Portuguese - ADM

Item 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS (Continued)Other operating profits increased $99 million to $409 million. Other – Food, Feed, and Industrial operating profitsincreased $55 million and include a $53 million gain on the sale of the Company’s Arkady food ingredient businessand a $15 million charge for abandonment and write-down of long-lived assets. Other – Food, Feed, and Industrialoperating results for 2006 include a $51 million charge for abandonment and write-down of long-lived assets, a $2million charge related to the adoption of FIN 47, a $9 million charge representing the Company’s share of a chargefor abandonment and write-down of long-lived assets reported by an unconsolidated affiliate of the Company, a$17 million gain from the sale of long-lived assets, and a $16 million charge related to exiting the European animalfeed business. Excluding the effect of these 2007 and 2006 items, Other – Food, Feed, and Industrial operatingprofits declined $44 million due primarily to cocoa processing operating results declining from prior year levelsand costs related to the start-up of the Company’s natural plastics production operations. Cocoa processingoperating results declined primarily due to increased industry production capacity which caused downwardpressure on cocoa processing margins. These increases were partially offset by improved operating results of theCompany’s wheat flour processing and protein specialty operations. Other – Financial operating profits increased$44 million principally due to increased valuations of the Company’s private equity fund investments and higheroperating results of the Company’s futures commission merchant business, partially offset by lower operatingresults of the Company’s captive insurance operations. The results of the Company’s captive insurance operationsfor 2007 include a $12 million charge related to a Hurricane Katrina trade disruption insurance settlement.Corporate expense decreased $199 million to $7 million principally due to a $345 million increase in realizedsecurities gains principally resulting from sales of the Company’s equity securities of Tyson Foods, Inc. andOverseas Shipholding Group, Inc. and a $103 million reduction in unallocated interest expense due principally tohigher levels of invested funds and higher interest rates. These decreases were partially offset by a $206 millioncharge, compared to a $12 million credit in the prior year, related to the effect of changing commodity prices onLIFO inventory valuations and a $46 million charge related to the repurchase of $400 million of the Company’soutstanding debentures.Income taxes increased due principally to higher pretax earnings and the absence of last year’s $36 million incometax credit related to the recognition of federal and state income tax credits and adjustments resulting from thereconciliation of filed tax returns to the previously estimated tax provision. The Company’s effective tax rateduring 2007 was 31.5% and, after excluding the effect of last year’s $36 million tax credit, was 31.2% for the prioryear. The increase in the Company’s effective tax rate is primarily due to changes in the geographic mix of pretaxearnings.2006 Compared to 2005As 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 has positively impacted rapeseed crushing margins in Europe. Abundant oilseed supplies and strongprotein meal demand have positively impacted oilseed crushing margins in North America. A good corn supplyresulting in lower price levels for corn favorably impacted corn processing operations, while ethanol experiencedgood demand due to gasoline refiners replacing MTBE with ethanol. Solid demand for sweetener and starchproducts has also improved corn processing results. During the first half of 2006, hurricanes in the gulf coastregion of the United States disrupted North American grain origination and agricultural commodity exportoperations, negatively impacting export sales volumes. The gulf coast hurricanes also disrupted rivertransportation, resulting in increased barge demand and barge freight rates.25