strong biodiesel and vegetable oil markets and a continued good supply of rapeseed.
A high portion of the rapeseed oil that ADM produces in Europe is used to make biodiesel today with the potential for expansion as more countries adopt this clean, renewable fuel source.
Crushing capacity utilization in Europe was in excess of 90 percent in the second quarter of fiscal 2005.
Asian results turned profitable, rebounding sharply from our previous two quarters.
Profits were up year over year from strong meal and oil demand and increased production volumes.
The local Chinese crushers have defaulted on their soybean delivery contracts in mid 2004, have had to deal with tougher payment terms and higher imported soybean prices from their suppliers.
ADM's joint venture honored their contracts, and as a result, is currently enjoying a competitive advantage.
Capacity utilization remains strong in the second quarter.
Our strategy in China continues to meet our expectations.
As diets improve and the demand for livestock grows, we see China as a very large and long-term growth market.
The ADM joint venture in China is well positioned to meet this growing demand with local processing facilities.
Turning to the corn processing segment, cure profits were 132 million this year versus 172 million in fiscal '04.
The U.S. produced a record harvest of 11.8 billion bushels in 2004, and the market is anticipating even more acres in 2005.
This large crop assures an ample supply for all industry needs.
Looking at the sweeteners and starches segment, sector, profits here were 45 million versus 76 million the previous year.
Profits were down due to higher net corn and energy costs.
Today's spot price of corn is lower than what we processed in the second quarter, and we will be seeing the benefit of today's lower corn costs in future quarters.
We continue our negotiations on high fructose corn syrup pricing, but since they are not finalized, we will not comment any further at this time.
In the bioproducts sector, profits this year, 87 million versus 2004 of 96 million.
Ethanol profits were up.
The higher prices in the ethanol market more than offset the increased net corn costs and lower year-over-year shipment of ethanol.
As you recall, we had very large shipments last year as we delivered ethanol from inventory to meet the startup needs of new markets.
Ethanol capacity industry-wide at the end of 2004 was around 3.6 billion gallons, and is projected to rise to roughly 4 billion gallons by the end of 2005.
We see a good balance of supply and demand through this year, but there is a potential for an imbalance if the expected new ethanol markets don't open while new ethanol capacity comes online.
With that caution, however, we should note that at today's energy prices, and today's corn prices, ethanol offers good value to the blenders and is profitable to the producers.
Looking at the specialty feed ingredients area, lysine profits were down from last year, last year's record levels, as price decreases in the high net corn costs more than offset the sales volume increase.
There continues to be, however, very strong and growing demand for lysine.
In citric acid, results were comparable to last year, but with pricings moving up and demand strengthening, we are looking for an improvement here.
This past quarter we announced a strategic alliance on PHA with metabolics for the purpose of commercializing PHA, a biodegradable plastic.
PHA offers the potential of expanding the number and volume of higher valued products made from the starch from our corn wet milling plant.
As we have discussed before, these new higher value uses of our starch stream add value to the entire corn processing portfolio.
Turning to the agricultural services segment, profits here were 88 million versus 106 million in the year ago period.
The agricultural services segment was down versus last year, but still delivered very solid performance.
North American operations delivered record profits this year from gains in our grain origination, storage and transportation activities.
ADM's global network creates value by connecting areas of surplus with areas of deficit.
The unique merchandisings opportunities created by the global market disparities last year did not reoccur this quarter.
Our transportation asset base is generating good returns and providing value as we meet our customers requirements in today's challenging transportation environment.
Strong demand from new customers improved barge revenues in the quarter.
Recent flooding on some of the rivers is challenging our operations, but the ADM network continues to meet customer needs in a timely way.
In the other segment, profits were 146 million this year versus 96 million in the year ago period.
In the food and feed ingredient sector of this segment, profits were 71 million versus 73 million a year.
The financial results, 75 million this year versus 23 million in the year ago period.
In the food and feed ingredient segment, looking at wheat, operating results were comparable to last year.
Industry capacity utilization for the quarter, which is the peak flour demand season, was over 90 percent.
European operations were better than last year.
Profits from our Caribbean operations were negatively impacted from the hurricane damage a few months ago.
Cocoa operations continue to deliver strong results for the quarter.
Cocoa bean harvest in western Africa is progressing with a good quality crop.
We see good interest in our finished and semi finished chocolate business, continued healthy demand for butter and an improving demand for powder.
As Doug has already commented on the financial part of this, of the other segment, I won't comment on that.
So Amanda, we are ready for questions.
Operator
At this time, I would like to remind everyone, if you would like to ask a question, please press star, then the number one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Your first question comes from David Nelson with CSFB.
David Nelson - Analyst
Hello?
Allen Andreas - Chairman & CEO
Good morning, David.
David Nelson - Analyst
Oh, just want to make sure you could hear me.
Is there a -- couple months ago you announced a rather large share repurchase program, 100 million shares.
Could you give us an update on that, please?
Allen Andreas - Chairman & CEO
Well, the program is in place and over the last quarter we did -- we made no additional purchases of shares.
David Nelson - Analyst
Okay.
Any, any thoughts on when you might do that?
Allen Andreas - Chairman & CEO
We're always looking at the markets and evaluating the best uses of our capital for our businesses.
So, it's only a question of the opportunities that we're looking at, how we allocate it, and how much we choose to put to stock repurchase, David.
I would say it's an ongoing process every day.
We have a lot of activity here and a lot of demands for our capital, and the question is how can we make the most effective use of that capital and these cash flows for our shareholders' benefit?
So, right now we're not in the marketplace buying shares back, but the program is in place.
It started January 1st, and it was intended to be a solid program to look out over the next few years for opportunities for utilization of cash flows that are coming in.
David Nelson - Analyst
Okay.
Maybe, for Doug, how much was the writeup in the value of the assets?
By contribution to the financial line, please?
Doug Schmalz - SVP & CFO
It was about 43 this year versus 19 last year.
David Nelson - Analyst
Great.
Thanks.
Biodiesel is getting a lot more press and you've got a lot of that going in Germany, and it obviously helped your results in European oilseeds.
Could you maybe address what you might be planning for the U.S?
And I'm also hearing about some biodiesel going up in Brazil, and what might do you to capitalize on that?
Brian Peterson - SVP, Corporate Affairs
Well, David, this is Brian.
David Nelson - Analyst
Yes.
Brian Peterson - SVP, Corporate Affairs
In our European operations, of course, we've been in the biodiesel business there for sometime.
The EU has really promulgated legislation to facilitate the development to the market there, and it's really a very growing, very healthy market.
We are rapidly expanding our capacity, and it's a good business for us.
In the U.S., as you're probably aware, there are some incentives right now for biodiesel.
However, they only are extending out through 2006, which is not really much of an incentive, if you will, for people that will be new to the business or making investments here in the U.S..
So, I think that there's a lot of activity in the biodiesel front in the U.S., in term from a marketing standpoint, and also from various governments, state governments looking at ways to develop the demand.
But, it's a little ways away here in the U.S. yet.
David Nelson - Analyst
The thing is, Allen mentioned that, Europe, Chinese soy crush operations are getting adequate supplies in the commit of the vendor because you did not default on purchases.
Are you seeing or hearing any signs of shutdowns in China?
Are these plants going away or consolidation?
Brian Peterson - SVP, Corporate Affairs
No.
I don't think there's anything specific we could comment on, David.
We know, that there, has been some reduction in crush over there because some of the crushes over there have had some difficulties with suppliers.
But in terms of any long-term closing of plants, I don't -- I'm not aware of anything that I could comment on at the present time.
David Nelson - Analyst
Okay.
Thank you very much.
Operator
Your next questions from John McMillin with Prudential Equity Group.
John McMillin - Analyst
Good morning, everybody.
Allen Andreas - Chairman & CEO
Good morning, John.
Brian Peterson - SVP, Corporate Affairs
Good morning, John.
John McMillin - Analyst
A, don't want to make a big deal out of this, because, the quarter was okay, good, maybe even better than good, but your comments in the press release that they were record, if you do look at the segment income, which is probably the way you measure it, and take out the charges, the segment income was down 5 percent on an operating basis.
Can you kind of put them together, I mean your comment about record and then the decline and operating income, despite some, some change in equity values?
Allen Andreas - Chairman & CEO
Sure, John.
I was, in the quote that's in the release that we made, I was pointing out the fact of the matter, which is that although we recorded historically high profits for the quarter, that you ought to look at those earnings in the proper context, which was a balanced contribution from diverse operating segments.
So, I think it was quite clear, what I was trying to do, is to convey to the marketplace that we keep adapting our strategies to meet the demands of our businesses, and that the fact that we have historically high levels of earnings in this particular quarter reflected the broad base of our earnings and cash flows.
And as you know, we had significant contribution during these, during this first half of our fiscal year from a variety of things other than operating earnings, a variety of items.
And so that was the purpose of my comment, was just to say, although historically this is the largest earnings that we have enjoyed in the history of the Company, you ought to take a look at those earnings.
Because we're continuing to deal with a lot of variables in our business, and I think we're coping with them in a very effective fashion, and the cash flows are solid, and we're getting back to the areas where we can achieve real returns to our shareholders on their invested capital.
So, that was the point that I was trying to make.
John McMillin - Analyst
And that's fair enough.
Doug, if I take out 45 million pretax, and take out 45 million after tax for the non-operating gain, I get to $0.41 with a 34.4 tax rate.
Doug Schmalz - SVP & CFO
It would be about 34, that's about right.
I don't know if it's 34.4.
John McMillin - Analyst
Now, why would that go up?
Doug Schmalz - SVP & CFO
As our earnings, as our earnings have increased, you got to think about the fixed items that are included in our effective rate, like the ETI credit, don't go up in same proportion to what your pretax earnings would.
So as your earnings increase, your effective rate is going to go up, because the ETI credit is sort of more like a fixed number.
I know it isn't exactly fixed, but it does not go up in the same proportion to your pretax earnings, and therefore your effective rate goes up.
And so we had some catch up there just because we had good earnings during this last six months.
John McMillin - Analyst
Now, milling and baking news is probably the only one that the media place that kind of writes about high fructose corn syrup pricing.
I know there's a general reluctance to talk about it until it's completed, and I know milling and baking news is talking more about 42 fructose than 55.
But, in case you haven't read the latest edition, and I guess I wouldn't be surprised if you did, they talk about roughly, that the industry was trying for $0.75 per hundred weight, which is about 7 1/2 percent, maybe 8, 9 percent on the 42, but they go -- they got -- but they didn't get the full amount sought, which is this 8 to 9 percent increase, but got an increase.
Can you kind of discuss the accuracy, and I'll repeat it if you want, the accuracy of that milling and baking news statement, or can you kind of give us any color what's being contracted particularly for 55?
Allen Andreas - Chairman & CEO
You're really trying to draw us into a discussion of that, aren't you, John?
Just let me--
John McMillin - Analyst
Everybody's got a different job.
Allen Andreas - Chairman & CEO
Well, we are-- as we say, we'rein negotiations and we're really not going to comment on it, except to say that we have higher costs and we have been unsatisfied with the performance of this sector of our business and we are trying to for higher prices.
So, I think I will just leave it at that, see how the negotiations come out.
John McMillin - Analyst
So, looking at these segment earnings, you can certainly, you can send these segment earnings to Coke and Pepsi and everybody else to kind of highlight that.
And I'm sure you'll get something, and I'm sure-- the corn processing side will improve.
Can you just tell me again how ethanol -- are you doing any -- I mean it's nice to see oil prices go back up, but are you going to do any kind of hedges to try to play -- not play, but I mean people do hedge markets, to take advantage of the recent bite backup in oil to maybe kind of hedge.
Do you do any of that in the ethanol business?
Allen Andreas - Chairman & CEO
Well, I mean, yes, we're making, John, we're making evaluations of the market, what we think the market might do.
And obviously it depends on what our customers are prepared to do, but where there is opportunities for good margins in the ethanol business, we would -- you could expect that we would be more aggressive in selling our product.
John McMillin - Analyst
Okay.
Well, I'll see you in a couple of weeks.
Allen Andreas - Chairman & CEO
Good.
Operator
Your next question comes from Leonard Teitelbaum with Merrill Lynch.
Leonard Teitelbaum - Analyst
Good morning.
Allen Andreas - Chairman & CEO
Good morning, Lenny.
Leonard Teitelbaum - Analyst
Much to talk about after John's monologue here, but let's move on to a couple of things.
I'm going take your statement that net corn costs are beginning to decline at its face value.
Because if I look at the numbers anyway, clearly you want to attack -- we definitely have got some questions to ask in the corn processing area, and there you have said it was net corn cost plus energy.
Now, is it fair to presume that the net corn costs that you'reg to incur in the March quarter will be below those that you incurred in the December quarter?
Allen Andreas - Chairman & CEO
Yes.
Leonard Teitelbaum - Analyst
Okay.
And is it going to be a meaningful amount?
Are we going to--
Allen Andreas - Chairman & CEO
I would, I would say it would be a significant amount.
Leonard Teitelbaum - Analyst
Okay.
Allen Andreas - Chairman & CEO
Corn prices, as you know, Lenny, have come down quite substantially and we still have some fairly solid bi-products credits.
And so, if you look over a historical period of time and our purchases of corn, that's just rolling right into this new calendar year.
Leonard Teitelbaum - Analyst
Okay.
My only concern was, when did it hit?
Did it hit in the -- will it hit in the March quarter, or the June quarter?
And you're telling me it's going to -- we're going to get the benefit in this current quarter.
Allen Andreas - Chairman & CEO
That's correct.
It's declining right now as we speak, every day.
Leonard Teitelbaum - Analyst
Now, to the extent that you guys are, in essence, sold out on ethanol, any legislation favoring ethanol probably helps the multiple more than the earnings, but, can you update us where we stand on that from your perspective?
On getting out the build there, testing to the usage of ethanol?
Doug Schmalz - SVP & CFO
Only to say that I think the picture is a bit unclear at the present time.
There's a number of bills, and that seem to be coming forward at the present time, and I just think it's really just a bit premature to comment on that, Lenny.
Leonard Teitelbaum - Analyst
Do you see any redrafting going on about ethanol in the legislation that's coming out?
Doug Schmalz - SVP & CFO
Yes, I think that there is consideration.
Considerations are being made as the proposals get drafted.
So, yes, I think that we could--
Allen Andreas - Chairman & CEO
As you know, Lenny, the original bill provided to, over a period of time, to raise the total amount in the required usage to 5 billion gallons.
And we're already at levels that are -- that will quickly reach close to 5 billion, so there's considerable discussion whether those levels truly reflect a meaningful application for an energy package.
And we have every reason to believe that there is likely to be bills put in the hopper that have scaled those numbers up and are looking more towards renewable fuels as a source of energy for the country.
Leonard Teitelbaum - Analyst
Beautiful.
Thank you.
Now, it's my understanding you have contracted out -- used to be 50 percent contract, 50 percent floating, I think most of your capacity is contracted out, is that right, or does that end in February, or what's the status on those contracts?
Brian Peterson - SVP, Corporate Affairs
For ethanol?
Leonard Teitelbaum - Analyst
Yes, sir.
Brian Peterson - SVP, Corporate Affairs
Yes.
I think for ethanol we have a fair amount of our production committed for going forward.
Leonard Teitelbaum - Analyst
And are they committed at higher oil prices?
Or are they on the market?
Doug Schmalz - SVP & CFO
It would be a mix.
Leonard Teitelbaum - Analyst
Okay.
Allen Andreas - Chairman & CEO
But those markets have been quite strong.
Leonard Teitelbaum - Analyst
Yes, sir, I, I appreciate that.
Now, if I take a look at the oilseed side of the business, which, came in relatively flat with last year, aren't the margins improving currently?
Brian Peterson - SVP, Corporate Affairs
The margins are improving currently, yes.
Leonard Teitelbaum - Analyst
Yeah, and I would think some of the reluctance from the farmers on the South America profits coming in to hang on to beans is probably going to ebb.
Is that a fair conclusion?
Brian Peterson - SVP, Corporate Affairs
Well, I-- the farmers will make their conclusions, I guess, but what we're seeing right now of course is a very large south American market -- crop starting to come to market.
And as I indicated, our overseas operations, our European operations and our Chinese operations are in the process of switching their sourcing to South America and we'll see that occur this month.
Leonard Teitelbaum - Analyst
Okay.
Brian Peterson - SVP, Corporate Affairs
I'm sorry.
We'll see it occur in February.
Leonard Teitelbaum - Analyst
February, right.
All right.
Now, couple of final, then I'll relinquish the floor here.
Remind me when we took the China hit.
Was that in the March quarter or the June quarter for the --
Allen Andreas - Chairman & CEO
It was in the June quarter, Lenny.
Leonard Teitelbaum - Analyst
100 percent of it was in the June quarter, it didn't creep in, right?
Doug Schmalz - SVP & CFO
A little creeped into the first quarter of this year.
Leonard Teitelbaum - Analyst
A little will.
Doug Schmalz - SVP & CFO
Yes.
Leonard Teitelbaum - Analyst
Right, okay.
Now, have you exhausted your LIFO reserve or we still have more to go?
Doug Schmalz - SVP & CFO
No more to go.
Leonard Teitelbaum - Analyst
There is more?
Doug Schmalz - SVP & CFO
No.
Leonard Teitelbaum - Analyst
There is no more.
Does that mean we probably will not have any LIFO income in the March quarter?
Allen Andreas - Chairman & CEO
Yes.
Doug Schmalz - SVP & CFO
That is correct.
Leonard Teitelbaum - Analyst
Okay, and I think -- did you have anything?
All right, so, if I were to recap this for my simple way of thinking, oilseeds ought to be at least better because our crush margins are starting to improve; corn ought to have a rebound because net corn costs are certainly better than they were last quarter; and I'm pulling the financial gains out and looking at the operating income, and I don't see why we shouldn't be -- if I stop at the food and feed ingredients, not below the financial on your calculations, why the [expletive] I shouldn't have a fairly better quarter in terms of absolute dollars produced on an operating basis in March than I do in December.
What am I missing here?
Brian Peterson - SVP, Corporate Affairs
You do a very good job of analyzing the situation, Lenny.
Leonard Teitelbaum - Analyst
Give me an earnings --
Brian Peterson - SVP, Corporate Affairs
That was quite an exhaustive review of our business, and I'm not quite sure what you're missing, it sounded pretty comprehensive to me.
Leonard Teitelbaum - Analyst
Why don't you just give me the earnings per share number. [laughter] Okay.
Thanks a lot, guys, I appreciate it.
Allen Andreas - Chairman & CEO
Thanks, Lenny.
Operator
Your next question comes from Ken Zaslow from Harris Nesbitt.
Ken Zaslow - Analyst
Hey everybody.
Couple questions.
One is, outside the financial division, did your operational results fall short of your expectations?
Allen Andreas - Chairman & CEO
Well, I would say no.
From my perspective, we knew that margins were very stressed during the quarter for a variety of different reasons.
The farmers had an excellent year last year, and their financial condition is very strong.
So we watch the margins every day, and I would say our results came in as expected.
And we have -- we can clearly trace the downturn in the corn results in the sweetener sector to higher net corn costs and energy costs, and so they were within the expectations.
And one of my points that I wanted to make is, this is a very broadly-based large agra business that we're operating, and from time to time we've got stresses on different parts of the business and that's all taken into account in the way we manage it.
And so, we were not disappointed.
We saw what we expected.
We hade other contributions come in from other sources.
And I really wanted to point out in my remarks that all of these increases to cause us to have the largest historical results on the bottom line this year were not from just the basic operations, but they were from a diverse base of financial and other businesses, along with the total picture in order to show a very, very solid return to our shareholders.
So, we were very pleased with the results.
Ken Zaslow - Analyst
Let me ask a little bit about the oilseed business, because I, I'm a little confused.
When you were saying margins are improving, do you talk about it -- do you think of it really improving from hitting its low, say, in November or December, or do you consider it improving on a year over year basis?
Because isn't year over year basis probably a little more important to look at?
Doug Schmalz - SVP & CFO
Well, I am -- I'm, when I said that margins are improving, I'm looking at a general margins that we were looking at in the December quarter versus what we see at the present time, and going forward here.
We've got very strong demand for both meal and oil in the sector, and it just-- fully expect that we'll see more soy beans move to market this quarter, and next quarter.
And so therefore, that's, that's what I'm -- why I'm saying I think that they will better than what they were in the December quarter just finished, that we're reporting on now.
Ken Zaslow - Analyst
What about on a year-over-year basis?
Doug Schmalz - SVP & CFO
On a year-over-year basis, I guess that just remains to be seen, Ken.
As I recall, they were really very good a year.
Ken Zaslow - Analyst
That's what I recall too.
Doug Schmalz - SVP & CFO
Yeah, and so I, I -- whether they reach that level or not, I -- remains to be seen.
Ken Zaslow - Analyst
Okay.
What concerns do you have with the competitive new products versus soybean meal out there, such as, you guys obviously produce a DVG and Lysine, and is that taking away some of the pricing power, or just the price of soybean meal out there?
Doug Schmalz - SVP & CFO
Well, it's a competitive factor for soybean meal, along with a number of things, but it's not -- obviously, it can't replace soybean meal.
And just looking at the overall animal feed area, we're just seeing very good demand for soybean meal.
Ken Zaslow - Analyst
And couple more just on this soy side.
Are you seeing farmers actually release soybeans in the U.S. and South America right now?
Doug Schmalz - SVP & CFO
Yes, certainly in North America, we are at the present time.
Ken Zaslow - Analyst
So, would you say it's back to normal situation now with such a great crop, and now we should start getting utilization rates and, still staying around this 90 percent amount?
Doug Schmalz - SVP & CFO
Well, we are -- we're seeing it go back to a more normal, I think, in terms of slow of raw materials to market.
To say that it's normal yet, probably be a bit premature, but it's moving in that direction.
Ken Zaslow - Analyst
And my last question on the soybeans.
In Asia, you said capacity utilization remains strong.
In the other reasons you gave numbers.
What do you mean by strong?
Is that 80 percent, 90 percent or 60 percent, or how do you look at strong?
Doug Schmalz - SVP & CFO
If overall in China, I can't really comment.
But looking at our operations area, you'll have to recall, of course that, we had a very significant increase in capacity there.
Ken Zaslow - Analyst
Yes.
Doug Schmalz - SVP & CFO
And I would say that our capacity utilization of our assets in China, including the new capacity that's come online, or has been built, would be roughly 75 percent.
Ken Zaslow - Analyst
Okay.
Great.
Allen Andreas - Chairman & CEO
We don't get the kind of numbers, Ken, out of China on the total crush with the same degree of validity that we do in the United States or in North America.
So, it's a little more difficult to know what the smaller crushers are doing, but we're still operating at very acceptable levels in our own operations, and we're a substantial portion of the crush there, and very optimistic about the longer term future.
Ken Zaslow - Analyst
And you've worked through all your cheap soybeans that you had two quarters ago, right?
Everything's completely worked through on your -- soybeans don't last that long?
Allen Andreas - Chairman & CEO
That's correct.
Ken Zaslow - Analyst
Okay.
Thank you very much.
Operator
Your next question comes from Eric Katzman with Deutsche Bank.
Eric Katzman - Analyst
Hi, good morning, everybody.
Allen Andreas - Chairman & CEO
Good morning, Eric.
Brian Peterson - SVP, Corporate Affairs
Good morning.
Eric Katzman - Analyst
Allen, I guess the question I had for you is that, what -- I mean, do you think it's more of an industry situation or -- meaning improvement, or actions that you're taking, whether it's Paul's efforts to cut costs, or just to kind of day to day executing versus your competition?
I mean what takes earnings from what have been, give or take $0.40 in the last few quarters, let's say up to the next level?
I mean, clearly the market has given you credit, and credit that's deserved for taking the Company's earnings up in the last few years, but in terms of like moving it to the next level, is it more a function of the industry trends, or is it internal effort on your part?
How would you kind of characterize that effort?
Allen Andreas - Chairman & CEO
Well, we continue every day to try and reduce our costs, and we've been shifting from less efficient units to more efficient units, and really reshuffling the deck in many of our businesses, from oilseeds to cocoa and in the corn complex also, we've added considerably over the past few years, but, I think we have only begun to see the new levels of potential that can come out of the total group.
We have a very solid business now, with a good strategy across the globe, and it's integrated in a fashion that really allows us to take advantage of lots of opportunities.
As you know, our short-term debt has come down from May of last year of 2 billion 7 down to 300 million in the commercial paper markets.
And so, our balance sheet is very strong.
We're well positioned.
We have a good mix of assets, and I think our earnings capacity could very well be just beginning to plateau at new levels.
So that's all part of the whole game, is, as to how we run our businesses.
We're diversified geographically.
We're diversified across the product lines, and you put those altogether and we have good opportunities for a solid base.
And my point was to say the earnings that we reported this quarter show the strong cash flows that were generated from our diverse group of businesses.
So, we look on it as being very achievable, that we can continue to grow in the double-digit returns to our shareholders, and I think in today's business environment, that has some very positive implications.
Eric Katzman - Analyst
Is there a way to kind of just, approximately quantify how much of the improvement in earnings from, let's say, the $0.20 level that you were doing a few years ago on a quarterly basis averaged to $0.40?
Like how much of that improvement has come from cost cutting internally versus industry improvement?
Allen Andreas - Chairman & CEO
Well, we do that, and we do have our own internal numbers that show how we have cut our costs, and how the efficiencies are working.
But more importantly is really the strategy of our businesses, and the consolidation of our businesses, into much more productive asset base over a period of time as we move into the proper areas of the value chain along the food sector.
So, and the energy, new addition of energy and high petroleum prices has created opportunities for us that didn't exist a few years ago.
Eric Katzman - Analyst
You can share those numbers.
You don't have to be scared. [laughter]
Allen Andreas - Chairman & CEO
There -- it is a combination, though, I think, of all of those different factors.
And we do continue to see real progress in the development of this company for the long-term interests.
Eric Katzman - Analyst
Okay, and then, two more questions.
One, specifically in the U.S. wheat milling, I don't think you commented on the U.S. situation.
You commented on Europe and the Caribbean.
Could you talk about the U.S. a little bit?
Allen Andreas - Chairman & CEO
Well, yes.
The U.S. results were just, basically, pretty flat compared to a year ago.
That is our, seasonally the best quarter.
And we're seeing some, probably some recovery in flour demand as the low carb fad seems to be waning a bit, but results were pretty flat compared to a year ago.
Eric Katzman - Analyst
Okay.
I can never let a quarter go without asking Doug some specifics.
Any -- with all this cash flow coming in, Doug, where do you -- and the debt paydown, where do you -- where should we look for interest expense to come out for the, for the year?
Doug Schmalz - SVP & CFO
Well, our interest expense should continue to decline.
That's assuming rates stay the same, because any rate changes -- I mean our fixed debt, we don't have anymore coming off.
We had some come off this last quarter, so it should continue down, as our short-term debt levels would continue to decrease, but then again, if we have interest rate increases it could offset that.
Eric Katzman - Analyst
Okay.
Depreciation, amortization and any update on what you expect for CapEx for the year?
Doug Schmalz - SVP & CFO
I think as we said before, I think our CapEx will be around that 600 million, maybe a little bit over that level.
We're running at 284 through six months.
Eric Katzman - Analyst
Okay, and the D&A?
Doug Schmalz - SVP & CFO
Should be approximately the same, wouldn't be much difference for the next six months.
Eric Katzman - Analyst
Great.
I think that does it.
Thank you.
Allen Andreas - Chairman & CEO
Thank you, Eric.
Operator
Your next question comes from Todd Lubick(ph) of Banc of America Securities.
Todd Lubick - Analyst
Yes, good morning.
Allen Andreas - Chairman & CEO
Good morning, Todd.
Todd Lubick - Analyst
I wanted to ask you just a bit about your credit rating.
S&P has had a negative outlook on your A-plus rating.
I guess since October 2002 and. at least by my calculations your credit measures have improved in the second quarter, and obviously, with the debt paydown, you're in a much better position today than probably the last several quarters.
And so I guess what my question is, what is the timeframe in which you next plan to meet with S&P?
And do you see -- do you think that your credit protection measures right now are where you want them to be, or do you have plans for improving those incrementally beyond here?
Doug Schmalz - SVP & CFO
I think yes to all of the above.
It has been that long, and we would -- I would hope to get something from them after this quarterly release on S&P.
But, yes, we feel that our credit measures right now are very strong, and we'll just continue to monitor that going forward.
Allen Andreas - Chairman & CEO
We have an ongoing dialogue, Todd, with these rating agencies, and without, particularly the last issue that came from Fitch, had a good understanding of our business and our better model in terms of being able to recognize the value of readily marketable inventories and the strengths of our balance sheet.
And when we did have the report released by Moody's, we were curious that the value of our debt did not change materially in the marketplace, and people said agra businesses are very solid places for debt.
And so, we're continuing to have a good cost of debt, and we think that's positive for our competitive position in the industry.
Todd Lubick - Analyst
Right.
Do you anticipate that S&P will recognize your readily marketable inventories in the future as well?
Allen Andreas - Chairman & CEO
We -- there's some very capable people that are at S&P, and I'm certain that they will recognize what we're doing here at ADM with our balance sheet and and our income side.
Todd Lubick - Analyst
Okay.
And one other question.
With respect to ethanol, did I understand correct in hearing that ethanol sales on the quarter were down, or volumes were down?
Doug Schmalz - SVP & CFO
Volume, yes, were down on the quarter.
Todd Lubick - Analyst
And what was, what was the reason for that?
Doug Schmalz - SVP & CFO
The reason was in the year ago period we had built up inventories prior to that quarter, the December quarter '04, in anticipation of new markets needing to -- coming online and needing to develop their supplies, so we had purposely built up inventories to be able to supply that new demand and fill the pipeline.
Todd Lubick - Analyst
Okay.
Doug Schmalz - SVP & CFO
So shipments were significantly higher in the year ago quarter.
However, production this quarter compared to a year ago was higher.
Allen Andreas - Chairman & CEO
And our sales and demand is very strong going forward.
Todd Lubick - Analyst
Okay.
Very good.
Thank you very much.
Operator
Your next question comes from Christine McCracken with FTN Midwest.
Christine McCracken - Analyst
Good morning.
Allen Andreas - Chairman & CEO
Hi, Christine.
Christine McCracken - Analyst
Not a lot left here to talk about.
But, I wanted to discuss, you talk about your utilization rates being pretty high at this point, and you do have a lot of cash on hand, or at least very strong cash flows.
I was wondering, going forward, what are your expectations in terms of expansion?
It's been sometime since we really looked at that.
I don't think we're there yet, but is it your expectation that the industry or ADM would start putting money into this space?
Allen Andreas - Chairman & CEO
Well, I guess I'll comment on that, Christine.
We've got-- there's been a lot of consolidation of our industries in the past several years, and you may also have noticed that we closed another oilseed processing plant this past, just in the past few weeks, and we continue to look for good balance between supply and demand.
So, if you're not looking at the markets that really have emerging capabilities and possibilities of expansion, for example, Asia-Pacific, and maybe certain other unique opportunities in eastern Europe, or wherever, there's not need for additional capacity.
I think we have adequate capacity in the ethanol business and the sweeteners business.
And so, there is not likely to be a major movement forward in terms of our expanding our basic core processing industries.
But on the other hand, there are many exciting opportunities on the research and development side, and our new joint venture with metabolics has some significant possibilities.
We're growing and expanding our market share, and we continue to look for opportunities to strategically join with others who have facilities that could be put together with ours to make the market more effective and more profitable for our businesses.
So, we do not see any need for immediate expansion of existing businesses in our develop markets, but we do have lots of opportunities to use our capital and we're assessing those every day.
Some of these expenses, some of these factories could be very expensive if the research works out to prove some new petroleum and other products that are, products that are currently made from petroleum, that could be applicable for our -- from our carbohydrate sources.
Christine McCracken - Analyst
What about moving into new areas?
Several of your competitors, Cargill and Bunge, both participate in the fertilizer markets in a fairly large way.
You guys really aren't there.
It seems like a logical fit.
Is that something you'd consider going forward?
Allen Andreas - Chairman & CEO
We'll, we're continuing to expand our fertilizer interest as well, particularly in South America and across the United States.
We've -- we think that's an area of potential growth, particularly in certain parts of the world where there's going to be more usage of fertilizer, for example, in South America.
It's a good solid business, so, it's possible.
We continue to explore a variety of different ways of expanding those businesses and they continue to yield very good results on the bottom line for our profitability.
Christine McCracken - Analyst
Fair enough.
And then just looking at the edible oils markets, and noticing a divergence with corn oil, and corn oil prices, to us, seem fairly high.
I'm wondering if you could give us some insight, relative to soy, I'm wondering if you could give us any insight into -- as to the strong demand there, what's driving that?
Doug Schmalz - SVP & CFO
I think that corn oil is recognized that it has properties that make it suitable for formulations for people that are working on low trans fat products, and that's increased the demand for corn oil, Christine.
Christine McCracken - Analyst
Fair enough.
And relative to your healthier oils ventures, can you give us any update there?
You do -- you are, I guess, pursuing a number of proprietary products.
Is that also yielding good benefits as people focus on that area?
Allen Andreas - Chairman & CEO
Well, we've -- we've coming up with a different -- several different ways of approaching the requirement for low trans fat oils, zero trans fat oils, and, yes, generally we've been very successful in meeting our customer's needs for these new products, utilizing proprietary technology, as well as some things that probably are generally available to the market.
So, yes, we are very, very pleased with the way that's been going.
Christine McCracken - Analyst
Any way of quantifying a percentage of your overall refinery, or, I guess --
Allen Andreas - Chairman & CEO
No, I -- no I -- not -- I wouldn't quantify it based on that.
I think our oil refining and packaging business is performing at a very high level, but I couldn't specifically comment on the, the trans fat technology that we have.
Christine McCracken - Analyst
And just then on, on the comments relative to west and the southeast, a lot of differing views on how that might impact acreage next yeat, and it's probably too soon to tell.
But clearly, you have one of the better views, maybe, into the industry.
I'm wondering in terms of how you position your business next year?
Is there any expected shift, or do you think it will be really offset, possibly, with maybe increased soybean acreage in uneffected areas?
How do you anticipate that effecting your cost next year?
Allen Andreas - Chairman & CEO
Well, there's just a tremendous amount of discussion on that issue in the producer community.
We live here in central Illinois and we have access to a lot of rural radio stations and television stations, and that's really one of the things that's just being talked about every day.
And I think to draw some conclusion out of that right now would be very difficult.
I think it's fair to say that there is, obviously, a concern about the rust amongst producers, and it's anticipated that there might be some shift away from soybeans.
But to quantify that at the present time would be, would be foolish on my part.
Christine McCracken - Analyst
It would be, probably, a logical conclusion, though, to expect as you had mentioned earlier in your comments, possibly lower corn costs, if any of that acreage did shift in corn.
Would there be some offset to your corn business even if soy prices moved higher?
Allen Andreas - Chairman & CEO
Well, that's possible.
That's possible.
But we're dealing with very large corn supplies right now that are in the marketplace, and as I indicated, the expectation is we will see an even -- some increase in corn acres again this year.
So, what might come out of the shift away from soybeans to corn, and whether that would benefit our business net overall, is impossible to predict.
Christine McCracken - Analyst
Fair enough.
We'll keep an eye out.
Thanks.
Operator
At this time, I would again like to remind everyone, if you would like to ask a question, please press star one on your telephone keypad.
We'll again pause for just a moment to compile the Q&A roster.
Your next question comes from David Driscoll with Citigroup Smith Barney.
David Driscoll - Analyst
Hi, good morning, everyone.
Allen Andreas - Chairman & CEO
Good morning, David.
David Driscoll - Analyst
Just a couple of, that I think what should be relatively quick ones.
I believe you guys said a moment ago that the wheat division was flat year over year.
Doug, if I recall correctly, the second fiscal quarter of 2004 in that cocoa and wheat line it had a $10 million asset impairment.
I think if I add that back, I would get $82 million in profits versus this quarter's up(ph) profit of 71 million.
If the wheat part of that, part that business was flat, then that would say to me that cocoa is down.
Last quarter, I think cocoa had a remarkably good quarter, so it's gone up, it's gone down.
Where are we going trend wise on that business?
I know it's been good, but if you could help me think about what happens going forward the next couple of quarters, that would be great.
Doug Schmalz - SVP & CFO
Talking cocoa?
David Driscoll - Analyst
Yes.
Doug Schmalz - SVP & CFO
It's been a good solid business and earnings have been comparable.
There's not been significant changes up or down during just the most recent quarters.
And last year the impairment charge was not against either cocoa or wheat.
It was in other food ingredients group.
David Driscoll - Analyst
Would that now be classified as financial, or would it still be classified in that cocoa and wheat group?
Doug Schmalz - SVP & CFO
No, it's still in the cocoa and wheat group.
David Driscoll - Analyst
Okay.
On the-- I think you said the private equity gains were something like $43 million.
What is that on an after-tax basis?
Is that about $0.04 a share?
Doug Schmalz - SVP & CFO
Oh, yes, that would be about right.
David Driscoll - Analyst
Okay.
And then, maybe kind of picking up a little bit on what Christine was asking about with the capital spending trends.
Back in, I think it was like 1996-1997, Archer Daniels was spending something like 720 to $780 million in capital spending.
Allen, you talked about your business right now being a poor business, not really needing any additional capital, but it certainly would seem to me that there are -- the history of the Company, to my mind, is one of expanding the businesses that you're in, but always something related to the core operations, but there could be significant capital spending that would need to be done.
I guess I'm, maybe I'm asking almost the identical question Christine did, but it's a question of really, when we model going forward the uses of cash, and even Dave Nelson's question, it's the same question, if you don't put it in CapEx and you don't really need to pay down debt, then the only real logical place for me to go with it is share repurchase.
Allen Andreas - Chairman & CEO
I think that's a point well taken and we certainly will be mindful of that.
We have dividends to pay, and we've got CapEx.
Our CapEx has gone up, somewhat, due to a variety of different factors involving pollution control requirements, as well as, as well as just bringing our costs down in all of our operations.
So we're closer now to 600 million on just core CapEx than we were in those previous years in '96, '97.
But we remain very focused on our agra businesses, and we're very mindful of what's going on in the core of those businesses, and we continue to spend money there.
So, to the extent that we don't have opportunities there, we're looking at other possibilities for growth and expansion in related areas, and we're looking at share repurchase opportunities.
So, that's correct.
David Driscoll - Analyst
Okay.
Then maybe just another follow up on the North American crushing operations.
The year ago period was one where we had a fairly bad harvest, and then this year, of course, we've had a very good harvest on the soy side.
So is it -- was it a bit surprising to you guys that the North American results were down year on year?
Doug Schmalz - SVP & CFO
Well, I think looking back at the year ago period, of course, as you recall, we had-- we were dealing with a short crop, changes in the Brazil situation, rapidly escalating prices, and that really creates a market situation where buyers become particularly aggressive for their raw materials.
That is, people that buy meal and oil from us become particularly aggressive for raw materials.
So, I think that we didn't have that environment this year, and I think that that probably is somewhat indicative, or reflected in our results.
David Driscoll - Analyst
When you think about, or this goes to Lenny's question on the third quarter, just seems kind of difficult here to match up exactly what's going happen on the oilseed side.
So, you're saying that last year, of course, I know very well what you're saying, that there was an incredible amount of volatility in the bean price, that's an opportunity for Archer Daniels, if that situation was was occurring in the fiscal third quarter a year ago, does that make it harder for to you beat that year over year operating profit number?
Or do you see this environment being that comparison actually not being very difficult?
Doug Schmalz - SVP & CFO
Well, last year was a unique and exceptional circumstance.
I wouldn't expect that those -- I mean those certainly won't be repeated, or it's highly doubtful that those will be repeated this year.
I think the thing that I am confident about saying is that we are seeing better crush margins at the present time, relative to our second quarter, and -- but making comparisons to a year ago, again, against a unique situation, it's difficult.
David Driscoll - Analyst
Okay.
Well, very good.
I don't want to really keep everyone any longer.
Thanks for the time.
Allen Andreas - Chairman & CEO
You're welcome, David.
Operator
Your next question comes from John McMillan with Prudential Equity Group.
John McMillin - Analyst
Hopefully I won't offend Lenny by asking another question.
Allen Andreas - Chairman & CEO
[laughter] Please, feel free to go ahead, John.
John McMillin - Analyst
I'm just trying to follow in Lenny's foot steps.
Your dividend -- I guess your board meets next week, is that right?
Allen Andreas - Chairman & CEO
That's correct.
John McMillin - Analyst
And I know you don't want to preempt the board meeting, but dividends would seem to be a topic of discussion, would they not?
Allen Andreas - Chairman & CEO
That's correct.
They will be.
They are on the agenda.
John McMillin - Analyst
Okay.
So is this the time of the year when you look for increases?
I can't remember what you did last year, but --
Allen Andreas - Chairman & CEO
I think this, this meeting last year is when we did increase the cash dividend.
And it'll be considered again this year by our board of directors, with a appreciation in price of our shares, of course, our yield has become a little weaker over the last year from when we made the last adjustment ,and we do have very solid cash flows, so it's an appropriate subject for our board to consider.
John McMillin - Analyst
Okay.
Thank you.
Allen Andreas - Chairman & CEO
You're welcome.
Operator
At this time, gentlemen, there are no further questions.
Are there any closing remarks?
Brian Peterson - SVP, Corporate Affairs
I don't think -- anyone have a closing remark?
Allen Andreas - Chairman & CEO
No.
We're all set.
Amanda, thank you very much.
And we appreciate all of you -- your interest in our company, and will continue to be working for your best interests.