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Item 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONSCompany OverviewThe Company is principally engaged in procuring, transporting, storing, processing, and merchandising agriculturalcommodities 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 uponthe nature of products and services offered. The Company’s remaining operations are aggregated and classified asOther.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 feedindustries. In addition, oilseeds may be resold into the marketplace as a raw material for other processors. Crudevegetable oil is sold “as is” or is further processed by refining, bleaching, and deodorizing into salad oils. Saladoils can be further processed by hydrogenating and/or interesterifying into margarine, shortening, and other foodproducts. Partially refined oil is sold for use in chemicals, paints, and other industrial products. Refined oil can befurther processed for use in the production of biodiesel. Oilseed meals are primary ingredients used in themanufacture of commercial livestock and poultry feeds. Oilseeds Processing also includes activities related to theCompany’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, andsyrups for the food and beverage industry as well as activities related to the production, by fermentation, ofbioproducts 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 tobuy, store, clean, and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats, and barley, andresells these commodities primarily as feed ingredients and as raw materials for the agricultural processingindustry. Agricultural Services’ grain sourcing and transportation network provides reliable and efficient servicesto the Company’s agricultural processing operations. Also included in Agricultural Services are the activities ofA.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 businessesand financial activities. Food, feed, and industrial includes: Wheat Processing, with activities related to theproduction of wheat flour; Cocoa Processing, with activities related to the production of chocolate and cocoaproducts; the production of natural health and nutrition products; and the production of other food, feed, andindustrial products. Financial activities include banking, captive insurance, private equity fund investments, andfutures commission merchant activities.Operating Performance IndicatorsThe Company’s Oilseeds Processing, Agricultural Services, and Wheat Processing operations are principallyagricultural commodity-based businesses where changes in segment selling prices move in relationship to changesin prices of the commodity-based agricultural raw materials. Therefore, changes in agricultural commodity priceshave relatively equal impacts on both net sales and cost of products sold and minimal impact on the gross profit ofunderlying transactions. As a result, changes in net sales amounts of these business segments do not necessarilycorrespond to the changes in gross profit realized by these businesses.The Company’s Corn Processing operations and certain other food and feed processing operations also utilizeagricultural commodities (or products derived from agricultural commodities) as raw materials. In theseoperations, agricultural commodity price changes can result in significant fluctuations in cost of products sold, andsuch price changes cannot necessarily be passed directly through to the selling price of the finished products. Forproducts such as ethanol, selling prices bear no direct relationship to the raw material cost of the agriculturalcommodity from which it is produced.20
Item 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS (Continued)The Company conducts its business in many countries. For the majority of the Company’s subsidiaries locatedoutside the United States, the local currency is the functional currency. Revenues and expenses denominated inforeign currencies are translated into U.S. dollars at the weighted average exchange rates for the applicable periods.Fluctuations in the exchange rates of foreign currencies, primarily the Euro and British pound, as compared to theU.S. dollar will result in corresponding fluctuations in the relative U.S. dollar value of the Company’s revenues andexpenses. The impact of these currency exchange rate changes, where significant, is discussed below.The Company measures the performance of its business segments using key operating statistics such as segmentoperating profit and return on fixed capital investment, and return on net assets. The Company’s operating resultscan vary significantly due to changes in unpredictable factors such as fluctuations in energy prices, weatherconditions, crop plantings, global government farm programs and policies, changes in global demand resultingfrom population growth and changes in standards of living, and global production of similar and competitive crops.Due to these unpredictable factors, the Company does not provide forward-looking information in “Management’sDiscussion and Analysis of Financial Condition and Results of Operations.”2007 Compared to 2006As an agricultural-based commodity business, the Company is subject to a variety of market factors which affectthe Company’s operating results. Strong biodiesel demand in Europe continued to create increased vegetable oildemand and positively impacted rapeseed crushing margins in Europe. Abundant oilseed supplies, improvedvegetable oil values, and strong protein meal demand have positively impacted oilseed crushing margins in NorthAmerica. Increased ethanol contracted selling prices, continuing strong ethanol demand, and solid demand forsweetener and starch products improved corn processing results. These increases in corn processing results werepartially offset by higher net corn costs. Global grain merchandising opportunities resulting from regionalproduction imbalances also improved operating results. North American river transportation operations werefavorably impacted by strong demand for river transportation services which increased barge freight rates.Increasing commodity price levels negatively affected LIFO inventory valuations partially offsetting theimprovements in operating results.Net earnings increased principally due to improved operating results in all of the Company’s operating segments.Earnings before income taxes for 2007 include a gain of $440 million related to the exchange of the Company’sinterests in certain Asian joint ventures for shares of Wilmar International Limited (the Wilmar Gain), a $357million realized securities gain from sales of the Company’s equity securities of Tyson Foods, Inc. and OverseasShipholding Group, Inc., a gain of $153 million from the sale of the Company’s interest in Agricore United and a$53 million gain from the sale of the Company’s Arkady food ingredient business. Earnings before income taxesfor 2007 also include charges of $206 million from the effect of changing commodity prices on LIFO inventoryvaluations, $46 million related to the repurchase of $400 million of the Company’s outstanding debentures, and $21million related to abandonment and write-down of long-lived assets. Net earnings for 2006 include a $36 millionreduction in income tax expense related to the recognition of federal and state income tax credits and adjustmentsresulting from the reconciliation of filed tax returns to the previously estimated tax provision. Earnings beforeincome taxes for 2006 include charges of $15 million resulting from the Company’s adoption of FinancialAccounting Standards Board Interpretation Number 47, Accounting for Conditional Asset Retirement Obligations,an interpretation of FASB Statement No. 143 (FIN 47), $71 million related to abandonment and write-down oflong-lived assets, $9 million representing the Company’s share of a charge for abandonment and write-down oflong-lived assets reported by an unconsolidated affiliate of the Company, and $22 million associated with theclosure of a citric acid plant and exiting the European animal feed business. Earnings before income taxes for 2006also include credits of $12 million from the effect of changing commodity prices on LIFO inventory valuations,$17 million from the sale of long-lived assets, $46 million related to Brazilian transactional tax credits, and $40million related to realized securities gains.21
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Report of Independent Registered Pu
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Item 9.CHANGES IN AND DISAGREEMENTS
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Item 10.DIRECTORS, EXECUTIVE OFFICE
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INFORMATIONEN FÜR AKTIONÄREBörse
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German - ADM

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