Archer Daniels Midland 2007 Annual Report Download - page 31

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23
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Selling, general, and administrative expenses of $1.2 billion were comparable to 2006 and include $25 million of
currency exchange rate increases. Excluding the impact of currency exchange rate increases, selling, general and
administrative expenses decreased $23 million principally due to 2006 selling, general and administrative expenses
including $20 million of severance costs associated with the closure of a citric acid plant. During 2007 and 2006,
the Company issued option grants and restricted stock awards to officers and key employees pursuant to the
Company’s Long-term Management Incentive Program. Certain officers and key employees of the Company
receiving option grants and restricted stock awards are eligible for retirement. Compensation expense related to
option grants and restricted stock awards issued to these retirement-eligible employees is recognized in earnings on
the date of grant. Selling, general, and administrative expense for 2007 and 2006 includes compensation expense
related to option grants and restricted stock awards granted to retirement-eligible employees of $30 million and $31
million, respectively.
Other income increased $1.0 billion primarily due to the $440 million Wilmar Gain, a $357 million gain on the sale
of the Company’s equity securities of Tyson Foods, Inc. and Overseas Shipholding Group, Inc., a $153 million gain
on the sale of the Company’s interest in Agricore United, and a $53 million gain on the sale of the Company’s
Arkady food ingredient business. Other income also includes a $46 million charge related to the repurchase of
$400 million of the Company’s outstanding debentures. Excluding these items, other income increased $73 million
primarily due to a $120 million increase in equity in earnings of unconsolidated affiliates, and a $53 million
increase in investment income, partially offset by a $69 million increase in interest expense and a $27 million
reduction in gains on sales of long-lived assets. The increase in equity in earnings of unconsolidated affiliates is
primarily due to higher valuations of the Company’s private equity fund investments and improved operating
results of the Company’s Asian oilseed crushing ventures. Interest expense and investment income increased
primarily due to increased average borrowing and investment levels.
Operating profit by segment is as follows:
2007 2006 Change
(In millions)
Oilseeds Processing $1,117 $ 599 $ 518
Corn Processing
Sweeteners and Starches 485 432 53
Bioproducts
634 445 189
Total Corn Processing 1,119 877 242
Agricultural Services 516 275 241
Other
Food, Feed, and Industrial 214 159 55
Financial
195 151 44
Total Other 409 310 99
Total Segment Operating Profit 3,161 2,061 1,100
Corporate (7) (206) 199
Earnings Before Income Taxes $3,154 $1,855 $1,299