Archer Daniels Midland 2007 Annual Report Download - page 76

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Archer Daniels Midland Company
Notes to Consolidated Financial Statements (Continued)
Note 14. Segment and Geographic Information
The Company is principally engaged in procuring, transporting, storing, processing, and merchandising
agricultural commodities and products. The Company’s operations are classified into three reportable business
segments: Oilseeds Processing, Corn Processing, and Agricultural Services. Each of these segments is organized
based upon the nature of products and services offered. The Company’s remaining operations are aggregated
and classified as Other.
The Oilseeds Processing segment includes activities related to processing oilseeds such as soybeans, cottonseed,
sunflower seeds, canola, peanuts, and flaxseed into vegetable oils and meals principally for the food and feed
industries. In addition, oilseeds may be resold into the marketplace as a raw material for other processors.
Crude vegetable oil is sold “as is” or is further processed by refining, bleaching, and deodorizing into salad oils.
Salad oils can be further processed by hydrogenating and/or interesterifying into margarine, shortening, and
other food products. Partially refined oil is sold for use in chemicals, paints, and other industrial products.
Refined oil can be further processed for use in the production of biodiesel. Oilseed meals are primary
ingredients used in the manufacture of commercial livestock and poultry feeds. Oilseeds Processing also
includes activities related to the Company’s interest in Wilmar International Limited, the largest agricultural
processing business in Asia.
The Corn Processing segment includes activities related to the production of sweeteners, starches, dextrose, and
syrups for the food and beverage industry as well as activities related to the production, by fermentation, of
bioproducts such as alcohol, amino acids, and other specialty food and feed ingredients.
The Agricultural Services segment utilizes the Company’s extensive grain elevator and transportation network to
buy, store, clean, and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats, and barley,
and resells these commodities primarily as feed ingredients and as raw materials for the agricultural processing
industry. Agricultural Services’ grain sourcing and transportation network provides reliable and efficient
services to the Company’s agricultural processing operations. Also included in Agricultural Services are the
activities of A.C. Toepfer International, a global merchandiser of agricultural commodities and processed
products.
Other includes the Company’s remaining operations, consisting principally of food, feed, and industrial
businesses and financial activities. Food, feed, and industrial includes: Wheat Processing, with activities related
to the production of wheat flour; Cocoa Processing, with activities related to the production of chocolate and
cocoa products; the production of natural health and nutrition products; and the production of other food, feed,
and industrial products. Financial activities include banking, captive insurance, private equity fund investments,
and futures commission merchant activities.
Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is
based on net sales less identifiable operating expenses, including an interest charge related to working capital
usage. Also included in operating profit are the related equity in earnings of affiliates based on the equity method
of accounting. General corporate expenses, investment income, unallocated interest expense, marketable securities
transactions, and FIFO to LIFO inventory adjustments have been excluded from segment operations and classified
as Corporate. Gross additions to property, plant, and equipment represent purchases of property, plant, and
equipment plus amounts allocated to property, plant, and equipment related to acquired businesses.