Archer Daniels Midland 2009 Annual Report Download - page 52

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46
Archer Daniels Midland Company
Notes to Consolidated Financial Statements (Continued)
Note 3.
Fair Value Measurements (Continued)
Level 2: Observable inputs, including Level 1 prices that have been adjusted; quoted prices for similar assets or
liabilities; quoted prices in markets that are less active than traded exchanges; and other inputs that are observable
or can be substantially corroborated by observable market data.
Level 3: Unobservable inputs that are supported by little or no market activity and that are a significant component
of the fair value of the assets or liabilities. In evaluating the significance of fair value inputs, the Company
generally classifies assets or liabilities as Level 3 when their fair value is determined using unobservable inputs that
individually, or when aggregated with other unobservable inputs, represent more than 10% of the fair value of the
assets or liabilities. Judgment is required in evaluating both quantitative and qualitative factors in the determination
of significance for purposes of fair value level classification. Level 3 amounts can include assets and liabilities
whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as
well as assets and liabilities for which the determination of fair value requires significant management judgment or
estimation.
The following table sets forth, by level, the Company’s assets and liabilities that were accounted for at fair value on
a recurring basis as of June 30, 2009. Pursuant to FSP FAS 157-2, Effective Date of FASB Statement No. 157, the
Company has delayed the adoption of SFAS 157 for its nonfinancial assets and liabilities that are recognized on a
nonrecurring basis, including goodwill, other intangible assets, and asset retirement obligations to July 1, 2009. In
many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value
hierarchy. The lowest level of input that is a significant component of the fair value measurement determines the
placement of the entire fair value measurement in the hierarchy. The Company’s assessment of the significance of
a particular input to the fair value measurement requires judgment, and may affect the classification of assets and
liabilities within the fair value hierarchy levels.
Fair Value Measurements at June 30, 2009
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
(In millions)
Assets:
Inventories carried at market
$ –
$ 4,081
$ 488
$ 4,569
Unrealized gains on derivative
contracts
742
1,018
82
1,842
Marketable securities
921
606
-
1,527
Total Assets
$ 1,663
$ 5,705
$ 570
$ 7,938
Liabilities:
Unrealized losses on derivative
contracts
$ 972
$ 1,124
$ 84
$ 2,180
Inventory-related liabilities
–
245
20
265
Total Liabilities
$ 972
$ 1,369
$ 104
$ 2,445