item 14 exhibits financial statement schedules reports form 8k a1the following consolidated financial statements financial data registrant subsidiaries included annual report registrant shareholders year ended june 30 1994 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 1994 consolidated statements earningsyears ended june 30 1994 1993 1992 consolidated statements shareholders equity years ended june 30 1994 1993 1992 consolidated statements cash flowsyears ended june 30 1994 1993 1992 notes consolidated financial statementsjune 30 quarterly financial data unaudited a2the following consolidated financial schedules registrant subsidiaries included report schedule imarketable securitiesother investments schedule vproperty plant equipment schedule viaccumulated depreciation depletion amortization property plant equipment schedule ixshortterm borrowings 27 schedule xsupplementary income statement information 28 schedules applicable therefore included report financial statements affiliates accounted equity method omitted considered individually constitute significant subsidiariesitem 14 exhibits financial statement schedules reports form 8k continued a3 list exhibits 3 composite certificate incorporation bylaws filed november 7 1986 exhibits 3a 3b respectively post effective amendment 1 registration statement form s3 registration 336721 incorporated herein reference 4 instruments defining rights security holders including indenture dated may 15 1981 registrant morgan guaranty trust company new york trustee incorporated reference exhibit 4b amendment 1 registration statement 271862 relating 250000000 7 debentures due may 15 2011 ii indenture dated may 1 1982 registrant morgan guaranty trust company new york trustee incorporated reference exhibit 4c registration statement 2 77368 relating 400000000 zero coupon debentures due may 1 2002 iiiindenture dated march 1 1984 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated august 3 1984 file 144 supplemented supplemental indenture dated january 9 1986 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated january 9 1986 file 144 relating 100000000 10 14 debentures due january 15 2006 iv indenture dated june 1 1986 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 33 6721 relating 300000000 8 78item 14 exhibits financial statement schedules reports form 8k continued debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10material contractscopies companys stock option plans savings investment plans pursuant instruction 10iiia item 601 regulation sk incorporated herein reference follows registration statement 291811 form s8 dated june 22 1984 definitive prospectus dated july 16 1984 relating archer daniels midland 1982 incentive stock option plan iiregistration statement 3327331 form s8 dated february 27 1989 relating archer daniels midland company savings investment plan hourly employees iii registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan 13 annual report security holders 21 subsidiaries registrantitem 14 exhibits financial statement schedules reports form 8k continued 23 consent independent auditors 24 powers attorney 27 financial data schedule b reports form 8k form 8k filed quarter ended june 30 1994 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 27 1994 archerdanielsmidland company r p reising vice president secretary general counsel j schmalz vice president controller chief financial officer pursuant requirements securities exchange act 1934 report signed september 27 1994 following persons behalf registrant capacities indicated andreas chairman board chief executive director principal executive officer l w andreas director andreas director l andreas director archer jr director ralph bruce director h g buffett director j h daniels director r goldberg director h hale director f r johnson director j r randall director mrs n rockefeller director r strauss director j k vanier director g webb director r p reising attorneyinfact powers attorney authorizing r l erickson r p reising j schmalz j smith sign form 10k behalf abovenamed officers directors company filed exchange commissionnotes schedule vproperty plant equipment archer daniels midland company subsidiaries june 30 1994 1 additions consist principally 1994bioproduct facility expansions decatur illinois southport north carolina corn processing expansions cedar rapids clinton iowa decatur peoria illinois walhalla north dakota flour milling facility beech grove indiana rice processing expansion weiner arkansas transportation equipment consisting primarily railroad cars 1993bioproduct facility expansions decatur illinois southport north carolina ringaskiddy ireland corn processing expansions cedar rapids clinton iowa decatur peoria illinois flour milling facility beech grove indiana transportation equipment consisting primarily railroad cars barges 1992bioproduct facility expansion antibiotic plant expansions corn processing sorbitol soy protein isolate decatur illinois soy protein concentrate plant second gas turbine system oil refinery europoort netherlands corn processing cogeneration expansions cedar rapids iowa citric acid expansion cogeneration plant southport north carolina corn processing expansion oil refinery clinton iowa softseed extraction plant erith england cogeneration facility spyck germany oil refinery frankfort indiana transportation equipment consisting primarily railroad cars 2other changes relate assets acquired companies changes due foreign currency translation 3the annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 50 years machinery equipment 3 20 yearsitem 14 exhibits financial statement schedules reports form 8k a1the following consolidated financial statements financial data registrant subsidiaries included annual report registrant shareholders year ended june 30 1995 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 1995 consolidated statements earningsyears ended june 30 1995 1994 1993 consolidated statements shareholders equity years ended june 30 1995 1994 1993 consolidated statements cash flowsyears ended june 30 1995 1994 1993 notes consolidated financial statementsjune 30 1995 item 14 exhibits financial statement schedules reports form 8k continued summary significant accounting policies quarterly financial data unaudited a2schedules applicable therefore included report financial statements affiliates accounted equity method omitted considered individually constitute significant subsidiaries a3 list exhibits 3 composite certificate incorporation bylaws filed november 7 1986 exhibits 3a 3b respectively post effective amendment 1 registration statement form s3 registration 336721 incorporated herein reference 4 instruments defining rights security holders including indenture dated may 15 1981 registrant morgan guaranty trust company new york trustee incorporated reference exhibit 4b amendment 1 registration statement 271862 relating 250000000 7 debentures due may 15 2011 ii indenture dated may 1 1982 registrant morgan guaranty trust company new york trustee incorporated reference exhibit 4c registration statement 277368 relating 400000000 zero coupon debentures due may 1 2002 iii indenture dated march 1 1984 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated august 3 1984 file 144 supplemented supplemental indenture dated january 9 1986 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated january 9 1986 file 144 relating 100000000 10 14 debentures due january 15 2006 item 14 exhibits financial statement schedules reports form 8k continued iv indenture dated june 1 1986 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 33 6721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c post effective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10material contractscopies companys stock option plans savings investment plans pursuant instruction 10iiia item 601 regulation sk incorporated herein reference follows registration statement 291811 form s8 dated june 22 1984 definitive prospectus dated july 16 1984 relating archer daniels midland 1982 incentive stock option plan ii registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan item 14 exhibits financial statement schedules reports form 8k continued iii registration statement 3358387 form s8 dated april 3 1995 relating adm savings investment plan salaried employees adm savings investment plan hourly employees 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent auditors 24 powers attorney 27 financial data schedule b reports form 8k form 8k filed quarter ended june 30 1995 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date august 17 1995 archerdanielsmidland company r p reising r p reising vice president secretary general counsel j schmalz j schmalz vice president controller chief financial officer pursuant requirements securities exchange act 1934 report signed august 17 1995 following persons behalf registrant capacities indicated andreas chairman board chief executive director principal executive officer l w andreas director andreas director l andreas director archer jr director ralph bruce director g coan director j h daniels director r goldberg director h hale director f r johnson director b mulroney director j r randall director mrs n rockefeller director r strauss director j k vanier director g webb director r p reising attorneyinfact powers attorney authorizing r p reising j schmalz j smith sign form 10k behalf abovenamed officers directors company filed securities exchange commissionitem 14 exhibits financial statement schedules reports form 8k a1 following consolidated financial statements financial data registrant subsidiaries included annual report registrant shareholders year ended june 30 1996 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 1996 1995 consolidated statements earningsyears ended june 30 1996 1995 1994 consolidated statements shareholders equity years ended june 30 1996 1995 1994 consolidated statements cash flowsyears ended june 30 1996 1995 1994 notes consolidated financial statementsjune 30 summary significant accounting policies quarterly financial data unaudited a2 schedules applicable therefore included report financial statements affiliates accounted equity method omitted considered individually constitute significant subsidiaries a3 list exhibits 3composite certificate incorporation bylaws filed november 7 1986 exhibits 3a 3b respectively post effective amendment 1 registration statement form s3 registration 336721 incorporated herein referenceitem 14 exhibits financial statement schedules reports form 8k continued 4instruments defining rights security holders including indenture dated may 15 1981 registrant morgan guaranty trust company new york trustee incorporated reference exhibit 4b amendment 1 registration statement 271862 relating 250000000 7 debentures due may 15 2011 ii indenture dated may 1 1982 registrant morgan guaranty trust company new york trustee incorporated reference exhibit 4c registration statement 2 77368 relating 400000000 zero coupon debentures due may 1 2002 iii indenture dated march 1 1984 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated august 3 1984 file 144 supplemented supplemental indenture dated january 9 1986 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated january 9 1986 file 144 relating 100000000 10 14 debentures due january 15 2006 iv indenture dated june 1 1986 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013item 14 exhibits financial statement schedules reports form 8k continued copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option plans savings investment plans pursuant instruction 10iiia item 601 regulation sk incorporated herein reference follows registration statement 291811 form s8 dated june 22 1984 definitive prospectus dated july 16 1984 relating archer daniels midland 1982 incentive stock option plan ii registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan iii registration statement 3358387 form s8 dated april 3 1995 relating adm savings investment plan salaried employees adm savings investment plan hourly employees 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent auditors 24 powers attorney 27 financial data schedule b reports form 8k form 8k filed april 16 1996 report information pertaining companys participation agreement settle federal class action lawsuits filed several companies involving sale lysine signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 30 1996 archerdanielsmidland company r p reising r p reising vice president secretary general counsel j schmalz j schmalz vice president chief financial officer r mills r mills controller pursuant requirements securities exchange act 1934 report signed september 30 1996 following persons behalf registrant capacities indicated andreas chairman board chief executive director principal executive officer l w andreas director andreas director l andreas director ralph bruce director g coan director j h daniels director r goldberg director f r johnson director j r randall director mrs n rockefeller director r strauss director j k vanier director g webb director j smith attorneyinfact powers attorney authorizing r p reising j schmalz j smith sign form 10k behalf abovenamed officers directors company filed securities exchange commissionitem 14exhibits financial statement schedules reports form 8k a1 following consolidated financial statements financial data registrant subsidiaries included annual report registrant shareholders year ended june 30 1997 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 1997 1996 consolidated statements earningsyears ended june 30 1997 1996 1995 consolidated statements shareholders equity years ended june 30 1997 1996 1995 item 14exhibits financial statement schedules reports form 8k continued consolidated statements cash flowsyears ended june 30 1997 1996 1995 notes consolidated financial statementsjune 30 summary significant accounting policies quarterly financial data unaudited a2 schedules applicable therefore included report financial statements affiliates accounted equity method omitted considered individually constitute significant subsidiaries a3 list exhibits 3 composite certificate incorporation bylaws filed november 7 1986 exhibits 3a 3b respectively post effective amendment 1 registration statement form s3 registration 336721 incorporated herein reference 4 instruments defining rights security holders including iindenture dated may 15 1981 r egistrant morgan guaranty trust company new york trustee incorporated reference exhibit 4b amendment 1 registration statement 271862 relating 250000000 7 debentures due may 15 2011 iiindenture dated may 1 1982 r egistrant morgan guaranty trust company new york trustee incorporated reference exhibit 4c registration statement 2 77368 relating 400000000 zero coupon debentures due may 1 2002 item 14exhibits financial statement schedules reports form 8k continued iiiindenture dated march 1 1984 betwe en registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated august 3 1984 file 144 supplemented supplemental indenture dated january 9 1986 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated january 9 1986 file 144 relating 100000000 10 14 debentures due january 15 2006 ivindenture dated june 1 1986 r egistrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option plans savings investment plans pursuant instruction 10iiia item 601 regulation sk incorporated herein reference follows iregistration statement 291811 form 8 dated june 22 1984 definitive prospectus dated july 16 1984 relating archer daniels midland 1982 incentive stock option planitem 14exhibits financial statement schedules reports form 8k continued iiregistration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan iiiregistration statement 3358387 s8 dated april 3 1995 relating adm savings investment plan salaried employees adm savings investment plan hourly employees 13portions annual report shareholders incorporated reference 21subsidiaries registra nt 23consent independent audit ors 24 powers attorney 27 financial data schedule b reports form 8k form 8k filed quarter ended june 30 1997 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 26 1997 archerdanielsmidland company j smith j schmalz r mills j smith j schmalz r mills vice president secretary vice president controller general counsel chief financial officer pursuant requirements securities exchange act 1934 report signed september 26 1997 following persons behalf registrant capacities indicated powers attorney authorizing r p reising j schmalz j smith sign form 10k behalf abovenamed officers directors company filed securities exchange commissionitem 14exhibits financial statement schedules reports form 8k a1 following consolidated financial statements financial data registrant subsidiaries included annual report registrant shareholders year ended june 30 1998 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 1998 1997 consolidated statements earningsyears ended june 30 1998 1997 1996 consolidated statements shareholders equity years ended june 30 1998 1997 1996item 14exhibits financial statement schedules reports form 8k continued consolidated statements cash flowsyears ended june 30 1998 1997 1996 notes consolidated financial statementsjune 30 1998 summary significant accounting policies quarterly financial data unaudited a2 schedules applicable therefore included report financial statements affiliates accounted equity method omitted considered individually constitute significant subsidiaries a3 list exhibits 3 composite certificate incorporation bylaws filed november 7 1986 exhibits 3a 3b respectively post effective amendment 1 registration statement form s3 registration 336721 incorporated herein reference 4 instruments defining rights security holders including iindenture dated may 15 1981 r egistrant morgan guaranty trust company new york trustee incorporated reference exhibit 4b amendment 1 registration statement 271862 relating 250000000 7 debentures due may 15 2011 iiindenture dated may 1 1982 r egistrant morgan guaranty trust company new york trustee incorporated reference exhibit 4c registration statement 2 77368 relating 400000000 zero coupon debentures due may 1 2002 iiiindenture dated march 1 1984 betwe en registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated august 3 1984 file 144 supplemented supplemental indenture dated january 9 1986 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated january 9 1986 file 144 relating 100000000 10 14 debentures due january 15 2006item 14exhibits financial statement schedules reports form 8k continued ivindenture dated june 1 1986 r egistrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option stock unit plans savings investment plans pursuant instruction 10iiia item 601 regulation sk incorporated herein reference follows iregistration statement 291811 form s8 dated june 22 1984 definitive prospectus dated july 16 1984 relating archer daniels midland 1982 incentive stock option plan iiregistration statement 3349409 form 8 dated march 15 1993 relating archer daniels idland 1991 incentive stock option plan archer dan iels midland company savings investment planitem 14exhibits financial statement schedules reports form 8k continued iiiregistration statement 33339605 fo rm s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees ivregistration statement 33351381 s8 dated april 30 1998 relating archerdanielsmidland company 1996 stock option plan vthe archerdanielsmidland company stock uni plan nonemployee directors incorporated reference exhibit 10 companys quarterly report form 10q quarter ended december 31 1997 13portions annual report shareholders incorporated reference 21subsidiaries registra nt 23consent independent audit ors 24 powers attorney 27 financial data schedule b reports form 8k form 8k filed quarter ended june 30 1998 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 24 1998 archerdanielsmidland company j smith j schmalz r mills j smith j schmalz r mills vice president secretary vice president controller general counsel chief financial officer pursuant requirements securities exchange act 1934 report signed september 24 1998 following persons behalf registrant capacities indicated powers attorney authorizing r p reising j schmalz j smith sign form 10k behalf abovenamed officers directors company filed securities exchange commissionitem 14exhibits financial statement schedules reports form 8k a1 following consolidated financial statements financial data registrant subsidiaries included annual report registrant shareholders year ended june 30 1999 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 1999 1998 consolidated statements earningsyears ended june 30 1999 1998 1997 consolidated statements shareholders equity years ended june 30 1999 1998 1997item 14exhibits financial statement schedules reports form 8k continued consolidated statements cash flowsyears ended june 30 1999 1998 1997 notes consolidated financial statementsjune 30 1999 summary significant accounting policies quarterly financial data unaudited a2 schedules applicable therefore included report financial statements affiliates accounted equity method omitted considered individually constitute significant subsidiaries a3 list exhibits 3 icomposite certificate incorporation amended iibylaws filed may 14 1999 exhibit 3ii form 10q quarter ended march 31 1999 incorporated herein reference 4 instruments defining rights security holders including iindenture dated may 1 1982 gistrant morgan guaranty trust company new york trustee incorporated reference exhibit 4c registration statement 2 77368 relating 400000000 zero coupon debentures due may 1 2002 iiindenture dated march 1 1984 registrant chase manhattan bank formerly known chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated august 3 1984 file 144 supplemented supplemental indenture dated january 9 1986 registrant chemical bank trustee incorporated reference exhibit 4 registrants current report form 8k dated january 9 1986 file 144 relating 100000000 10 14 debentures due january 15 2006item 14exhibits financial statement schedules reports form 8k continued iiiindenture dated june 1 1986 registrant chase manhattan bank formerly known chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option stock unit plans savings investment plans pursuant instruction 10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 14c form 10k incorporated herein reference follows iregistration statement 291811 form s8 dated june 22 1984 definitive prospectus dated july 16 1984 relating archer daniels midland 1982 incentive stock option plan iiregistration statement 3349409 form 8 dated march 15 1993 relating archer daniels idland 1991 incentive stock option plan archer dan iels midland company savings investment planitem 14exhibits financial statement schedules reports form 8k continued iiiregistration statement 33339605 fo rm s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees ivregistration statement 33351381 s8 dated april 30 1998 relating archerdanielsmidland company 1996 stock option plan vthe archerdanielsmidland company stock uni plan nonemployee directors incorporated reference exhibit 10 companys quarterly report form 10q quarter ended december 31 1997 viregistration statement 33375073 s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees 13portions annual report shareholders incorporated reference 21subsidiaries registra nt 23consent independent audit ors 24 powers attorney 27 financial data schedule b reports form 8k form 8k filed quarter ended june 30 1999 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 22 1999 archerdanielsmidland company j smith j smith vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed september 22 1999 following persons behalf registrant capacities indicated g andreas b mulroney g andreas b mulroney chief executive director principal executive officer r strauss sd j schmalz r strauss j schmalz director vice president chief financial officer j k vanier principal financial officer j k vanier director ss r mills r mills g webb controller g webb controller director andreas young andreas young director j r block j smith j r block attorneyinfact director r burt r burt director mrs h carter mrs h carter director g coan g coan director f r johnson f r johnson director powers attorney authorizing r p reising j schmalz j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 14exhibits financial statement schedules reports form 8k a1the following consolidated financial statements financial data registrant subsidiaries included annual report registrant shareholders year ended june 30 2000 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 2000 1999 consolidated statements earningsyears ended june 30 2000 1999 1998item 14 exhibits financial statement schedules reports form 8kcontinued consolidated statements shareholders equity years ended june 30 2000 1999 1998 consolidated statements cash flowsyears ended june 30 2000 1999 1998 notes consolidated financial statementsjune 30 2000 summary significant accounting policies quarterly financial data unaudited a2 schedules applicable therefore included report financial statements affiliates accounted equity method omitted considered individually constitute significant subsidiaries a3 list exhibits 3icomposite certificate incorporation amended filed exhibit 3i form 10k year ended june 30 1999 file 144 incorporated herein reference iibylaws amended restated filed may 12 2000 exhibit 3ii form 10q quarter ended march 31 2000 incorporated herein reference 4 instruments defining rights security holders including iindenture dated june 1 1986 registrant chase manhattan bank formerly known chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029item 14 exhibits financial statement schedules reports form 8kcontinued copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option stock unit plans savings investment plans pursuant instruction 10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 14c form 10k incorporated herein reference follows registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii registration statement 33339605 form 8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii registration statement 33351381 form s8 dated april 30 1998 relating archer danielsmidland company 1996 stock option plan iv archerdanielsmidland company stock unit plan nonemployee directors incorporated reference exhibit 10 companys quarterly report form 10q quarter ended december 31 1997 file 144 v registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees vi archerdanielsmidland company incentive compensation plan incorporated reference exhibit companys definitive proxy statement filed securities exchange commission september 15 1999 file 144item 14 exhibits financial statement schedules reports form 8kcontinued vii registration statement 33342612 form 8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective 1 registration statement 33342612 form s8 dated august 8 2000 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent auditors 24 powers attorney 27 financial data schedule b reports form 8k form 8k filed quarter ended june 30 2000signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 27 2000 archerdanielsmidland company j smith j smith vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed september 27 2000 following persons behalf registrant capacities indicated powers attorney authorizing j schmalz r mills j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 14 exhibits financial statement schedules reports form 8k a1 following consolidated financial statements financial data registrant subsidiaries included annual report registrant shareholders year ended june 30 2001 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 2001 2000 consolidated statements earningsyears ended june 30 2001 2000 1999 consolidated statements shareholders equity years ended june 30 2001 2000 1999 consolidated statements cash flowsyears ended june 30 2001 2000 1999 notes consolidated financial statementsjune 30 2001 summary significant accounting policies quarterly financial data unaudited item 14 exhibits financial statement schedules reports form 8kcontinued a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3i composite certificate incorporation amended filed exhibit 3i form 10k year ended june 30 1999 file 144 incorporated herein reference ii bylaws amended restated filed may 12 2000 exhibit 3ii form 10q quarter ended march 31 2000 incorporated herein reference instruments defining rights security holders including indenture dated june 1 1986 registrant chase manhattan bank formerly known chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 item 14 exhibits financial statement schedules reports form 8kcontinued copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction 10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 14c form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii exhibit 4 registration statement 33351381 form s8 dated april 30 1998 relating archerdanielsmidland company 1996 stock option plan iv archerdanielsmidland company stock unit plan nonemployee directors incorporated reference exhibit 10 companys quarterly report form 10q quarter ended december 31 1997 file 144 exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees archerdanielsmidland company incentive compensation plan incorporated reference exhibit companys definitive proxy statement filed securities exchange commission september 15 1999 file 144 exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective 1 registration statement 33342612 form s8 dated august 8 2000 exhibit 43 registration statement 33367962 form s8 dated august 20 2001 relating adm deferred compensation plan selected management employees item 14 exhibits financial statement schedules reports form 8kcontinued 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent auditors 24 powers attorney b reports form 8k form 8k filed quarter ended june 30 2001 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 27 2001 archerdanielsmidland company j smith j smith vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed september 27 2001 following persons behalf registrant capacities indicated g andreas f r johnson g andreas f r johnson chief executive director principal executive officer j mimran sd j schmalz j mimran j schmalz director vice president chief financial officer b mulroney principal financial officer b mulroney director ss r mills r mills r strauss vice president controller r strauss controller director andreas j k vanier andreas j k vanier director j r block g webb j r block g webb director r burt young r burt young director mrs h carter j smith mrs h carter attorneyinfact director h de boon h de boon director powers attorney authorizing j schmalz r mills j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 14 principal accountant fees services information responsive item set forth fees paid independent auditors definitive proxy statement companys annual meeting stockholders held november 6 2003 incorporated herein reference audit committee adopted audit nonaudit services preapproval policy provides audit services engagement terms fees changes terms fees subject specific preapproval audit committee policy provides audit services auditrelated services tax services permitted nonaudit services subject general preapproval audit committee provided tax services involving large complex transactions require specific preapproval audit committee requests applications services provided independent auditor require specific approval audit committee submitted chief financial officer determination whether services included within services received general preapproval audit committee audit committee designated chief financial officer monitor performance services provided independent auditor determine whether services compliance policy chief financial officer report audit committee periodic basis results monitoring immediately report chairman audit committee breach policy chairman audit committee authorized act behalf audit committee meetings part iv item 15item 14 principal accountant fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 4 2004 incorporated herein reference part iv item 15item 14 principal accountant fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 3 2005 incorporated herein reference part iv item 15item 14 principal accountant fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 2 2006 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 6 2008 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 5 2009 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 4 2010 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 3 2011 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 1 2012 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held may 1 2014 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held may 5 2016 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held may 3 2018 incorporated herein reference part iv item 15item 14principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders filed april 30 2021 incorporated herein reference part iv item 15item 14 controls procedures applicable part iv item 15item 14 principal accountant fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held november 8 2007 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held may 7 2015 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held may 4 2017 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held may 2 2019 incorporated herein reference part iv item 15item 14 principal accounting fees services information responsive item set forth “fees paid independent auditors” “audit committee preapproval policies” definitive proxy statement company’s annual meeting stockholders held may 7 2020 incorporated herein reference part iv item 15 item 7managements discussion analysis financial condition results operations managements discussion operations financial condition pages 24 25 annual shareholders report year ended june 30 1994 incorporated herein reference item 8item 7managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 1995 incorporated herein reference item 8nanitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 1997 incorporated herein reference item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 1998 incorporated herein reference item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 1999 incorporated herein reference item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2000 incorporated herein reference item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2001 incorporated herein reference item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2003 incorporated herein reference item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2004 incorporated herein reference item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2005 incorporated herein reference item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2006 incorporated herein reference item 7aitem 7 management’s discussion analysis financial condition results operations company overview company principally engaged procuring transporting storing processing merchandising agricultural commodities products beginning fiscal 2008 company reclassified certain operations within reportable segments reflect company manages businesses following realignment organizational structure company reflect activities company viewed company’s chief operating decision maker prior period segment information reclassified conform new presentation company’s operations classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations aggregated classified oilseeds processing segment includes activities related origination crushing oilseeds soybeans cottonseed sunflower seeds canola peanuts flaxseed vegetable oils protein meals principally food feed industries addition oilseeds oilseed products may processed internally resold marketplace raw materials processing crude vegetable oil sold processed refining bleaching deodorizing salad oils salad oils processed hydrogenating andor interesterifying margarine shortening food products partially refined oil sold use chemicals paints industrial products refined oil processed use production biodiesel oilseed protein meals primary ingredients used manufacture commercial livestock poultry feeds oilseeds processing includes activities related production natural health nutrition products production specialty food feed ingredients segment also includes activities related company’s interests unconsolidated affiliates asia principally wilmar international limited corn processing segment includes activities related production sweeteners starches dextrose syrups primarily food beverage industry well activities related production fermentation bioproducts ethanol amino acids food feed industrial products agricultural services segment utilizes company’s extensive grain elevator transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats barley edible beans resells processes commodities primarily food feed ingredients agricultural processing industry agricultural services’ grain sourcing transportation network provides reliable efficient services company’s agricultural processing operations also included agricultural services activities ac toepfer international global merchant agricultural commodities processed products includes company’s remaining processing operations consisting activities related processing agricultural commodities food ingredient products wheat flour cocoa chocolate cocoa products barley malt also includes financial activities related banking captive insurance private equity fund investments futures commission merchant activities operating performance indicators company’s oilseeds processing agricultural services wheat processing operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts net sales cost products sold minimal impact gross profit underlying transactions result changes gross profit businesses necessarily correspond changes net sales amounts item 7 management’s discussion analysis financial condition results operations continued company’s corn processing operations certain food animal feed processing operations also utilize agricultural commodities products derived agricultural commodities raw materials operations agricultural commodity market price changes result significant fluctuations cost products sold price changes cannot necessarily passed directly selling price finished products company conducts business many countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar compared us dollar result corresponding fluctuations us dollar value revenues expenses reported company impact currency exchange rate changes significant discussed company measures performance business segments using key operating statistics segment operating profit return fixed capital investment return equity return net assets cost per metric ton produced company’s operating results vary significantly due changes unpredictable factors fluctuations energy prices weather conditions crop plantings government programs policies changes global demand resulting population growth changes standards living global production similar competitive crops due unpredictable factors company provide forwardlooking information “management’s discussion analysis financial condition results operations” compared 2007 agriculturalbased commodity business company subject variety market factors affect company’s operating results strong demand agricultural commodities processed products challenged global supply chain provided exceptional margin opportunities 2008 strong global demand protein meal vegetable oil strong fertilizer demand south america positively impacted oilseeds processing results market price corn rose due increased demand resulting higher raw material costs corn processing partially passed form increased selling prices sweeteners starches average ethanol selling prices decreased due additional supply entering market large north american crops combined global wheat shortages created favorable conditions agricultural merchandising handling operations increased commodity costs resulted larger lifo inventory valuation reserves earnings income taxes decreased due principally gains totaling 10 billion income tax business disposals recorded 2007 including 440 million related exchange company’s interest certain asian joint ventures shares wilmar international limited wilmar gain 357 million realized securities gain sales company’s equity securities tyson foods inc overseas shipholding group inc gain 153 million sale company’s interest agricore united 53 million gain sale company’s arkady food ingredient business earnings income taxes 2008 include charge 569 million effect changing commodity prices lifo inventory valuations compared charge 207 million 2007 earnings income taxes 2008 also include 32 million charge related abandonment writedown longlived assets 38 million gain sales securities 21 million gain disposal longlived assets earnings income taxes 2007 include charges 46 million related repurchase 400 million company’s outstanding debentures 21 million related abandonment writedown longlived assets item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings net sales operating income increased 59 698 billion increased selling prices agricultural commodities oilseed processing products lesser extent corn processing products wheat flour accounted 85 increase higher sales volumes principally agricultural commodities ethanol biodiesel also contributed increase net sales addition net sales operating income increased 183 billion 4 due currency rate fluctuations net sales operating income segment follows oilseeds processing sales increased 67 233 billion due principally increased average selling prices resulting primarily increases underlying commodity costs continuing strong demand vegetable oil biodiesel protein meal sales volumes vegetable oil protein meal biodiesel also increased corn processing sales increased 23 71 billion good demand sweeteners starches resulted higher average selling prices bioproducts sales increased primarily result increased ethanol sales volumes partially offset lower average ethanol selling prices increased ethanol sales volumes reflect higher gasoline prices improved gasoline blending economics additional demand principally newlyopened markets southeastern united states agricultural services sales increased 66 340 billion primarily due increased underlying commodity costs lesser extent increased sales volumes sales segment increased 42 54 billion primarily due higher average selling prices wheat flour lesser extent higher sales volumes higher average selling prices cocoa products cost products sold increased 62 660 billion primarily due higher agricultural commodity costs lesser extent higher sales volumes manufacturing expenses increased 549 million primarily due higher energy transportation fuel costs increased employeerelated costs higher storage handling costs increased production capacity impact foreign currency translation addition cost products sold increased 175 billion 4 due currency rate fluctuations item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses increased 224 million 14 billion primarily due higher employeerelated costs higher outside service costs including 44 million related organizational realignment reorganization company’s european headquarters increased 37 million due impact currency rate fluctuations income net decreased 911 million primarily due gains totaling 10 billion business disposals recorded 2007 including 440 million related wilmar gain 357 million realized securities gain sales company’s equity securities tyson foods inc overseas shipholding group inc gain 153 million sale company’s interest agricore united 53 million gain sale company’s arkady food ingredient business equity earnings unconsolidated affiliates increased 121 million 2008 primarily related improved operating results company’s investments us grain export asian oilseeds peanut processing ventures income net also reflects 38 million gains sales securities 2008 21 million gains disposals longlived assets 2008 increase 2007 2008 11 million charges related abandonment writedown longlived assets charge 46 million related repurchase 400 million company’s outstanding debentures 2007 operating profit segment follows oilseeds processing operating profit decreased 9 10 billion excluding 440 million wilmar gain reflected asia results 2007 oilseeds processing operating profit increased 49 primarily due strong global demand protein meal vegetable oil fertilizer crushing origination operating profits increased 76 727 million due principally improved crushing margins north south america improved fertilizer results south america refining packaging biodiesel operating profits decreased 10 181 million due principally decreased biodiesel margins europe asset impairment charges 28 million 2008 partially offset improved global refining margins 2007 operating profit refining packaging biodiesel includes 14 million gain business disposal excluding wilmar gain asia operating profits increased 59 132 million principally reflecting company’s share improved operating profits wilmar international limited item 7 management’s discussion analysis financial condition results operations continued corn processing operating profits decreased 13 961 million primarily due higher net corn costs sweeteners starches operating profits 529 relatively unchanged higher average selling prices offset higher net corn costs increased manufacturing costs manufacturing cost increases reflect higher energy costs higher repair maintenance expenses higher costs chemicals used manufacturing process bioproducts operating profits decreased 28 432 million primarily due higher net corn costs higher manufacturing expenses decreased average ethanol selling prices partially offset higher sales volumes ethanol lesser extent higher average lysine selling prices higher lysine sales volumes agricultural services operating profits increased 89 10 billion 2007 operating profits merchandising handling include 153 million gain sale company’s interest agricore united excluding gain merchandising handling operating profits increased 281 873 million increase primarily due enhanced merchandising handling margins caused volatile global grain freight markets favorable risk management results lesser extent increased sales volumes transportation operating profits decreased 8 144 million primarily due increased fuel costs operating profits increased 12 423 million wheat cocoa malt operating profits increased 4 217 million 2007 operating profits wheat included gain 39 million sale company’s arkady food ingredient business excluding arkady gain wheat cocoa malt operating profits improved 28 primarily due improved wheat malt margins reflecting increased demand partially offset decreased cocoa processing margins reflecting higher raw material operating costs competitive pressures experienced north american chocolate market financial operating profits improved 21 206 million primarily due improvements company’s futures commission merchant business corporate expense increased 810 million 817 million primarily due 362 million increase charge related effects changing commodity prices lifo inventory valuations 371 million decrease realized securities gains primarily reflecting 357 million gain recorded 2007 sales company’s equity securities tyson foods inc overseas shipholding group inc 51 million increase corporate expenses due principally reorganization realignment costs partially offset charge 46 million recorded 2007 related repurchase 400 million company’s outstanding debentures income taxes decreased primarily due lower pretax earnings company’s effective tax rate 2008 313 comparable 2007 rate 315 item 7 management’s discussion analysis financial condition results operations continued compared 2006 agriculturalbased commodity business company subject variety market factors affect company’s operating results strong biodiesel demand europe continued create increased vegetable oil demand positively impacted rapeseed crushing margins europe abundant oilseed supplies improved vegetable oil values strong protein meal demand positively impacted oilseed crushing margins north america increased ethanol contracted selling prices continuing strong ethanol demand solid demand sweetener starch products improved corn processing results increases corn processing results partially offset higher net corn costs global grain merchandising opportunities resulting regional production imbalances also improved operating results north american river transportation operations favorably impacted strong demand river transportation services increased barge freight rates increasing commodity price levels resulted larger lifo inventory valuation reserves net earnings increased due principally improved operating results company’s operating segments earnings income taxes 2007 include gain 440 million related exchange company’s interests certain asian joint ventures shares wilmar international limited wilmar gain 357 million realized securities gain sales company’s equity securities tyson foods inc overseas shipholding group inc gain 153 million sale company’s interest agricore united 53 million gain sale company’s arkady food ingredient business earnings income taxes 2007 also include charges 207 million effect changing commodity prices lifo inventory valuations 46 million related repurchase 400 million company’s outstanding debentures 21 million related abandonment writedown longlived assets net earnings 2006 include 36 million reduction income tax expense related recognition federal state income tax credits adjustments resulting reconciliation filed tax returns previously estimated tax provision earnings income taxes 2006 include charges 15 million resulting company’s adoption financial accounting standards board interpretation 47 accounting conditional asset retirement obligations interpretation fasb statement 143 fin 47 71 million related abandonment writedown longlived assets 9 million representing company’s share charge abandonment writedown longlived assets reported unconsolidated affiliate company 22 million associated closure citric acid plant exiting european animal feed business earnings income taxes 2006 also include credits 12 million effect changing commodity prices lifo inventory valuations 17 million sale longlived assets 46 million related brazilian transactional tax credits 40 million related realized securities gains analysis statements earnings net sales operating income increased 20 440 billion due primarily increased selling prices agricultural commodities oilseed corn processing products lesser extent increased sales volumes agricultural commodities oilseed processing products addition net sales operating income increased 916 million 3 due currency exchange rate fluctuations item 7 management’s discussion analysis financial condition results operations continued net sales operating income segment follows oilseeds processing sales increased 17 139 billion due principally increased average selling prices vegetable oil increased sales volumes vegetable oil biodiesel vegetable oil selling prices volumes improved markets anticipated new demand developing united states biodiesel industry biodiesel sales volumes increased due additional production capacity corn processing sales increased 11 58 billion due principally increased sales bioproducts lesser extent increased sales sweeteners starches bioproducts sales increased primarily due higher average selling prices ethanol partially offset lower sales volumes ethanol average selling prices increased primarily due higher gasoline prices ethanol sales volumes decreased 2006 sales volumes exceeded production due release inventories built anticipation refiners replacing mtbe ethanol sweeteners starches sales increased primarily due higher average selling prices resulting good demand sweetener starch products agricultural services sales increased 26 204 billion due principally increased agricultural commodity prices increased sales volumes increase commodity prices primarily due higher average market prices corn north america increased 60 prior year increased sales volumes global grain merchandising activities also contributed increase agricultural services sales increased 16 38 billion primarily due higher average selling prices wheat flour products lesser extent increased sales volumes higher average selling prices cocoa products cost products sold increased 21 408 billion primarily due higher average costs agricultural commodities increased sales volumes manufacturing costs 2007 2006 include 21 million 62 million charge respectively abandonment writedown longlived assets addition cost products sold increased 874 million 3 due currency exchange rate fluctuations item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses 12 billion comparable 2006 included 25 million currency exchange rate increases excluding impact currency exchange rate increases selling general administrative expenses decreased 23 million due principally 2006 selling general administrative expenses including 20 million severance costs associated closure citric acid plant 2007 2006 company issued option grants restricted stock awards officers key employees pursuant company’s longterm management incentive program certain officers key employees company receiving option grants restricted stock awards eligible retirement compensation expense related option grants restricted stock awards issued retirementeligible employees recognized earnings date grant selling general administrative expense 2007 2006 includes compensation expense related option grants restricted stock awards granted retirementeligible employees 30 million 31 million respectively income net increased 10 billion primarily due 440 million wilmar gain 357 million gain sale company’s equity securities tyson foods inc overseas shipholding group inc 153 million gain sale company’s interest agricore united 53 million gain sale company’s arkady food ingredient business income net also includes 46 million charge related repurchase 400 million company’s outstanding debentures 2007 excluding items income net increased 73 million primarily due 120 million increase equity earnings unconsolidated affiliates 53 million increase investment income partially offset 69 million increase interest expense 27 million reduction gains sales longlived assets increase equity earnings unconsolidated affiliates primarily due higher valuations company’s private equity fund investments improved operating results company’s asian oilseed ventures interest expense investment income increased primarily due increased average borrowing investment levels operating profit segment follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profits increased 570 million 11 billion due principally 440 million wilmar gain improved market conditions geographic regions north american processing results improved due principally abundant oilseed supplies united states good demand vegetable oil soybean meal vegetable oil values improved markets anticipated new demand developing united states biodiesel industry north american processing results also favorably impacted lower plant operating costs resulting improved capacity utilization asian joint venture results improved due improved palm processing operating results partially offset decreased soy crushing operating results european processing results improved due principally abundant oilseed supplies europe strong demand vegetable oil strong demand vegetable oil result strong biodiesel demand increases partially offset decreased biodiesel operating profits resulting higher vegetable oil prices increased market production capacity lower diesel fuel prices south american processing results declined due principally 27 million credit brazilian transactional taxes 2006 excluding impact credit brazilian transactional taxes south american processing results improved due principally increased fertilizer margins improvement fertilizer margins primarily due higher average sales prices due improved fertilizer demand combined stable raw material costs operating profits 2007 include 6 million charge abandonment writedown longlived assets operating profits 2006 include 14 million charge abandonment writedown longlived assets 6 million charge related adoption fin 47 corn processing operating profits increased 204 million 11 billion due principally higher average selling prices lower energy costs partially offset lower ethanol sales volumes higher net corn costs net corn costs increased approximately 60 2007 due significant anticipated demand increases corn resulting primarily increasing cornderived ethanol industry capacity agricultural commodity market concerns regarding expected decline ending 2006 corn crop carryover also contributed increase corn costs sweeteners starches operating profits increased 51 million primarily due higher average sales prices lower energy costs sales prices increased due principally good demand sweetener starch products increases partially offset increased net corn costs sweeteners starches operating profits 2006 include 5 million charge related adoption fin 47 bioproducts operating profits increased 153 million primarily due higher ethanol average selling prices lower energy costs partially offset increased net corn costs lower ethanol sales volumes ethanol average sales prices increased due principally strong demand gasoline refiners higher gasoline prices ethanol sales volumes decreased 2006 sales volumes exceeded production due release inventories built anticipation refiners replacing mtbe ethanol bioproducts operating results 2007 include 1 million charge abandonment writedown longlived assets bioproducts operating results 2006 include 6 million charge abandonment writedown longlived assets 2 million charge related adoption fin 47 6 million costs related closure citric acid plant agricultural services operating profits increased 301 million 538 million due principally 153 million gain sale company’s interest agricore united canadian business specialized crop input crop protection services grain marketing merchandising excluding agricore united gain agricultural services operating profits increased 148 million 385 million due principally improved global grain merchandising operating results lesser extent improved transportation north american origination operating results global grain merchandising results improved regional production imbalances allowed company capitalize merchandising opportunities north american river transportation operating results increased primarily due increased barge freight rates created strong demand barge capacity north american origination operating results improved due good export demand agricultural commodities higher ocean freight rates agricultural services operating profits 2007 include 12 million trade disruption insurance recovery related hurricane katrina item 7 management’s discussion analysis financial condition results operations continued operating profits increased 25 million 379 million wheat cocoa malt operating profits decreased 19 million wheat operating profits include 39 million gain sale company’s arkady food ingredient business 2007 17 million gain sale longlived assets 2006 excluding effect onetime gains wheat cocoa malt operating profits declined 41 million primarily due cocoa operating results declining prior year levels lesser extent weaker equity earnings investment gruma sa partially offset improved operating results company’s wheat flour processing operations cocoa processing operating results declined primarily due increased industry production capacity caused downward pressure cocoa processing margins financial operating profits increased 44 million due principally increased valuations company’s private equity fund investments higher operating results company’s futures commission merchant business partially offset lower operating results company’s captive insurance operations results company’s captive insurance operations 2007 include 12 million charge related hurricane katrina trade disruption insurance settlement corporate expense decreased 199 million 7 million due principally 345 million increase realized securities gains principally resulting sales company’s equity securities tyson foods inc overseas shipholding group inc 103 million reduction unallocated interest expense due principally higher levels invested funds higher interest rates decreases partially offset 207 million charge compared 12 million credit prior year related effect changing commodity prices lifo inventory valuations 46 million charge related repurchase 400 million company’s outstanding debentures income taxes increased due principally higher pretax earnings absence 36 million income tax credit 2006 related recognition federal state income tax credits adjustments resulting reconciliation filed tax returns previously estimated tax provision company’s effective tax rate 2007 315 excluding effect 2006 36 million tax credit 312 prior year increase company’s effective tax rate primarily due changes geographic mix pretax earnings liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agriculturalbased commodity business june 30 2008 company 13 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 17 1 included working capital 78 billion readily marketable commodity inventories cash used operating activities totaled 32 billion year compared 303 million cash generated operations last year change primarily due increase working capital requirements principally related increased market prices lesser extent increased quantities agricultural commodity inventories principally readily marketable commodity inventories increased receivables cash used investing activities increased 15 billion year 19 billion primarily due increased capital expenditures decreased proceeds sales businesses including sale company’s equity interests tyson foods inc overseas shipholding group inc agricore united 2007 cash generated financing activities 52 billion compared cash used financing activities 398 million last year net longterm borrowings increased primarily result issuance 2008 approximately 31 billion additional longterm debt including 500 million debentures issued december 2007 700 million notes issued march 2008 175 billion debentures june 2008 compared 115 billion convertible senior notes issued february 2007 partially offset 480 million reduced debt payments principally related company’s retirement 400 million debentures 2007 item 7 management’s discussion analysis financial condition results operations continued capital resources strengthened 2008 shown increase company’s net worth 113 billion 135 billion company’s ratio longterm debt total capital sum company’s longterm debt shareholders’ equity 36 june 30 2008 30 june 30 2007 ratio measure company’s longterm liquidity indicator financial flexibility company currently 74 billion commercial paper commercial bank lines available meet seasonal cash requirements 52 billion committed 22 billion uncommitted june 30 2008 company 31 billion shortterm debt outstanding standard poor’s moody’s fitch rate company’s commercial paper a1 p1 respectively rate company’s longterm debt a2 respectively addition cash flow generated operations company access equity debt capital numerous alternatives public private sources domestic international markets company outstanding 115 billion principal amount convertible senior notes june 30 2008 none conditions permitting conversion notes satisfied june 30 2008 market price company’s common stock greater exercise price purchased call options warrants related convertible senior notes june 2008 company issued 175 billion debentures component equity units equity units combination debt b forward contracts holder purchase company’s common stock purchase contracts obligate holder purchase company later june 1 2011 price 50 cash certain number shares ranging 10453 shares 12544 shares company’s common stock based formula established contract contractual obligations offbalance sheet arrangements normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued june 30 2008 company estimates spend approximately 25 billion next five years complete currently approved capital projects acquisitions included table company limited partner various private equity funds invest primarily emerging markets june 30 2008 company’s carrying value limited partnership investments 129 million company future capital commitments related partnerships 137 million expects majority additional capital commitments called funded cash flows generated partnerships company also outstanding letters credit surety bonds 500 million june 30 2008 addition company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations june 30 2008 contingent obligations totaled approximately 135 million amounts outstanding primary entity contingent obligations 62 million june 30 2008 critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements item 7 management’s discussion analysis financial condition results operations continued inventories derivatives certain company’s merchandisable agricultural commodity inventories forward fixedprice purchase sale contracts exchangetraded futures exchangetraded overthecounter options contracts valued estimated market values merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates market value based exchangequoted prices adjusted differences local markets changes market values inventories contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded statement earnings component cost products sold employee benefit plans company provides substantially domestic employees certain international subsidiaries pension benefits company also provides substantially domestic salaried employees postretirement health care life insurance benefits order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods income taxes company frequently faces challenges domestic foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization certain deferred tax assets reflects company’s tax planning strategies valuation allowances related deferred tax assets established extent realization tax benefit probable based management’s evaluation company’s tax position believed amounts related tax exposures appropriately accrued extent company favorably resolve matters accruals established required pay amounts excess aforementioned reserves company’s effective tax rate given financial statement period may impacted item 7 management’s discussion analysis financial condition results operations continued undistributed earnings company’s foreign subsidiaries affiliated corporate joint ventures accounted equity method considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven unpredictable factors weather plantings government programs policies changes global demand resulting population growth changes standards living global production similar competitive crops aforementioned unpredictable factors therefore may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency profitability company’s asset base terms geographic location size age factories company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist company evaluates goodwill intangible assets indefinite lives impairment annually assets written consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods valuation marketable securities investments affiliates company classifies majority marketable securities availableforsale carries securities fair value investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee publicly traded securities fair value company’s investments readily available based quoted market prices nonpublicly traded securities management’s assessment fair value based valuation methodologies including discounted cash flows estimates sales proceeds event decline fair value investment carrying value management may required determine decline fair value temporary evaluating nature decline fair value investment management considers market conditions trends earnings discounted cash flows trading volumes key measures investment well company’s ability intent hold investment decline value deemed temporary impairment loss recognized current period operating results extent decline see notes 3 5 company’s consolidated financial statements information regarding company’s marketable securities investments affiliates management used different estimates assumptions evaluation marketable securities company could recognize different amounts expense future periods item 7aitem 7 management’s discussion analysis financial condition results operations company overview company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations aggregated classified oilseeds processing segment includes activities related origination crushing oilseeds soybeans cottonseed sunflower seeds canola rapeseed peanuts flaxseed vegetable oils protein meals principally food feed industries addition oilseeds oilseed products may processed internally resold marketplace raw materials processing crude vegetable oil sold processed refining bleaching deodorizing salad oils salad oils processed hydrogenating andor interesterifying margarine shortening food products partially refined oil sold use chemicals paints industrial products refined oil processed use production biodiesel oilseed protein meals primary ingredients used manufacture commercial livestock poultry feeds oilseeds processing includes activities related production natural health nutrition products production specialty food feed ingredients segment also includes activities related company’s unconsolidated affiliate asia wilmar international limited corn processing segment includes activities related production sweeteners starches dextrose syrups primarily food beverage industry well activities related production fermentation bioproducts ethanol amino acids food feed industrial products agricultural services segment utilizes company’s extensive grain elevator transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients agricultural processing industry addition agricultural services segment includes activities related edible bean procurement rice milling formula feed animal health nutrition agricultural services’ grain sourcing transportation network also provides reliable efficient services company’s agricultural processing operations also included agricultural services activities ac toepfer international global merchant agricultural commodities processed products includes company’s remaining processing operations consisting activities related processing agricultural commodities food ingredient products wheat flour cocoa chocolate cocoa products barley malt sugarcane sugar ethanol also includes financial activities related banking captive insurance private equity fund investments futures commission merchant activities operating performance indicators company’s oilseeds processing agricultural services wheat processing operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts net sales operating income cost products sold minimal impact gross profit underlying transactions result changes gross profit businesses necessarily correspond changes net sales operating income amounts item 7 management’s discussion analysis financial condition results operations continued company’s corn processing operations certain food animal feed processing operations also utilize agricultural commodities products derived agricultural commodities raw materials operations agricultural commodity market price changes result significant fluctuations cost products sold price changes cannot necessarily passed directly selling price finished products company conducts business many countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar compared us dollar result corresponding fluctuations us dollar value revenues expenses reported company impact currency exchange rate changes significant discussed company measures performance business segments using key operating statistics segment operating profit return fixed capital investment return net assets return equity company’s operating results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies changes global demand resulting population growth changes standards living global production similar competitive crops due unpredictable factors company provide forwardlooking information “management’s discussion analysis financial condition results operations” 2009 compared 2008 agricultural commoditybased business company subject variety market factors affect company’s operating results net corn costs increased significantly 2009 compared 2008 negatively impacting ethanol margins lesser extent sweeteners starches margins higher net corn costs partially offset increased selling prices sweeteners starches additionally lower demand gasoline decreased gasoline prices excess ethanol industry capacity negatively impacted ethanol margins demand agricultural commodities freight products weaker 2009 line downturn global economy results negatively impacted decreased equity earnings unconsolidated affiliates including significant noncash charges related currency derivative losses incurred company’s equity investee gruma sab de cv losses company’s managed fund investments earnings income taxes 2009 include credit 517 million effect changing commodity prices lifo inventory valuation reserves compared charge 569 million 2008 income taxes 2009 include charges 158 million resulting restructuring holding company holds portion equity investment wilmar international limited item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings net sales operating income decreased 1 692 billion due foreign exchange translation impacts decreased sales volumes partially offset higher average selling prices net sales operating income increased 30 billion due higher average selling prices primarily related higher underlying commodity costs decreased 20 billion due foreign exchange translation impacts decreased 16 billion due lower sales volumes net sales operating income segment follows oilseeds processing sales increased 5 245 billion due principally increased sales volumes merchandised oilseeds biodiesel partially offset lower sales volumes vegetable oil protein meal corn processing sales increased 8 77 billion due principally higher sales volumes ethanol higher average selling prices sweeteners starches partially offset lower average selling prices ethanol agricultural services sales decreased 7 316 billion due principally lower sales volumes grain sales decreased 1 54 billion primarily due sale company’s malting business first quarter fiscal year 2009 lower average selling prices wheat flour partially offsetting decreases higher average selling prices cocoa products increased chocolate sales volumes cost products sold decreased 1 651 billion line decrease net sales operating income cost products sold decreased 856 million due principally decreased sales volumes decreased lifo inventory valuations approximately 19 billion impact foreign currency translation partially offset increased agricultural commodity costs manufacturing expenses decreased 215 million primarily due decreased energy fuel costs item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses 14 billion comparable 2008 decreased employeerelated costs favorable impacts foreign currency translation offset increases provisions doubtful accounts income expense net decreased 344 million primarily due decreased results equity earnings unconsolidated affiliates 270 million decreased investment income equity earnings unconsolidated affiliates included 275 million foreign exchange derivative losses incurred company’s equity investee gruma sab de cv operating profit segment follows oilseeds processing operating profit increased 23 13 billion crushing origination results increased 40 million improved global crushing margins partially offset lower fertilizer sales volumes margins lower north american crushing volumes due decreased demand vegetable oil protein meal refining packaging biodiesel results increased 84 million due principally higher biodiesel sales volumes south america increased average margins valueadded products 2008 results refining packaging biodiesel included asset abandonment charges 27 million asia results increased 116 million due principally company’s share improved operating results wilmar international limited corn processing operating profits decreased 81 185 million sweeteners starches decreased 57 million due impact higher net corn costs partially offset higher average sweetener starches selling prices bioproducts operating profit decreased 719 million year ethanol lysine margins declined significantly due higher corn costs lower average selling prices ethanol margins also impacted lower demand gasoline decreased gasoline prices excess ethanol industry capacity item 7 management’s discussion analysis financial condition results operations continued agricultural services operating profits decreased 2 994 million merchandising handling profit decreased 41 million merchandising margins moderated demand commodities slowed following downturn global economy transportation results increased 18 million due higher barge freight rates operating profits decreased 101 loss 6 million wheat cocoa malt sugar processing operating profit decreased 166 million year primarily due equity losses company’s investment gruma partially offset improved cocoa wheat processing margins financial operating profit decreased 263 million due losses managed fund investments compared gains year ended june 30 2008 increased captive insurance loss provisions decreased interest income lower marketable security gains company’s brokerage service business corporate results increased 898 million 81 million primarily due effects changing commodity prices lifo inventory valuations resulted credits 517 million year ended june 30 2009 compared 569 million lifo charges year ended june 30 2008 unallocated interest expense increased 238 million primarily due higher longterm debt interest expense decreased interest income corporate interest income decreased due lower shortterm interest rates lower working capital requirements operating segments company’s effective tax rate 2009 326 compared 313 2008 income taxes increased 5 million lower pretax earnings positive impacts favorable changes geographic mix earnings currency translation impacts south america lower tax rates certain foreign jurisdictions return provision adjustments offset charges 158 million resulting restructuring holding company holds portion equity investment wilmar international limited 2008 compared 2007 agricultural commoditybased business company subject variety market factors affect company’s operating results strong demand agricultural commodities processed products challenged global supply chain provided exceptional margin opportunities 2008 strong global demand protein meal vegetable oil strong fertilizer demand south america positively impacted oilseeds processing results market price corn rose due increased demand resulting higher raw material costs corn processing partially passed form increased selling prices sweeteners starches average ethanol selling prices decreased due additional supply entering market large north american crops combined global wheat shortages created favorable conditions agricultural merchandising handling operations increased commodity costs resulted larger lifo inventory valuation reserves earnings income taxes decreased due principally gains totaling 10 billion income tax business disposals recorded 2007 including 440 million related exchange company’s interest certain asian joint ventures shares wilmar international limited wilmar gain 357 million realized securities gain sales company’s equity securities tyson foods inc overseas shipholding group inc gain 153 million sale company’s interest agricore united 53 million gain sale company’s arkady food ingredient business earnings income taxes 2008 include charge 569 million effect changing commodity prices lifo inventory valuations compared charge 207 million 2007 earnings income taxes 2008 also include 32 million charge related abandonment writedown longlived assets 38 million gain sales securities 21 million gain disposal longlived assets earnings income taxes 2007 include charges 46 million related repurchase 400 million company’s outstanding debentures 21 million related abandonment writedown longlived assets item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings net sales operating income increased 59 698 billion increased selling prices agricultural commodities oilseed processing products lesser extent corn processing products wheat flour accounted 85 increase higher sales volumes principally agricultural commodities ethanol biodiesel also contributed increase net sales addition net sales operating income increased 183 billion 4 due currency rate fluctuations net sales operating income segment follows oilseeds processing sales increased 67 233 billion due principally increased average selling prices resulting primarily increases underlying commodity costs continuing strong demand vegetable oil biodiesel protein meal sales volumes vegetable oil protein meal biodiesel also increased corn processing sales increased 23 71 billion good demand sweeteners starches resulted higher average selling prices bioproducts sales increased primarily result increased ethanol sales volumes partially offset lower average ethanol selling prices increased ethanol sales volumes reflect higher gasoline prices improved gasoline blending economics additional demand principally newlyopened markets southeastern united states agricultural services sales increased 66 340 billion primarily due increased underlying commodity costs lesser extent increased sales volumes sales segment increased 42 54 billion primarily due higher average selling prices wheat flour lesser extent higher sales volumes higher average selling prices cocoa products cost products sold increased 62 660 billion primarily due higher agricultural commodity costs lesser extent higher sales volumes manufacturing expenses increased 549 million primarily due higher energy transportation fuel costs increased employeerelated costs higher storage handling costs increased production capacity impact foreign currency translation addition cost products sold increased 175 billion 4 due currency rate fluctuations item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses increased 224 million 14 billion primarily due higher employeerelated costs higher outside service costs including 44 million related organizational realignment reorganization company’s european headquarters 37 million due impact currency rate fluctuations income expense net decreased 911 million primarily due gains totaling 10 billion business disposals recorded 2007 including 440 million related wilmar gain 357 million realized securities gain sales company’s equity securities tyson foods inc overseas shipholding group inc gain 153 million sale company’s interest agricore united 53 million gain sale company’s arkady food ingredient business equity earnings unconsolidated affiliates increased 121 million 2008 primarily related improved operating results company’s investments us grain export asian oilseeds peanut processing ventures income expense net also reflects 38 million gains sales securities 2008 21 million gains disposals longlived assets 2008 increase 2007 2008 11 million charges related abandonment writedown longlived assets charge 46 million related repurchase 400 million company’s outstanding debentures 2007 operating profit segment follows oilseeds processing operating profit decreased 9 10 billion excluding 440 million wilmar gain reflected asia results 2007 oilseeds processing operating profit increased 49 primarily due strong global demand protein meal vegetable oil fertilizer crushing origination operating profits increased 76 727 million due principally improved crushing margins north south america improved fertilizer results south america refining packaging biodiesel operating profits decreased 10 181 million due principally decreased biodiesel margins europe asset impairment charges 28 million 2008 partially offset improved global refining margins 2007 operating profit refining packaging biodiesel includes 14 million gain business disposal excluding wilmar gain asia operating profits increased 59 132 million principally reflecting company’s share improved operating profits wilmar international limited item 7 management’s discussion analysis financial condition results operations continued corn processing operating profits decreased 13 961 million primarily due higher net corn costs sweeteners starches operating profits increased 9 557 million due principally higher average selling prices partially offset higher net corn costs increased manufacturing costs manufacturing cost increases reflect higher energy costs higher repair maintenance expenses higher costs chemicals used manufacturing process bioproducts operating profits decreased 32 404 million primarily due higher net corn costs higher manufacturing expenses decreased average ethanol selling prices partially offset higher sales volumes ethanol lesser extent higher average lysine selling prices higher lysine sales volumes agricultural services operating profits increased 89 10 billion 2007 operating profits merchandising handling include 153 million gain sale company’s interest agricore united excluding gain merchandising handling operating profits increased 281 873 million increase primarily due enhanced merchandising handling margins caused volatile global grain freight markets favorable risk management results lesser extent increased sales volumes transportation operating profits decreased 8 144 million primarily due increased fuel costs operating profits increased 12 423 million wheat cocoa malt operating profits increased 4 217 million 2007 operating profits wheat included gain 39 million sale company’s arkady food ingredient business excluding arkady gain wheat cocoa malt operating profits improved 28 primarily due improved wheat malt margins reflecting increased demand partially offset decreased cocoa processing margins reflecting higher raw material operating costs competitive pressures experienced north american chocolate market financial operating profits improved 21 206 million primarily due improvements company’s futures commission merchant business corporate expense increased 810 million 817 million primarily due 362 million increase charge related effects changing commodity prices lifo inventory valuations 371 million decrease realized securities gains primarily reflecting 357 million gain recorded 2007 sales company’s equity securities tyson foods inc overseas shipholding group inc 51 million increase corporate expenses due principally reorganization realignment costs partially offset charge 46 million recorded 2007 related repurchase 400 million company’s outstanding debentures income taxes decreased primarily due lower pretax earnings company’s effective tax rate 2008 313 comparable 2007 rate 315 liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business june 30 2009 company 16 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 22 1 included working capital 55 billion readily marketable commodity inventories cash generated operations totaled 53 billion year compared 32 billion cash used operating activities last year change primarily due decrease working capital requirements related lower agricultural commodity market prices cash used investing activities 19 billion comparable last year cash used financing activities 32 billion compared cash generated financing activities 52 billion last year 2008 company issued 31 billion longterm debt compared 101 million total net longterm borrowings 2009 result decreased working capital requirements payments line credit agreements 29 billion 2009 2008 company increased borrowings line credit agreements 26 billion item 7 management’s discussion analysis financial condition results operations continued capital resources remained strong reflected company’s net worth 135 billion company’s ratio longterm debt total capital sum company’s longterm debt shareholders’ equity 37 june 30 2009 36 june 30 2008 ratio measure company’s longterm liquidity indicator financial flexibility june 30 2009 company lines credit totaling 66 billion 65 billion unused company’s total lines credit 42 billion support commercial paper borrowing facility borrowings june 30 2009 standard poor’s moody’s fitch rate company’s commercial paper a1 p1 respectively rate company’s longterm debt a2 respectively addition cash flow generated operations company access equity debt capital public private sources domestic international markets company outstanding 115 billion principal amount convertible senior notes june 30 2009 none conditions permitting conversion notes satisfied company purchased call options warrants intended reduce potential shareholder dilution upon future conversion notes june 30 2009 market price company’s common stock greater exercise price purchased call options warrants related convertible senior notes june 2008 company issued 175 billion debentures component equity units see note 8 item 8 equity units combination debt forward contracts holder purchase company’s common stock purchase contract obligates holder purchase company later june 1 2011 price 50 cash certain number shares ranging 10453 shares 12544 shares company’s common stock based formula established contract contractual obligations offbalance sheet arrangements normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 54 million june 30 2009 due uncertainty timing deductibility applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued 1 represents expected future benefit payments including fiscal year 2019 projected payments beyond fiscal year 2019 currently determinable item 7 management’s discussion analysis financial condition results operations continued june 30 2009 company estimates spend approximately 17 billion next five years complete currently approved capital projects acquisitions included table company limited partner various private equity funds invest primarily emerging markets june 30 2009 company’s carrying value limited partnership investments 83 million company potential future capital commitments related partnerships 114 million expects majority additional capital commitments called funded cash flows generated partnerships company also outstanding letters credit surety bonds 398 million june 30 2009 addition company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations june 30 2009 contingent obligations totaled approximately 137 million amounts outstanding primary entity contingent obligations 82 million june 30 2009 critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements inventories derivatives certain company’s merchandisable agricultural commodity inventories forward fixedprice purchase sale contracts exchangetraded futures exchangetraded overthecounter options contracts valued estimated market values merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates market value based exchangequoted prices adjusted differences local markets changes market values inventories contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold net sales operating income statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded statement earnings component cost products sold item 7 management’s discussion analysis financial condition results operations continued employee benefit plans company provides substantially domestic employees certain international subsidiaries pension benefits eligible domestic employees five years service prior january 1 2009 participate defined benefit pension plan eligible domestic employees hired january 1 2009 eligible salaried employees less five years service prior january 1 2009 participate “cash balance” pension formula company provides eligible domestic employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods income taxes company frequently faces challenges domestic foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization certain deferred tax assets reflects company’s tax planning strategies valuation allowances related deferred tax assets established extent realization tax benefit probable based management’s evaluation company’s tax position believed amounts related tax exposures appropriately accrued extent company favorably resolve matters accruals established required pay amounts excess aforementioned reserves company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries affiliated corporate joint ventures accounted equity method considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements item 7 management’s discussion analysis financial condition results operations continued asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand resulting population growth changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age factories company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist company evaluates goodwill intangible assets indefinite lives impairment annually assets written consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods valuation marketable securities investments affiliates company classifies majority marketable securities availableforsale carries securities fair value company applies equity method investments investees company ability exercise significant influence investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee publicly traded securities fair value company’s investments readily available based quoted market prices nonpublicly traded securities management’s assessment fair value based valuation methodologies including discounted cash flows estimates sales proceeds event decline fair value investment carrying value management required determine decline fair value temporary evaluating nature decline fair value investment management considers market conditions trends earnings discounted cash flows trading volumes key measures investment well company’s ability intent hold investment decline value deemed temporary impairment loss recognized current period operating results extent decline see notes 5 6 company’s consolidated financial statements information regarding company’s marketable securities investments affiliates management used different estimates assumptions evaluation marketable securities company could recognize different amounts expense future periods item 7aitem 7 management’s discussion analysis financial condition results operations continued 2010 compared 2009 agricultural commoditybased business company subject variety market factors affect company’s operating results market expectations throughout fiscal 2010 fewer global crop supply demand imbalances coupled continuing uncertainty shortterm demand led generally lower less volatile agricultural commodity market prices conditions addition late extended us harvest reduced profit opportunities north american oilseed exports domestic crushing volumes enhanced poor supply 2009 crop year soybeans south america increased government mandates use biodiesel south america europe resulted increased biodiesel demand helped keep overall demand refined crude vegetable oil steady regions however north america demand vegetable oils remained weak due low consumption oils food service biodiesel industries part due expiration biodiesel blending credit us january 1 2010 soybean protein meal demand improved particularly asia market prices corn decreased resulting lower raw material costs corn processing decreased average selling prices sweeteners starches lower energy fuel chemical costs per unit positively impacted company’s manufacturing costs favorable ethanol blending economics together increased ethanol merchandising activity resulted increased demand higher ethanol sales volumes improved margins earnings income taxes 2010 include credit 42 million effect changing commodity prices lifo inventory valuations compared credit 517 million 2009 income taxes decreased 146 million due lower effective income tax rate partially offset higher pretax earnings income taxes 2009 included 158 million charge resulting restructuring holding company holds portion equity investment wilmar analysis statements earnings net sales operating income segment follows item 7 management’s discussion analysis financial condition results operations continued net sales operating income decreased 11 617 billion due principally lower average selling prices line yearoveryear declines underlying commodity costs oilseeds processing sales decreased 6 231 billion due principally lower average selling prices soybeans protein meal refined oil biodiesel partially offset increased sales volumes soybeans fertilizer corn processing sales increased 3 79 billion primarily result increased sales volumes ethanol lysine partially offset lower average selling prices ethanol sweeteners starches agricultural services sales decreased 19 254 billion due lower average selling prices line yearoveryear declines underlying commodity prices lower sales volumes sales decreased 3 52 billion primarily due lower average selling prices wheat flour partially offset increased wheat flour sales volumes higher average selling prices sales volumes cocoa products cost products sold decreased 11 578 billion due principally decreased agricultural commodity costs including impact changes lifo inventory valuations reduced cost products sold 42 million 2010 compared 517 million 2009 manufacturing expenses decreased 1 60 million primarily due lower energy chemical fuel costs partially offset higher employeerelated costs 124 million increase depreciation amortization expense 2010 manufacturing expenses included additional costs associated company’s new greenfield plants selling general administrative expenses decreased 1 14 billion due principally decreased provisions doubtful accounts partially offset increased expenses legal professional commercial services income expense net improved 317 million primarily due increased equity earnings unconsolidated affiliates 416 million decreased expense elimination aftertax mandatorily redeemable interests consolidated subsidiaries increases partially offset pretax charges 75 million related early extinguishment debt 59 million unrealized losses interest rate swaps information see note 8 item 8 financial statements supplementary data equity earnings unconsolidated affiliates 2009 included noncash charge 275 million related currency derivative losses company’s equity investee gruma sab de cv income taxes decreased 146 million due lower effective income tax rate partially offset higher pretax earnings company’s effective income tax rate 2010 258 2009 effective income tax rate 325 included 158 million income tax charges related partial restructuring holding company structure company holds portion equity investment wilmar excluding wilmar charges company’s effective income tax rate 2009 262 information concerning wilmar tax matters see note 12 item 8 item 7 management’s discussion analysis financial condition results operations continued operating profit segment follows corporate results follows oilseeds processing operating profit increased 9 14 billion crushing origination results increased 51 million due higher north american soybean crushing margins favorable soft seed commodity positioning partially offset lower soybean crushing margins europe south america refining packaging biodiesel operating profit increased 26 million due primarily higher south american biodiesel results improved margins europe oilseeds processing results asia increased 43 million 291 million due principally improved equity earnings wilmar item 7 management’s discussion analysis financial condition results operations continued corn processing operating profit increased 537 million 722 million bioproducts operating profit increased 508 million due improved ethanol lysine sales volumes improved ethanol margins resulting lower net corn costs decreased manufacturing costs ethanol sales volumes increased due favorable gasoline blending economics increased merchandising activity sweeteners starches operating profit increased 29 million due lower net corn manufacturing costs due principally lower energy chemical prices lower manufacturing costs partially offset lower average selling prices agricultural services operating profit decreased 326 million 668 million merchandising handling results decreased 249 million enhanced volume margin opportunities created last year’s volatile commodity markets tight credit markets recur volumes margins 2010 benefited strong demand us soybean exports following short south american 2009 crop transportation results decreased 77 million due lower barge freight rates decreased barge utilization levels resulting weaker us economic conditions late extended north american harvest operating profit increased 455 million 449 million wheat cocoa malt operating profit increased 352 million due improved equity earnings company’s investment gruma improved wheat milling margins improved cocoa processing results financial operating profit increased 103 million due primarily absence losses experienced last year managed fund investments captive insurance operations corporate results decreased 701 million effects changing commodity prices lifo inventory valuations resulted credit 42 million year ended june 30 2010 compared credit 517 million year ended june 30 2009 unallocated interest expense net increased 91 million reflecting reduction corporate interest income caused lower shortterm interest rates lower working capital requirements operating segments january 2010 company repurchased 500 million longterm debt generated 75 million pretax charge early extinguishment debt connection debt remarketing planned 2011 company entered interest rate swaps fix interest rate portion planned remarketing resulted 59 million unrealized losses interest rate swaps 2009 compared 2008 agricultural commoditybased business company subject variety market factors affect company’s operating results net corn costs increased significantly 2009 compared 2008 negatively impacting ethanol margins lesser extent sweeteners starches margins higher net corn costs partially offset increased selling prices sweeteners starches additionally lower demand gasoline decreased gasoline prices excess ethanol industry capacity negatively impacted ethanol margins demand agricultural commodities freight products weaker 2009 line downturn global economy results negatively impacted decreased equity earnings unconsolidated affiliates including significant noncash charges related currency derivative losses incurred company’s equity investee gruma sab de cv losses company’s managed fund investments earnings income taxes 2009 include credit 517 million effect changing commodity prices lifo inventory valuation reserves compared charge 569 million 2008 item 7 management’s discussion analysis financial condition results operations continued income taxes 2009 include charges 158 million resulting restructuring holding company holds portion equity investment wilmar analysis statements earnings net sales operating income decreased 1 692 billion due foreign exchange translation impacts decreased sales volumes partially offset higher average selling prices net sales operating income increased 30 billion due higher average selling prices primarily related higher underlying commodity costs decreased 20 billion due foreign exchange translation impacts decreased 16 billion due lower sales volumes net sales operating income segment follows oilseeds processing sales increased 5 245 billion due principally increased sales volumes merchandised oilseeds biodiesel partially offset lower sales volumes vegetable oil protein meal corn processing sales increased 8 77 billion due principally higher sales volumes ethanol higher average selling prices sweeteners starches partially offset lower average selling prices ethanol agricultural services sales decreased 7 316 billion due principally lower sales volumes grain sales decreased 1 54 billion primarily due sale company’s malting business first quarter fiscal year 2009 lower average selling prices wheat flour partially offsetting decreases higher average selling prices cocoa products increased chocolate sales volumes cost products sold decreased 1 651 billion line decrease net sales operating income cost products sold decreased 856 million due principally decreased sales volumes decreased lifo inventory valuations approximately 19 billion impact foreign currency translation partially offset increased agricultural commodity costs manufacturing expenses decreased 215 million primarily due decreased energy fuel costs item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses 14 billion comparable 2008 decreased employeerelated costs favorable impacts foreign currency translation offset increases provisions doubtful accounts income expense net decreased 348 million primarily due decreased results equity earnings unconsolidated affiliates 270 million decreased investment income equity earnings unconsolidated affiliates included noncash charge 275 million foreign exchange derivative losses incurred company’s equity investee gruma sab de cv operating profit segment follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profit increased 23 13 billion crushing origination results increased 40 million improved global crushing margins partially offset lower fertilizer sales volumes margins lower north american crushing volumes due decreased demand vegetable oil protein meal refining packaging biodiesel results increased 84 million due principally higher biodiesel sales volumes south america increased average margins valueadded products 2008 results refining packaging biodiesel included asset abandonment charges 27 million asia results increased 116 million due principally company’s share improved operating results wilmar corn processing operating profits decreased 81 185 million sweeteners starches decreased 57 million due impact higher net corn costs partially offset higher average sweetener starches selling prices bioproducts operating profit decreased 719 million year ethanol lysine margins declined significantly due higher corn costs lower average selling prices ethanol margins also impacted lower demand gasoline decreased gasoline prices excess ethanol industry capacity agricultural services operating profits decreased 2 994 million merchandising handling profit decreased 41 million merchandising margins moderated demand commodities slowed following downturn global economy transportation results increased 18 million due higher barge freight rates operating profits decreased 101 loss 6 million wheat cocoa malt processing operating profit decreased 166 million year primarily due equity losses company’s investment gruma partially offset improved cocoa wheat processing margins financial operating profit decreased 263 million due losses managed fund investments compared gains year ended june 30 2008 increased captive insurance loss provisions decreased interest income lower marketable security gains company’s brokerage service business corporate results increased 894 million 47 million primarily due effects changing commodity prices lifo inventory valuations resulted credits 517 million year ended june 30 2009 compared 569 million lifo charges year ended june 30 2008 unallocated interest expense increased 241 million primarily due higher longterm debt interest expense decreased interest income corporate interest income decreased due lower shortterm interest rates lower working capital requirements operating segments company’s effective tax rate 2009 325 compared 311 2008 income taxes increased 4 million lower pretax earnings positive impacts favorable changes geographic mix earnings currency translation impacts south america lower tax rates certain foreign jurisdictions return provision adjustments offset charges 158 million resulting restructuring holding company holds portion equity investment wilmar item 7 management’s discussion analysis financial condition results operations continued liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business primary source funds finance company’s operations capital expenditures cash generated operations addition company maintains commercial paper borrowing facility access equity debt capital public private sources domestic international markets june 30 2010 company 14 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 21 1 included working capital 49 billion readily marketable commodity inventories cash generated operating activities decreased 27 billion year compared 53 billion last year due primarily 31 billion decrease 2009 working capital requirements related lower agricultural commodity market prices cash used investing activities 17 billion compared 19 billion last year cash used financing activities 10 billion year compared 32 billion last year due principally decrease repayments commercial paper borrowings partially offset repurchase 500 million longterm debt june 30 2010 company’s capital resources included net worth 146 billion lines credit totaling 60 billion 57 billion unused company’s ratio longterm debt total capital sum company’s longterm debt shareholders’ equity 32 june 30 2010 36 june 30 2009 ratio measure company’s longterm liquidity indicator financial flexibility company’s total lines credit 42 billion support commercial paper borrowing facility borrowings june 30 2010 company outstanding 115 billion principal amount convertible senior notes june 30 2010 none conditions permitting conversion notes satisfied company purchased call options warrants intended reduce potential shareholder dilution upon future conversion notes june 30 2010 market price company’s common stock greater exercise price purchased call options warrants related convertible senior notes june 2008 company issued 175 billion debentures component equity units see note 8 item 8 debentures remarketed 2011 equity units combination debt forward contracts holder purchase company’s common stock purchase contract obligates holder purchase company later june 1 2011 price 50 cash certain number shares ranging 10453 shares 12544 shares company’s common stock based formula established contract company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants june 30 2010 item 7 management’s discussion analysis financial condition results operations continued contractual obligations offbalance sheet arrangements normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 84 million june 30 2010 due uncertainty timing deductibility applicable information included company’s consolidated financial statements notes crossreferenced table 1 company unable estimate amount pension contributions beyond fiscal year 2011 information concerning company’s pension postretirement plans see note 14 item 8 june 30 2010 company estimates spend approximately 15 billion calendar year 2013 complete currently approved capital projects included table company also outstanding letters credit surety bonds 459 million june 30 2010 addition company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations june 30 2010 contingent obligations totaled approximately 131 million amounts outstanding primary entity contingent obligations 74 million june 30 2010 item 7 management’s discussion analysis financial condition results operations continued critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements inventories derivatives certain company’s merchandisable agricultural commodity inventories forward fixedprice purchase sale contracts exchangetraded futures exchangetraded overthecounter options contracts valued estimated market values merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates market value based exchangequoted prices adjusted differences local markets changes market values inventories contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold net sales operating income statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded statement earnings component cost products sold employee benefit plans company provides substantially domestic employees certain international subsidiaries pension benefits eligible domestic employees five years service prior january 1 2009 participate defined benefit pension plan eligible domestic employees hired january 1 2009 eligible salaried employees less five years service prior january 1 2009 participate “cash balance” pension formula company provides eligible domestic employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods item 7 management’s discussion analysis financial condition results operations continued income taxes company frequently faces challenges domestic foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example subsidiary company received tax assessment amount 456 million subject variation currency exchange rates consisting tax penalty interest brazilian federal revenue service challenging deductibility commodity hedging losses incurred company 2004 company evaluated tax position regarding hedging transactions concluded based part upon advice brazilian legal counsel appropriate recognize tax benefits deductions see note 12 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely extent company favorably resolve matters accruals established required pay amounts excess aforementioned reserves company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries affiliated corporate joint ventures accounted equity method considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand resulting population growth changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age factories company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist company evaluates goodwill intangible assets indefinite lives impairment annually assets written consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods item 7 management’s discussion analysis financial condition results operations continued valuation marketable securities investments affiliates company classifies majority marketable securities availableforsale carries securities fair value company applies equity method investments investees company ability exercise significant influence investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee publicly traded securities fair value company’s investments readily available based quoted market prices nonpublicly traded securities management’s assessment fair value based valuation methodologies including discounted cash flows estimates sales proceeds event decline fair value investment carrying value management required determine decline fair value temporary evaluating nature decline fair value investment management considers market conditions trends earnings discounted cash flows trading volumes key measures investment well company’s ability intent hold investment decline value deemed temporary impairment loss recognized current period operating results extent decline see notes 5 6 item 8 information regarding company’s marketable securities investments affiliates management used different estimates assumptions evaluation marketable securities company could recognize different amounts expense future periods item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements company principally engaged procuring transporting storing processing merchandising agricultural commodities products company uses significant global asset base originate transport agricultural commodities connecting markets 75 countries company also processes corn oilseeds wheat cocoa products food animal feed chemical energy uses company uses global asset network business acumen relationships suppliers customers generate returns shareholders principally margins earned activities company’s operations organized managed classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations include wheat processing cocoa processing financial business units reportable segments defined applicable accounting standard classified oilseeds processing segment includes activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds oilseeds processing segment also produces natural health nutrition products specialty food feed ingredients north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets europe south america oilseeds processing segment includes origination merchandising activities network grain elevators port facilities transportation assets used buy store clean transport agricultural commodities adjuncts oilseeds processing assets south america oilseeds processing segment operates fertilizer blending facilities effective december 31 2010 company acquired alimenta usa inc result transaction owns 100 golden peanut leading us peanut sheller oil refiner operator one peanut shelling facility argentina oilseeds processing segment began consolidating operating results golden peanut previously 50 owned joint venture third quarter fiscal 2011 oilseeds processing segment also includes company’s share results equity investment wilmar share results edible oils limited stratas foods llc joint ventures item 7 management’s discussion analysis financial condition results operations continued company’s corn processing segment engaged corn wet milling dry milling activities asset base primarily located central part united states corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing products include citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities company’s brazilian sugarcane operations propylene ethylene glycol facility bioplastic facility equity investments renewable plastics segment includes company’s share results equity investments almidones mexicanos sa eaststarch cv red star yeast company llc agricultural services segment utilizes extensive us grain elevator global transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include truck rail barge port oceangoing vessel handling freight services agricultural services segment includes activities alfred c toepfer international 80 owned global merchant agricultural commodities processed products agricultural services segment also includes company’s share results kalama export company joint venture activities related processing distributing formula feeds animal health nutrition products procuring processing distributing edible beans includes company’s remaining processing operations consisting activities related processing agricultural commodities food ingredient products wheat flour cocoa chocolate cocoa products also includes financial activities related banking captive insurance futures commission merchant activities private equity fund investments company’s share results equity investment gruma sab de cv corporate results principally include impact liforelated inventory adjustments unallocated corporate expenses unallocated net interest costs aftertax elimination income attributable mandatorily redeemable interests consolidated subsidiaries operating performance indicators company’s oilseeds processing agricultural services wheat processing operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts net sales operating income cost products sold thus changes margins gross profit businesses necessarily correspond changes net sales operating income amounts company’s corn processing operations certain food animal feed processing operations also utilize agricultural commodities products derived agricultural commodities raw materials operations agricultural commodity market price changes result significant fluctuations cost products sold price changes cannot necessarily passed directly selling price finished products item 7 management’s discussion analysis financial condition results operations continued company conducts business 75 countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil functional currency us dollar however certain transactions including taxes occur local currency require conversion functional currency fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar result corresponding fluctuations us dollar value revenues expenses reported company measures performance business segments using key financial metrics segment operating profit return invested capital cost per metric ton company’s operating results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies changes global demand resulting population growth general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company provide forwardlooking information “management’s discussion analysis financial condition results operations” 2011 compared 2010 agricultural commoditybased business company subject variety market factors affect company’s operating results 2011 prices certain agricultural commodities higher response growing global demand tighter crop supplies projections lower 2011 carryover stocks certain key commodities coupled regional crop supply dislocations certain commodities also led high commodity price volatility global demand agricultural commodities grew 2011 resulting increased sales volumes company’s products large 2010 north american harvest resulted global merchandising handling processing opportunities protein meal markets commercial livestock producers us particularly poultry producers faced challenging conditions biodiesel markets europe south america together 2011 extension us biodiesel blender’s credit helped support global demand refined crude vegetable oils sweeteners starches demand remained strong 2011 due primarily us exports sweeteners improved demand industrial starches ethanol sales volumes including increased volumes company’s new dry mills ramped supported favorable gasoline blending economics us good export demand net earnings increased 106 million 20 billion due principally 782 million increase segment operating profit partially offset negative impact changing lifo inventory valuations higher income taxes 2011 company successfully managed significant increases market prices agricultural commodity raw materials resulting increased segment operating profit earnings income taxes includes charges 368 million effect increasing agricultural commodity prices lifo inventory valuation reserves compared credits 42 million prior year caused decreasing agricultural commodity prices income taxes increased 331 million due higher effective income tax rate higher earnings income taxes effective income tax rate 331 2011 result changes geographic mix earnings unfavorable specific tax items fully diluted earnings per share calculation 2011 impacted completion company’s debt remarketing related 175 billion equity units approximately 44 million new common shares related 175 billion equity units issued june 1 2011 “if converted” method accounting diluted earnings per share required diluted eps calculated company issued shares january 1 2011 assumption resulted dilutive impact 004 earnings per share see note 9 accompanying consolidated financial statements item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings prior year net sales operating income segment reclassified conform current year’s presentation resulting reclassified net sales operating income segment level impact total net sales operating income operating profit net sales operating income segment follows net sales operating income increased 190 billion 31 807 billion net sales operating income increased 142 billion due higher average selling prices primarily related higher underlying commodity costs increased 48 billion due increased sales volumes including sales volumes acquisitions agricultural services sales increased 42 379 billion due higher average selling prices agricultural commodities higher global sales volumes oilseeds processing sales increased 22 267 billion primarily due higher average selling prices vegetable oils soybeans biodiesel protein meal corn processing sales increased 26 99 billion due higher average selling prices increased sales volumes ethanol corn products part due company’s two new ethanol dry mills coming online sales increased 18 62 billion primarily due higher average selling prices cocoa products wheat flour increased sales volumes cocoa products item 7 management’s discussion analysis financial condition results operations continued cost products sold increased 32 764 billion due higher costs agricultural commodities negative impacts resulting changes lifo inventory valuations higher manufacturing costs cost products sold includes charges 368 million effect increasing agricultural commodity prices lifo inventory valuation reserves compared credits 42 million prior year caused decreasing agricultural commodity prices manufacturing expenses increased 410 million due primarily higher processed volumes including volumes company’s new greenfield operations coming online higher average unit costs certain chemicals fuels used company’s processing transportation operations second quarter fiscal 2011 company updated estimates service lives certain machinery equipment assets change estimate resulted 133 million decrease depreciation expense compared amount depreciation expense company would recorded using previously estimated service lives manufacturing expenses included 94 million fiscal 2011 related start new plants compared 110 million prior year selling general administrative expenses increased 15 16 billion increase due higher employeerelated costs higher administrative expenses higher employeerelated costs principally reflect increase number employees year included higher salaries wages higher accruals performancebased compensation higher benefit expenses equity earnings unconsolidated affiliates declined 3 542 million decline earnings company’s equity investee wilmar partially offset higher earnings company’s equity investee gruma part due gain disposition assets interest income increased 8 136 million principally resulting higher interest earned advances affiliates interest expense increased 14 482 million interest costs capitalized component major construction projects progress 7 million compared 75 million prior year interest incurred longterm debt declined 24 million result debt retirements interest incurred shortterm debt increased 15 million due higher average borrowings driven higher working capital requirements income expense net increased 255 million primarily due 71 million gain resulting revaluation company’s previously held equity interest golden peanut upon acquisition remaining 50 interest gains interest rate swaps 30 million compared loss 59 million prior year decrease charges related early extinguishment debt 75 million prior year 15 million current year income taxes increased 331 million 997 million due higher effective income tax rate higher pretax earnings company’s effective income tax rate increased 331 2011 compared 258 fiscal 2010 increase current year rate primarily due geographic mix earnings shifted us higher us effective income tax rate income tax expense associated foreign currency remeasurement nonmonetary assets brazil adjustments deferred income tax balances item 7 management’s discussion analysis financial condition results operations continued operating profit segment follows corporate results follows oilseeds processing operating profit increased 9 15 billion crushing origination results increased 195 million 10 billion include 71 million gain revaluation company’s equity interest golden peanut result acquisition remaining 50 interest improved north american crushing results particularly cotton seed canola partially offset lower crushing margins south america europe margins globally enhanced good positioning improved origination results south america fertilizer results improved due higher margins volumes refining packaging biodiesel results increased 38 million 329 million due principally higher packaged oils margins improved north american european biodiesel results asia results decreased 109 million due principally decreased earnings company’s equity investee wilmar item 7 management’s discussion analysis financial condition results operations continued corn processing operating profit increased 47 11 billion includes favorable impacts ownership positions allocated sweeteners starches bioproducts based total grind sweeteners starches operating profit decreased 209 million 320 million due higher net corn costs partially offset higher sales volumes sales volumes increased due us export shipments sweeteners improved us demand industrial starches bioproducts operating profit improved 549 million primarily due higher ethanol sales volumes higher average selling prices leading increased ethanol lysine margins bioproducts margins also enhanced favorable corn ownership positions bioproducts results included startup costs related company’s new plants 94 million current year compared 107 million prior year agricultural services operating profit increased 38 922 million merchandising handling results increased due higher corn wheat sales volumes higher margins large 2010 us harvest combined strong international demand resulted higher us export shipments merchandising handling results year include insurance recovery 67 million related property damage business interruption resulting october 2008 explosion company’s destrehan louisiana export facility international merchandising results weaker part due positions impacted unexpected shifts crop supply caused weather conditions government actions black sea region transportation results increased 19 million 104 million primarily due higher barge freight rates higher barge utilization levels part due higher us export volumes operating profit increased 14 513 million processing operating results improved company’s wheat milling cocoa business units due principally increased equity earnings company’s equity investee gruma include 78 million gain related disposal gruma assets financial operating profit decreased 7 million primarily due higher captive insurance loss provisions principally related 67 million loss related company’s destrehan louisiana export facility insurance claim corporate results decreased 352 million primarily due negative impact changing lifo inventory valuations higher unallocated interest expense net effects changing commodity prices lifo inventory reserves resulted charges 368 million compared credits 42 million prior year corporate unallocated interest expense increased 52 million mostly due lower capitalization interest costs construction projects progress partially offsetting higher lifo unallocated interest costs 30 million gains interest rate swaps compared prior year losses interest rate swaps 59 million addition prior year included charges 75 million early debt extinguishment compared 8 million similar charges current year 2010 compared 2009 agricultural commoditybased business company subject variety market factors affect company’s operating results market expectations throughout fiscal 2010 fewer global crop supply demand imbalances coupled continuing uncertainty shortterm demand led generally lower less volatile agricultural commodity market prices conditions addition late extended us harvest reduced profit opportunities north american oilseed exports us crushing volumes enhanced 2010 poor supply 2009 crop year soybeans south america increased government mandates use biodiesel south america europe resulted increased biodiesel demand helped keep overall demand refined crude vegetable oil steady regions however north america demand vegetable oils remained weak 2010 due low consumption oils food service biodiesel industries part due expiration biodiesel blending credit us january 1 2010 soybean protein meal demand improved particularly asia market prices corn decreased 2010 resulting lower raw material costs corn processing decreased average selling prices sweeteners starches lower energy fuel chemical costs per unit positively impacted company’s manufacturing costs favorable ethanol blending economics together increased ethanol merchandising activity resulted increased demand higher ethanol sales volumes improved margins item 7 management’s discussion analysis financial condition results operations continued earnings income taxes 2010 include credit 42 million effect changing commodity prices lifo inventory valuations compared credit 517 million 2009 income taxes decreased 146 million due lower effective income tax rate partially offset higher pretax earnings income taxes 2009 included 158 million charge resulting restructuring holding company holds portion equity investment wilmar analysis statements earnings net sales operating income segment 2010 2009 reclassified conform current year’s presentation resulting reclassified net sales operating income segment level impact total net sales operating income operating profit net sales operating income segment follows net sales operating income decreased 11 617 billion due principally lower average selling prices 2010 line yearoveryear declines underlying commodity costs oilseeds processing sales decreased 9 218 billion due principally lower average selling prices soybeans protein meal refined oil biodiesel partially offset increased sales volumes soybeans fertilizer corn processing sales increased 3 79 billion primarily result increased sales volumes ethanol lysine partially offset lower average selling prices ethanol sweeteners starches agricultural services sales decreased 17 268 billion due lower average selling prices line yearoveryear declines underlying commodity prices lower sales volumes sales decreased 3 52 billion primarily due lower average selling prices wheat flour partially offset increased wheat flour sales volumes higher average selling prices sales volumes cocoa products item 7 management’s discussion analysis financial condition results operations continued cost products sold decreased 11 578 billion due principally decreased agricultural commodity costs including impact changes lifo inventory valuations reduced cost products sold 42 million 2010 compared 517 million 2009 manufacturing expenses decreased 1 60 million primarily due lower energy chemical fuel costs partially offset higher employeerelated costs 124 million increase depreciation amortization expense 2010 manufacturing expenses included additional costs associated company’s new greenfield plants selling general administrative expenses decreased 1 14 billion due principally decreased provisions doubtful accounts partially offset increased expenses legal professional commercial services equity earnings unconsolidated affiliates increased 416 million 561 million primarily due absence noncash charge 275 million 2009 related currency derivative losses company’s equity investee gruma sab de cv interest income declined 55 million 126 million primarily due lower average interest rates interest expense declined 47 million 422 million primarily due lower average interest rates expense net increased 91 million due pretax charges 75 million related early extinguishment debt 59 million unrealized losses interest rate swaps information charges related early extinguishment debt see note 8 item 8 financial statements supplementary data income taxes decreased 146 million due lower effective income tax rate partially offset higher pretax earnings company’s effective income tax rate 2010 258 2009 effective income tax rate 325 included 158 million income tax charges related partial restructuring holding company structure company holds portion equity investment wilmar excluding wilmar charges company’s effective income tax rate 2009 262 information concerning wilmar tax matters see note 13 item 8 item 7 management’s discussion analysis financial condition results operations continued operating profit segment follows corporate results follows oilseeds processing operating profit increased 9 14 billion crushing origination results increased 51 million due higher north american soybean crushing margins favorable soft seed commodity positioning partially offset lower soybean crushing margins europe south america refining packaging biodiesel operating profit increased 26 million due primarily higher south american biodiesel results improved margins europe oilseeds processing results asia increased 43 million 291 million due principally improved equity earnings wilmar item 7 management’s discussion analysis financial condition results operations continued corn processing operating profit increased 537 million 722 million bioproducts operating profit increased 508 million due improved ethanol lysine sales volumes improved ethanol margins resulting lower net corn costs decreased manufacturing costs ethanol sales volumes increased due favorable gasoline blending economics increased merchandising activity sweeteners starches operating profit increased 29 million due lower net corn manufacturing costs due principally lower energy chemical prices lower manufacturing costs partially offset lower average selling prices agricultural services operating profit decreased 326 million 668 million merchandising handling results decreased 249 million enhanced volume margin opportunities created 2009’s volatile commodity markets tight credit markets recur volumes margins 2010 benefited strong demand us soybean exports following short south american 2009 crop transportation results decreased 77 million due lower barge freight rates decreased barge utilization levels resulting weaker us economic conditions late extended north american harvest operating profit increased 455 million 449 million processing operating profit increased 352 million due improved equity earnings company’s investment gruma improved wheat milling margins improved cocoa processing results financial operating profit increased 103 million due primarily absence losses experienced 2009 managed fund investments captive insurance operations corporate results decreased 701 million effects changing commodity prices lifo inventory valuations resulted credit 42 million year ended june 30 2010 compared credit 517 million year ended june 30 2009 unallocated interest expense net increased 91 million reflecting reduction corporate interest income caused lower shortterm interest rates lower working capital requirements operating segments march 2010 company repurchased 500 million longterm debt generated 75 million pretax charge early extinguishment debt connection debt remarketing planned 2011 company entered interest rate swaps fix interest rate portion planned remarketing resulted 59 million unrealized losses interest rate swaps liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business primary source funds finance company’s operations capital expenditures cash generated operations addition company maintains commercial paper borrowing facility access equity debt capital public private sources us international markets june 30 2011 company 14 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 21 1 included working capital 71 billion readily marketable commodity inventories cash used operating activities 23 billion year compared cash provided operating activities 27 billion last year working capital increased current year due principally higher agricultural commodity market prices cash used investing activities 17 billion principally capital expenditures businesses acquired investments line last year cash provided financing activities 36 billion year compared cash used financing activities 10 billion last year net borrowings increased primarily fund higher working capital shortterm borrowings increased due principally higher commercial paper borrowings longterm borrowings increased primarily result issuance 15 billion 18month floating rate notes february 2011 addition company issued common stock received 175 billion forward stock purchase component company’s equity units see note 8 item 8 june 30 2011 company’s capital resources included net worth 188 billion lines credit totaling 69 billion 57 billion unused company’s ratio longterm debt total capital sum company’s longterm debt shareholders’ equity 30 june 30 2011 32 june 30 2010 ratio measure company’s longterm indebtedness indicator financial flexibility company’s total lines credit 46 billion support commercial paper borrowing facility 620 million commercial paper outstanding june 30 2011 item 7 management’s discussion analysis financial condition results operations continued company outstanding 115 billion principal amount convertible senior notes june 30 2011 none conditions permitting conversion notes satisfied company purchased call options warrants intended reduce potential shareholder dilution upon future conversion notes june 30 2011 market price company’s common stock greater exercise price purchased call options warrants related convertible senior notes july 1 2011 company entered 364day accounts receivable securitization facility provides company 10 billion liquidity facility company’s usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity sells undivided interest receivable collateral borrowings facility borrowings facility recorded secured borrowings august 24 2011 company used facility expands company’s access liquidity efficient use balance sheet assets company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants june 30 2011 contractual obligations offbalance sheet arrangements normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 79 million june 30 2011 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table 1 includes pension contributions 47 million fiscal 2012 company unable estimate amount pension contributions beyond fiscal year 2012 information concerning company’s pension postretirement plans see note 15 item 8 june 30 2011 company estimates spend approximately 28 billion calendar year 2014 complete currently approved capital projects included table company also outstanding letters credit surety bonds 620 million june 30 2011 item 7 management’s discussion analysis financial condition results operations continued addition company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations june 30 2011 contingent obligations totaled approximately 121 million amounts outstanding primary entity contingent obligations 69 million june 30 2011 critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements inventories derivatives certain company’s merchandisable agricultural commodity inventories forward fixedprice purchase sale contracts exchangetraded futures exchangetraded overthecounter options contracts valued estimated market values merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates market value based exchangequoted prices adjusted differences local markets changes market values inventories contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold net sales operating income statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded statement earnings component cost products sold see note 4 item 8 additional information item 7 management’s discussion analysis financial condition results operations continued employee benefit plans company provides substantially us employees certain international subsidiaries pension benefits eligible us employees five years service prior january 1 2009 participate defined benefit pension plan eligible us employees hired january 1 2009 eligible salaried employees less five years service prior january 1 2009 participate “cash balance” pension formula company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods see note 15 item 8 additional information income taxes company frequently faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example subsidiary company received tax assessments amount 665 million consisting tax penalty interest adjusted interest variation currency exchange rates brazilian federal revenue service challenging deductibility commodity hedging losses incurred company tax years 2004 2006 2007 company evaluated tax position regarding hedging transactions concluded based part upon advice brazilian legal counsel appropriate recognize tax benefits deductions see note 13 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely extent company favorably resolve matters accruals established required pay amounts excess aforementioned reserves company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 82 billion june 30 2011 considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements item 7 management’s discussion analysis financial condition results operations continued asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand resulting population growth changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age factories company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods goodwill intangible assets company accounts goodwill intangible assets accordance asc topic 350 intangibles goodwill standard goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level fourth quarter fiscal year whenever indicators carrying value assets may fully recoverable definitelived intangible assets amortized estimated useful lives management used different estimates assumptions impairment tests company could recognize different amounts expense future periods valuation marketable securities investments affiliates company classifies majority marketable securities availableforsale carries securities fair value company applies equity method investments company ability exercise significant influence investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee publicly traded securities fair value company’s investments readily available based quoted market prices nonpublicly traded securities management’s assessment fair value based valuation methodologies including discounted cash flows estimates sales proceeds event decline fair value investment carrying value management required determine decline fair value temporary evaluating nature decline fair value investment management considers market conditions trends earnings discounted cash flows trading volumes key measures investment well company’s ability intent hold investment decline value deemed temporary impairment loss recognized current period operating results extent decline see notes 5 6 item 8 information regarding company’s marketable securities investments affiliates management used different estimates assumptions evaluation marketable securities company could recognize different amounts expense future periods item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements company principally engaged procuring transporting storing processing merchandising agricultural commodities products company uses significant global asset base originate transport agricultural commodities connecting markets 160 countries company also processes corn oilseeds wheat cocoa products food animal feed chemical energy uses company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities company’s operations organized managed classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified fiscal 2012 company reorganized streamlined business unit reporting structure broadened management spans control starting annual report form 10k oilseeds processing reportable segment includes cocoa processing operations agricultural services reportable segment includes wheat processing operations corn processing reportable segment includes sweeteners starches bioproducts remains unchanged company’s remaining operations primarily include financial business units continue classified previously cocoa wheat processing operations included also fiscal 2012 company discontinued allocation interest expense corporate operating segments throughout annual report form 10k prior periods reclassified conform current period segment presentation oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment produces natural health nutrition products specialty food feed ingredients oilseeds processing segment major supplier peanuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets south america oilseeds processing segment operates fertilizer blending facilities oilseeds processing segment also includes activities related procurement transportation processing cocoa beans cocoa liquor cocoa butter cocoa powder chocolate various compounds north america south america europe asia africa food processing industry oilseeds processing segment also includes company’s share results equity investment wilmar share results stratas foods llc edible oils limited joint ventures item 7 management’s discussion analysis financial condition results operations continued company’s corn processing segment engaged corn wet milling dry milling activities asset base primarily located central part united states corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing products include citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities propylene ethylene glycol facility company’s brazilian sugarcane ethanol plant related operations fiscal 2012 company ended commercial alliance metabolix inc result decision telles llc sales marketing commercial alliance created commercialize mirel™ biobased plastic dissolved production mirel™ behalf telles llc ended segment also includes company’s share results equity investments almidones mexicanos sa eaststarch cv red star yeast company llc agricultural services segment utilizes extensive us grain elevator global transportation network port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail freight services agricultural services segment also includes activities related processing wheat flour processing distribution formula feeds animal health nutrition products procurement processing distribution edible beans agricultural services segment includes activities alfred c toepfer international 80 owned global merchant agricultural commodities processed products agricultural services segment also includes company’s share results kalama export company joint venture equity investment gruma sab de cv includes company’s remaining operations primarily financial business units related principally futures commission merchant activities captive insurance september 30 2011 company sold majority ownership interest bank deconsolidated company’s consolidated financial statements first quarter fiscal 2012 resulting material effect adm’s earnings company accounts remaining ownership interest bank equity method corporate results principally include impact liforelated inventory adjustments unallocated corporate expenses interest cost net investment income prior january 1 2012 corporate results included aftertax elimination income attributable mandatorily redeemable interests consolidated subsidiaries upon expiration put options related interests results included noncontrolling interest item 7 management’s discussion analysis financial condition results operations continued operating performance indicators company’s oilseeds processing agricultural services operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts net sales operating income cost products sold thus changes margins gross profit businesses necessarily correspond changes net sales operating income amounts company’s corn processing operations certain food animal feed processing operations also utilize agricultural commodities products derived agricultural commodities raw materials operations agricultural commodity market price changes result significant fluctuations cost products sold price changes cannot necessarily passed directly selling price finished products company consolidated subsidiaries 75 countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil functional currency us dollar however certain transactions including taxes occur local currency require conversion functional currency fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar result corresponding fluctuations us dollar value revenues expenses reported company measures performance business segments using key financial metrics segment operating profit return invested capital cost per metric ton company’s operating results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company provide forwardlooking information “management’s discussion analysis financial condition results operations” 2012 compared 2011 agricultural commoditybased business company subject variety market factors affect company’s operating results demand perspective global protein meal consumption continued grow although slower rate excess industry crushing production capacity pressured oilseeds margins company adjusted production rates regionally balance supply current market demand biodiesel markets supported global demand refined crude vegetable oils us high biodiesel inventories associated december 31 2011 expiration blender’s incentives dampened margins second half fiscal year us corn sweetener exports continue support sales volumes margins ethanol sales volumes supported favorable gasoline blending economics us however excess industry production ethanol together recently reduced us ethanol export demand negatively impacted ethanol margins supply perspective crop supplies certain key growing regions beginning fiscal year including south america black sea region adequate smallerthannormal harvest north america last fall resulted low us carryover stocks corn soybeans smaller expected current year south american harvest global supplies corn soybeans dependent year’s north american harvest plantings corn increased year us drought conditions late fiscal year decreased expectations size current year harvest factors combined concerns european debt situation ongoing geopolitical uncertainties contributed volatile commodity market price movements fiscal year item 7 management’s discussion analysis financial condition results operations continued net earnings attributable controlling interests decreased 08 billion 12 billion segment operating profit declined 16 billion 25 billion amid challenging conditions generally affecting reportable segments segment operating profit fiscal 2012 included 349 million asset impairment charges exit costs comprised 335 million exit company’s clinton ia bioplastics plant 14 million shut walhalla nd ethanol dry mill earnings income taxes included credit 10 million effect lifo inventory valuation reserves including liquidation lifo inventory layers partially offset increasing agricultural commodity prices compared charges 368 million prior year fiscal 2012 unallocated corporate expenses included 71 million charges related company’s global workforce reduction program income taxes decreased 05 billion due lower earnings income taxes lower effective income tax rate company’s effective income tax rate declined 296 compared 331 prior year primarily due income tax benefits associated foreign currency remeasurement nonmonetary assets partially offset geographic mix earnings shifted foreign jurisdictions analysis statements earnings net sales operating income segment follows item 7 management’s discussion analysis financial condition results operations continued net sales operating income increased 70 billion due higher average selling prices primarily related higher underlying commodity costs 21 billion due increased sales volumes including sales volumes acquisitions partially offset changes foreign currency exchange rates 07 billion oilseeds processing sales increased 16 347 billion due principally higher average selling prices vegetable oils merchandised commodities protein meal biodiesel increased sales volumes biodiesel protein meal peanuts part due acquisition golden peanut december 2010 corn processing sales increased 22 121 billion due principally higher average selling prices ethanol sweeteners well higher sales volumes sugar ethanol agricultural services sales increased 3 421 billion due higher average selling prices corn wheat flour partially offset lower sales volumes part due lower export volumes us cost products sold increased 12 854 billion due principally higher costs agricultural commodities lesser extent increased sales volumes changes foreign currency exchange rates reduced current year cost products sold 07 billion manufacturing expenses increased 02 billion due higher costs maintenance employee benefitrelated expenses energy chemicals higher costs primarily due higher production volumes acquisitions higher unit costs fuels certain chemicals partially offsetting higher costs lower depreciation expense part due company’s change estimated service lives machinery equipment second quarter fiscal 2011 selling general administrative expenses remained steady 16 billion loss provisions mainly due unfavorable arbitration award company’s agricultural services operating segment partially offset lower overhead expenses asset impairment exit restructuring costs 437 million comprised 349 million corn processing segment related company’s exit clinton ia bioplastics business ethanol dry mill walhalla nd 71 million corporate global workforce reduction 17 million corporate investment writedown facility exitrelated costs interest expense decreased 9 441 million primarily due lower longterm debt balances higher interest expense capitalized construction projects progress lower interest expense related uncertain income tax positions equity earnings unconsolidated affiliates decreased 13 472 million principally due decreased equity earnings company’s equity investee gruma included 78 million gain prior year related gruma’s disposal certain assets interest income declined 18 112 million primarily related sale deconsolidation bank effective september 30 2011 income net declined 113 million 17 million due primarily absence income recognized prior year period 71 million golden peanut gain 30 million gains interest rate swaps item 7 management’s discussion analysis financial condition results operations continued operating profit segment follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profit decreased 04 billion 13 billion crushing origination operating profit decreased 284 million 641 million primarily due weaker results european softseeds lower results north american softseeds lower north american positioning results partially offsetting lower results higher grain origination results south america driven higher volumes favorable positioning poor european softseeds results driven small prior year rapeseed crop positioning losses weaker demand protein meal oils north american softseed results declined primarily result lower margins generated tight cottonseed supply refining packaging biodiesel results declined 47 million 295 million due primarily declines biodiesel margins south america europe lower margins specialty fats oils europe declines partially offset improved north american protein specialties natural health nutrition results due higher margins volumes cocoa results declined 57 million 183 million current year results cocoa reduced 100 million net unrealized marktomarket losses related certain forward purchase sales commitments accounted derivatives last year included 9 million net unrealized marktomarket losses excluding timing effects cocoa results improved current year driven improved press margins caused strong cocoa powder demand prior year included 71 million golden peanut gain partially offset year higher earnings company’s peanut business part due first full year consolidated results golden peanut reported company fiscal 2012 asia results remained steady 183 million principally reflecting company’s share results equity investee wilmar corn processing operating results decreased 818 million 261 million due principally poor ethanol margins 349 million asset impairment charges exit costs excluding asset impairment exit costs related company’s bioplastics business walhalla nd ethanol dry grind facility corn processing operating profit 610 million current year represents decline 469 million compared prior year processed volumes 5 percent net corn costs increased compared last year sweeteners starches operating profit increased 5 million 335 million higher average selling prices offset higher net corn costs bioproducts profit decreased 823 million loss 74 million including 349 million asset impairment exit charges lower ethanol margins caused excess supply previously offline production restarted industry demand declined part due slowing export demand prior year bioproducts results enhanced favorable corn ownership positions lowered net corn costs period bioproducts results prior year negatively impacted startup costs 94 million related company’s new drygrind ethanol bioplastic glycol plants agricultural services operating profits decreased 376 million 947 million merchandising handling earnings decreased primarily due lower results us operations lower sales volumes principally result relatively higher cost us grains oilseeds global market due lower stocks caused smaller us harvest 2011 relatively weaker position led reduced us grain exports prior year merchandising handling results positively impacted higher quantities us grain exports company addition fiscal 2012 included 40 million increased loss provisions mainly due unfavorable arbitration award earnings transportation steady last year’s operating results milling operations included 78 million gain related gruma’s disposal certain assets financial operating profit decreased 24 million 15 million mainly due higher loss provisions company’s captive insurance subsidiary related property crop risk reserves corporate expenses declined 356 million 760 million year effects liquidation lifo inventory layers partially offset increasing commodity prices lifo inventory valuations resulted credit 10 million current year compared charge 368 million prior year primarily due higher prices corporate interest expense decreased 22 million primarily due lower interest expense lower longterm debt balances unallocated corporate costs include 71 million costs related global workforce reduction program excluding costs unallocated corporate costs declined 37 million due primarily lower administrative costs corporate income increased due higher investment income partially offset 17 million investment writedown facility exitrelated costs also prior year company recognized 30 million gains interest rate swaps item 7 management’s discussion analysis financial condition results operations continued 2011 compared 2010 agricultural commoditybased business company subject variety market factors affect company’s operating results 2011 prices certain agricultural commodities higher response growing global demand tighter crop supplies projections lower 2011 carryover stocks certain key commodities coupled regional crop supply dislocations certain commodities also led high commodity price volatility global demand agricultural commodities grew 2011 resulting increased sales volumes company’s products large 2010 north american harvest resulted global merchandising handling processing opportunities protein meal markets commercial livestock producers us particularly poultry producers faced challenging conditions biodiesel markets europe south america together 2011 extension us biodiesel blender’s credit helped support global demand refined crude vegetable oils sweeteners starches demand remained strong 2011 due primarily us exports sweeteners improved demand industrial starches ethanol sales volumes including increased volumes company’s new dry mills ramped supported favorable gasoline blending economics us good export demand net earnings increased 106 million 20 billion due principally 794 million increase segment operating profit partially offset negative impact changing lifo inventory valuations higher income taxes 2011 company successfully managed significant increases market prices agricultural commodity raw materials resulting increased segment operating profit earnings income taxes includes charges 368 million effect increasing agricultural commodity prices lifo inventory valuation reserves compared credits 42 million prior year caused decreasing agricultural commodity prices income taxes increased 331 million due higher effective income tax rate higher earnings income taxes effective income tax rate 331 2011 result changes geographic mix earnings unfavorable specific tax items fully diluted earnings per share calculation 2011 impacted completion company’s debt remarketing related 175 billion equity units approximately 44 million new common shares related 175 billion equity units issued june 1 2011 “if converted” method accounting diluted earnings per share required diluted eps calculated company issued shares january 1 2011 assumption resulted dilutive impact 004 earnings per share see note 11 accompanying consolidated financial statements item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings net sales operating income segment follows net sales operating income increased 190 billion 31 807 billion net sales operating income increased 142 billion due higher average selling prices primarily related higher underlying commodity costs increased 48 billion due increased sales volumes including sales volumes acquisitions agricultural services sales increased 39 408 billion due higher average selling prices agricultural commodities higher global sales volumes oilseeds processing sales increased 23 299 billion primarily due higher average selling prices vegetable oils soybeans biodiesel protein meal corn processing sales increased 26 99 billion due higher average selling prices increased sales volumes ethanol corn products part due company’s two new ethanol dry mills coming online item 7 management’s discussion analysis financial condition results operations continued cost products sold increased 32 764 billion due higher costs agricultural commodities negative impacts resulting changes lifo inventory valuations higher manufacturing costs cost products sold includes charges 368 million effect increasing agricultural commodity prices lifo inventory valuation reserves compared credits 42 million prior year caused decreasing agricultural commodity prices manufacturing expenses increased 410 million due primarily higher processed volumes including volumes company’s new greenfield operations coming online higher average unit costs certain chemicals fuels used company’s processing transportation operations second quarter fiscal 2011 company updated estimates service lives certain machinery equipment assets change estimate resulted 133 million decrease depreciation expense compared amount depreciation expense company would recorded using previously estimated service lives manufacturing expenses included 94 million fiscal 2011 related startup new plants compared 110 million prior year selling general administrative expenses increased 15 16 billion increase due higher employeerelated costs higher administrative expenses higher employeerelated costs principally reflect increase number employees year included higher salaries wages higher accruals performancebased compensation higher benefit expenses equity earnings unconsolidated affiliates declined 3 542 million decline earnings company’s equity investee wilmar partially offset higher earnings company’s equity investee gruma part due gain gruma’s disposition certain assets interest income increased 8 136 million principally resulting higher interest earned advances affiliates interest expense increased 14 482 million interest costs capitalized component major construction projects progress 7 million compared 75 million prior year interest incurred longterm debt declined 24 million result debt retirements interest incurred shortterm debt increased 15 million due higher average borrowings driven higher working capital requirements income expense net increased 255 million primarily due 71 million gain resulting revaluation company’s previously held equity interest golden peanut upon acquisition remaining 50 interest gains interest rate swaps 30 million compared loss 59 million prior year decrease charges related early extinguishment debt 75 million prior year 15 million current year income taxes increased 331 million 997 million due higher effective income tax rate higher pretax earnings company’s effective income tax rate increased 331 2011 compared 258 fiscal 2010 increase 2011 rate primarily due geographic mix earnings shifted us higher us effective income tax rate income tax expense associated foreign currency remeasurement nonmonetary assets brazil adjustments deferred income tax balances item 7 management’s discussion analysis financial condition results operations continued operating profit segment follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profit increased 9 17 billion crushing origination results increased 91 million 925 million improved north american crushing results particularly cotton seed canola partially offset lower crushing margins south america europe margins globally enhanced good positioning improved origination results south america fertilizer results improved due higher margins volumes refining packaging biodiesel results increased 42 million 342 million due principally higher packaged oils margins improved north american european biodiesel results cocoa results increased 114 million 240 million primarily due 71 million gain revaluation company’s equity interest golden peanut higher peanut profits result december 31 2010 acquisition remaining 50 interest golden peanut asia results decreased 108 million due principally decreased earnings company’s equity investee wilmar corn processing operating profit increased 46 11 billion includes favorable impacts ownership positions allocated sweeteners starches bioproducts based total grind sweeteners starches operating profit decreased 208 million 330 million due higher net corn costs partially offset higher sales volumes sales volumes increased due us export shipments sweeteners improved us demand industrial starches bioproducts operating profit improved 549 million primarily due higher ethanol sales volumes higher average selling prices leading increased ethanol lysine margins bioproducts margins also enhanced favorable corn ownership positions bioproducts results included startup costs related company’s new plants 94 million 2011 compared 107 million prior year agricultural services operating profit increased 32 13 billion merchandising handling results increased due higher corn wheat sales volumes higher margins large 2010 us harvest combined strong international demand resulted higher us export shipments merchandising handling results 2011 included insurance recovery 67 million related property damage business interruption resulting october 2008 explosion company’s destrehan la export facility international merchandising results weaker part due positions impacted unexpected shifts crop supply caused weather conditions government actions black sea region transportation results increased 21 million 117 million primarily due higher barge freight rates higher barge utilization levels part due higher us export volumes milling results improved due principally increased equity earnings company’s equity investee gruma include 78 million gain related gruma’s disposal certain assets financial operating profit decreased 15 39 million primarily due higher captive insurance loss provisions principally related 67 million loss related company’s destrehan la export facility insurance claim corporate results decreased 364 million primarily due negative impact changing lifo inventory valuations higher interest expense net effects changing commodity prices lifo inventory reserves resulted charges 368 million compared credits 42 million prior year corporate interest expense increased 64 million mostly due lower capitalization interest costs construction projects progress partially offsetting higher lifo interest costs 30 million gains interest rate swaps compared prior year losses interest rate swaps 59 million addition 2010 included charges 75 million early debt extinguishment compared 8 million similar charges 2011 liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business primary source funds finance company’s operations capital expenditures cash generated operations lines credit including commercial paper borrowing facility addition company believes access funds public private equity debt capital markets us international markets item 7 management’s discussion analysis financial condition results operations continued cash provided operating activities 29 billion year compared cash used operating activities 23 billion last year working capital decreased 03 billion since beginning fiscal 2012 due principally 10 billion account receivable securitization program discussed fiscal 2011 working capital increased 52 billion due principally higher agricultural commodity prices cash used investing activities 11 billion year compared 17 billion use last year capital expenditures 15 billion year compared 12 billion last year company spent approximately 02 billion acquisitions fiscal 2012 2011 related sale majority interest hickory point bank company reduced holdings marketable securities generating cash 03 billion divested cash 01 billion result deconsolidation fiscal 2011 net purchases marketable securities used 03 billion cash used financing activities 11 billion year compared cash provided financing activities 36 billion last year fiscal 2012 company returned nearly 10 billion shareholders form dividends share repurchases including acquisition 184 million common shares 05 billion fiscal 2011 net borrowings increased primarily fund higher working capital short term borrowings increased due principally higher commercial paper borrowings longterm borrowings increased primarily result issuance 15 billion 18month floating rate notes february 2011 addition company issued 44 million shares common stock received 175 billion fiscal 2011 forward stock purchase component company’s equity units see note 10 item 8 “financial statements supplementary data” june 30 2012 company 15 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 18 1 included working capital 78 billion readily marketable commodity inventories june 30 2012 company’s capital resources included net worth 182 billion lines credit totaling 65 billion 44 billion unused company’s ratio longterm debt total capital sum company’s longterm debt shareholders’ equity 26 june 30 2012 30 june 30 2011 ratio measure company’s longterm indebtedness indicator financial flexibility company’s total lines credit 43 billion support commercial paper borrowing facility 13 billion commercial paper outstanding june 30 2012 august 2012 company added 20 billion credit facility support commercial paper borrowings march 27 2012 company entered amendment accounts receivable securitization program amended “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program provides company 10 billion funding accounts receivable transferred program expands company’s access liquidity efficient use balance sheet assets program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 10 billion additional amount upon collection accounts receivable deferred consideration adm receivables uses cash proceeds transfer receivables purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company acts master servicer responsible servicing collecting accounts receivable program terminates june 28 2013 see note 20 information disclosures program june 30 2012 fair value trade receivables transferred purchasers program derecognized company’s consolidated balance sheet 16 billion exchange transfer company received cash 10 billion recorded receivable deferred consideration included current assets company outstanding 14 billion principal amount floating rate notes due august 13 2012 interest notes accrues floating rate threemonth libor reset quarterly plus 016 paid quarterly june 30 2012 interest rate notes 063 august 2012 company paid notes funds available shortterm borrowings item 7 management’s discussion analysis financial condition results operations continued company outstanding 115 billion principal amount convertible senior notes june 30 2012 none conditions permitting conversion notes satisfied company purchased call options warrants intended reduce potential shareholder dilution upon future conversion notes june 30 2012 market price company’s common stock greater exercise price purchased call options warrants related convertible senior notes company currently experiencing generally higher prices agricultural commodities result tightening crop supplies mostly due weather impacts current year us corn soybean crop production higher prices commodities historically correlated increases company’s working capital requirements company depends access credit markets impacted credit rating factors outside company’s control european debt situation fund working capital needs capital expenditures company expects capital expenditures range 05 billion 06 billion upcoming 6 month period ending december 31 2012 november 5 2009 company’s board directors approved stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2010 ending december 31 2014 company acquired approximately 316 million shares program resulting remaining approval acquire 684 million shares company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants june 30 2012 contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 80 million june 30 2012 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table 1 includes pension contributions 53 million fiscal 2013 company unable estimate amount pension contributions beyond fiscal year 2013 information concerning company’s pension postretirement plans see note 17 item 8 item 7 management’s discussion analysis financial condition results operations continued june 30 2012 company estimates spend approximately 21 billion calendar year 2015 complete currently approved capital projects included table company also outstanding letters credit surety bonds 644 million june 30 2012 addition company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations june 30 2012 contingent obligations totaled approximately 30 million balance sheet arrangements march 27 2012 company entered amendment accounts receivable securitization program amended “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 10 billion additional amount upon collection accounts receivable deferred consideration adm receivables uses cash proceeds transfer receivables purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration june 30 2012 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold program terminates june 28 2013 june 30 2012 fair value trade receivables transferred purchasers program derecognized company’s consolidated balance sheet 16 billion exchange transfer company received cash 10 billion recorded receivable deferred consideration included current assets cash collections customers receivables sold 89 billion four months ended june 30 2012 amount 89 billion pertains cash collections deferred consideration deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases program company’s risk loss following transfer accounts receivable program limited deferred consideration outstanding classified current assets 06 billion june 30 2012 company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement asc 820 consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant transfers receivables program year ended june 30 2012 resulted expense loss sale 4 million classified selling general administrative expenses consolidated statements earnings item 7 management’s discussion analysis financial condition results operations continued critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements fair value measurements inventories derivatives certain company’s assets liabilities june 30 2012 valued estimated fair values including 68 billion merchandisable agricultural commodity inventories 31 billion derivative assets 30 billion derivative liabilities 03 billion inventoryrelated payables derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities forward foreign exchange contracts overthecounter instruments options contracts merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 1 level 2 within fair value hierarchy level 3 fair value measurements represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 3 item 8 “financial statements supplementary data” changes market values inventories contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol designated hedging programs principally relate company’s corn processing operating segment change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold net sales operating income statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component cost products sold see note 4 item 8 additional information item 7 management’s discussion analysis financial condition results operations continued investments affiliates company applies equity method accounting investments company ability exercise significant influence including 164 investment wilmar investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may differ income taxes company frequently faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example subsidiary company received tax assessments amount 570 million consisting tax penalty interest adjusted interest variation currency exchange rates brazilian federal revenue service challenging deductibility commodity hedging losses incurred company tax years 2004 2006 2007 company evaluated tax position regarding hedging transactions concluded based part upon advice brazilian legal counsel appropriate recognize tax benefits deductions see note 15 item 8 “financial statements supplementary data” additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely extent company favorably resolve matters accruals established required pay amounts excess aforementioned reserves company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 72 billion june 30 2012 considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements item 7 management’s discussion analysis financial condition results operations continued property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods 2012 2011 2010 impairment charges 367 million 2 million 9 million respectively see note 19 additional information charges taken 2012 goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level fourth quarter fiscal year whenever indicators carrying value assets may fully recoverable definitelived intangible assets amortized estimated useful lives reviewed impairment whenever indicators carrying value assets may fully recoverable management used different estimates assumptions impairment tests company could recognize different amounts expense future periods employee benefit plans company provides substantially us employees certain international subsidiaries pension benefits eligible us employees five years service prior january 1 2009 participate defined benefit pension plan eligible us employees hired january 1 2009 eligible salaried employees less five years service prior january 1 2009 participate “cash balance” pension formula company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods see note 17 item 8 additional information item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements company principally engaged procuring transporting storing processing merchandising agricultural commodities products company uses significant global asset base originate transport agricultural commodities connecting markets 144 countries company also processes corn oilseeds wheat cocoa products food animal feed chemical energy uses company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities company’s operations organized managed classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment produces natural health nutrition products specialty food feed ingredients oilseeds processing segment major supplier peanuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets south america oilseeds processing segment operates fertilizer blending facilities oilseeds processing segment also includes activities related procurement transportation processing cocoa beans cocoa liquor cocoa butter cocoa powder chocolate various compounds north america south america europe asia africa food processing industry oilseeds processing segment also includes company’s share results equity investment wilmar share results stratas foods llc edible oils limited joint ventures company’s corn processing segment engaged corn wet milling dry milling activities asset base primarily located central part united states corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing products include citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities propylene ethylene glycol facility company’s brazilian sugarcane ethanol plant related operations segment also includes company’s share results equity investments almidones mexicanos sa eaststarch cv red star yeast company llc item 7 management’s discussion analysis financial condition results operations continued agricultural services segment utilizes extensive us grain elevator global transportation network port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail freight services agricultural services segment also includes activities related processing wheat flour processing distribution formula feeds animal health nutrition products procurement processing distribution edible beans agricultural services segment includes activities alfred c toepfer international 80 owned global merchant agricultural commodities processed products agricultural services segment also includes company’s share results kalama export company llc joint venture returns associated companys investment graincorp prior december 2012 company 232 interest gruma sab de cv gruma world’s largest producer marketer corn flour tortillas additionally company joint ventures corn flour wheat flour mills gruma december 2012 company sold 232 interest gruma grumarelated joint ventures includes company’s remaining operations primarily financial business units related principally futures commission merchant insurance activities corporate results principally include impact liforelated inventory adjustments unallocated corporate expenses interest cost net investment income corporate results also include aftertax elimination income attributable mandatorily redeemable interests toepfer except calendar year 2012 put options related interests expired results included noncontrolling interest adm cocoa strategic review june 20 2013 company announced engaged exploratory discussions various parties potential sale cocoa business december 31 date report definitive sale agreement reached remains uncertain discussions result transaction sell part cocoa business company considered whether part cocoa business classified held sale december 31 2013 determined requirements applicable authoritative accounting literature held sale accounting treatment met operating performance indicators company’s oilseeds processing agricultural services operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts revenues cost products sold thus changes revenues businesses necessarily correspond changes margins gross profit company’s corn processing operations certain food animal feed processing operations also utilize agricultural commodities products derived agricultural commodities raw materials however operations agricultural commodity market price changes necessarily equal changes cost products sold thus changes revenues businesses may correspond changes margins gross profit company consolidated subsidiaries 74 countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil functional currency us dollar however certain transactions including taxes occur local currency require conversion functional currency fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar result corresponding fluctuations us dollar value revenues expenses reported company item 7 management’s discussion analysis financial condition results operations continued company measures performance using key financial metrics including net earnings segment operating profit return invested capital ebitda economic value added cost per metric ton company’s operating results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company provide forwardlooking information “management’s discussion analysis financial condition results operations” year ended december 31 2013 compared year ended december 31 2012 unaudited 2012 company’s fiscal year changed begin january 1 end december 31 year starting january 1 2013 previously companys fiscal year twelve months ended june 30 result change fiscal year required transition period july 1 2012 december 31 2012 audited included transition period form 10k report purposes preparing years managements discussion analysis companys management believes calendar year 2012 directly comparable period calendar year 2013 results calendar year ended december 31 2012 data unaudited compiled companys quarterly reports quarters ended march 31 2012 june 30 2012 september 30 2012 december 31 2012 agricultural commoditybased business company subject variety market factors affect companys operating results demand global protein meal vegetable oil remained strong steady us biodiesel demand saw modest recovery along 2013 reinstatement blenders credit led improved margins steady corn sweetener demand continued create tight us sweetener industry capacity ethanol margins improved amid volatile industry conditions following belowaverage 2012 harvest north america corn soybean certain soft seed supplies tight lowering north american export opportunities driving nearby prices agricultural commodities large 20122013 harvest south america replenished global supply chain agricultural commodities slow reach global markets due logistical challenges large 2013 fall harvest north america resulted significant decline crop prices late 2013 cocoa margins weak much 2013 due primarily excess cocoa pressing capacity strong competition although conditions improved later year net earnings attributable controlling interests 13 billion decreased 33 million earnings income taxes increased 43 million income tax expense increased 81 million segment operating profit 27 billion 2013 declined 60 million 2013 segment operating profit included 155 million writedown related companys graincorp investment 51 million impairment certain longlived assets brazilian sugar mill approximately 27 million longlived asset impairment charges principally corn processing segment 2012 segment operating profit included 62 million gain related settlement total return swap instruments related companys interest graincorp 146 million impairment charge related companys disposal equity interest gruma grumarelated joint ventures excluding items segment operating profit improved approximately 3 2013 corporate costs 07 billion 2013 declined 103 million 2013 lifo inventory reserves declined resulting pretax lifo credits earnings 225 million compared lifo credits 3 million 2012 equity earnings companys investment cip decreased 89 million 2013 primarily due marktomarket affects underlying investments 2013 corporate costs included 54 million charge related settlement fcpa matter 40 million foreign currency losses related companys planned acquisition graincorp 21 million costs related strategic projects 32 million costs primarily related asset writedowns allocations costs corporate operating segments 2012 corporate costs included 71 million exit costs related primarily workforce reduction 68 million related pension settlements excluding lifo items corporate costs increased 22 million primarily due higher employee benefitrelated expenses costs projects partially offsetting increase lower interest expense minority interest income 2013 companys effective tax rate 2013 331 compared 297 2012 2013 rate negatively impacted valuation allowances deferred tax assets shift geographic mix earnings partially offset favorable discrete income tax benefits related amounts received us government form biodiesel credits excluding factors effective tax rate 2013 30 item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings revenues segment years ended december 31 2013 2012 follows revenues 2013 decreased 1 898 billion primarily due lower average selling prices related decrease underlying commodity costs partially offset approximate 08 billion favorable variance foreign exchange translation oilseeds processing sales decreased 2 349 billion due principally lower sales volumes merchandised soybeans lower average selling prices biodiesel cocoa products decreases partially offset higher average selling prices merchandised soybeans corn processing sales increased 11 131 billion due principally higher ethanol sales volumes including merchandised volumes agricultural services sales decreased 4 415 billion due principally lower us sales volumes caused part droughtrelated decreased crop availability lower average selling prices corn soybeans cost products sold also decreased 1 859 billion due principally lower average commodity costs partially offset approximate 08 billion increase foreign exchange translation included 2013 cost products sold credit 225 million effect decreasing agricultural commodity prices lifo inventory valuation reserves compared credit 3 million 2012 manufacturing expenses increased 02 billion mostly due higher employee employeerelated costs higher utilities costs due principally higher natural gas prices higher maintenance costs part due enhanced preventative maintenance practices item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses increased 94 million 18 billion 2013 selling general administrative expenses include 54 million charge settle fcpa matter 21 million costs related strategic merger acquisition projects 2012 selling general administrative expenses include 68 million pension settlement charges excluding items selling general administrative expense increased 87 million principally due higher bad debt expense higher employee benefitrelated expenses partly due sharebased compensation expenses projectrelated expenses asset impairment exit restructuring costs 259 million comprised otherthantemporary impairment charges 155 million companys graincorp investment asset impairment charges 51 million related companys brazilian sugar milling business impairment charges principally certain property plant equipment assets totaling 53 million 2012 charges 243 million comprised 146 million charge related impairment companys equity method investment gruma grumarelated joint ventures charges 71 million severance benefits related global workforce reduction 14 million charges facility exit related costs primarily walhalla nd corn plant shutdown 12 million related otherthantemporary impairment charge one companys marketable security investments interest expense decreased 32 million 7 413 million primarily due lower average outstanding longterm debt balances 2013 equity earnings unconsolidated affiliates decreased 65 million 14 411 million primarily due 89 million decrease equity earnings companys investment cip due marktomarket effects underlying investments partially offset higher equity earnings companys investment wilmar addition company sold investment gruma grumarelated joint ventures december 2012 accordingly current period excludes equity earnings investments compared 42 million grumarelated earnings 2012 income 53 million decreased 73 million 2013 company earned 49 million related sale property plant equipment assets marketable securities additionally 2013 company recognized income minority interest holders portion losses incurred less wholly owned subsidiary toepfer partially offsetting gains losses 40 million incurred australian dollar currency hedges related graincorp transaction 2012 company recognized 62 million gain related settlement total return swap instruments related investment graincorp additionally 2012 company earned 91 million related sale property plant equipment assets marketable securities item 7 management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes year ended december 31 2013 2012 follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profit decreased 147 million 15 billion crushing origination operating profit decreased 96 million 835 million weaker soft seed results partially offset improved soybean crushing results soft seed crushing results north america declined due primarily low seed availability affected seed basis production capacity utilization soybean crushing results improved region even though company processed lower volumes due primarily tight global crop supplies prior 2013 harvests improved european rape seed results due generally better crop availability 2013 refining packaging biodiesel results improved 213 million 454 million us european biodiesel margins improved significantly 2013 us biodiesel volumes margins enhanced blenders incentivized take advantage tax credits prior expiration end december cocoa results decreased 309 million loss 33 million due principally weaker cocoa press margins unfavorable variance net unrealized marktomarket gains losses approximately 86 million mark market gains losses represent fair value changes related certain cocoa forward purchase sales commitments accounted derivatives cocoa press margins negatively impacted excess industry processing capacity strong competition peanut results declined primarily due lower margins asia results improved 45 million 217 million principally reflecting companys share results equity investee wilmar corn processing operating profit increased 536 million 814 million primarily due significant improvement ethanol margins lower net corn costs strong sweetener demand company recognized net losses timing effects related corn hedge ineffectiveness 15 million 2013 compared net losses 9 million 2012 addition 2013 company recognized 51 million asset impairment charges related brazilian sugar milling business 20 million asset impairment charges related longlived assets prior year bioproducts results included 10 million charge principally due impairment costs upon closure 30 million gallon per year ethanol dry mill walhalla nd excluding timing effects corn hedges asset impairment charges sweeteners starches operating profit increased 90 million solid demand corn sweeteners translated tight corn sweetener industry capacity excluding timing effects corn hedges impairment charges brazilian sugar milling business asset impairments bioproducts profit current year improved 513 million overall industry ethanol margins profitable volatile 2013 compared negative margins 2012 due principally supply demand imbalances agricultural services operating profit decreased 399 million 380 million 2013 agricultural services incurred 155 million asset impairment charge related temporary impairment graincorp investment recognized insurance gain approximately 30 million offset insurance expense recognized 2012 agricultural services recorded 62 million gain related total return swaps used build investment interest graincorp 42 million equity earnings gruma incurred asset impairment charge 146 million related disposal gruma excluding items merchandising handling operating profit decreased 257 million due principally lower 2012 droughtrelated us origination export volumes slower farmer selling recent 2013 harvested corn fewer wheat merchandising opportunities lower execution margins international merchandising excluding 2012 gruma asset impairment charge equity earnings milling operating profit declined 25 million 270 million solid weaker margins earnings transportation operations declined 34 million 77 million lower us exports reduced barge freight utilization financial operating profit decreased 50 million 41 million mainly due approximate 30 million expense offsets insurancerelated gain reported agricultural services segment absence prior year gains sale member exchange interests companys futures commission brokerage business corporate loss 684 million 2013 compared loss 787 million 2012 effects changing commodity prices lifo inventory valuations resulted credit 225 million 2013 compared credit 3 million 2012 equity earnings companys investment cip decreased 89 million 2013 primarily due marktomarket effects underlying investments 2013 corporate costs included 54 million charge related settlement fcpa matter 40 million foreign currency losses related companys planned acquisition graincorp 21 million costs related strategic merger acquisition projects 32 million costs primarily related asset writedowns reallocations costs operating segments corporate 2012 corporate costs included 71 million exit costs related primarily workforce reduction 68 million related pension settlements excluding lifo items corporate costs increased 22 million mostly due higher unallocated corporate costs unallocated corporate costs increased due primarily higher employee benefitrelated expenses part due higher company stock price higher costs projects interestnet declined 37 million primarily due lower outstanding debt balances 2013 income attributable minority shareholders mandatorily redeemable interests 35 million included minority interest item 7 management’s discussion analysis financial condition results operations continued six months ended december 31 2012 compared six months ended december 31 2011 unaudited net earnings attributable controlling interests increased 152 million 692 million asset impairment exit restructuring costs 2012 period decreased 115 million tax 206 million pretax 2012 period results also include gains 49 million tax related company’s interest graincorp gain 24 million tax related sale certain company’s exchange membership interests partially offset charges 44 million tax related pension settlements income taxes increased 66 million due higher earnings income taxes effective income tax rate 304 2012 compares rate 303 prior period segment operating profit 2012 period increased 243 million due 318 million improvement operating results oilseeds processing segment absence prior period asset impairment charges 339 million corn processing segment related primarily writedown assets clinton ia bioplastics facility higher results company’s financial operations 76 million part due gain sale certain company’s exchange membership interests favorable captive insurance loss reserve adjustments partially offsetting improvements lower results 2012 period corn processing’s bioproducts business 408 million excluding clinton ia asset impairment charge discussed 2012 period loss 146 million agricultural services segment related disposal gruma corporate expenses 27 million higher 2012 period due primarily 68 million pension settlement charges partially offset higher returns companys equity method investment cip analysis statements earnings revenues segment six months ended december 31 2012 2011 follows item 7 management’s discussion analysis financial condition results operations continued agricultural commoditybased business company subject variety market factors affect company’s operating results demand perspective protein meal demand continued increase particularly us domestic export markets demand soybeans solid weaker us gasoline demand unfavorable global ethanol trade flows resulted continued excess industry ethanol capacity supply perspective following belowaverage harvests 20112012 crop year north south america corn soybean supplies tight commodity market prices generally higher south america farmers responded high crop prices record soybean plantings 20122013 crop year lower corn harvest us due drought led higher corn prices higher demand corn south america revenues increased 15 billion 467 billion higher average selling prices increased revenues 49 billion primarily due increases underlying commodity prices lower sales volumes inclusive effects acquisitions reduced revenues 24 billion changes foreign currency exchange rates decreased revenues 10 billion oilseeds processing sales increased 4 181 billion due principally higher average selling prices protein meal soybeans higher sales volumes corn primarily south america protein meal corn processing sales decreased 4 62 billion due principally lower average selling prices ethanol agricultural services sales increased 5 224 billion due higher average selling prices soybeans wheat partially offset lower sales volumes corn cost products sold increased 16 billion 449 billion due principally higher costs agricultural commodities partially offset lower manufacturing costs 11 billion related effects changing foreign currency rates manufacturing expenses decreased 102 million 3 due principally lower energy repairs maintenance costs savings employee benefitrelated costs selling general administrative expenses increased 39 million 869 million included selling general administrative expenses pension settlement charges 68 million six months ended december 31 2012 excluding pension settlement charges selling general administrative expenses declined 29 million 3 due principally lower employee benefitrelated costs asset impairment charges 2012 period represent impairments 146 million related company’s divestment equity method investments gruma grumarelated joint ventures prior year charges relate company’s clinton ia bioplastics facility property plant equipment written estimated fair value resulting impairment charges 320 million addition charges 32 million recognized exit activities impair assets income increased 97 million 109 million due primarily 62 million gains related company’s interest graincorp 39 million gains sale certain company’s exchange membership interests item 7 management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes six months ended december 31 2012 2011 follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profit increased 318 million 747 million crushing origination operating profit increased 290 million 517 million results north america europe south america improved company’s us soybean operations delivered strong results high seasonal utilization amid good us export meal demand europe rapeseed soybean crushing earnings improved significantly south america results benefited improved soybean crushing margins refining packaging biodiesel results decreased 54 million 78 million primarily due weaker european us biodiesel results cocoa results increased 93 million weaker cocoa press margins offset absence prior period’s net unrealized marktomarket losses related certain forward purchase sales commitments accounted derivatives asia results decreased 11 million 87 million principally reflecting company’s share results equity investee wilmar corn processing operating profit increased 17 million 71 million prior period results include 339 million asset impairment charges exit costs related company’s clinton ia bioplastics facility excluding bioplastics charges exit costs corn processing operating profit declined 322 million sweeteners starches operating profit increased 86 million 191 million tight sweetener industry capacity supported higher average selling prices prior period sweeteners starches results negatively impacted higher net corn costs related marktomarket timing effects economic hedges bioproducts profit decreased 69 million 120 million loss excluding 339 million prior year asset impairment charges bioproducts profit decreased 408 million weak domestic gasoline demand unfavorable global ethanol trade flows resulted continued excess industry capacity keeping ethanol margins negative agricultural services operating profit including 2012 period 146 million gruma asset impairment charge 62 million gain company’s interest graincorp decreased 168 million 395 million merchandising handling earnings decreased 16 million mostly due weaker us merchandising results impacted smaller us harvest merchandising handling earnings 2012 period include 62 million gain company’s interest graincorp earnings transportation operations decreased 14 million 67 million due increased barge operating expenses caused low water mississippi river partially offset higher freight rates milling operating profit decreased 138 million 29 million due principally 146 million impairment charge disposal company’s equity method investments gruma grumarelated joint ventures milling results remained strong company’s feed business saw improved margins amid stronger demand financial operating profit increased 76 million 93 million mainly due asset disposal gains certain company’s exchange membership interests improved results company’s captive insurance subsidiary corporate expenses increased 27 million 309 million 2012 period company incurred 68 million pension settlement charges related onetime window lump sum distributions us conversion dutch pension plan multiemployer plan excluding pension charges corporate expenses declined 41 million corporate interest expense net increased 22 million mostly due absence interest income received prior period related contingent gain settlement unallocated corporate costs lower 15 million primarily due lower employee benefitrelated costs increase income 56 million primarily due improved equity earnings corporate affiliate investments year ended june 30 2012 compared year ended june 30 2011 agricultural commoditybased business company subject variety market factors affect company’s operating results demand perspective global protein meal consumption continued grow although slower rate excess industry crushing production capacity pressured oilseeds margins company adjusted production rates regionally balance supply current market demand biodiesel markets supported global demand refined crude vegetable oils us high biodiesel inventories associated december 31 2011 expiration blender’s incentives dampened margins second half fiscal year us corn sweetener exports continue support sales volumes margins ethanol sales volumes supported favorable gasoline blending economics us however excess industry production ethanol together recently reduced us ethanol export demand negatively impacted ethanol margins supply perspective crop supplies certain key growing regions beginning fiscal 2012 including south america black sea region adequate smallerthannormal harvest north america fall 2011 resulted low us carryover stocks corn soybeans smaller expected south american harvest global supplies corn soybeans dependent north american harvest plantings corn increased us fiscal 2012 drought conditions late fiscal year decreased expectations size harvest factors combined concerns european debt situation ongoing geopolitical uncertainties contributed volatile commodity market price movements fiscal 2012 item 7 management’s discussion analysis financial condition results operations continued net earnings attributable controlling interests decreased 08 billion 12 billion segment operating profit declined 16 billion 25 billion amid challenging conditions generally affecting reportable segments segment operating profit fiscal 2012 included 349 million asset impairment charges exit costs comprised 335 million exit company’s clinton ia bioplastics plant 14 million shut walhalla nd ethanol dry mill earnings income taxes included credit 10 million effect lifo inventory valuation reserves including liquidation lifo inventory layers partially offset increasing agricultural commodity prices compared charges 368 million prior year fiscal 2012 unallocated corporate expenses included 71 million charges related company’s global workforce reduction program income taxes decreased 05 billion due lower earnings income taxes lower effective income tax rate company’s effective income tax rate declined 296 compared 331 prior year primarily due income tax benefits associated foreign currency remeasurement nonmonetary assets partially offset geographic mix earnings shifted foreign jurisdictions analysis statements earnings revenues segment follows revenues increased 70 billion due higher average selling prices primarily related higher underlying commodity costs 21 billion due increased sales volumes including sales volumes acquisitions partially offset changes foreign currency exchange rates 07 billion oilseeds processing sales increased 16 347 billion due principally higher average selling prices vegetable oils merchandised commodities protein meal biodiesel increased sales volumes biodiesel protein meal peanuts part due acquisition golden peanut december 2010 corn processing sales increased 22 121 billion due principally higher average selling prices ethanol sweeteners well higher sales volumes sugar ethanol agricultural services sales increased 3 421 billion due higher average selling prices corn wheat flour partially offset lower sales volumes part due lower export volumes us item 7 management’s discussion analysis financial condition results operations continued cost products sold increased 12 854 billion due principally higher costs agricultural commodities lesser extent increased sales volumes changes foreign currency exchange rates reduced fiscal 2012 cost products sold 07 billion manufacturing expenses increased 02 billion due higher costs maintenance employee benefitrelated expenses energy chemicals higher costs primarily due higher production volumes acquisitions higher unit costs fuels certain chemicals partially offsetting higher costs lower depreciation expense part due company’s change estimated service lives machinery equipment second quarter fiscal 2011 selling general administrative expenses remained steady 16 billion loss provisions mainly due unfavorable arbitration award company’s agricultural services operating segment partially offset lower overhead expenses asset impairment exit restructuring costs 449 million comprised 349 million corn processing segment related company’s exit clinton ia bioplastics business ethanol dry mill walhalla nd 71 million corporate global workforce reduction 29 million corporate investment writedowns facility exitrelated costs interest expense decreased 9 441 million primarily due lower longterm debt balances higher interest expense capitalized construction projects progress lower interest expense related uncertain income tax positions equity earnings unconsolidated affiliates decreased 13 472 million principally due decreased equity earnings company’s equity investee gruma included 78 million gain prior year related gruma’s disposal certain assets interest income declined 18 112 million primarily related sale deconsolidation hickory point bank trust company fsb effective september 30 2011 income net declined 101 million 17 million due primarily absence income recognized prior year period 71 million golden peanut gain 30 million gains interest rate swaps item 7 management’s discussion analysis financial condition results operations continued operating profit segment follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profit decreased 04 billion 13 billion crushing origination operating profit decreased 284 million 641 million primarily due weaker results european softseeds lower results north american softseeds lower north american positioning results partially offsetting lower results higher grain origination results south america driven higher volumes favorable positioning poor european softseed results driven small prior year rapeseed crop positioning losses weaker demand protein meal oils north american softseed results declined primarily result lower margins generated tight cottonseed supply refining packaging biodiesel results declined 47 million 295 million due primarily declines biodiesel margins south america europe lower margins specialty fats oils europe declines partially offset improved north american protein specialties natural health nutrition results due higher margins volumes cocoa results declined 57 million 183 million fiscal 2012 results cocoa reduced 100 million net unrealized marktomarket losses related certain forward purchase sales commitments accounted derivatives prior year included 9 million net unrealized marktomarket losses excluding timing effects cocoa results improved fiscal 2012 driven improved press margins caused strong cocoa powder demand prior year included 71 million golden peanut gain partially offset fiscal 2012 higher earnings company’s peanut business part due first full year consolidated results golden peanut reported company fiscal 2012 asia results remained steady 183 million principally reflecting company’s share results equity investee wilmar corn processing operating results decreased 818 million 261 million due principally poor ethanol margins 349 million asset impairment charges exit costs excluding asset impairment exit costs related company’s bioplastics business walhalla nd ethanol dry grind facility corn processing operating profit 610 million fiscal 2012 represented decline 469 million compared prior year processed volumes 5 percent net corn costs increased compared prior year sweeteners starches operating profit increased 5 million 335 million higher average selling prices offset higher net corn costs bioproducts profit decreased 823 million loss 74 million including 349 million asset impairment exit charges lower ethanol margins caused excess supply previously offline production restarted industry demand declined part due slowing export demand prior year bioproducts results enhanced favorable corn ownership positions lowered net corn costs period bioproducts results prior year negatively impacted startup costs 94 million related company’s new drygrind ethanol bioplastics glycol plants agricultural services operating profits decreased 376 million 947 million merchandising handling earnings decreased primarily due lower results us operations lower sales volumes principally result relatively higher cost us grains oilseeds global market due lower stocks caused smaller us harvest 2011 relatively weaker position led reduced us grain exports prior year merchandising handling results positively impacted higher quantities us grain exports company addition fiscal 2012 included 40 million increased loss provisions mainly due unfavorable arbitration award earnings transportation steady prior year’s operating results milling operations included 78 million gain related gruma’s disposal certain assets financial operating profit decreased 24 million 15 million mainly due higher loss provisions company’s captive insurance subsidiary related property crop risk reserves corporate expenses declined 356 million 760 million fiscal 2012 effects liquidation lifo inventory layers partially offset increasing commodity prices lifo inventory valuations resulted credit 10 million fiscal 2012 compared charge 368 million prior year primarily due higher prices corporate interest expense decreased 22 million primarily due lower interest expense lower longterm debt balances unallocated corporate costs include 71 million costs related global workforce reduction program excluding costs unallocated corporate costs declined 37 million due primarily lower administrative costs corporate income increased due higher investment income partially offset 29 million investment writedown facility exitrelated costs also prior year company recognized 30 million gains interest rate swaps item 7 management’s discussion analysis financial condition results operations continued liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business companys strategy involves expanding volume diversity crops merchandises processes expanding global reach core model expanding valueadded product portfolio company depends access credit markets impacted credit rating factors outside company’s control fund working capital needs capital expenditures primary source funds finance company’s operations capital expenditures advancement growth strategy cash generated operations lines credit including commercial paper borrowing facility addition company believes access funds public private equity debt capital markets us international markets cash provided operating activities 52 billion 2013 compared 23 billion 2012 working capital changes increased cash 29 billion current year decreased cash 85 million prior year inventories declined approximately 24 billion december 31 2013 compared december 31 2012 lower prices reduced inventories approximately 20 billion lower quantities reduced inventories 04 billion cash used investing activities 06 billion year compared 12 billion last year capital expenditures net assets businesses acquired 10 billion year compared 13 billion last year cash used financing activities 32 billion year compared 03 billion last year current year net borrowings principally commercial paper borrowings decreased mostly due decreased working capital requirements december 31 2013 company 36 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 18 1 included working capital 75 billion readily marketable commodity inventories december 31 2013 company’s capital resources included shareholders equity 202 billion lines credit totaling 69 billion 66 billion unused company’s ratio longterm debt total capital sum longterm debt shareholders’ equity 21 december 31 2013 25 december 31 2012 ratio measure company’s longterm indebtedness indicator financial flexibility company’s ratio net debt sum shortterm debt current maturities longterm debt longterm debt less sum cash equivalents shortterm marketable securities capital sum net debt shareholders’ equity 14 december 31 2013 27 december 31 2012 company’s total lines credit 40 billion support commercial paper borrowing facility commercial paper outstanding december 31 2013 company reduced commercial paper borrowing facility 60 billion december 31 2012 40 billion december 31 2013 due companys improved liquidity position lower forecasted future borrowing needs company focused efforts achieving improvements generating conserving cash operations years ended december 31 2013 2012 company freed cash monetizing nonstrategic equity investments assets using alternative forms financing margin requirements futures transactions maximizing cash flows joint ventures reducing certain agricultural commodity inventories december 31 2013 company 04 billion cash held foreign subsidiaries whose undistributed earnings considered permanently reinvested due companys historical ability generate sufficient cash flows us operations unused available us credit capacity 40 billion company asserted funds permanently reinvested outside us since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program provides company 11 billion funding accounts receivable transferred program expands companys access liquidity efficient use balance sheet assets program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 11 billion additional amount upon collection accounts receivable deferred consideration adm receivables uses cash proceeds transfer receivables purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company acts master servicer responsible servicing collecting accounts receivable program terminates june 28 2014 unless extended see note 20 item 8 information disclosures program item 7 management’s discussion analysis financial condition results operations continued december 31 2013 company outstanding 115 billion principal amount convertible senior notes december 31 2013 none conditions permitting conversion notes satisfied company purchased call options warrants intended reduce potential shareholder dilution upon future conversion notes february 18 2014 convertible senior notes repaid available funds november 5 2009 company’s board directors approved stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2010 ending december 31 2014 company acquired approximately 344 million shares program resulting remaining approval acquire 656 million shares december 2013 company announced expected acquire 18 million outstanding shares end 2014 program company expects capital expenditures 14 billion 2014 dividends 18 million share buyback assuming market prices companys common stock comparable market prices end january 2014 expected result additional total cash outlay approximately 14 billion company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2013 three major credit rating agencies put companys credit rating stable outlook contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 66 million december 31 2013 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued 1 includes pension contributions 41 million fiscal 2014 company unable estimate amount pension contributions beyond fiscal year 2014 information concerning company’s pension postretirement plans see note 16 item 8 december 31 2013 company estimates spend approximately 15 billion fiscal year 2018 complete currently approved capital projects included table company also outstanding letters credit surety bonds 795 million december 31 2013 company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations december 31 2013 contingent obligations totaled approximately 37 million balance sheet arrangements accounts receivable securitization program since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 11 billion additional amount upon collection accounts receivable deferred consideration adm receivables uses cash proceeds transfer receivables purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2013 2012 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold program terminates june 28 2014 unless extended december 31 2013 fair value trade receivables transferred purchasers program derecognized company’s consolidated balance sheet 19 billion exchange transfer company received cash 11 billion recorded 08 billion receivable deferred consideration included current assets cash collections customers receivables sold 398 billion 308 billion 219 billion 89 billion years ended december 31 2013 2012 six months ended december 31 2012 year ended june 30 2012 respectively cash collections applied deferred consideration deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases program company’s risk loss following transfer accounts receivable program limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant transfers receivables program years ended december 31 2013 2012 six months ended december 31 2012 year ended june 30 2012 resulted expense loss sale 4 million 8 million 4 million 4 million respectively classified selling general administrative expenses consolidated statements earnings company reflects cash flows related program operating activities consolidated statement cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables item 7 management’s discussion analysis financial condition results operations continued synthetic leasing program company party lease agreements synthetic leasing programs certain us barge trucking assets periods ranging 5 7 years december 31 2013 outstanding lease balances including value underlying assets 145 million offbalance sheet agreements provide company right use assets specified periods exchange obligation make rental payments agreements accounted operating leases rent expense recorded consolidated statement earnings future lease payments pertaining lease agreements included contractual obligations table item 7 leasing programs utilized primarily diversify funding sources retain flexibility company recorded 3 million rent expense pertaining synthetic lease payments year ended december 31 2013 rent expense year ended december 31 2012 immaterial critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements fair value measurements inventories commodity derivatives certain company’s inventory commodity derivative assets liabilities december 31 2013 valued estimated fair values including 61 billion merchandisable agricultural commodity inventories 09 billion derivative assets 06 billion derivative liabilities 07 billion inventoryrelated payables commodity derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s inventory derivative commodity fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 2 within fair value hierarchy level 3 fair value measurements approximately 21 billion assets 03 billion liabilities represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 3 item 8 changes market values inventories commodity contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol designated hedging programs principally relate company’s corn processing operating segment assuming normal market conditions change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold revenues statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component cost products sold see note 4 item 8 additional information item 7 management’s discussion analysis financial condition results operations continued investments affiliates company applies equity method accounting investments company ability exercise significant influence including 164 investment wilmar investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may differ income taxes company accounts income tax positions accordance applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company frequently faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example company received tax assessments tax authorities brazil argentina challenging income tax positions taken subsidiaries company evaluated tax positions matters concluded based part upon advice legal counsel appropriate recognize tax benefits positions see note 14 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely 2013 company increased valuation allowances approximately 150 million primarily related net operating loss carryforwards capital losses extent company favorably resolve matters valuation allowances established required pay amounts excess aforementioned valuation allowances company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 75 billion december 31 2013 considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements item 7 management’s discussion analysis financial condition results operations continued property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 impairment charges property plant equipment 84 million 30 million 0 337 million 367 million 2 million respectively see note 19 item 8 additional information goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level annually october 1 whenever indicators carrying value assets may fully recoverable fiscal years ended june 30 2012 prior company performed annual goodwill impairment test april 1 see note 1 item 8 additional information regarding change accounting policy definitelived intangible assets amortized estimated useful lives reviewed impairment whenever indicators carrying value assets may fully recoverable management used different estimates assumptions impairment tests company could recognize different amounts expense future periods employee benefit plans company provides substantially us employees certain international subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage others provided health care reimbursement accounts order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods see note 16 item 8 additional information item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements company principally engaged procuring transporting storing processing merchandising agricultural commodities products company uses significant global asset base originate transport agricultural commodities connecting markets 165 countries company also processes corn oilseeds wheat products food animal feed chemical energy uses company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities company’s operations organized managed classified four reportable business segments agricultural services corn processing oilseeds processing wild flavors specialty ingredients segments organized based upon nature products services offered company’s remaining operations reportable business segments defined applicable accounting standard classified see note 17 item 8 information company’s business segments effective january 1 2015 company formed fourth reportable business segment wild flavors specialty ingredients results wild flavors sci acquired fourth quarter fiscal 2014 reported segment addition results certain product lines previously reported agricultural services corn processing oilseeds processing business segments prior period results product lines previously reported reportable business segments reclassified conform current period presentation company’s recent significant portfolio actions announcements include • construction new feed premix plant city zhangzhou china new feed plant glencoe minnesota • expansion export facilities puerto san martin argentine state sante fe • construction soy protein production complex campo grande mato grosso sul brazil • purchase may 2015 remaining ownership interest north star shipping minmetal operate export facilities romanian port constanta black sea • sale june 2015 50 stake export terminal barcarena northern brazilian state pará • sale july 31 2015 global chocolate business cargill inc • purchase september 2015 aor nv • purchase october 16 2015 eatem foods company • sale october 16 2015 global cocoa business olam international limited • purchase november 2 2015 remaining interest eaststarch cv • opening november 2015 new feedpremix plant nanjing china soluble dietary fiber plant tianjin china • pending expansion olenex joint venture wilmar sale marketing refined vegetable oils fats europe • pending purchase 50 interest cairobased medsofts group joint venture manage merchandising supply chain operations • pending purchase controlling stake harvest innovations industry leader minimally processed expellerpressed soy proteins oils glutenfree ingredients • pending acquisition tate lyle casablanca moroccobased corn wet mill produces glucose native starch construction new feed plant facilities china minnesota soy protein facility brazil expansion export facilities argentina expected completed 2016 pending transactions expected close 2016 subject regulatory approvals item 7 management’s discussion analysis financial condition results operations continued part evolution company’s strategic plan company currently undertaking fresh look capital intensity operations portfolio seeking innovative ways reduce redeploy capital efforts drive longterm returns including strategic review us corn dry mills options brazilian sugarcane ethanol business based uncertain outlook brazilian sugarcane ethanol business yearend company continues evaluate options doesn’t expect operate plant year’s seasonal shutdown financial impacts arising portfolio actions described pages 31 33 relevant notes item 8 operating performance indicators company’s agricultural services oilseeds processing operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts revenues cost products sold thus changes revenues businesses necessarily correspond changes margins gross profit company’s corn processing operations wild flavors specialty ingredients businesses also utilize agricultural commodities products derived agricultural commodities raw materials however operations agricultural commodity market price changes necessarily equal changes cost products sold thus changes revenues businesses may correspond changes margins gross profit company consolidated subsidiaries 82 countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil functional currency us dollar however certain transactions including taxes occur local currency require conversion functional currency changes revenues expected correlated changes expenses reported company caused fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar company measures performance using key financial metrics including net earnings segment operating profit return invested capital ebitda economic value added manufacturing expenses selling general administrative expenses company’s financial results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company undertakes responsibility updating forwardlooking information contained within “management’s discussion analysis financial condition results operations” item 7 management’s discussion analysis financial condition results operations continued year ended december 31 2015 compared year ended december 31 2014 agricultural commoditybased business company subject variety market factors affect company’s operating results agricultural services negatively impacted ample global supply agricultural commodities limited merchandising opportunities reduced demand north american grain exports moderated commodity prices throughout year increase global supply due several large harvests built world grain stocks historically high levels addition us dollar continued firm weakening global currencies particularly major crop growing countries brazil argentina ukraine resulted margin pressure decreased north american export volumes year partially offset higher domestic grain demand transportation also impacted decreased north american export volumes well lower global freight rates demand prices sweeteners starches remained solid coproduct prices weakened ethanol demand remained strong north america export markets due favorable gasoline blending economics ethanol’s continuing status competitive octane enhancer despite strong demand ethanol margins weak due recordhigh levels us industry production year leading excess inventory overall demand global protein meal vegetable oil remained strong especially north america south american oilseeds saw significantly higher volumes margins grain origination exports due significant depreciation brazilian real us dollar lower softseed availability affected seed basis resulting lower softseed crushing volumes weaker margins particularly europe biodiesel demand resulting international biofuel standards continued support demand crude refined vegetable oil although demand biodiesel softer throughout 2015 due weaker economic conditions certain countries wild flavors specialty ingredients business continued focus cost synergies new revenue opportunities amid economic uncertainty many emerging economies softening demand customers’ interest develop innovative healthy nutritious food products response macro trends diet demographics remained strong continued grow net earnings attributable controlling interests decreased 04 billion 18 billion segment operating profit 16 due primarily weaker ethanol margins lower volumes margins north american grain exports corporate results current year include charge 189 million related repurchase outstanding debt addition credit 2 million effect decreasing agricultural commodity prices lifo inventory valuation reserves compared lifo credit 245 million prior year income taxes decreased 877 million 438 million due lower earnings income taxes decreased effective tax rate company’s effective tax rate 2015 decreased 19 compared 28 2014 due primarily low tax rates significant onetime gains related portfolio actions 70 million favorable impact discrete items mainly release 66 million valuation allowance changes geographic mix pretax earnings see note 13 item 8 information analysis statements earnings processed volumes product years ended december 31 2015 2014 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react current seasonal local supply demand conditions record volumes oilseeds processed year increased prior year result strong demand environment soybean meal processed volumes corn decreased response high ethanol industry production outpaced demand throughout year processed volumes cocoa beans decreased due sale global cocoa business october 2015 item 7 management’s discussion analysis financial condition results operations continued revenues segment years ended december 31 2015 2014 follows revenues cost products sold commodity merchandising processing business affected underlying commodity prices volumes periods significant changes commodity prices underlying performance company better evaluated looking margins since revenues cost products sold particularly oilseeds processing agricultural services generally relatively equal impact commodity price changes generally result insignificant impact gross profit revenues decreased 17 due principally lower sales prices 129 billion lower sales volumes 06 billion sales prices decreased principally due lower underlying agricultural commodity prices particular prices soybeans corn wheat 58 billion foreign currency translation impacts due strength us dollar agricultural services revenues decreased 18 primarily due lower sales prices 53 billion lower sales volumes 13 billion corn processing revenues decreased 19 due principally lower sales prices 19 billion lower sales volumes 04 billion oilseeds processing revenues decreased 18 due principally lower sales prices 55 billion lower sales volumes 02 billion wild flavors specialty ingredients revenues increased 76 due principally higher sales volumes resulting inclusion full year results wild flavors sci acquired fourth quarter fiscal 2014 12 billion partially offset lower prices 02 billion item 7 management’s discussion analysis financial condition results operations continued cost products sold decreased 128 billion 637 billion due principally lower average commodity prices including 56 billion foreign currency translation impacts due strength us dollar lower manufacturing costs included cost products sold credit 2 million effect decreasing agricultural commodity prices lifo inventory valuation reserves compared credit 245 million prior year manufacturing expenses decreased 291 million 55 billion primarily due lower fuel prices partially offset increased employee benefit costs due inclusion full year costs wild flavors sci gross profit decreased 07 billion 16 40 billion due principally lower ethanol margins 06 billion foreign currency translation impacts 02 billion inclusion full year results wild flavors sci partially offset lower credit effect decreasing agricultural commodity prices lifo valuation reserves factors explained segment operating profit discussion page 33 decrease underlying commodity prices result significant decrease margins gross profit lower underlying commodity prices relatively equal impact revenues cost products sold selling general administrative expenses increased 103 million 20 billion due principally increased expenses 219 million related inclusion full year results wild flavors sci current year compared threemonth results prior year partially offset decreased pension expense primarily due 98 million onetime pension settlement prior year asset impairment exit restructuring costs recognized current year 200 million consisted longlived asset impairments 129 million related certain oilseeds processing facilities sugar ethanol facilities brazil facility corn processing segment capitalized software costs restructuring exit costs 71 million related principally international pension plan settlement sugar ethanol facilities brazil restructuring exit costs longlived asset impairment fiscal year ended december 31 2015 consisted property plant equipment asset impairments 70 million corn processing segment 49 million oilseeds processing segment 1 million wild flavors specialty ingredients segment 9 million corporate asset impairment exit restructuring costs recognized prior year 105 million consisted costs associated relocation company’s global headquarters chicago illinois 16 million restructuring charges related primarily wild flavors acquisition integration subsidiary following acquisition minority interest 48 million otherthantemporary investment writedown 6 million fixed asset impairments 35 million interest expense declined 29 million 308 million primarily due lower interest rates resulting issuance eurodenominated debt repurchase certain company’s us dollardenominated outstanding debentures equity earnings unconsolidated affiliates increased 18 million 390 million primarily due higher earnings company’s investment cip income increased 74 million 247 million 321 million income year ended december 31 2015 consisted primarily gain sales 256 million related primarily sale cocoa chocolate lactic businesses gain 212 million revaluation company’s previously held equity investments north start shipping minmetal eaststarch cv conjunction acquisition remaining interests gain 62 million sale 50 interest barcarena export terminal facility brazil glencore plc partially offset 189 million loss debt extinguishment related repurchase outstanding debt current year loss provisions 45 million related sugar ethanol facilities brazil income year ended december 31 2014 consisted primarily gains 156 million upon company’s effective dilution pacificor joint venture 126 million sale fertilizer business partially offset losses 102 million euro foreign currency derivative contracts entered economically hedge wild flavors acquisition item 7 management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes year ended december 31 2015 2014 follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued agricultural services operating profit decreased 32 merchandising handling results decreased fewer merchandising opportunities lower margins due ample global supplies grain reduced us export competitiveness second half year due strong us dollar large south american harvest also contributing decrease absence prior year gain 17 million related partial recovery loss provision prior year gain 156 million company’s effective dilution pacificor joint venture partially offset 27 million current year gain revaluation company’s previously held investments north star shipping minmetal conjunction acquisition remaining interests milling results improved due higher product margins strong merchandising results transportation results declined due lower freight rates volumes driven reduced us export volumes second half year corn processing operating profit decreased 44 included current year operating profit approximately 13 million marktomarket losses related hedge timing effects compared 25 million gains prior year excluding items sweeteners starches operating profit increased 213 million due principally 185 million gain revaluation company’s previously held investment eaststarch cv conjunction acquisition remaining interest november 2015 also contributing increase lower raw material costs good demand relative supply products excluding hedge timing effects bioproducts operating profit declined 675 million primarily due lower industry ethanol margins strong industry production levels resulted high industry inventory levels kept industry margins considerably lower last year despite increased domestic export demand also contributing decrease restructuring fixed asset impairment charges 75 million loss provisions 45 million related sugar ethanol business brazil oilseeds processing operating profit increased 9 included current year operating profit 45 million marktomarket gains related cocoa hedge timing effects compared 17 million losses prior year crushing origination operating profit includes current year gain 62 million related sale assets new barcarena export terminal joint venture brazil prior year gain 126 million related sale fertilizer business excluding gains crushing origination operating profit increased 38 million primarily due strong north american european soybean crushing volumes margins first half year driven strong demand ample global bean supply starting third quarter continuing fourth quarter global soybean crush margins declined competitive argentine meal anticipated enter already wellsupplied global markets due changes argentine policies softseed margins volumes lower particularly europe resulting weaker global demand vegetable oil large south american corn soybean harvests also helped support significant improvement south america origination results refining packaging biodiesel operating profit declined primarily due lower south american european results partially offset improved margins north american oil refining operations excluding hedge timing effects cocoa results increased 149 million current year gain 244 million sale global cocoa chocolate business partially offset lower earnings due sale businesses lower cocoa press margins peanut processing results asia results declined due principally longlived asset goodwill impairments partially offset increase company’s share results equity investee wilmar wild flavors specialty ingredients operating profit increased due primarily acquisitions wild flavors sci fourth quarter fiscal 2014 incremental earnings acquisitions partially offset lower overall results specialty ingredients businesses due weakness many emerging economies strong us dollar reduced volumes margins across number product lines corporate results net charge 988 million current period compared 785 million prior period effects changing commodity prices lifo inventory valuations resulted credit 2 million current year compared credit 245 million prior year interest expense net declined due principally lower interest rates unallocated corporate costs increased 19 million due primarily increased pension expense resulting adoption new mortality assumption increased spending company’s erp program various strategic business improvement projects partially offset lower employee compensation expense charges current year consisted 189 million loss debt extinguishment related repurchase outstanding debt restructuring charges 29 million related principally international pension plan settlement asset impairment settlement charges 24 million charges prior year consisted 102 million loss euro foreign currency derivative contracts entered economically hedge wild flavors acquisition costs associated relocation company’s global headquarters chicago illinois 16 million restructuring charges related alfred c toepfer international integration restructuring charges 15 million pension settlement 98 million minority interest expense prior year consisted primarily 56 million loss related company’s equity method investment cip item 7 management’s discussion analysis financial condition results operations continued nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda nongaap financial measures defined securities exchange commission evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps certain specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes management believes adjusted eps adjusted ebitda useful measures company’s profitability enhance investor’s understanding company’s financial performance adjusted eps adjusted ebitda intended replace alternative diluted eps earnings income taxes respectively directly comparable amounts reported gaap reconciliation diluted eps adjusted eps years ended december 31 2015 2014 provided following table 1 tax effected using company’s us effective tax rate 2 tax effected using applicable tax rates reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2015 2014 provided following table item 7 management’s discussion analysis financial condition results operations continued item 7 management’s discussion analysis financial condition results operations continued year ended december 31 2014 compared year ended december 31 2013 agricultural commoditybased business company subject variety market factors affect company’s operating results demand global protein meal vegetable oil remained strong steady demand export north american corn soybeans strong logistical challenges winter months including rail delays river freezes caused higher costs making us exports less competitive despite large harvest south america us grain exports continued longer normal 2014 due slow south american farmer selling us corn wheat storage merchandising opportunities limited much year 2014 record fall harvest corn sweetener demand steady strong us ethanol demand domestic export markets combined industry logistical production challenges winter months led volatile strong overall 2014 ethanol margins south american grain oilseed origination volumes margins challenged slow farmer selling cocoa press margins continued improve last year margins negatively impacted excess capacity net earnings attributable controlling interests increased 09 billion 22 billion segment operating profit 39 billion 45 due primarily improved corn processing grain merchandising handling results included 2014 segment operating profit gain approximately 156 million upon company’s effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units gain 126 million sale fertilizer business longlived asset impairment charges 35 million wild flavors restructuring charges acquisition costs 33 million 2013 segment operating profit included 155 million writedown related company’s graincorp investment 51 million impairment certain longlived assets brazilian sugar mill approximately 27 million longlived asset impairment charges principally corn processing segment excluding unique items segment operating profit improved approximately 26 2014 corporate costs 785 million 2014 higher 101 million included 2014 costs losses 102 million euro foreign currency derivative contracts entered economically hedge anticipated wild flavors acquisition 98 million noncash pension settlement charges included 2013 costs 54 million charges related anticorruption settlement losses 40 million australian dollar foreign currency derivative contracts entered economically hedge proposed graincorp acquisition 21 million costs related strategic projects costs 32 million primarily related asset writedowns allocations costs corporate operating segments 2014 lifo inventory reserves declined resulting pretax lifo credits earnings 245 million compared lifo credits 225 million 2013 excluding lifo items corporate costs increased 68 million primarily due higher enterprise resource planning project projectrelated costs partially offsetting increase lower interest expense due principally lower outstanding longterm debt balances company’s effective tax rate 2014 280 compared 331 2013 2014 rate positively impacted 47 million positive discrete tax adjustments slight favorable shift geographic mix earnings 2013 rate negatively impacted valuation allowances deferred tax assets partially offset favorable discrete income tax benefits related amounts received us government form biodiesel credits excluding factors effective tax rate 2013 approximately 30 analysis statements earnings processed volumes product years ended december 31 2014 2013 follows metric tons company continued operate production facilities overall basis near capacity adjusting facilities individually needed react current seasonal local supply demand conditions item 7 management’s discussion analysis financial condition results operations continued revenues segment years ended december 31 2014 2013 follows revenues 2014 decreased 10 due principally lower average sales prices 80 billion related decrease underlying commodity prices lower overall sales volumes 07 billion changes foreign currency exchange rates 02 billion partially offset higher revenues wild flavors specialty ingredients 03 billion due acquisition wild flavors sci decrease underlying commodity prices result significant decrease margins gross profit lower underlying commodity prices relatively equal impact cost products sold agricultural services revenues decreased 10 due principally lower average sales prices 52 billion partially offset higher sales volumes 11 billion corn processing revenues decreased 11 due principally lower average sales prices 16 billion partially offset higher sales volumes 01 billion oilseeds processing revenues decreased 10 due principally lower sales volumes soybeans soybean meal 19 billion lower average sales prices 14 billion cost products sold decreased 11 764 billion due principally lower average commodity costs partially offset higher manufacturing costs included 2014 cost products sold credit 245 million effect decreasing agricultural commodity prices lifo inventory valuation reserves compared credit 225 million 2013 manufacturing expenses increased 02 billion 58 billion mostly due higher energy costs higher maintenance costs higher energy costs driven unusually high volatility natural gas prices winter months early year due primarily supply interruptions impacted severe winter weather conditions item 7 management’s discussion analysis financial condition results operations continued gross profit increased 09 billion 23 48 billion increase gross profit consists principally stronger margins ethanol 04 billion increased margins cocoa 01 billion higher us grain export volumes 03 billion higher volumes freight rates barge operations 01 billion inclusion results wild flavors 01 billion partially offset lower south american grain origination results 01 billion factors explained segment operating profit discussion page 40 effects decreasing commodity price changes lifo inventory valuations immaterial impact gross profit decrease underlying commodity prices result significant decrease margins gross profit lower underlying commodity prices relatively equal impact revenues cost products sold selling general administrative expenses sga increased 148 million 19 billion due principally 98 million noncash pretax pension settlement charge related settling certain us retiree liabilities lump sum payments incremental sga expenses 73 million related acquired wild flavors sci businesses partially offset absence prior year charge 54 million related anticorruption settlement addition salaries benefits enterprise resource planning project information technology projectrelated costs higher year asset impairment exit restructuring costs 105 million include 16 million costs associated relocation company’s global headquarters chicago illinois 48 million restructuring charges related primarily wild flavors acquisition toepfer integration following acquisition minority interest otherthantemporary investment writedown 6 million property plant equipment asset impairments 35 million 2013 charges 259 million comprised otherthantemporary impairment charges 155 million company’s graincorp investment asset impairment charges 51 million related company’s brazilian sugar milling business impairment charges principally certain property plant equipment assets totaling 53 million interest expense decreased 76 million 337 million primarily due lower outstanding longterm debt balances february 2014 company repaid 115 billion principal amount convertible senior notes available funds equity earnings unconsolidated affiliates decreased 39 million 372 million primarily due lower earnings company’s investments cip wilmar income increased 194 million 247 million due principally gain 156 million upon company’s effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units gain 126 million sale south american fertilizer business absence prior year losses 40 million australian dollar foreign currency derivative contracts entered economically hedge proposed graincorp acquisition partially offset current period losses 102 million euro foreign currency derivative contracts entered economically hedge wild flavors acquisition item 7 management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes year ended december 31 2014 2013 follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued agricultural services operating profit increased 205 2014 results merchandising handling include gain 156 million upon company’s effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units asset impairment charges 14 million prior year results included approximately 30 million intercompany insurancerelated gain 155 million asset impairment charge related temporary impairment company’s graincorp investment excluding items merchandising handling operating profit increased 353 million due principally higher us grain export volumes improvement international merchandising results transportation operating profit improved due higher volumes freight rates barge operations milling results declined lower margins volumes milling business 2014 reducing opportunities grain feed merchandising corn processing operating profit increased 49 included 2014 operating profit gain approximately 25 million corn hedge timing effects 15 million asset impairment charges 2013 included charge approximately 15 million corn hedge time effects 71 million asset impairment charges excluding items sweeteners starches operating profit decreased 49 million primarily due lower average selling prices partially offset lower net corn costs also contributing decrease decreased coproducts income additional 8 million bad debt reserve 7 million startup costs related new sweetener facility tianjin china excluding corn hedge timing effects asset impairment charges bioproducts profit current year improved 328 million solid demand us ethanol domestic export markets lower net corn costs lower industry production volumes early year caused logistical production challenges combined drive volatile overall strong margins oilseeds processing operating profit increased 12 included 2014 operating profit charge approximately 17 million cocoa hedge timing effects compared charge approximately 13 million prior year crushing origination operating profit increased 4 included 2014 results gain sale fertilizer business 126 million excluding gain crushing origination operating profit decreased 93 million primarily due lower south american grain origination results caused yearoveryear slower farmerselling reduced crush margins lower fertilizer results partially offset strong soybean softseed volumes margins north america europe refining packaging biodiesel results improved good demand improved margins refined packaged oils improved european biodiesel results cocoa results including marktomarket timing effects discussed improved cocoa press margins significantly increased asia results declined principally reflecting decrease company’s share results equity investee wilmar wild flavors specialty ingredients operating profit decreased due primarily results wild flavors sci acquired company fourth quarter 2014 wild flavors’ results include 33 million restructuring charges acquisition costs 23 million additional expense amortization fair value adjustments primarily related inventories financial operating profit increased mainly due absence approximately 30 million insurancerelated loss 2013 offset insurancerelated gain reported agricultural services segment corporate results net charge 785 million 2014 compared net charge 684 million 2013 effects decreasing commodity prices lifo inventory valuations resulted credit 245 million 2014 compared credit 225 million 2013 interest expense net declined due principally lower outstanding longterm debt balances unallocated corporate costs increased primarily due higher expenses related enterprise resource planning project special strategic projects compensation accruals charges 2014 consisted losses 102 million euro foreign currency derivative contracts entered economically hedge anticipated wild flavors acquisition global headquarters relocation costs 16 million integration subsidiary following acquisition minority interest restructuring charges 15 million pension settlement 98 million charges 2013 consisted 54 million provision related anticorruption settlement losses 40 million australian dollar foreign currency derivative contracts entered economically hedge proposed graincorp acquisition 21 million costs related strategic merger acquisition projects 32 million costs primarily related asset writedowns reallocations costs operating segments corporate minority interest expense increased primarily due changes elimination income attributable minority shareholder subsidiary item 7 management’s discussion analysis financial condition results operations continued nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda nongaap financial measures defined securities exchange commission evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps certain specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes management believes adjusted eps adjusted ebitda useful measures company’s profitability enhance investor’s understanding company’s financial performance adjusted eps adjusted ebitda intended replace alternative diluted eps earnings income taxes respectively directly comparable amounts reported gaap reconciliation diluted eps adjusted eps years ended december 31 2014 2013 provided following table 1 tax effected using company’s us effective tax rate 2 tax effected using us applicable tax rates 3 tax effected using us mexican applicable tax rates reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2014 2013 provided following table item 7 management’s discussion analysis financial condition results operations continued item 7 management’s discussion analysis financial condition results operations continued liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business company’s strategy involves expanding volume diversity crops merchandises processes expanding global reach core model expanding valueadded product portfolio company depends access credit markets impacted credit rating factors outside company’s control fund working capital needs capital expenditures primary source funds finance company’s operations capital expenditures advancement growth strategy cash generated operations lines credit including commercial paper borrowing facility addition company believes access funds public private equity debt capital markets us international markets cash provided operating activities 25 billion 2015 compared 50 billion 2014 working capital changes net source cash 02 billion current year compared 23 billion prior year inventories declined approximately 09 billion december 31 2015 compared december 31 2014 due lower prices partially offset higher inventory quantities 2015 company made 02 billion voluntary contribution us pension plans similar contribution made 2014 cash used investing activities 21 million year compared 34 billion last year primarily due capital expenditures net assets businesses acquired 16 billion year compared 37 billion last year proceeds sale businesses assets 18 billion compared 04 billion last year cash used financing activities 26 billion year compared 36 billion last year longterm debt borrowings current year include €11 billion 12 billion notes issued june 24 2015 longterm debt payments current period include purchase 935 million aggregate principal amount certain company’s outstanding debentures 11 billion pursuant cash tender offers debt redemption prior period included 115 billion convertible debt settled available cash february 2014 treasury stock purchases 20 billion current year compared 12 billion last year december 31 2015 company 13 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 16 1 included working capital 51 billion readily marketable commodity inventories december 31 2015 company’s capital resources included shareholders’ equity 179 billion lines credit totaling 57 billion 56 billion unused company’s ratio longterm debt total capital sum longterm debt shareholders’ equity 24 december 31 2015 22 december 31 2014 company uses ratio measure company’s longterm indebtedness indicator financial flexibility company’s ratio net debt sum shortterm debt current maturities longterm debt longterm debt less sum cash equivalents shortterm marketable securities capital sum net debt shareholders’ equity 20 december 31 2015 17 december 31 2014 company’s total lines credit 40 billion support commercial paper borrowing facility commercial paper outstanding december 31 2015 december 31 2015 company 09 billion cash equivalents 05 billion cash held foreign subsidiaries whose undistributed earnings considered permanently reinvested based company’s historical ability generate sufficient cash flows us operations unused available us credit capacity 44 billion company asserted funds permanently reinvested outside us company accounts receivable securitization programs “programs” certain commercial paper conduit purchasers committed purchasers programs provide company 16 billion funding accounts receivable transferred programs expands company’s access liquidity efficient use balance sheet assets see note 20 item 8 information disclosures programs december 31 2015 company utilized 12 billion facility programs november 5 2014 company’s board directors approved new stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2015 ending december 31 2019 company acquired approximately 433 million shares program company expects capital expenditures 10 billion 2016 company expects additional cash outlays approximately 07 billion dividends 10 billion 15 billion share repurchases subject strategic capital requirements approximately 130 million upon completion previouslyannounced harvest innovations medsofts group morocco corn plant transactions item 7 management’s discussion analysis financial condition results operations continued company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2015 three major credit rating agencies maintained company’s credit ratings solid investment grade levels stable outlooks july 1 2015 company accepted purchase 794 million aggregate principal amount certain outstanding debentures “debentures” validly tendered withdrawn pursuant terms previously announced cash tender offers company paid aggregate total consideration 961 million debentures accepted purchase september 2015 company redeemed 141 million 545 outstanding debentures 156 million finance cash tender offers debt redemption company issued eurodenominated debt june 24 2015 see note 10 item 8 company recognized debt extinguishment charge 189 million including transaction expenses 7 million 2015 pertaining transactions july 31 2015 company completed sale global chocolate business cargill inc 431 million company recorded gain disposal 38 million net transaction expenses oilseeds processing segment year ended december 31 2015 october 16 2015 company completed acquisition eatem foods company leading developer producer premium traditional natural organic savory flavor systems 160 million closed sale global cocoa business olam international limited approximately 12 billion subject postclosing adjustments november 2 2015 company completed acquisition remaining interest eaststarch cv €240 million approximately 265 million subject postclosing adjustments contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 49 million december 31 2015 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued 1 includes pension contributions 31 million fiscal 2016 company unable estimate amount pension contributions beyond fiscal year 2016 information concerning company’s pension postretirement plans see note 15 item 8 december 31 2015 company estimates spend approximately 15 billion fiscal year 2020 complete currently approved capital projects included table company also outstanding letters credit surety bonds 08 billion december 31 2015 company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations december 31 2015 contingent obligations totaled approximately 4 million balance sheet arrangements accounts receivable securitization programs company accounts receivable securitization program certain commercial paper conduit purchasers committed purchasers march 2014 company entered second accounts receivable securitization program certain commercial paper conduit purchasers committed purchasers see note 20 item 8 information programs synthetic leasing program company party lease agreements synthetic leasing programs certain us barge trucking assets periods ranging 5 7 years december 31 2015 outstanding lease balances including value underlying assets 141 million offbalance sheet agreements provide company right use assets specified periods exchange obligation make rental payments agreements accounted operating leases rent expense recorded consolidated statement earnings future lease payments pertaining lease agreements included contractual obligations table item 7 leasing programs utilized primarily diversify funding sources retain flexibility company recorded 5 million 5 million 3 million rent expense pertaining synthetic lease payments years ended december 31 2015 2014 2013 respectively item 7 management’s discussion analysis financial condition results operations continued critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements fair value measurements inventories commodity derivatives certain company’s inventory commodity derivative assets liabilities december 31 2015 valued estimated fair values including 41 billion merchandisable agricultural commodity inventories 08 billion derivative assets 06 billion derivative liabilities 07 billion inventoryrelated payables commodity derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s inventory derivative commodity fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 2 within fair value hierarchy level 3 fair value measurements approximately 12 billion assets 01 billion liabilities represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 3 item 8 changes market values inventories commodity contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol designated hedging programs principally relate company’s corn processing operating segment assuming normal market conditions change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred accumulated comprehensive income net applicable income taxes recognized component cost products sold revenues statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component cost products sold see note 4 item 8 additional information investments affiliates company applies equity method accounting investments company ability exercise significant influence including 190 investment wilmar investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may materially differ item 7 management’s discussion analysis financial condition results operations continued income taxes company accounts income tax positions accordance applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company frequently faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example company received tax assessments tax authorities brazil argentina challenging income tax positions taken subsidiaries company evaluated tax positions matters concluded based part upon advice legal counsel appropriate recognize tax benefits positions see note 13 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely 2015 company decreased valuation allowances approximately 45 million primarily related net operating loss carryforwards asset impairments extent company favorably resolve matters valuation allowances established required pay amounts excess aforementioned valuation allowances company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 96 billion december 31 2015 considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods years ended december 31 2015 2014 2013 impairment charges property plant equipment 108 million 35 million 84 million respectively see note 19 item 8 additional information item 7 management’s discussion analysis financial condition results operations continued business combinations company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended assets acquired liabilities assumed based preliminary purchase price allocations adjusted fair values acquisition date remainder purchase price recorded goodwill determining fair values assets acquired liabilities assumed management makes significant estimates assumptions especially respect intangible assets critical estimates valuing certain intangible assets include limited future expected cash flows discount rates although management’s estimates fair value based upon assumptions believed reasonable actual results may differ goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level annually october 1 whenever indicators carrying value assets may fully recoverable critical estimates determination fair value reporting unit include limited future expected cash flows discount rates definitelived intangible assets amortized estimated useful lives 2 47 years reviewed impairment whenever indicators carrying value assets may fully recoverable company recorded impairment charge goodwill intangibles 21 million 9 million years ended december 31 2015 2013 respectively see note 19 item 8 information impairment charges recorded goodwill indefinitelived intangible assets year ended december 31 2014 management used different estimates assumptions impairment tests company could recognize different amounts expense future periods employee benefit plans company provides substantially us employees certain international subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage others provided health care reimbursement accounts order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements company principally engaged procuring transporting storing processing merchandising agricultural commodities products ingredients company uses significant global asset base originate transport agricultural commodities connecting markets 170 countries company also processes corn oilseeds wheat products food animal feed chemical energy uses company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities company’s operations organized managed classified four reportable business segments agricultural services corn processing oilseeds processing wild flavors specialty ingredients segments organized based upon nature products services offered company’s remaining operations reportable business segments defined applicable accounting standard classified see note 17 item 8 information company’s business segments company’s recent significant portfolio actions announcements include • acquisition february 2017 crosswind industries inc industry leader manufacture contract private label pet treats foods well specialty ingredients • acquisition february 2017 89 controlling interest biopolis sl leading provider microbial technology strong portfolio novel food ingredients followed later year partnership mayo clinic explore personalized nutrition applications including effects prebiotics probiotics may improve digestive health • construction new feedpremix facility xiangtan china expected completed 2019 • sale may 2017 companys crop risk services business validus holdings global group insurance reinsurance companies • completion may 2017 series major enhancements company’s export terminal santos brazilian state sao paulo • construction new flour mill mendota illinois expected completed 2019 • expansion golden peanut tree nuts production facility blakely georgia expected completed 2018 • completion june 2017 new silo located danube river silistra bulgaria • acquisition june 2017 chamtor french producer wheatbased sweeteners starches • acquisition july 2017 51 controlling interest industries centers israeli company specializing import distribution agricultural feed products known adm israel • modernization flour mill enid oklahoma expected completed 2018 • announcement december 2017 sale companys oilseeds operations bolivia inversiones piuranas sa subject regulatory approvals expected close first half 2018 • announcement january 2018 joint development agreement vland biotech develop commercialize enzymes animal feed part implementation company’s strategic plan company continues evaluate capital intensity operations portfolio seeking ways reduce redeploy capital efforts reduce volatility earnings drive longterm returns operating performance indicators company’s agricultural services oilseeds processing operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts revenues cost products sold thus changes revenues businesses necessarily correspond changes margins gross profit item 7 management’s discussion analysis financial condition results operations continued company’s corn processing operations wild flavors specialty ingredients businesses also utilize agricultural commodities products derived agricultural commodities raw materials however operations agricultural commodity market price changes necessarily correlate changes cost products sold thus changes revenues businesses may correspond changes margins gross profit company consolidated subsidiaries 80 countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil functional currency us dollar however certain transactions including taxes occur local currency require remeasurement functional currency changes revenues expected correlated changes expenses reported company caused fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar company measures performance using key financial metrics including net earnings segment operating profit return invested capital ebitda economic value added manufacturing expenses selling general administrative expenses company’s financial results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies trade policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company undertakes responsibility updating forwardlooking information contained within “management’s discussion analysis financial condition results operations” year ended december 31 2017 compared year ended december 31 2016 agricultural commoditybased business company subject variety market factors affect companys operating results agricultural services us export competitiveness strong first half year weakened second half due large crops south america overall low market volatility continued due surplus global market corn processing demand prices sweeteners starches remained solid north america coproduct prices stable ethanol continues face challenging environment although ethanol demand remained strong north america export markets due favorable gasoline blending economics ethanols continuing status competitive octane enhancer us industry ethanol production also remained high levels limited margins global oilseeds processing volumes remained strong ample supply competing proteins abundance argentine meal oil world markets pressured margins slow selling farmers brazil continues depress grain origination margins despite strong export volumes demand margins refined oil remained solid across regions uncertainty surrounding us biodiesel tax credit negatively impacted biodiesel margins wild flavors specialty ingredients benefited strong demand flavor ingredients flavor systems continued adversely affected startup costs margin pressure certain nonflavor food ingredient markets net earnings attributable controlling interests increased 03 billion 16 billion segment operating profit decreased 02 billion 25 billion included segment operating profit current year net charge 134 million consisting net gain sales assets businesses impairment restructuring settlement charges corn hedge timing effects included segment operating profit prior year income 81 million consisting net gain sales assets businessesrevaluation impairment restructuring charges corn hedge timing effects adjusted segment operating profit increased 47 million 27 billion due solid results corn processing partially offset weaker south american origination margins lower soybean crush margins weaker results specialty ingredients corporate results net expense 927 million current year compared 882 million prior year corporate results current year included credit 2 million effect changes agricultural commodity prices lifo inventory valuation reserves compared charge 19 million prior year income taxes decreased 527 million due lower earnings income taxes lower effective tax rate company’s effective tax rate 2017 decreased 04 compared 293 2016 due primarily estimated impact tax cuts jobs act “act” excluding impact act companys effective tax rate 2017 would decreased 293 approximately 240 due primarily impact changes discrete tax items including favorable resolution uncertain tax position related 2014 acquisition return provision adjustments current year partially offset changes geographic mix pretax earnings expiration us tax credits including biodiesel credit end 2016 see note 13 item 8 information item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings processed volumes product years ended december 31 2017 2016 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react current margin environment seasonal local supply demand conditions processed volumes oilseeds increased due strong demand environment soybean meal canola oil overall increase corn due strong demand environment ethanol partially offset production disruption one company’s plants due water main break first quarter reconfiguration company’s peoria illinois ethanol complex revenues segment years ended december 31 2017 2016 follows revenues cost products sold commodity merchandising processing business affected underlying commodity prices volumes periods significant changes commodity prices underlying performance company better evaluated looking margins since revenues cost products sold particularly oilseeds processing agricultural services generally relatively equal impact commodity price changes generally result insignificant impact gross profit item 7 management’s discussion analysis financial condition results operations continued revenues decreased 15 billion 2 608 billion due lower sales volumes 14 billion lower average sales prices 01 billion decrease sales volumes due principally decrease volumes unprocessed commodities particular volumes soybeans corn rapeseed wheat agricultural services revenues decreased 6 262 billion due lower sales volumes 15 billion lower average sales prices 01 billion corn processing revenues decreased 1 94 billion due lower sales volumes 01 billion oilseeds processing revenues increased 2 225 billion due higher sales volumes 03 billion wild flavors specialty ingredients revenues decreased 5 23 billion due lower sales volumes 01 billion cost products sold decreased 14 billion 573 billion due principally lower sales volumes included cost products sold credit 2 million effect changes agricultural commodity prices lifo inventory valuation reserves compared charge 19 million prior year manufacturing expenses increased 01 billion 52 billion due increased expenses energy operating maintenance supplies contracted labor higher salaries benefits gross profit decreased 01 billion 3 35 billion lower results soybean processing 152 million grain origination 90 million partially offset higher results canola processing 41 million sweeteners starches 71 million animal nutrition 53 million factors explained segment operating profit discussion page 31 effect changes agricultural commodity prices lifo inventory valuation reserves 2 million positive impact gross profit compared negative impact 19 million prior year selling general administrative expenses 20 billion comparable prior year current year expenses included increased salaries benefits cost related investments company’s business transformation research development innovation initiatives prior year expenses included expenses related settlement legal matter asset impairment exit restructuring costs increased 118 million 173 million current year charges consisted 63 million asset impairments corn processing segment primarily related reconfiguration company’s peoria illinois ethanol complex 20 million asset impairments wild flavors specialty ingredients segment primarily related closure facility 54 million restructuring charges corporate primarily related reduction certain positions within company’s global workforce 36 million several individually insignificant asset impairments restructuring charges prior year charges included 11 million software impairment corporate 6 million otherthantemporary impairment charges companys investment two available sale equity securities corporate 17 million 21 million individually insignificant fixed asset impairment restructuring charges respectively interest expense increased 37 million 330 million primarily due higher interest rates shortterm debt issuance 1 billion fixedrate notes august 2016 interest related amended foreign income tax prior year partially offset retirement 261 million bond matured april 2017 interest expense prior year also included credit 8 million revaluation mandatorily redeemable 10 interest harvest innovations equity earnings unconsolidated affiliates increased 164 million 456 million primarily due higher earnings company’s investment wilmar resulting increased ownership stake higher results wilmar improved results company’s equity investment cip partially offset losses new equity investment decreased earnings resulting disposal equity investment income net decreased 110 million 37 million prior year income included realized additional consideration related sale companys equity investment gruma sab de cv december 2012 recovery loss provisions gain related sale companys brazilian sugar ethanol facilities gain related revaluation remaining interest settlement value conjunction acquisition amazon flavors loss sale individually immaterial assets current period income included gains related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business changes contingent settlement provisions charge related full redemption companys 559 million notes due march 15 2018 foreign exchange losses item 7 management’s discussion analysis financial condition results operations continued segment operating profit adjusted segment operating profit nongaap measure earnings income taxes year ended december 31 2017 2016 follows 1 adjusted segment operating profit segment operating profit excluding specified items item 7 management’s discussion analysis financial condition results operations continued corporate results follows agricultural services operating profit increased 2 merchandising handling operating results increased due improved global trade execution strong destination marketing volume growth merchandising handling results also included gain related confidential legal settlement 42 million net recovery property damage costs business interruption losses related companys new orleans louisiana export facility milling decreased due lower volumes margins transportation results decreased due river conditions lower barge freight volumes margins corn processing operating profit increased 19 sweeteners starches operating profit increased due improved domestic demand higher volumes margins international business bioproducts profit increased due improved lysine margins higher trading resuts partially offset lower volumes caused mild winter slightly lower ethanol margins oilseeds processing operating profit decreased 4 crushing origination operating profit decreased prior year higher softseed results north america europe offset weaker soybean crush margins due ample supply alternative proteins competing soybean meal addition improved south american soybean crushing results offset weak grain origination margins throughout year refining packaging biodiesel operating profit declined due weaker biodiesel specialty oils margins partially offset higher results south american packaged oils global peanut business asia results increased higher earnings company’s investment wilmar due increased ownership stake higher results wilmar wild flavors specialty ingredients wfsi operating profit increased 3 continuing strong demand flavor ingredients flavor systems across regions partially offset lower results specialty ingredients due part operational startup costs operating profit decreased 62 primarily due losses companys captive insurance operations lower results futures commission brokerage business current year results included settlement insurance claims companys agricultural services segment totaling 50 million related new orleans louisiana export facility corporate results net expense 927 million current year compared 882 million prior year effect changes agricultural commodity prices lifo inventory valuation reserves resulted credit 2 million current year compared charge 19 million prior year interest expense net increased 28 million due principally higher interest rates shortterm debt issuance 1 billion fixedrate debt august 2016 interest related amended foreign income tax return prior year partially offset retirement 261 million bond matured april 2017 absence original harvest innovation adjustment buyout liability may 2016 unallocated corporate costs increased 13 million due principally increased investments company’s business transformation research development innovation initiatives partially offset absence last year’s railroad maintenance expense charges current year included charge related full redemption company’s 559 million notes due march 15 2018 restructuring charges related reduction certain positions within company’s global workforce charges prior year included legal settlement costs legal fees software impairment charge otherthantemporary impairment charges company’s investments two available sale equity securities loss sale investment asset impairment restructuring charges partially offset gain related us retiree medical benefit plan curtailment minority interest expense increased 12 million due principally lower results companys equity investment cip item 7 management’s discussion analysis financial condition results operations continued nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda adjusted segment operating profit nongaap financial measures defined securities exchange commission evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps certain specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes adjusted segment operating profit segment operating profit adjusted applicable specified items management believes adjusted eps adjusted ebitda adjusted segment operating profit useful measures company’s performance provide investors additional information companys operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda adjusted segment operating profit intended replace alternative diluted eps earnings income taxes segment operating profit respectively directly comparable amounts reported gaap table provides reconciliation diluted eps adjusted eps years ended december 31 2017 2016 1 tax effected using company’s us tax rate 2 tax effected using applicable tax rates 3 includes tax adjustments related 2017 us tax cuts jobs act item 7 management’s discussion analysis financial condition results operations continued tables provide reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2017 2016 item 7 management’s discussion analysis financial condition results operations continued year ended december 31 2016 compared year ended december 31 2015 agricultural commoditybased business company subject variety market factors affect company’s operating results agricultural services negatively impacted first half year 2016 weak us grain export competitiveness decreased global merchandising opportunities starting third quarter export volumes margins improved due us harvest weather conditions south america corn processing global demand sweeteners starches us exports principally mexico continued grow europe raw material costs improved resulting improved margins cornbased ethanol remained competitive transportation fuel domestic blending strong us gasoline demand compared 2015 us ethanol also continued one cheapest oxygenates world driving strong export volumes throughout 2016 industry production levels remained high year limiting margins oilseeds processing global crushing operations achieved strong capacity utilization although margins weaker mainly due higher supply soybean meal argentina protein meal substitutes softseed margins improved due better seed supply oil demand vegetable oils continued maintain steady demand food industry additionally vegetable oil sales volumes benefited demand driven us 2016 biodiesel blenders credit wild flavors specialty ingredients business benefited increased demand flavor ingredients flavor systems specialty proteins natural health nutrition products polyols adversely impacted soft market conditions nonflavor food ingredient markets strong us dollar well operational issues specialty commodities unit net earnings attributable controlling interests decreased 06 billion 13 billion segment operating profit decreased 06 billion 27 billion primarily due 2015 gain sale global cocoa chocolate businesses lower earnings year 2016 due sale businesses weaker global crushing origination margins lower international merchandising results partially offset better ethanol results corporate results year 2016 included charge 19 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 2 million prior year decrease approximately 70 million companys share results compagnie industrielle et financiere des produits amylaces sa luxembourg cip income taxes increased 96 million due higher effective tax rate partially offset lower earnings income taxes companys effective tax rate 2016 increased 293 compared 192 2015 due primarily low tax rates significant gains related portfolio actions 2015 71 million 2015 discrete tax benefit resulting mainly release 66 million valuation allowance compared 49 million discrete tax expense 2016 changes geographic mix pretax earnings see note 13 item 8 information analysis statements earnings processed volumes product years ended december 31 2016 2015 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react current margin environment seasonal local supply demand conditions overall decrease corn relates disposal sugar ethanol operations may 2016 partially offset volumes acquisition eaststarch cv november 2015 item 7 management’s discussion analysis financial condition results operations continued revenues segment years ended december 31 2016 2015 follows revenues cost products sold commodity merchandising processing business affected underlying commodity prices volumes periods significant changes commodity prices underlying performance company better evaluated looking margins since revenues cost products sold particularly oilseeds processing agricultural services generally relatively equal impact commodity price changes generally result insignificant impact gross profit revenues decreased 54 billion 8 623 billion due lower average sales prices 35 billion including 06 billion foreign currency translation impacts lower overall sales volumes 19 billion decrease sales prices due principally lower underlying agricultural commodity prices particular prices corn soybeans soybeanrelated products decrease sales volumes due principally sale cocoa business decreased sales volumes ethanol south american grain oilseed origination agricultural services revenues decreased 6 279 billion due lower average sales prices 25 billion partially offset higher sales volumes 07 billion corn processing revenues decreased 5 95 billion due lower sales volumes 05 billion due principally ethanol sale sugar ethanol business partially offset sales volumes acquisition eaststarch cv oilseeds processing revenues decreased 12 222 billion due lower average sales prices 08 billion lower sales volumes 23 billion principally due south american grains oilseeds sale cocoa business wfsi revenues flat due lower average sales prices 02 billion offset higher sales volumes 02 billion cost products sold decreased 50 billion 587 billion due principally lower average commodity costs including 06 billion foreign currency translation impacts lower manufacturing costs included cost products sold charge 19 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 2 million prior year manufacturing expenses decreased 02 billion 52 billion primarily due sale cocoa business lower energy usage prices decreased repairs maintenance expenses item 7 management’s discussion analysis financial condition results operations continued gross profit decreased 03 billion 9 36 billion decrease gross profit consisted principally lower soy crush margins 309 million reduced merchandising results 95 million primarily due agricultural services global trade execution positioning losses lower volumes freight rates barge operations 24 million sale cocoa business 2015 78 million partially offset contribution recent eaststarch cv acquisition 85 million higher results sweeteners starches 169 million factors explained segment operating profit discussion page 38 effect changes agricultural commodity prices lifo inventory valuation reserves 19 million negative impact gross profit compared positive impact 2 million 2015 decrease underlying commodity prices result significant decrease margins gross profit lower underlying commodity prices relatively equal impact revenues cost products sold selling general administrative expenses 20 billion comparable 2015 decreased expenses related sale cocoa business us retiree medical benefit plan curtailment gain offset legal settlements costs legal fees increased transaction fees due increased trading volume brokerage business expenses recently consolidated eaststarch cv asset impairment exit restructuring costs decreased 145 million 55 million charges 2015 included longlived asset impairments 129 million related certain oilseeds processing facilities sugar ethanol facilities brazil facility corn processing segment capitalized software costs restructuring exit costs 71 million related principally international pension plan settlement sugar ethanol facilities brazil several individually insignificant restructuring exit costs charges 2016 included 11 million software impairment corporate 6 million otherthantemporary impairment charges companys investment two available sale equity securities corporate 17 million 21 million individually insignificant fixed asset impairment restructuring charges respectively interest expense declined 15 million 293 million primarily due lower interest rates longterm debt 8 million effect revaluation mandatorily redeemable 10 interest harvest innovations equity earnings unconsolidated affiliates decreased 98 million 292 million primarily due lower earnings company’s investments wilmar cip decrease equity earnings eaststarch cv fully consolidated following acquisition remaining interest november 2015 partially offset increased earnings equity investees income net decreased 203 million 147 million income 2015 consisted primarily gain sales 256 million related primarily sale cocoa chocolate lactic businesses gain 212 million revaluation company’s previously held equity investments north star shipping minmetal eaststarch cv conjunction acquisition remaining interests gain 62 million sale 50 interest barcarena export terminal facility brazil glencore plc partially offset 189 million loss debt extinguishment related repurchase outstanding debt loss provisions 45 million related sugar ethanol facilities brazil income 2016 included 48 million realized additional consideration related sale company’s equity investment gruma sab de cv december 2012 59 million gain including recovery loss provisions related sale company’s brazilian sugar ethanol facilities 12 million gain related revaluation remaining interest settlement value conjunction acquisition amazon flavors 10 million loss sale individually immaterial assets item 7 management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes year ended december 31 2016 2015 follows item 7 management’s discussion analysis financial condition results operations continued corporate results follows agricultural services operating profit decreased 16 merchandising handling operating results declined primarily due compressed grain handling margins first half 2016 international merchandising results driven poor execution low market volatility limited forward merchandising opportunities partially offset strong origination results argentina addition destination marketing egypt company’s medsofts joint venture milling results decreased 7 due lower grain feed margins transportation operating profit declined due weak barge demand lower freight rates corn processing operating profit increased 26 sweeteners starches operating profit increased business continued perform well higher volumes pricing improved margins optimizing flex grind company’s corn wet mills integration eaststarch cv morocco acquisitions progressed smoothly significantly exceeding companys earnings accretion target bioproducts profit declined weak ethanol margins continued due high industry inventory levels oilseeds processing operating profit decreased 32 crushing origination operating profit declined driven primarily lower global soy crush margins high 2015 lower south american grain origination results caused smaller soybean corn crops region yearoveryear slower farmerselling partially offset strong softseed volumes margins north america refining packaging biodiesel results improved due good demand improved margins refined packaged oils improved european biodiesel results asia results declined due primarily equity losses 48 million company’s investment wilmar recorded companys results third quarter 2016 wild flavors specialty ingredients wfsi operating profit decreased 5 due weaker sales hydrocolloids fibers short edible beans crop impacting volumes costs operational issues specialty commodities unit partially offset strong results flavors systems polyols natural health nutrition products operating profit increased higher volumes company’s futures commission brokerage business improved results captive insurance operations corporate results net expense 882 million 2016 compared 988 million prior year effect changes agricultural commodity prices lifo inventory valuation reserves resulted charge 19 million 2016 compared credit 2 million prior year interest expense net declined 15 million due principally lower interest rates longterm debt effect revaluation mandatorily redeemable 10 interest harvest innovations unallocated corporate costs increased 24 million due primarily increased spending company’s erp program various strategic business improvement projects charges 2016 included legal settlement costs legal fees software impairment charge otherthantemporary impairment charges company’s investments two available sale equity securities loss sale investment asset impairment restructuring charges partially offset gain related us retiree medical benefit plan curtailment charges 2015 consisted 189 million loss debt extinguishment related repurchase outstanding debt restructuring charges 29 million related principally international pension plan settlement asset impairment settlement charges 24 million increase minority interest expense due decrease approximately 70 million company’s share results cip item 7 management’s discussion analysis financial condition results operations continued nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda adjusted segment operating profit nongaap financial measures defined securities exchange commission evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps certain specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes adjusted segment operating profit segment operating profit adjusted applicable specified items management believes adjusted eps adjusted ebitda adjusted segment operating profit useful measures company’s performance provide investors additional information companys operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda adjusted segment operating profit intended replace alternative diluted eps earnings income taxes segment operating profit respectively directly comparable amounts reported gaap table provides reconciliation diluted eps adjusted eps years ended december 31 2016 2015 1 tax effected using company’s us effective tax rate 2 tax effected using us applicable tax rates item 7 management’s discussion analysis financial condition results operations continued tables provide reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2016 2015 liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business company’s strategy involves expanding volume diversity crops merchandises processes expanding global reach core model expanding valueadded product portfolio company depends access credit markets impacted credit rating factors outside company’s control fund working capital needs capital expenditures primary source funds finance company’s operations capital expenditures advancement growth strategy cash generated operations lines credit including commercial paper borrowing facility addition company believes access funds public private equity debt capital markets us international markets cash provided operating activities 22 billion 2017 compared 16 billion 2016 working capital changes increased cash 03 billion current year compared decrease 05 billion prior year trade receivables decreased 01 billion due lower revenues higher receivables sold accounts receivable securitization programs inventories increased 01 billion due higher prices company made voluntary contribution us pension plans 02 billion 2016 cash used investing activities 09 billion year compared 12 billion last year capital expenditures net assets businesses acquired 12 billion year compared 10 billion last year proceeds sale businesses assets 02 billion current year comparable prior year sales marketable securities net purchases 04 billion year compared 03 billion last year investments advances affiliates included additional investments wilmar 03 billion year compared 06 billion last year cash used financing activities 10 billion year compared 06 billion last year longterm debt borrowings current year related 05 billion notes issued september 14 2017 compared prior years 10 billion notes issued august 11 2016 longterm debt payments current year 08 billion primarily related full redemption 559 million notes due 2018 retirement 261 million bond matured april 2017 company issued 05 billion notes current year general corporate expenses pay commercial paper borrowings commercial paper borrowings current year 07 billion compared 01 billion prior year share repurchases 08 billion current year compared 10 billion prior year item 7 management’s discussion analysis financial condition results operations continued december 31 2017 company 08 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 16 1 included working capital 59 billion readily marketable commodity inventories december 31 2017 company’s capital resources included shareholders’ equity 183 billion lines credit including accounts receivable securitization programs described totaling 77 billion 55 billion unused company’s ratio longterm debt total capital sum longterm debt shareholders’ equity 27 december 31 2017 2016 company uses ratio measure company’s longterm indebtedness indicator financial flexibility company’s ratio net debt sum shortterm debt current maturities longterm debt longterm debt less sum cash equivalents shortterm marketable securities capital sum net debt shareholders’ equity 27 december 31 2017 26 december 31 2016 company’s total lines credit 50 billion support commercial paper borrowing facility 07 billion commercial paper outstanding december 31 2017 december 31 2017 company 08 billion cash equivalents 04 billion cash held foreign subsidiaries whose undistributed earnings considered indefinitely reinvested based company’s historical ability generate sufficient cash flows us operations unused available us credit capacity 45 billion company asserted funds indefinitely reinvested outside us tax cuts jobs act “act” enacted december 22 2017 reduces us federal corporate tax rate 35 21 provides onetime transition tax untaxed accumulated foreign earnings result company recorded transition tax liability 270 million december 31 2017 expects pay estimated 43 million amount 2018 see contractual obligations commitments table item 7 addition due passage act company expects effective tax rate discrete item items 20 23 2018 company accounts receivable securitization programs “programs” certain commercial paper conduit purchasers committed purchasers programs provide company 16 billion funding accounts receivable transferred programs expands company’s access liquidity efficient use balance sheet assets see note 19 item 8 information disclosures programs december 31 2017 company utilized 14 billion facility programs november 5 2014 company’s board directors approved stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2015 ending december 31 2019 company acquired approximately 862 million shares program december 31 2017 company expects capital expenditures 08 billion 2018 company expects additional cash outlays approximately 08 billion dividends company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2017 three major credit rating agencies maintained company’s credit ratings solid investment grade levels stable outlooks contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 56 million december 31 2017 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued 1 includes pension contributions 28 million fiscal 2018 company unable estimate amount pension contributions beyond fiscal year 2018 information concerning company’s pension postretirement plans see note 15 item 8 december 31 2017 company estimates spend approximately 16 billion fiscal year 2022 complete currently approved capital projects included table company also outstanding letters credit surety bonds 12 billion december 31 2017 included table company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations balance sheet arrangements accounts receivable securitization programs since march 2012 company accounts receivable securitization program certain commercial paper conduit purchasers committed purchasers march 2014 company entered second accounts receivable securitization program certain commercial paper conduit purchasers committed purchasers see note 19 item 8 information programs synthetic leasing program company party lease agreements synthetic leasing programs certain us barge trucking assets periods ranging 5 7 years december 31 2017 outstanding lease balances including value underlying assets 164 million offbalance sheet agreements provide company right use assets specified periods exchange obligation make rental payments agreements accounted operating leases rent expense recorded consolidated statement earnings future lease payments pertaining lease agreements included contractual obligations table item 7 leasing programs utilized primarily diversify funding sources retain flexibility company recorded 10 million rent expense pertaining synthetic lease payments year ended december 31 2017 5 million years ended december 31 2016 2015 item 7 management’s discussion analysis financial condition results operations continued critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements fair value measurements inventories commodity derivatives certain company’s inventory commodity derivative assets liabilities december 31 2017 valued estimated fair values including 49 billion merchandisable agricultural commodity inventories 04 billion derivative assets 05 billion derivative liabilities 07 billion inventoryrelated payables commodity derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s inventory derivative commodity fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 2 within fair value hierarchy level 3 fair value measurements approximately 16 billion assets 01 billion liabilities represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 3 item 8 changes market values inventories commodity contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges hedge purchase price anticipated volumes commodities purchased processed future month hedge purchase price company’s anticipated natural gas requirements certain production facilities hedge sales price anticipated volumes ethanol designated hedging programs principally relate company’s corn processing operating segment assuming normal market conditions change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred accumulated comprehensive income net applicable income taxes recognized component cost products sold revenues statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component revenues andor cost products sold see note 4 item 8 additional information investments affiliates company applies equity method accounting investments company ability exercise significant influence investments carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may materially differ item 7 management’s discussion analysis financial condition results operations continued income taxes company accounts income tax positions accordance applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company frequently faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example company received tax assessments tax authorities brazil argentina challenging income tax positions taken subsidiaries company evaluated tax positions matters concluded based part upon advice legal counsel appropriate recognize tax benefits positions see note 13 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely 2017 company increased valuation allowances approximately 48 million primarily related certain foreign capital losses incurred state tax credit utilization limitations extent company favorably resolve matters valuation allowances established required pay amounts excess aforementioned valuation allowances company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 94 billion december 31 2017 considered indefinitely reinvested tax cuts jobs act enacted december 22 2017 reduces us federal corporate rate 35 21 provides onetime transition tax untaxed accumulated foreign earnings result company recorded provisional amount onetime transition tax liability 149 million net foreign tax credits prior year accruals deferred tax liabilities unremitted earnings deemed indefinitely reinvested onetime transition tax based company’s total post1986 earnings profits ep previously deferred us income taxes company yet finalized calculation total post1986 ep foreign subsidiaries transition tax based part amount earnings held cash specified assets amount may change calculation post1986 foreign ep previously deferred us federal taxation amounts held cash specified assets finalized subject refinement guidance issued federal state taxing authorities company elected pay onetime transition tax eight years additional income taxes provided remaining undistributed foreign earnings subject transition tax additional outside basis difference inherent entities amounts continue indefinitely reinvested foreign operations practicable determine amount unrecognized deferred tax liability related remaining undistributed foreign earnings subject transition tax additional outside basis difference entities act also contains new provisions related global intangible low taxed income gilti company currently refining estimate gilti update estimate additional guidance accounting effects gilti provisions company made accounting policy election time item 7 management’s discussion analysis financial condition results operations continued property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods years ended december 31 2017 2016 2015 impairment charges property plant equipment 101 million 17 million 108 million respectively see note 18 item 8 additional information business combinations company’s acquisitions accounted purchases accordance accounting standards codification asc topic 805 business combinations amended assets acquired liabilities assumed based preliminary purchase price allocations recorded fair values acquisition date remainder purchase price recorded goodwill determining fair values assets acquired liabilities assumed management makes significant estimates assumptions especially respect intangible assets critical estimates valuing certain intangible assets include limited future expected cash flows discount rates although management’s estimates fair value based upon assumptions believed reasonable actual results may differ goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level annually october 1 whenever indicators carrying value assets may fully recoverable company adopted provisions asc 350 intangibles goodwill permits require company qualitatively assess indicators reporting units fair value completing qualitative assessment company believes likely reporting unit impaired discounted cash flow analysis prepared estimate fair value critical estimates determination fair value reporting unit include limited future expected cash flows discount rates definitelived intangible assets amortized estimated useful lives 2 50 years reviewed impairment whenever indicators carrying value assets may fully recoverable impairment charges recorded goodwill intangible assets year ended december 31 2017 company recorded impairment charge goodwill intangibles 11 million 21 million years ended december 31 2016 2015 respectively see note 18 item 8 information management used different estimates assumptions impairment tests company could recognize different amounts expense future periods employee benefit plans company provides substantially us employees certain international subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides certain eligible us employees retire qualifying conditions subsidized postretirement health care coverage health care reimbursement accounts item 7 management’s discussion analysis financial condition results operations continued order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods company uses corridor approach amortizing actuarial losses corridor approach net unrecognized actuarial losses excess 10 greater projected benefit obligation market related value plan assets amortized future periods plans little active participants amortization period remaining average life expectancy participants plans active participants amortization period remaining average service period active participants amortization periods range 5 30 years companys defined benefit pension plans 7 24 years companys postretirement benefit plans item 7aitem 7management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements adm global leader human animal nutrition one world’s premier agricultural origination processing companies one world’s leading producers ingredients human animal nutrition products made nature company uses significant global asset base originate transport agricultural commodities connecting markets 200 countries company also processes corn oilseeds wheat products food animal feed chemical energy uses company also engages manufacturing sale distribution specialty products including natural flavor ingredients flavor systems natural colors proteins emulsifiers soluble fiber polyols hydrocolloids natural health nutrition products specialty food feed ingredients company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities company’s operations organized managed classified three reportable business segments ag services oilseeds carbohydrate solutions nutrition segments organized based upon nature products services offered company’s remaining operations reportable business segments defined applicable accounting standard classified business financial information respect company’s reportable business segments set forth note 17 “notes consolidated financial statements” included item 8 herein “financial statements supplementary data” item 8 effective january 1 2020 company started reporting newly created dry mill ethanol subsidiary vantage corn processors vcp subsegment within carbohydrate solutions segment vcp replaces bioproducts subsegment included combined results company’s corn dry wet mill ethanol operations wet mill ethanol operations previously reported bioproducts included starches sweeteners subsegment addition dry mill ethanol production vcp sellsbrokers adm’s wet mill ethanol production sole marketer ethanol produced company’s facilities change impact total results carbohydrate solutions segment company’s review strategic options related vcp ongoing prior period results reclassified conform current period segment presentation company’s recent significant portfolio actions announcements include •the acquisition january 2020 yerbalatina natural plantbased extracts ingredients manufacturer brazil •the temporary idling april 2020 ethanol production corn dry mill facilities cedar rapids iowa columbus nebraska due reduced demand better align production current demand company also reduced ethanol grind corn wet mill plants rebalanced grind produce industrial alcohol sanitizer market industrial starches container board market •the announcements march may 2020 new goals 2035 reduce company’s absolute greenhouse gas emissions 25 energy intensity 15 water intensity 10 achieve 90 landfill diversion rate •the announcement july 2020 adm’s participation signatory along almost one hundred flavor fragrance companies ambitious new sustainability charter seeking improve sustainability across two industries •the sale august 2020 portion company’s shares wilmar issuance 300 million aggregate principal amount zerocoupon bonds exchangeable wilmar shares •the repurchase redemption september 2020 12 billion aggregate principal amount debentures notes •the announcement october 2020 agreement spiber inc spiber expand production spiber’s innovative brewed protein™ polymers use apparel consumer products •the announcement october 2020 company’s plan construct new stateoftheart facility valencia spain expand capabilities meet growing demand microbiome solutions •the launch october 2020 plantplus foods 30 joint venture marfrig one world’s leading beef producers world’s largest beef patty producer offer wide range finished plantbased food products across north south america item 7management’s discussion analysis financial condition results operations continued •the announcement november 2020 company’s investment health life capital fund ii leading venture capital fund dedicated health nutrition microbiota digital health •the announcement november 2020 plans collaborate innovafeed world leader producing premium insect ingredients animal feed construction operation world’s largest insect protein production site decatur illinois •the announcement december 2020 end dry lysine production early 2021 company executes strategic vision three pillars optimize core drive efficiencies expand strategically supported readiness effort company launched readiness drive new efficiencies improve customer experience company’s existing businesses combination data analytics process simplification standardization behavioral cultural change building upon earlier 1adm operational excellence programs operating performance indicators company’s ag services oilseeds operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials result changes agricultural commodity prices relatively equal impacts revenues cost products sold therefore changes revenues businesses necessarily correspond changes margins gross profit thus gross margins per volume metric ton meaningful gross margins percentage revenues company’s carbohydrate solutions operations nutrition businesses also utilize agricultural commodities products derived agricultural commodities raw materials however operations agricultural commodity market price changes necessarily correlate changes cost products sold therefore changes revenues businesses may correspond changes margins gross profit thus gross margin rates meaningful performance indicator businesses company consolidated subsidiaries 70 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland euro functional currency brazil argentina us dollar functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil argentina functional currency us dollar however certain transactions including taxes occur local currency require remeasurement functional currency changes revenues expected correlated changes expenses reported company caused fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar company measures performance using key financial metrics including net earnings gross margins segment operating profit return invested capital ebitda economic value added manufacturing expenses selling general administrative expenses company’s financial results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies trade policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company undertakes responsibility updating forwardlooking information contained within “management’s discussion analysis financial condition results operations” item 7management’s discussion analysis financial condition results operations continued market factors influencing operations results twelve months ended december 31 2020 company subject variety market factors affect company’s operating results north american crushing margins volatile due slow farmer selling covid19 impacts demand meal oil earlier 2020 strengthened third quarter due increasingly tight soybean stocks south america south america saw record origination volumes first half 2020 benefited strong farmer selling brazil driven devaluation brazilian real record us industry exports fourth quarter driven strong demand china rest world demand margins biodiesel remained solid north south america margins starches sweeteners wheat flour remained solid demand soft due impacts covid19 food service sector ethanol margins mixed us industry ethanol production exceeded demand inventories remained high early year improved stabilized rest year adm many ethanol producers idled capacity due low demand nutrition benefited growing demand flavors pet food feed livestock plantbased proteins edible beans probiotics lower outofhome consumption caused covid19 lockdown measures negatively impacted flavors textured plantbased protein volumes especially food service channel well demand aqua feed amino acids global demand amino acids also negatively impacted lower livestock counts following african swine fever outbreak year ended december 31 2020 compared year ended december 31 2019 net earnings attributable controlling interests increased 28 04 billion 18 billion segment operating profit increased 17 05 billion 35 billion included net income 7 million consisting gains sale portion company’s shares wilmar certain assets partially offset asset impairment restructuring settlement charges included segment operating profit prior year net charge 134 million consisting asset impairment restructuring settlement charges gains sale certain assets stepup gain equity investment adjusted segment operating profit increased 04 billion 34 billion due primarily higher results ag services vantage corn processors human animal nutrition higher equity earnings wilmar investment partially offset lower results crushing refined products business refined products prior year included 128 million 2018 portion twoyear retroactive biodiesel tax credits corporate results current year net charge 16 billion included early debt retirement charges 409 million marktomarket loss 17 million conversion option exchangeable bonds issued august 2020 impairment restructuring charges 16 million acquisitionrelated expenses 4 million gains sale certain assets 7 million credit 91 million elimination lastin firstout lifo reserve connection accounting change effective january 1 2020 corporate results prior year net charge 14 billion included restructuring pension settlement remeasurement charges 159 million primarily related early retirement reorganization initiatives loss sale companys equity investment cip 101 million charge 37 million effect changes agricultural commodity prices lifo inventory valuation reserves income taxes 101 million decreased 108 million company’s effective tax rate 2020 54 compared 132 2019 change rate due primarily changes geographic mix earnings foreign currency remeasurement adjustments previously filed returns rates 2020 2019 also impacted us tax credits mainly railroad maintenance tax credit offsetting expense cost products sold analysis statements earnings processed volumes product years ended december 31 2020 2019 follows metric tons item 7management’s discussion analysis financial condition results operations continued company generally operates production facilities overall basis near capacity adjusting facilities individually needed react local supply demand conditions overall increase oilseeds due increased plant capacity utilization combined downtime prior year due weatherrelated issues overall decrease corn processed primarily related temporary idling two dry mill facilities second quarter due low ethanol demand company currently expects idled facilities restarted demand ethanol improves within next 12 months revenues segment years ended december 31 2020 2019 follows revenues cost products sold agricultural merchandising processing businesses significantly correlated underlying commodity prices volumes periods significant changes market prices underlying performance company better evaluated looking margins since revenues cost products sold particularly ag services oilseeds generally relatively equal impact market price changes generally result insignificant impact gross profit revenues decreased 03 billion 644 billion due lower sales volumes 23 billion partially offset higher sales prices 20 billion lower sales volumes rice ethanol oils corn byproducts lower sales prices biodiesel partially offset higher sales volumes biodiesel higher sales prices soybeans oils meal ag services oilseeds revenues increased 2 497 billion due higher sales prices 19 billion partially offset lower sales volumes 09 billion carbohydrate solutions revenues decreased 14 85 billion due lower sales volumes 14 billion primarily due temporarily idled dry mill facilities nutrition revenues increased 2 58 billion due higher sales prices 01 billion item 7management’s discussion analysis financial condition results operations continued cost products sold decreased 06 billion 599 billion due principally lower sales volumes partially offset higher commodity prices included cost products sold current year credit 91 million effect elimination lifo reserve connection accounting change current year compared charge 37 million effect changes agricultural commodity prices lifo inventory valuation reserves prior year manufacturing expenses decreased 01 billion 56 billion due principally lower energy costs decreased operating supplies partially offset increased railroad maintenance expenses foreign currency translation impacts decreased revenues cost products sold 03 billion gross profit increased 03 billion 7 45 billion higher results human animal nutrition 02 billion ag services 03 billion partially offset lower results refined products 01 billion crushing 01 billion factors explained segment operating profit discussion page 38 corporate positive periodoverperiod impact lifo 01 billion due elimination lifo reserve connection accounting change effective january 1 2020 changes agricultural commodity prices lifo inventory valuation reserves prior period offset increase railroad maintenance expenses 01 billion selling general administrative expenses increased 8 27 billion due principally higher variable performance related compensation expenses increased projectrelated expenses asset impairment exit restructuring costs decreased 223 million 80 million charges current year consisted primarily 47 million impairments related certain intangible longlived assets 17 million individually insignificant restructuring charges presented specified items within segment operating profit 7 million individually insignificant impairments 9 million individually insignificant restructuring charges corporate prior year charges consisted impairments 131 million related certain facilities vessels long lived assets 11 million related goodwill intangible assets presented specified items within segment operating profit 159 million restructuring pension settlement remeasurement charges corporate primarily related early retirement reorganization initiatives several individually insignificant restructuring charges presented specified items within segment operating profit interest expense decreased 63 million 339 million due lower interest rates net interest savings cross currency swaps partially offset marktomarket loss adjustment related conversion option exchangeable bonds issued august 2020 equity earnings unconsolidated affiliates increased 125 million 579 million due principally higher earnings company’s investment wilmar loss debt extinguishment 409 million current year related multiple early debt redemptions including 07 billion debt tender september 2020 interest income decreased 104 million 88 million interest income segregated funds company’s futures commission brokerage business declined due lower interest rates income net 278 million increased 285 million current year income included gains related sale portion company’s shares wilmar certain assets investment revaluation gain nonservice components net pension benefit income foreign exchange gains income prior year expense included loss sale company’s equity investment cip foreign exchange losses partially offset gains sale certain assets stepup gains equity investments gains disposals individually insignificant assets ordinary course business income item 7management’s discussion analysis financial condition results operations continued segment operating profit adjusted segment operating profit nongaap measure earnings income taxes years ended december 31 2020 2019 follows 1 adjusted segment operating profit segment operating profit excluding listed specified items item 7management’s discussion analysis financial condition results operations continued ag services oilseeds operating profit increased 9 ag services results higher prior year negatively impacted challenging weather conditions uschina trade tensions strong performance global trade driven strong results destination marketing increased trading volumes robust farmer selling brazil strong margins north america drove higher origination results current year results also included 54 million settlement related us high water insurance claims 2019 crushing results lower prior year although volumes strong execution margins solid negative timing impacts drove lower results current year compared favorable timing effects prior year refined products results lower due decreased biodiesel margins north america 128 million 2018 portion retroactive biodiesel tax credits recorded prior year equity earnings wilmar higher yearoveryear carbohydrate solutions operating profit increased 11 starches sweeteners results higher due strong margins corn wet milling wheat milling north america improved conditions emeai partially offset negative marktomarket timing effects corn oil covidrelated impacts volumes across business vantage corn processors results improved prior year due effective risk management strong demand industrial alcohol nutrition operating profit increased 37 human nutrition delivered strong performance growth across broad portfolio strong execution meet rising customer demand plantbased proteins edible beans drove higher results specialty ingredients additional income fermentation strong sales probiotics fiber drove higher performance health wellness flavors continued deliver strong results animal nutrition results improved yearoveryear driven strong performance neovia good margins commercial livestock premix improved margins amino acids business operating profit decreased 39 lower results including loss provisions related company’s futures commission brokerage business partially offset improvements underwriting performance captive insurance operations corporate results follows item 7management’s discussion analysis financial condition results operations continued corporate results net charge 16 billion current year compared 14 billion prior year elimination lifo reserve connection accounting change effective january 1 2020 resulted credit 91 million current year compared charge 37 million effect changes agricultural commodity prices lifo inventory valuation reserves prior year interest expense net decreased 35 million due principally lower interest rates net interest savings cross currency swaps unallocated corporate costs increased 210 million due principally higher variable performancerelated compensation expenses increased projectrelated expenses related business transformation program includes implementation enterprise resource planning system loss sale assets prior year related sale company’s equity investment cip expenses related acquisitions prior year consisted expenses primarily related neovia acquisition loss debt extinguishment related multiple early debt redemptions 07 billion debt tender september 2020 loss debt conversion option related marktomarket adjustment conversion option exchangeable bonds issued august 2020 impairment restructuring charges current year related impairment certain assets individually insignificant restructuring charges impairment restructuring settlement charges prior year included restructuring pension settlement remeasurement charges related early retirement reorganization initiatives charges current year included railroad maintenance expenses 138 million partially offset foreign exchange gains investment revaluation gain nonservice components net pension benefit income charges prior year included railroad maintenance expenses 51 million nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda adjusted segment operating profit nongaap financial measures defined sec evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes adjusted segment operating profit segment operating profit adjusted applicable specified items management believes adjusted eps adjusted ebitda adjusted segment operating profit useful measures company’s performance provide investors additional information company’s operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda adjusted segment operating profit intended replace alternative diluted eps earnings income taxes segment operating profit respectively directly comparable amounts reported gaap item 7management’s discussion analysis financial condition results operations continued table provides reconciliation diluted eps adjusted eps years ended december 31 2020 2019 1 tax effected using company’s us tax rate lifo accounting discontinued effective january 1 2020 2 tax effected using applicable tax rates tables provide reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2020 2019 item 7management’s discussion analysis financial condition results operations continued market factors influencing operations results twelve months ended december 31 2019 company subject variety market factors affect company’s operating results sales volumes margins ag services oilseeds negatively impacted challenging north american weather conditions particular high water mississippi river system first half 2019 continuing global trade tensions china handling volumes north america impacted late harvest planting delayed due spring flooding continued good global meal demand resulted strong global crushing volumes solid margins south american origination volumes benefited uschina trade dispute also impacted softer chinese demand due african swine fever impact local feed demand intermittent farmer selling global demand margins refined oil biodiesel remained solid demand prices sweeteners starches remained solid north america coproduct prices stable although ethanol demand remained steady north america margins severely pressured us industry ethanol production stocks remained high levels us exports china ceased trade dispute severe weather conditions north america also adversely impacted operations carbohydrate solutions business unit nutrition benefited growing demand flavors systems human pet health wellness products plantbased proteins negatively impacted african swine fever asia pacific also resulted pricing pressures global lysine market year ended december 31 2019 compared year ended december 31 2018 net earnings attributable controlling interests decreased 24 04 billion 14 billion segment operating profit decreased 10 03 billion 29 billion included net charge 134 million consisting asset impairment restructuring settlement charges gains sale certain assets stepup gain equity investment included segment operating profit 2018 net charge 89 million consisting asset impairment restructuring settlement charges net gain sales assets businesses adjusted segment operating profit decreased 03 billion 31 billion due lower results ag services crushing carbohydrate solutions lower equity earnings wilmar partially offset higher results refined products nutrition refined products 2019 included 270 million related biodiesel tax credit 2018 2019 compared 120 million 2017 recorded prior year corporate results net charge 14 billion 2019 included restructuring pension settlement remeasurement charges 159 million primarily related early retirement reorganization initiatives loss sale company’s equity investment cip 101 million charge 37 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 18 million 2018 corporate results 2018 12 billion included pension settlement charge 117 million 49 million charge related discontinued software project restructuring charges 24 million primarily related reorganization services income taxes 209 million decreased 36 million company’s effective tax rate 2019 132 compared 119 2018 low 2019 tax rate primarily due impact us tax credits including 2018 2019 biodiesel tax credit railroad maintenance tax credit signed law december 2019 effective tax rate 2018 included 2017 biodiesel tax credit recorded first quarter 2018 additional trueup adjustments related 2017 us tax reform along certain favorable discrete tax items netting favorable 74 million analysis statements earnings processed volumes product years ended december 31 2019 2018 follows metric tons item 7management’s discussion analysis financial condition results operations continued company generally operates production facilities overall basis near capacity adjusting facilities individually needed react local supply demand conditions processed volumes corn decreased slightly prior year levels primarily related production disruptions columbus nebraska corn processing plant due flooding production issues decatur illinois corn complex revenues segment years ended december 31 2019 2018 follows revenues cost products sold agricultural merchandising processing businesses significantly correlated underlying commodity prices volumes periods significant changes market prices underlying performance company better evaluated looking margins since revenues cost products sold particularly ag services oilseeds generally relatively equal impact market price changes generally result insignificant impact gross profit revenues increased 315 million 647 billion due overall higher sales volumes 32 billion partially offset lower sales prices 29 billion increase sales volumes due principally soybeans wheat cotton higher sales volumes feed ingredients related acquisitions decrease sales prices due principally soybeans meal wheat ag services oilseeds revenues decreased 2 487 billion due lower sales prices 30 billion partially offset higher sales volumes 18 billion carbohydrate solutions revenues decreased 4 99 billion due lower sales volumes 04 billion nutrition revenues increased 50 57 billion due higher sales volumes 18 billion primarily related acquisitions higher sales prices 01 billion cost products sold increased 03 billion 605 billion due overall higher sales volumes partially offset lower prices commodities included cost products sold 2019 charge 37 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 18 million 2018 manufacturing expenses increased 03 billion 57 billion due principally new acquisitions foreign currency translation impacts decreased revenues cost products sold 08 billion item 7management’s discussion analysis financial condition results operations continued gross profit decreased 34 million 1 41 billion lower results ag services oilseeds 40 million carbohydrate solutions 301 million 6 million offset higher results nutrition 400 million factors explained discussions segment operating profit page 45 effect changes agricultural commodity prices lifo inventory valuation reserves negative impact gross profit 37 million 2019 compared positive impact 18 million 2018 selling general administrative expenses increased 15 25 billion due principally new acquisitions primarily nutrition segment higher spending business transformation growthrelated investments readinessrelated projects partially offset lower variable performancerelated stock compensation expenses asset impairment exit restructuring costs increased 132 million 303 million charges 2019 consisted asset impairments 131 million related certain facilities vessels longlived assets 11 million related goodwill intangible assets presented specified items within segment operating profit 159 million restructuring pension settlement remeasurement charges corporate primarily related early retirement reorganization initiatives several individually insignificant restructuring charges presented specified items within segment operating profit charges 2018 totaling 171 million consisted 56 million impairment certain longlived assets 12 million impairment equity investment 21 million impairment related longterm financing receivable 9 million individually insignificant impairment restructuring charges presented specified items within segment operating profit 49 million charge related discontinued software project 18 million restructuring charges related reorganization services 6 million individually insignificant restructuring charges corporate interest expense increased 38 million 402 million due higher borrowings fund recent acquisitions partially offset lower interest rates equity earnings unconsolidated affiliates decreased 64 million 454 million due lower earnings company’s investments wilmar cip partially offset higher earnings company’s investments olenex equity investees expense net 7 million decreased 94 million expense 2019 included loss sale company’s equity investment cip foreign exchange loss partially offset gains sale certain assets stepup gains equity investments gains disposals individually insignificant assets ordinary course business income expense 2018 included foreign exchange losses noncash pension settlement charge 117 million related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain us salaried retirees company’s adm retirement plan expenses partially offset gains disposals businesses equity investment individually insignificant assets ordinary course business income item 7management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes years ended december 31 2019 2018 follows 1 adjusted segment operating profit segment operating profit excluding specified items item 7management’s discussion analysis financial condition results operations continued ag services oilseeds operating profit decreased 4 ag services results lower due weaker north american grain margins lower volumes part due challenging weather conditions uschina trade tensions results 2019 negatively impacted high water conditions first half year limited grain movement sales north america slow farmer selling lower chinese demand south american origination part due african swine fever also impacted results crushing results strong compared 2018 lower executed crush margins around globe drove lower results partially offset favorable timing effects approximately 102 million hedges entered 2018 refined products results compared 2018 primarily due retroactive biodiesel tax credit 270 million 2018 2019 recorded 2019 compared 120 million 2017 recorded 2018 strong demand higher results equity investments wilmar results lower year carbohydrate solutions operating profit decreased 32 starches sweeteners results primarily due lower results emea margins pressured due low sugar prices turkish quota starchbased sweeteners higher manufacturing costs decatur il complex weaker margins flour milling also contributed decrease vantage corn processors results due significantly lower ethanol margins amid continued unfavorable ethanol industry environment exacerbated lack chinese demand ethanol due uschina trade dispute nutrition operating profit increased 23 human nutrition results higher year strong sales margin growth north america europe middle east africa india emeai contributions acquisitions animal nutrition results driven largely contributions acquisition neovia partially offset additional expenses related inventory valuation newlyacquired neovia weaker lysine results business operating profit increased 47 primarily due improved results company’s futures commission brokerage business captive insurance underwriting performance corporate results follows corporate results net charge 14 billion 2019 compared 12 billion 2018 effect changes agricultural commodity prices lifo inventory valuation reserves resulted charge 37 million 2019 compared credit 18 million 2018 interest expense net increased 27 million due higher borrowings fund recent acquisitions partially offset interest savings crosscurrency swaps unallocated corporate costs decreased 13 million due principally decreased performancerelated compensation accruals partially offset higher spending business transformation growthrelated investments readinessrelated projects loss sale asset related sale company’s equity investment cip expenses related acquisitions 2019 consisted expenses primarily related neovia acquisition expenses related acquisitions 2018 consisted expenses losses foreign currency derivative contracts entered economically hedge certain acquisitions impairment restructuring settlement charges 2019 included restructuring pension settlement remeasurement charges related early retirement reorganization initiatives impairment restructuring settlement charges 2018 included pension settlement charge 117 million related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain us salaried retirees company’s adm retirement plan 49 million charge related discontinued software project restructuring charges 24 million primarily related reorganization services charges 2019 included railroad maintenance expenses 51 million charges 2018 included foreign exchange losses partially offset earnings company’s equity investment cip item 7management’s discussion analysis financial condition results operations continued nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda adjusted segment operating profit nongaap financial measures defined sec evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes adjusted segment operating profit segment operating profit adjusted applicable specified items management believes adjusted eps adjusted ebitda adjusted segment operating profit useful measures company’s performance provide investors additional information company’s operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda adjusted segment operating profit intended replace alternative diluted eps earnings income taxes segment operating profit respectively directly comparable amounts reported gaap table provides reconciliation diluted eps adjusted eps years ended december 31 2019 2018 1 tax effected using company’s us tax rate 2 tax effected using applicable tax rates 3 includes tax adjustments related us tax cuts jobs act discrete items item 7management’s discussion analysis financial condition results operations continued tables provide reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2019 2018 item 7management’s discussion analysis financial condition results operations continued liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business company depends access credit markets impacted credit rating factors outside adm’s control fund working capital needs capital expenditures primary source funds finance adm’s operations capital expenditures advancement growth strategy cash generated operations lines credit including commercial paper borrowing facility accounts receivable securitization programs addition company believes access funds public private equity debt capital markets us international markets cash used operating activities 24 billion 2020 compared 55 billion 2019 working capital changes described including impact deferred consideration decreased cash 55 billion current year compared 77 billion prior year trade receivables increased 01 billion primarily due lower receivables sold inventories increased 24 billion primarily due higher inventory prices current assets accrued expenses payables increased 21 billion 13 billion respectively primarily due increases contracts futures gains losses trade payables increased 07 billion principally reflecting seasonal cash payments north american harvestrelated grain purchases payables brokerage customers increased 14 billion due increased customer trading activity company’s futures commission brokerage business deferred consideration securitized receivables 46 billion 77 billion 2020 2019 respectively offset amounts net consideration received beneficial interest obtained selling trade receivables cash provided investing activities 45 billion year compared 53 billion last year capital expenditures 08 billion current year comparable last year net assets businesses acquired 15 million year compared 19 billion last year due acquisition neovia 2019 proceeds sales business assets 07 billion current year related sale portion company shares wilmar certain assets compared 03 billion prior year net consideration received beneficial interest obtained selling trade receivables 46 billion 77 billion 2020 2019 respectively cash used financing activities 04 billion year compared 07 billion last year longterm debt borrowings current year 18 billion consisted 05 billion 10 billion aggregate principal amounts 275 notes due 2025 325 notes due 2030 respectively issued march 27 2020 03 billion aggregate principal amount zero coupon exchangeable bonds due 2023 issued august 26 2020 proceeds borrowings current year used general corporate purposes including reduction shortterm debt commercial paper net borrowings 08 billion current year compared 09 billion prior year longterm debt payments current year 21 billion related primarily early redemption 05 billion 04 billion aggregate principal amounts 4479 debentures due 2021 3375 debentures due 2022 respectively repurchase 07 billion aggregate principal amount certain outstanding notes debentures redemption 02 billion aggregate principal amount private placement notes due 2021 2024 longterm debt payments 06 billion prior year related €500 million floating rate notes matured june 2019 share repurchases current year 01 billion compared 02 billion prior year dividends paid current year 08 billion comparable prior year december 31 2020 adm 07 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 15 1 included working capital 79 billion readily marketable commodity inventories december 31 2020 company’s capital resources included shareholders’ equity 200 billion lines credit including accounts receivable securitization programs described totaling 102 billion 66 billion unused adm’s ratio longterm debt total capital sum longterm debt shareholders’ equity 28 29 december 31 2020 2019 respectively company uses ratio measure adm’s longterm indebtedness indicator financial flexibility company’s ratio net debt sum shortterm debt current maturities longterm debt longterm debt less sum cash equivalents shortterm marketable securities capital sum net debt shareholders’ equity 32 29 december 31 2020 2019 respectively company’s total lines credit 50 billion supported commercial paper borrowing programs 17 billion commercial paper outstanding december 31 2020 item 7management’s discussion analysis financial condition results operations continued covid19 significantly impacted adm’s capital financial resources pricing revolving credit facility remains unchanged however line overall markets covid19 created dislocations credit markets certain periods first half 2020 corporate spreads increasing partially offset decline benchmark yields company utilized diversified sources liquidity including inventory financing bilateral bank facilities ensure ample cash prepared possible unexpected credit market disruptions additionally adm accepted federal reserve’s commercial paper financing facility bank england’s covid corporate financing facility ensuring uninterrupted access us european commercial paper markets federal reserve’s commercial paper financing facility bank england’s covid corporate financing facility expire march june 2021 respectively unless renewed date company utilized facilities second half 2020 global credit market stabilized corporate credit spreads prepandemic levels continued actions central banks provided additional support shortterm longterm funding markets stabilizing corporate credit markets low benchmark yields favorable credit spreads coupled continued strong cash flow generation second half year presented opportunities adm rebalance company’s liability portfolio prepandemic levels starting june 2020 adm began series liability management transactions including multiple early debt redemptions 07 billion debt tender september 2020 capitalize alltime low interest rates december 31 2020 company 07 billion cash equivalents 03 billion cash held foreign subsidiaries whose undistributed earnings considered indefinitely reinvested based company’s historical ability generate sufficient cash flows us operations unused available us credit capacity 40 billion company asserted funds indefinitely reinvested outside us company accounts receivable securitization programs “programs” certain commercial paper conduit purchasers committed purchasers programs provide company 18 billion funding accounts receivable transferred programs expand company’s access liquidity efficient use balance sheet assets see note 19 item 8 information disclosures programs december 31 2020 company utilized 16 billion facility programs november 5 2014 company’s board directors approved stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2015 ending december 31 2019 august 7 2019 company’s board directors approved extension stock repurchase program december 31 2024 repurchase additional 100000000 shares extended program company acquired approximately 955 million shares program december 31 2020 2021 company expects capital expenditures 09 billion 10 billion additional cash outlays approximately 08 billion dividends 05 billion share repurchases subject strategic uses capital company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2020 three major credit rating agencies maintained company’s credit ratings solid investment grade levels stable outlooks item 7management’s discussion analysis financial condition results operations continued contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 151 million december 31 2020 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table 1 includes pension contributions 29 million fiscal 2021 company unable estimate amount pension contributions beyond fiscal year 2021 information concerning company’s pension postretirement plans see note 15 item 8 december 31 2020 company estimates spend approximately 17 billion fiscal year 2025 complete currently approved capital projects included table company also outstanding letters credit surety bonds 12 billion december 31 2020 included table company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements immaterial arises primary entity fails perform contractual obligation company collateral portion contingent obligations item 7management’s discussion analysis financial condition results operations continued balance sheet arrangements accounts receivable securitization programs april 1 2020 october 1 2020 company restructured accounts receivable securitization programs deferred purchase price pledge structure new structure adm ireland receivables adm receivables transfer portion purchased accounts receivable together equally proportional interest right title interest remaining purchased accounts receivable commercial paper conduit purchasers committed purchasers exchange adm ireland receivables adm receivables receive cash payment accounts receivables transferred see note 19 “notes consolidated financial statements” included item 8 herein “financial statements supplementary data” information disclosures programs material changes company’s balance sheet arrangements year critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements fair value measurements inventories commodity derivatives certain company’s inventory commodity derivative assets liabilities december 31 2020 valued estimated fair values including 79 billion merchandisable agricultural commodity inventories 28 billion commodity derivative assets 20 billion commodity derivative liabilities 05 billion inventoryrelated payables commodity derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s inventory derivative commodity fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 2 within fair value hierarchy level 3 fair value measurements approximately 30 billion assets 09 billion liabilities represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 4 item 8 changes market values inventories commodity contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges hedge purchase sales price anticipated volumes commodities purchased processed future month assuming normal market conditions change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred accumulated comprehensive income net applicable income taxes recognized component cost products sold revenues statement earnings hedged item recognized earnings determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component revenues andor cost products sold see note 5 item 8 additional information item 7management’s discussion analysis financial condition results operations continued investments affiliates company applies equity method accounting investments company ability exercise significant influence investments carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may materially differ income taxes company accounts income taxes accordance applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example company received tax assessments tax authorities argentina netherlands challenging income tax positions taken subsidiaries company evaluated tax positions matters concluded based part upon advice legal counsel appropriate recognize tax benefits positions see note 13 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely 2020 company increased valuation allowances approximately 14 million primarily related capital loss carryforwards extent company favorably resolve matters valuation allowances established required pay amounts excess aforementioned valuation allowances company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries corporate joint ventures amounting approximately 125 billion december 31 2020 considered indefinitely reinvested company responsibility ensure adm businesses within company follow responsible tax practices adm manages tax affairs based upon following key principles commitment paying tax compliance applicable laws regulations jurisdictions company operates commitment effective sustainable active management companys tax affairs developing sustaining open honest relationships governments jurisdictions company operates regarding formulation tax laws item 7management’s discussion analysis financial condition results operations continued property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist addition assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods 2020 company temporarily idled certain corn processing assets ethanol produced performed quantitative impairment assessment assets resulting impairment charges total carrying value temporarily idled assets december 31 2020 immaterial years ended december 31 2020 2019 2018 asset abandonment impairment charges property plant equipment 28 million 131 million 100 million respectively business combinations company’s acquisitions accounted accordance accounting standards codification asc topic 805 business combinations amended consideration transferred allocated various assets acquired liabilities assumed estimated fair values acquisition date residual allocated goodwill fair values allocated assets acquired liabilities assumed business combinations require management make significant judgments estimates assumptions especially respect intangible assets management makes estimates fair values based upon assumptions believes reasonable estimates based upon historical experience information obtained management acquired companies inherently uncertain estimated fair values related intangible assets primarily consist customer relationships trademarks developed technology determined primarily using discounted cash flow models estimates discounted cash flow models include limited certain assumptions form basis forecasted results eg revenue growth rates customer attrition rates royalty rates significant assumptions forward looking could affected future economic market conditions measurement period may take one year acquisition date adjustments due changes estimated fair value assets acquired liabilities assumed may recorded adjustments consideration transferred related allocations upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first adjustments charged consolidated statements earnings item 7management’s discussion analysis financial condition results operations continued goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level annually october 1 whenever indicators carrying value may fully recoverable company adopted provisions asc 350 intangibles goodwill permits require company qualitatively assess indicators reporting unit’s fair value completing qualitative assessment company believes likely reporting unit impaired discounted cash flow analysis prepared estimate fair value critical estimates determination fair value reporting unit include limited future expected cash flows discount rates year ended december 31 2020 company evaluated goodwill impairment using qualitative assessment six reporting units using quantitative assessment one reporting unit estimated fair value reporting unit evaluated impairment using quantitative assessment substantially excess carrying value definitelived intangible assets including capitalized expenses related company’s 1adm program amortized estimated useful lives 1 50 years reviewed impairment whenever indicators carrying values may fully recoverable company recorded impairment charges totaling 26 million related customer lists 11 million related goodwill intangibles 9 million related customer lists years ended december 31 2020 2019 2018 respectively see note 18 item 8 information management used different estimates assumptions impairment tests company could recognize different amounts expense future periods employee benefit plans company provides substantially us employees certain international subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides certain eligible us employees retire qualifying conditions subsidized postretirement health care coverage health care reimbursement accounts order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods company uses corridor approach amortizing actuarial losses corridor approach net unrecognized actuarial losses excess 10 greater projected benefit obligation market related value plan assets amortized future periods plans little active participants amortization period remaining average life expectancy participants plans active participants amortization period remaining average service period active participants amortization periods range 2 36 years company’s defined benefit pension plans 6 24 years company’s postretirement benefit plans item 7aitem 7 managements discussion analysis financial condition results operations information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2002 incorporated herein reference item 7aitem 7 management’s discussion analysis financial condition results operations company overview company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations aggregated classified oilseeds processing segment includes activities related processing oilseeds soybeans cottonseed sunflower seeds canola peanuts flaxseed vegetable oils meals principally food feed industries addition oilseeds may resold marketplace raw material processors crude vegetable oil sold processed refining bleaching deodorizing salad oils salad oils processed hydrogenating andor interesterifying margarine shortening food products partially refined oil sold use chemicals paints industrial products refined oil processed use production biodiesel oilseed meals primary ingredients used manufacture commercial livestock poultry feeds oilseeds processing also includes activities related company’s interest wilmar international limited largest agricultural processing business asia corn processing segment includes activities related production sweeteners starches dextrose syrups food beverage industry well activities related production fermentation bioproducts alcohol amino acids specialty food feed ingredients agricultural services segment utilizes company’s extensive grain elevator transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats barley resells commodities primarily feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing transportation network provides reliable efficient services company’s agricultural processing operations also included agricultural services activities ac toepfer international global merchandiser agricultural commodities processed products includes company’s remaining operations consisting principally food feed industrial businesses financial activities food feed industrial includes wheat processing activities related production wheat flour cocoa processing activities related production chocolate cocoa products production natural health nutrition products production food feed industrial products financial activities include banking captive insurance private equity fund investments futures commission merchant activities operating performance indicators company’s oilseeds processing agricultural services wheat processing operations principally agricultural commoditybased businesses changes segment selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts net sales cost products sold minimal impact gross profit underlying transactions result changes net sales amounts business segments necessarily correspond changes gross profit realized businesses company’s corn processing operations certain food feed processing operations also utilize agricultural commodities products derived agricultural commodities raw materials operations agricultural commodity price changes result significant fluctuations cost products sold price changes cannot necessarily passed directly selling price finished products ethanol selling prices bear direct relationship raw material cost agricultural commodity produced item 7 management’s discussion analysis financial condition results operations continued company conducts business many countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods fluctuations exchange rates foreign currencies primarily euro british pound compared us dollar result corresponding fluctuations relative us dollar value company’s revenues expenses impact currency exchange rate changes significant discussed company measures performance business segments using key operating statistics segment operating profit return fixed capital investment return net assets company’s operating results vary significantly due changes unpredictable factors fluctuations energy prices weather conditions crop plantings global government farm programs policies changes global demand resulting population growth changes standards living global production similar competitive crops due unpredictable factors company provide forwardlooking information “management’s discussion analysis financial condition results operations” compared 2006 agriculturalbased commodity business company subject variety market factors affect company’s operating results strong biodiesel demand europe continued create increased vegetable oil demand positively impacted rapeseed crushing margins europe abundant oilseed supplies improved vegetable oil values strong protein meal demand positively impacted oilseed crushing margins north america increased ethanol contracted selling prices continuing strong ethanol demand solid demand sweetener starch products improved corn processing results increases corn processing results partially offset higher net corn costs global grain merchandising opportunities resulting regional production imbalances also improved operating results north american river transportation operations favorably impacted strong demand river transportation services increased barge freight rates increasing commodity price levels negatively affected lifo inventory valuations partially offsetting improvements operating results net earnings increased principally due improved operating results company’s operating segments earnings income taxes 2007 include gain 440 million related exchange company’s interests certain asian joint ventures shares wilmar international limited wilmar gain 357 million realized securities gain sales company’s equity securities tyson foods inc overseas shipholding group inc gain 153 million sale company’s interest agricore united 53 million gain sale company’s arkady food ingredient business earnings income taxes 2007 also include charges 206 million effect changing commodity prices lifo inventory valuations 46 million related repurchase 400 million company’s outstanding debentures 21 million related abandonment writedown longlived assets net earnings 2006 include 36 million reduction income tax expense related recognition federal state income tax credits adjustments resulting reconciliation filed tax returns previously estimated tax provision earnings income taxes 2006 include charges 15 million resulting company’s adoption financial accounting standards board interpretation number 47 accounting conditional asset retirement obligations interpretation fasb statement 143 fin 47 71 million related abandonment writedown longlived assets 9 million representing company’s share charge abandonment writedown longlived assets reported unconsolidated affiliate company 22 million associated closure citric acid plant exiting european animal feed business earnings income taxes 2006 also include credits 12 million effect changing commodity prices lifo inventory valuations 17 million sale longlived assets 46 million related brazilian transactional tax credits 40 million related realized securities gains item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings net sales operating income increased 20 440 billion due primarily increased selling prices agricultural commodities oilseed corn processing products lesser extent increased sales volumes agricultural commodities oilseed processing products addition net sales operating income increased 916 million 3 due currency exchange rate fluctuations net sales operating income segment follows oilseeds processing sales increased 17 139 billion due principally increased average selling prices vegetable oil increased sales volumes vegetable oil biodiesel vegetable oil selling prices volumes improved markets anticipate new demand developing united states biodiesel industry biodiesel sales volumes increased due additional production capacity corn processing sales increased 12 54 billion principally due increased sales bioproducts lesser extent increased sales sweeteners starches bioproducts sales increased primarily due higher average selling prices ethanol partially offset lower sales volumes ethanol average selling prices increased principally due higher gasoline prices ethanol sales volumes decreased 2006 sales volumes exceeded production due release inventories built anticipation refiners replacing mtbe ethanol sweeteners starches sales increased primarily due higher average selling prices resulting good demand sweetener starch products agricultural services sales increased 28 197 billion principally due increased agricultural commodity prices increased sales volumes increase commodity prices primarily due higher average market prices corn north america increased 60 prior year increased sales volumes global grain merchandising activities also contributed increase agricultural services sales increased 11 49 billion primarily due higher average selling prices wheat flour products lesser extent increased sales volumes higher average selling prices cocoa products cost products sold increased 21 408 billion primarily due higher average prices agricultural commodities increased sales volumes manufacturing costs 2007 2006 include 21 million 62 million charge respectively abandonment writedown longlived assets addition cost products sold increased 874 million 3 due currency exchange rate fluctuations item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses 12 billion comparable 2006 include 25 million currency exchange rate increases excluding impact currency exchange rate increases selling general administrative expenses decreased 23 million principally due 2006 selling general administrative expenses including 20 million severance costs associated closure citric acid plant 2007 2006 company issued option grants restricted stock awards officers key employees pursuant company’s longterm management incentive program certain officers key employees company receiving option grants restricted stock awards eligible retirement compensation expense related option grants restricted stock awards issued retirementeligible employees recognized earnings date grant selling general administrative expense 2007 2006 includes compensation expense related option grants restricted stock awards granted retirementeligible employees 30 million 31 million respectively income increased 10 billion primarily due 440 million wilmar gain 357 million gain sale company’s equity securities tyson foods inc overseas shipholding group inc 153 million gain sale company’s interest agricore united 53 million gain sale company’s arkady food ingredient business income also includes 46 million charge related repurchase 400 million company’s outstanding debentures excluding items income increased 73 million primarily due 120 million increase equity earnings unconsolidated affiliates 53 million increase investment income partially offset 69 million increase interest expense 27 million reduction gains sales longlived assets increase equity earnings unconsolidated affiliates primarily due higher valuations company’s private equity fund investments improved operating results company’s asian oilseed crushing ventures interest expense investment income increased primarily due increased average borrowing investment levels operating profit segment follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profits increased 518 million 11 billion due 440 million wilmar gain improved market conditions geographic regions north american processing results improved principally due abundant oilseed supplies united states good demand vegetable oil soybean meal vegetable oil values improved markets anticipate new demand developing united states biodiesel industry north american processing results also favorably impacted lower plant operating costs resulting improved capacity utilization asian joint venture results improved due improved palm processing operating results partially offset decreased soy crushing operating results european processing results improved principally due abundant oilseed supplies europe strong demand vegetable oil strong demand vegetable oil result strong biodiesel demand increases partially offset decreased biodiesel operating profits resulting higher vegetable oil prices increased market production capacity lower diesel fuel prices south american processing results declined principally due last year’s 27 million credit brazilian transactional taxes excluding impact last year’s credit brazilian transactional taxes south american processing results improved principally due increased fertilizer margins improvement fertilizer margins primarily due higher average sales prices due improved fertilizer demand combined stable raw material costs operating profits 2007 include 5 million charge abandonment writedown longlived assets operating profits 2006 include 14 million charge abandonment writedown longlived assets 6 million charge related adoption fin 47 corn processing operating profits increased 242 million 11 billion principally due higher average selling prices lower energy costs partially offset lower ethanol sales volumes higher net corn costs net corn costs increased approximately 60 2007 due significant demand increases corn resulting primarily increase cornderived ethanol industry capacity agricultural commodity market concerns regarding expected decline ending 2006 corn crop carryover also contributed increase corn costs sweeteners starches operating profits increased 53 million due primarily higher average sales prices lower energy costs sales prices increased principally due good demand sweetener starch products increases partially offset increased net corn costs sweeteners starches operating profits 2006 include 5 million charge related adoption fin 47 bioproducts operating profits increased 189 million primarily due higher ethanol average selling prices lower energy costs partially offset increased net corn costs lower ethanol sales volumes ethanol average sales prices increased principally due strong demand gasoline refiners higher gasoline prices ethanol sales volumes decreased 2006 sales volumes exceeded production due release inventories built anticipation refiners replacing mtbe ethanol bioproducts operating results 2007 include 1 million charge abandonment writedown longlived assets bioproducts operating results 2006 include 6 million charge abandonment writedown longlived assets 2 million charge related adoption fin 47 6 million costs related closure citric acid plant agricultural services operating profits increased 241 million 516 million principally due 153 million gain sale company’s interest agricore united canadian business specialized crop input crop protection services grain marketing merchandising excluding agricore united gain agricultural services operating profits increased 88 million 363 million principally due improved global grain merchandising operating results lesser extent improved transportation north american origination operating results global grain merchandising results improved regional production imbalances allowed company capitalize merchandising opportunities north american river transportation operating results increased primarily due increased barge freight rates created strong demand barge capacity north american origination operating results improved due good export demand agricultural commodities higher ocean freight rates agricultural services operating profits 2007 include 12 million trade disruption insurance recovery related hurricane katrina item 7 management’s discussion analysis financial condition results operations continued operating profits increased 99 million 409 million food feed industrial operating profits increased 55 million include 53 million gain sale company’s arkady food ingredient business 15 million charge abandonment writedown longlived assets food feed industrial operating results 2006 include 51 million charge abandonment writedown longlived assets 2 million charge related adoption fin 47 9 million charge representing company’s share charge abandonment writedown longlived assets reported unconsolidated affiliate company 17 million gain sale longlived assets 16 million charge related exiting european animal feed business excluding effect 2007 2006 items food feed industrial operating profits declined 44 million due primarily cocoa processing operating results declining prior year levels costs related startup company’s natural plastics production operations cocoa processing operating results declined primarily due increased industry production capacity caused downward pressure cocoa processing margins increases partially offset improved operating results company’s wheat flour processing protein specialty operations financial operating profits increased 44 million principally due increased valuations company’s private equity fund investments higher operating results company’s futures commission merchant business partially offset lower operating results company’s captive insurance operations results company’s captive insurance operations 2007 include 12 million charge related hurricane katrina trade disruption insurance settlement corporate expense decreased 199 million 7 million principally due 345 million increase realized securities gains principally resulting sales company’s equity securities tyson foods inc overseas shipholding group inc 103 million reduction unallocated interest expense due principally higher levels invested funds higher interest rates decreases partially offset 206 million charge compared 12 million credit prior year related effect changing commodity prices lifo inventory valuations 46 million charge related repurchase 400 million company’s outstanding debentures income taxes increased due principally higher pretax earnings absence last year’s 36 million income tax credit related recognition federal state income tax credits adjustments resulting reconciliation filed tax returns previously estimated tax provision company’s effective tax rate 2007 315 excluding effect last year’s 36 million tax credit 312 prior year increase company’s effective tax rate primarily due changes geographic mix pretax earnings compared 2005 agriculturalbased commodity business company subject variety market factors affect company’s operating results strong biodiesel demand europe continued create increased vegetable oil demand positively impacted rapeseed crushing margins europe abundant oilseed supplies strong protein meal demand positively impacted oilseed crushing margins north america good corn supply resulting lower price levels corn favorably impacted corn processing operations ethanol experienced good demand due gasoline refiners replacing mtbe ethanol solid demand sweetener starch products also improved corn processing results first half 2006 hurricanes gulf coast region united states disrupted north american grain origination agricultural commodity export operations negatively impacting export sales volumes gulf coast hurricanes also disrupted river transportation resulting increased barge demand barge freight rates item 7 management’s discussion analysis financial condition results operations continued net earnings increased principally due improved operating results oilseeds processing corn processing addition net earnings also increased due 36 million reduction income tax expense related recognition federal state income tax credits adjustments resulting reconciliation filed tax returns previously estimated tax provision earnings income taxes 2006 include charges 31 million resulting company’s adoption statement financial accounting standards sfas number 123r share based payment 15 million resulting company’s adoption fin 47 71 million related abandonment writedown longlived assets 9 million representing company’s share charge abandonment writedown longlived assets reported unconsolidated affiliate company 22 million associated closure citric acid plant exiting european animal feed business earnings income taxes 2006 also include credits 12 million effect changing commodity prices lifo inventory valuations 17 million sale longlived assets 46 million related brazilian transactional tax credits 40 million related realized securities gains earnings income taxes 2005 included credits 114 million effect changing commodity prices lifo inventory valuations 114 million realized securities gain sale tate lyle plc shares 45 million representing company’s equity share gain reported company’s unconsolidated affiliate compagnie industrielle et financiere des produits amylaces sa cip upon sale interest tate lyle plc cip gain earnings income taxes 2005 also include 42 million charge abandonment writedown longlived assets analysis statements earnings net sales operating income increased 2 366 billion due primarily higher average selling prices agricultural commodities increased sales volumes selling prices corn processing products partially offset decreased average selling prices cocoa products currency exchange rate decreases 415 million net sales operating income segment follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing sales increased 64 million 119 billion principally due higher average selling prices south american oilseed exports vegetable oil increases partially offset lower average selling prices protein meal corn processing sales increased 11 49 billion due sales increases sweeteners starches bioproducts sweeteners starches sales increased due higher average selling prices sales volumes sales volumes prices increased primarily due solid demand sweetener starch products bioproducts sales increased primarily due increased sales volumes average selling prices ethanol partially offset lower average selling prices lysine increases ethanol sales volumes sales prices principally due increased demand gasoline refiners used ethanol replace mtbe gasoline additive increased gasoline prices agricultural services sales increased 2 154 billion primarily due increased commodity prices north america lesser extent increased barge freight rates gulf coast hurricanes reduced barge capacities created strong demand north american river transportation increases partially offset decreased commodity sales volumes north america decreased sales volumes primarily due disruptions north american grain origination export activities caused hurricanes gulf coast region sales decreased 3 44 billion primarily due decreased average selling prices cocoa products lower sales volumes formula feed products decreases partially offset increased average selling prices wheat flour products due higher commodity prices cost products sold increased 118 million 336 billion due primarily higher average prices agricultural commodities increased manufacturing costs partially offset currency exchange rate decreases 389 million manufacturing costs increased 399 million primarily due increased energy costs 86 million charge abandonment writedown longlived assets increased employeerelated costs selling general administrative expenses increased 112 million 12 billion principally due increased employeerelated costs including 31 million charge related adoption sfas 123r 20 million severance costs associated closure citric acid plant increased provisions doubtful accounts income decreased 84 million due primarily 73 million decrease realized securities gains 55 million decrease equity earnings affiliates 39 million increase interest expense partially offset 69 million increase investment income decrease realized securities gains primarily due 114 million realized securities gain 2005 sale tate lyle plc shares partially offset 40 million realized securities gains 2006 decrease equity earnings affiliates primarily due cip gain 2005 lower valuations company’s private equity fund investments 2006 partially offset improved earnings company’s asian oilseed crushing ventures interest expense increased primarily due higher average borrowing levels interest rates investment income increased primarily due reversal 19 million brazilian transactional taxes previously assessed investment income upon positive resolution brazilian supreme court higher levels invested funds higher interest rates item 7 management’s discussion analysis financial condition results operations continued operating profit segment follows oilseeds processing operating profits increased 254 million 599 million primarily due improved market conditions geographic regions european processing results improved principally due strong demand biodiesel abundant rapeseed supplies europe strong demand biodiesel europe increased european vegetable oil demand resulted improved oilseeds processing results abundant rapeseed supplies europe resulted lower rapeseed price levels north american processing results improved principally due abundant oilseed supplies united states good demand soybean meal vegetable oil values solid markets anticipate new demand developing united states biodiesel industry south american operating results increased primarily due improved origination activities 27 million credit brazilian transactional taxes operating results asia increased due improved soy crushing margins improved palm operations operating profits include 14 million charge abandonment writedown longlived assets 6 million charge related adoption fin 47 operating profits 2005 include charge 13 million abandonment writedown longlived assets corn processing operating profits increased 347 million 877 million primarily due higher average selling prices increased sales volumes lower net corn costs partially offset increased energy costs sweeteners starches operating profits increased 160 million due primarily decreased net corn costs higher average sales prices sales volumes sales volumes prices increased primarily due good demand sweetener starch products increases partially offset increased energy costs sweeteners starches operating profits include 5 million charge related adoption fin 47 bioproducts operating profits increased 187 million primarily due higher ethanol sales volumes average selling prices decreased net corn costs partially offset increased energy costs lower lysine average selling prices increases ethanol sales volumes average sales prices principally due increased demand gasoline refiners used ethanol replace mtbe gasoline additive increased gasoline prices bioproducts operating profits include 6 million charge abandonment writedown longlived assets 2 million charge related adoption fin 47 6 million costs related closure citric acid plant bioproducts operating profits 2005 include 16 million charge abandonment writedown longlived assets item 7 managements discussion analysis financial condition results operations continued agricultural services operating profits increased 13 million 275 million improved results transportation operations partially offset decline global grain merchandising north american origination operating results north american river transportation operating results increased primarily due increased barge freight rates created strong demand barge capacity increase partially offset increased fuel costs gulf coast hurricanes negatively impacted north american origination export activities first half 2006 operating profits decreased 104 million 310 million food feed industrial operating results decreased 104 million due primarily 51 million charge abandonment writedown longlived assets 2 million charge related adoption fin 47 9 million charge representing company’s share charge abandonment writedown longlived assets reported unconsolidated affiliate company addition cocoa processing natural health nutrition formula feed operating results declined prior year levels cocoa processing operating results declined primarily due increased industry capacity caused downward pressure cocoa finished product prices formula feed operating results declined due costs associated exiting european animal feed business food feed industrial operating profits include 17 million gain sale longlived assets food feed industrial operating results 2005 include 13 million charge abandonment writedown longlived assets financial operating profits comparable prior year levels improvements company’s captive insurance operations futures commission merchant business offset lower valuations company’s private equity fund investments corporate decreased 171 million due primarily 102 million decrease income effect changing commodity prices lifo inventory valuations 114 million realized securities gain 2005 sale tate lyle plc shares cip gain 2005 22 million charge 2006 upon adoption sfas 123r partially offset aforementioned 19 million reversal brazilian transactional taxes 97 million reduction unallocated interest expense reduction unallocated interest expense due principally higher levels invested funds higher interest rates income taxes increased due principally higher pretax earnings increase partially offset 36 million reduction income tax expense related recognition federal state income tax credits adjustments resulting reconciliation filed tax returns previously estimated tax provision company’s effective tax rate 2006 293 compared 311 2005 excluding effect 36 million tax credit company’s effective tax rate 312 2006 excluding effect cip gain 321 2005 tax provided cip gain 2005 cip corporate joint venture company proceeds sale permanently reinvested excluding effect 36 million tax credit 2006 cip gain 2005 decrease company’s effective tax rate primarily due changes geographic mix pretax earnings liquidity capital resources company’s objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agriculturalbased commodity business item 7 management’s discussion analysis financial condition results operations continued june 30 2007 company continued show substantial liquidity working capital 73 billion current ratio defined current assets divided current liabilities 19 1 included working capital 875 million cash equivalents shortterm marketable securities well 44 billion readily marketable commodity inventories cash generated operating activities totaled 303 million year compared 14 billion last year decrease primarily due increase working capital requirements principally related increased prices quantities agricultural commodity inventories increased receivables partially offset increased cash earnings despite increased investment property plant equipment cash used investing activities decreased 714 million year 355 million due primarily increased sales marketable securities proceeds sales businesses including sale company’s equity interests tyson foods inc overseas shipholding group inc agricore united cash used financing activities 398 million compared cash generated financing activities 284 million last year net longterm borrowings increased primarily result issuance 12 billion convertible senior notes february 2007 described detail compared 600 million 30year debentures issued september 2005 increase partially offset 283 million increased payments longterm debt principally related company retiring 400 million debentures 2007 capital resources strengthened shown increase company’s net worth 98 billion 113 billion company’s ratio longterm debt total capital sum company’s longterm debt shareholders’ equity 30 june 30 2007 29 june 30 2006 ratio measure company’s longterm liquidity indicator financial flexibility company currently 39 billion commercial paper commercial bank lines available meet seasonal cash requirements 26 billion committed 13 billion uncommitted june 30 2007 company 468 million shortterm debt outstanding standard poor’s moody’s fitch rate company’s commercial paper a1 p1 respectively rate company’s longterm debt a2 respectively addition cash flow generated operations company access equity debt capital numerous alternatives public private sources domestic international markets february 2007 company issued 12 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually notes convertible based initial conversion rate 228343 shares per 1000 principal amount notes equal initial conversion price approximately 4379 per share notes may converted subject adjustment following circumstances 1 calendar quarter beginning march 31 2007 closing price company’s common stock least 20 trading days 30 consecutive trading days ending last trading day immediately preceding quarter 140 applicable conversion price per share 1000 divided applicable conversion rate 2 five consecutive business day period immediately five consecutive trading day period note measurement period average trading price per 1000 principal amount notes equal less 98 average product closing price company’s common stock conversion rate date note measurement period 3 company makes specified distributions common stockholders specified corporate transactions occur 4 time january 15 2014 business day preceding maturity date upon conversion holder would receive amount cash equal lesser 1 1000 2 conversion value defined conversion value exceeds 1000 company deliver company’s election cash common stock combination cash common stock conversion value excess 1000 notes converted connection change control defined company may required provide makewhole premium form increase conversion rate subject stated maximum amount addition event change control holders may require company purchase portion notes purchase price equal 100 principal amount notes plus accrued unpaid interest item 7 management’s discussion analysis financial condition results operations continued concurrent issuance notes company purchased call options private transactions cost 299 million purchased call options allow company receive shares common stock andor cash counterparties equal amounts common stock andor cash related excess current market price company’s common stock exercise price purchased call options addition company sold warrants private transactions acquire subject customary antidilution adjustments 263 million shares common stock exercise price 6256 per share received proceeds 170 million average price company’s common stock defined period ending respective settlement dates exceeds exercise price warrants settled company’s option cash shares common stock purchased call options warrants intended reduce potential dilution upon future conversions notes effectively increasing initial conversion price 6256 per share upon closing sale notes 370 million net proceeds note issuance proceeds warrant transactions used repurchase 103 million shares company’s common stock company’s stock repurchase program june 30 2007 none conditions permitting conversion notes satisfied addition june 30 2007 market price company’s common stock greater exercise price purchased call options warrants contractual obligations offbalance sheet arrangements normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued june 30 2007 company estimates spend approximately 30 billion next four years complete approved capital projects acquisitions company limited partner various private equity funds invest primarily emerging markets june 30 2007 company’s carrying value limited partnership investments 165 million company future capital commitments related partnerships 138 million expects majority additional capital commitments called funded cash flows generated partnerships company also outstanding letters credit surety bonds 339 million june 30 2007 addition company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations june 30 2007 contingent obligations totaled approximately 98 million amounts outstanding primary entity contingent obligations 51 million june 30 2007 critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements item 7 management’s discussion analysis financial condition results operations continued inventories derivatives certain company’s merchandisable agricultural commodity inventories forward fixedprice purchase sale contracts exchangetraded futures options contracts valued estimated market values merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates market value based exchangequoted prices adjusted differences local markets changes market values inventories contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ company time uses derivative contracts fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol derivative contracts designated cash flow hedges change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures contracts would recorded statement earnings component cost products sold employee benefit plans company provides substantially domestic employees certain international subsidiaries pension benefits company also provides substantially domestic salaried employees postretirement health care life insurance benefits order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty specialists assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods income taxes company frequently faces challenges domestic foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves probable exposures deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization certain deferred tax assets reflects company’s tax planning strategies valuation allowances related deferred tax assets established extent realization tax benefit probable based management’s evaluation company’s tax position believed amounts related tax exposures appropriately accrued extent company favorably resolve matters accruals established required pay amounts excess aforementioned reserves company’s effective tax rate given financial statement period may impacted item 7 management’s discussion analysis financial condition results operations continued undistributed earnings company’s foreign subsidiaries affiliated corporate joint ventures accounted equity method considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven unpredictable factors weather plantings government domestic foreign farm programs policies changes population growth changes standards living production similar competitive crops aforementioned unpredictable factors therefore may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency profitability company’s fixed asset base terms geographic location size age factories company time also invest equipment technology related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets abandoned consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation fixed asset base company could recognize different amounts expense future periods valuation marketable securities investments affiliates company classifies majority marketable securities availableforsale carries securities fair value investments affiliates carried cost plus equity undistributed earnings publicly traded securities fair value company’s investments readily available based quoted market prices nonpublicly traded securities management’s assessment fair value based valuation methodologies including discounted cash flows estimates sales proceeds event decline fair value investment carrying value management may required determine decline fair value temporary evaluating nature decline fair value investment management considers market conditions trends earnings discounted cash flows trading volumes key measures investment well company’s ability intent hold investment decline value deemed temporary impairment loss recognized current period operating results extent decline see notes 3 5 company’s consolidated financial statements information regarding company’s marketable securities investments affiliates management used different estimates assumptions evaluation marketable securities company could recognize different amounts expense future periods item 7 management’s discussion analysis financial condition results operations continued company limited partner various private equity funds invest primarily emerging markets company accounts limited partnerships using equity method accounting therefore company recording consolidated statement earnings proportional share limited partnerships’ net income loss limited partnerships value investments fair value thus unrealized gains losses related change fair value investments recorded limited partnerships’ statements earnings valuation investments determined general partner subjective values may vary significantly factors causing subjectivity volatility valuations include illiquidity minority positions investments currency exchange rate fluctuations lessregulated securities exchanges inherent business risks limitations present emerging market countries company records results limited partnerships based information provided company general partner due subjectivity volatility valuing investments fair value investments thus company’s results could vary significantly future periods item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements company principally engaged procuring transporting storing processing merchandising agricultural commodities products company uses significant global asset base originate transport agricultural commodities connecting markets 147 countries company also processes corn oilseeds wheat cocoa products food animal feed chemical energy uses company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities company’s operations organized managed classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified fourth quarter 2014 company completed acquisition wild flavors sci total consideration 29 billion making company one world’s leading flavors specialty ingredients companies effective january 1 2015 company formed fourth reportable business segment wild flavors specialty ingredients results wild flavors sci reported 2014 results material company oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment produces natural health nutrition products specialty food feed ingredients oilseeds processing segment major supplier peanuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets oilseeds processing segment also includes activities related procurement transportation processing cocoa beans cocoa liquor cocoa butter cocoa powder chocolate various compounds north america south america europe asia africa food processing industry oilseeds processing segment also includes company’s share results equity investment wilmar share results stratas foods llc edible oils limited joint ventures prior december 2014 oilseeds processing segment operated fertilizer blending facilities south america december 2014 company completed sale fertilizer blending business item 7 management’s discussion analysis financial condition results operations continued company’s corn processing segment engaged corn wet milling dry milling activities asset base primarily located central part united states corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing products include citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities propylene ethylene glycol facility company’s brazilian sugarcane ethanol plant related operations segment also includes company’s share results equity investments almidones mexicanos sa eaststarch cv red star yeast company llc agricultural services segment utilizes extensive us grain elevator global transportation network port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail freight services agricultural services segment also includes activities related processing wheat flour processing distribution formula feeds animal health nutrition products procurement processing distribution edible beans agricultural services segment includes activities toepfer global merchant agricultural commodities processed products june 6 2014 company announced completed acquisition remaining 20 interest toepfer agricultural services segment also includes company’s 322 share results pacificor formerly kalama export company llc joint venture returns associated companys 198 investment graincorp prior december 2012 company 232 interest gruma sab de cv gruma world’s largest producer marketer corn flour tortillas additionally company joint ventures corn flour wheat flour mills gruma december 2012 company sold 232 interest gruma grumarelated joint ventures includes activities wild flavors sci company’s remaining operations primarily financial business units related principally futures commission merchant insurance activities corporate results principally include impact liforelated inventory adjustments unallocated corporate expenses interest cost net investment income company’s share results equity investment corporate results also include aftertax elimination income attributable minority shareholder toepfer except calendar year 2012 put options related interests expired results included noncontrolling interest company acquired remaining 20 interest toepfer second quarter 2014 thus longer requiring elimination income attributable minority shareholder june 30 2014 significant ongoing portfolio management actions companys recently announced additional significant actions portfolio management include • completing sale fertilizer blending business brazil paraguay december 17 2014 following announcement signed agreement mosaic company sell business april 15 2014 • announcing sale global chocolate business cargill inc 440 million september 2 2014 • announcing sale global cocoa business olam international limited 13 billion december 15 2014 • signing agreement glencore plc sell 50 percent stake export terminal barcarena northern brazilian state pará february 3 2015 item 7 management’s discussion analysis financial condition results operations continued chocolate cocoa export terminal transactions expected close 2015 subject completion customary closing conditions including regulatory approvals process chocolate cocoa businesses classified held sale december 31 2014 operating performance indicators company’s oilseeds processing agricultural services operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts revenues cost products sold thus changes revenues businesses necessarily correspond changes margins gross profit company’s corn processing operations certain food animal feed processing operations also utilize agricultural commodities products derived agricultural commodities raw materials however operations agricultural commodity market price changes necessarily equal changes cost products sold thus changes revenues businesses may correspond changes margins gross profit company consolidated subsidiaries 79 countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil functional currency us dollar however certain transactions including taxes occur local currency require conversion functional currency fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar result corresponding fluctuations us dollar value revenues expenses reported company measures performance using key financial metrics including net earnings segment operating profit return invested capital ebitda economic value added cost per metric ton company’s operating results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company undertakes responsibility updating forwardlooking information contained within “management’s discussion analysis financial condition results operations” year ended december 31 2014 compared year ended december 31 2013 agricultural commoditybased business company subject variety market factors affect company’s operating results demand global protein meal vegetable oil remained strong steady demand export north american corn soybeans strong logistical challenges winter months including rail delays river freezes caused higher costs making us exports less competitive despite large harvest south america us grain exports continued longer normal 2014 due slow south american farmer selling us corn wheat storage merchandising opportunities limited much year 2014 record fall harvest corn sweetener demand steady strong us ethanol demand domestic export markets combined industry logistical production challenges winter months led volatile strong overall 2014 ethanol margins south american grain oilseed origination volumes margins challenged slow farmer selling cocoa press margins continued improve last year margins negatively impacted excess capacity item 7 management’s discussion analysis financial condition results operations continued net earnings attributable controlling interests increased 09 billion 22 billion segment operating profit 39 billion 45 due primarily improved corn processing grain merchandising handling results included years segment operating profit gain approximately 156 million upon companys effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units gain 126 million sale fertilizer business longlived asset impairment charges 35 million wild flavors restructuring charges acquisition costs 33 million 2013 segment operating profit included 155 million writedown related companys graincorp investment 51 million impairment certain longlived assets brazilian sugar mill approximately 27 million longlived asset impairment charges principally corn processing segment excluding unique items segment operating profit improved approximately 26 2014 corporate costs 785 million 2014 higher 101 million included 2014 costs losses 102 million euro foreign currency derivative contracts entered economically hedge anticipated wild flavors acquisition 98 million noncash pension settlement charges prior year period included 54 million charges related anticorruption settlement losses 40 million australian dollar foreign currency derivative contracts entered economically hedge proposed graincorp acquisition 21 million costs related strategic projects costs 32 million primarily related asset writedowns allocations costs corporate operating segments 2014 lifo inventory reserves declined resulting pretax lifo credits earnings 245 million compared lifo credits 225 million 2013 excluding lifo items corporate costs increased 68 million primarily due higher enterprise resource planning project projectrelated costs partially offsetting increase lower interest expense due principally lower outstanding longterm debt balances companys effective tax rate 2014 280 compared 331 2013 2014 rate positively impacted 47 million positive discrete tax adjustments slight favorable shift geographic mix earnings 2013 rate negatively impacted valuation allowances deferred tax assets partially offset favorable discrete income tax benefits related amounts received us government form biodiesel credits excluding factors effective tax rate 2013 approximately 30 analysis statements earnings processed volumes product years ended december 31 2014 2013 follows metric tons company continued operate production facilities overall basis near capacity adjusting facilities individually needed react current seasonal local supply demand conditions item 7 management’s discussion analysis financial condition results operations continued revenues segment years ended december 31 2014 2013 follows revenues 2014 decreased 10 812 billion due principally lower average sales prices 80 billion related decrease underlying commodity prices lower overall sales volumes 07 billion changes foreign currency exchange rates 02 billion partially offset higher revenues 03 billion due recent acquisitions decrease underlying commodity prices result significant decrease margins gross profit lower underlying commodity prices relatively equal impact cost products sold oilseeds processing revenues decreased 10 315 billion due principally lower sales volumes soybeans soybean meal 19 billion lower average sales prices 14 billion corn processing revenues decreased 11 117 billion due principally lower average sales prices 16 billion partially offset higher sales volumes 01 billion agricultural services revenues decreased 10 373 billion due principally lower average sales prices 52 billion partially offset higher sales volumes 11 billion cost products sold decreased 11 764 billion due principally lower average commodity costs partially offset higher manufacturing costs included 2014 cost products sold credit 245 million effect decreasing agricultural commodity prices lifo inventory valuation reserves compared credit 225 million 2013 manufacturing expenses increased 02 billion mostly due higher energy costs higher maintenance costs higher energy costs driven unusually high volatility natural gas prices winter months early year due primarily supply interruptions impacted severe winter weather conditions selling general administrative expenses sga increased 148 million 19 billion due principally 98 million noncash pretax pension settlement charge related settling certain us retiree liabilities lump sum payments incremental sga expenses 73 million related acquired wild flavors sci businesses partially offset absence prior year charge 54 million related anticorruption settlement addition salaries benefits enterprise resource planning project information technology projectrelated costs higher year item 7 management’s discussion analysis financial condition results operations continued asset impairment exit restructuring costs 105 million include 16 million costs associated relocation company’s global headquarters chicago illinois 48 million restructuring charges related primarily wild flavors acquisition toepfer integration following acquisition minority interest otherthantemporary investment writedown 6 million property plant equipment asset impairments 35 million 2013 charges 259 million comprised otherthantemporary impairment charges 155 million companys graincorp investment asset impairment charges 51 million related companys brazilian sugar milling business impairment charges principally certain property plant equipment assets totaling 53 million interest expense decreased 76 million 337 million primarily due lower outstanding longterm debt balances february 2014 company repaid 115 billion principal amount convertible senior notes available funds equity earnings unconsolidated affiliates decreased 39 million 372 million primarily due lower earnings company’s investments cip wilmar income increased 194 million 247 million due principally gain 156 million upon companys effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units gain 126 million sale south american fertilizer business absence prior year losses 40 million australian dollar foreign currency derivative contracts entered economically hedge proposed graincorp acquisition partially offset current period losses 102 million euro foreign currency derivative contracts entered economically hedge wild flavors acquisition item 7 management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes year ended december 31 2014 2013 follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profit increased 132 million 16 billion included current year operating profit charge approximately 17 million cocoa hedge timing effects compared charge approximately 13 million prior year crushing origination operating profit increased 33 million 868 million included current year results gain sale fertilizer business 126 million excluding gain crushing origination operating profit decreased 93 million primarily due lower south american grain origination results caused yearoveryear slower farmerselling reduced crush margins lower fertilizer results partially offset strong soybean softseed volumes margins north america europe refining packaging biodiesel results improved 24 million 478 million good demand improved margins refined packaged oils improved european biodiesel results cocoa results including marktomarket timing effects discussed improved 125 million 92 million cocoa press margins significantly increased asia results declined 50 million 167 million principally reflecting decrease company’s share results equity investee wilmar corn processing operating profit increased 374 million 12 billion included current period operating profit gain approximately 25 million corn hedge timing effects 15 million asset impairment charges prior period included charge approximately 15 million corn hedge time effects 71 million asset impairment charges excluding items sweeteners starches operating profit decreased 39 million primarily due lower average selling prices partially offset lower net corn costs also contributing decrease decreased coproducts income additional 8 million bad debt reserve 7 million startup costs related new sweetener facility tianjin china excluding corn hedge timing effects asset impairment charges bioproducts profit current year improved 317 million solid demand us ethanol domestic export markets lower net corn costs lower industry production volumes early year caused logistical production challenges combined drive volatile overall strong margins agricultural services operating profit increased 709 million 11 billion current year results merchandising handling include gain 156 million upon companys effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units asset impairment charges 14 million prior year results included approximately 30 million intercompany insurancerelated gain 155 million asset impairment charge related temporary impairment companys graincorp investment excluding items merchandising handling operating profit increased 353 million due principally higher us grain export volumes improvement international merchandising results transportation operating profit improved 110 million 187 million due higher volumes freight rates barge operations milling results declined 21 million 249 million lower margins volumes milling business year reducing opportunities grain feed merchandising processing operating profit reflects loss 46 million due primarily results wild flavors sci acquired company fourth quarter 2014 wild flavors results include 33 million restructuring charges acquisition costs 23 million additional expense amortization fair value adjustments primarily related inventories financial operating profit increased 38 million 79 million mainly due absence approximately 30 million insurancerelated loss prior year offset insurancerelated gain reported agricultural services segment corporate results net charge 785 million current year compared net charge 684 million prior year effects decreasing commodity prices lifo inventory valuations resulted credit 245 million current year compared credit 225 million prior year interest expense net declined 90 million due principally lower outstanding longterm debt balances unallocated corporate costs increased 83 million primarily due higher expenses related enterprise resource planning project special strategic projects compensation accruals charges current year 228 million consisted losses 102 million euro foreign currency derivative contracts entered economically hedge anticipated wild flavors acquisition global headquarters relocation costs 16 million toepfer integration restructuring charges 15 million pension settlement 98 million charges prior year 147 million consisted 54 million provision related anticorruption settlement losses 40 million australian dollar foreign currency derivative contracts entered economically hedge proposed graincorp acquisition 21 million costs related strategic merger acquisition projects 32 million costs primarily related asset writedowns reallocations costs operating segments corporate minority interest expense increased 47 million primarily due changes elimination income attributable minority shareholder toepfer item 7 management’s discussion analysis financial condition results operations continued six months ended december 31 2012 compared six months ended december 31 2011 unaudited net earnings attributable controlling interests increased 152 million 692 million asset impairment exit restructuring costs 2012 period decreased 115 million tax 206 million pretax 2012 period results also include gains 49 million tax related company’s interest graincorp gain 24 million tax related sale certain company’s exchange membership interests partially offset charges 44 million tax related pension settlements income taxes increased 66 million due higher earnings income taxes effective income tax rate 304 2012 compares rate 303 prior period segment operating profit 2012 period increased 243 million due 318 million improvement operating results oilseeds processing segment absence prior period asset impairment charges 339 million corn processing segment related primarily writedown assets clinton ia bioplastics facility higher results company’s financial operations 76 million part due gain sale certain company’s exchange membership interests favorable captive insurance loss reserve adjustments partially offsetting improvements lower results 2012 period corn processing’s bioproducts business 408 million excluding clinton ia asset impairment charge discussed 2012 period loss 146 million agricultural services segment related disposal gruma corporate expenses 27 million higher 2012 period due primarily 68 million pension settlement charges partially offset higher returns companys equity method investment cip analysis statements earnings processed volumes product six months ended december 31 2012 2011 follows metric tons company continued operate production facilities overall basis near capacity adjusting facilities individually needed react current seasonal local supply demand conditions item 7 management’s discussion analysis financial condition results operations continued revenues segment six months ended december 31 2012 2011 follows agricultural commoditybased business company subject variety market factors affect company’s operating results demand perspective protein meal demand continued increase particularly us domestic export markets demand soybeans solid weaker us gasoline demand unfavorable global ethanol trade flows resulted continued excess industry ethanol capacity supply perspective following belowaverage harvests 20112012 crop year north south america corn soybean supplies tight commodity market prices generally higher south america farmers responded high crop prices record soybean plantings 20122013 crop year lower corn harvest us due drought led higher corn prices higher demand corn south america revenues increased 15 billion 467 billion higher average selling prices increased revenues 49 billion primarily due increases underlying commodity prices lower sales volumes inclusive effects acquisitions reduced revenues 24 billion changes foreign currency exchange rates decreased revenues 10 billion oilseeds processing sales increased 4 181 billion due principally higher average selling prices protein meal soybeans higher sales volumes corn primarily south america protein meal corn processing sales decreased 4 62 billion due principally lower average selling prices ethanol agricultural services sales increased 5 224 billion due higher average selling prices soybeans wheat partially offset lower sales volumes corn cost products sold increased 16 billion 449 billion due principally higher prices agricultural commodities partially offset lower manufacturing costs 11 billion related effects changing foreign currency rates manufacturing expenses decreased 102 million 3 due principally lower energy repairs maintenance costs savings employee benefitrelated costs item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses increased 39 million 869 million included selling general administrative expenses pension settlement charges 68 million six months ended december 31 2012 excluding pension settlement charges selling general administrative expenses declined 29 million 3 due principally lower employee benefitrelated costs asset impairment charges 2012 period represent impairments 146 million related company’s divestment equity method investments gruma grumarelated joint ventures prior year charges relate company’s clinton ia bioplastics facility property plant equipment written estimated fair value resulting impairment charges 320 million addition charges 32 million recognized exit activities impair assets income increased 97 million 109 million due primarily 62 million gains related company’s interest graincorp 39 million gains sale certain company’s exchange membership interests operating profit segment earnings income taxes six months ended december 31 2012 2011 follows item 7 management’s discussion analysis financial condition results operations continued corporate results follows oilseeds processing operating profit increased 318 million 747 million crushing origination operating profit increased 290 million 517 million results north america europe south america improved company’s us soybean operations delivered strong results high seasonal utilization amid good us export meal demand europe rapeseed soybean crushing earnings improved significantly south america results benefited improved soybean crushing margins refining packaging biodiesel results decreased 54 million 78 million primarily due weaker european us biodiesel results cocoa results increased 93 million weaker cocoa press margins offset absence prior period’s net unrealized marktomarket losses related certain forward purchase sales commitments accounted derivatives asia results decreased 11 million 87 million principally reflecting company’s share results equity investee wilmar corn processing operating profit increased 17 million 71 million prior period results include 339 million asset impairment charges exit costs related company’s clinton ia bioplastics facility excluding bioplastics charges exit costs corn processing operating profit declined 322 million sweeteners starches operating profit increased 86 million 191 million tight sweetener industry capacity supported higher average selling prices prior period sweeteners starches results negatively impacted higher net corn costs related marktomarket timing effects economic hedges bioproducts profit decreased 69 million 120 million loss excluding 339 million prior year asset impairment charges bioproducts profit decreased 408 million weak domestic gasoline demand unfavorable global ethanol trade flows resulted continued excess industry capacity keeping ethanol margins negative agricultural services operating profit including 2012 period 146 million gruma asset impairment charge 62 million gain company’s interest graincorp decreased 168 million 395 million merchandising handling earnings decreased 16 million mostly due weaker us merchandising results impacted smaller us harvest merchandising handling earnings 2012 period include 62 million gain company’s interest graincorp earnings transportation operations decreased 14 million 67 million due increased barge operating expenses caused low water mississippi river partially offset higher freight rates milling operating profit decreased 138 million 29 million due principally 146 million impairment charge disposal company’s equity method investments gruma grumarelated joint ventures milling results remained strong company’s feed business saw improved margins amid stronger demand financial operating profit increased 76 million 93 million mainly due asset disposal gains certain company’s exchange membership interests improved results company’s captive insurance subsidiary corporate expenses increased 27 million 309 million 2012 period company incurred 68 million pension settlement charges related onetime window lump sum distributions us conversion dutch pension plan multiemployer plan excluding pension charges corporate expenses declined 41 million corporate interest expense net increased 22 million mostly due absence interest income received prior period related contingent gain settlement unallocated corporate costs lower 15 million primarily due lower employee benefitrelated costs increase income 56 million primarily due improved equity earnings corporate affiliate investments item 7 management’s discussion analysis financial condition results operations continued year ended june 30 2012 compared year ended june 30 2011 agricultural commoditybased business company subject variety market factors affect company’s operating results demand perspective global protein meal consumption continued grow although slower rate excess industry crushing production capacity pressured oilseeds margins company adjusted production rates regionally balance supply current market demand biodiesel markets supported global demand refined crude vegetable oils us high biodiesel inventories associated december 31 2011 expiration blender’s incentives dampened margins second half fiscal year us corn sweetener exports continue support sales volumes margins ethanol sales volumes supported favorable gasoline blending economics us however excess industry production ethanol together recently reduced us ethanol export demand negatively impacted ethanol margins supply perspective crop supplies certain key growing regions beginning fiscal 2012 including south america black sea region adequate smallerthannormal harvest north america fall 2011 resulted low us carryover stocks corn soybeans smaller expected south american harvest global supplies corn soybeans dependent north american harvest plantings corn increased us fiscal 2012 drought conditions late fiscal year decreased expectations size harvest factors combined concerns european debt situation ongoing geopolitical uncertainties contributed volatile commodity market price movements fiscal 2012 net earnings attributable controlling interests decreased 08 billion 12 billion segment operating profit declined 16 billion 25 billion amid challenging conditions generally affecting reportable segments segment operating profit fiscal 2012 included 349 million asset impairment charges exit costs comprised 335 million exit company’s clinton ia bioplastics plant 14 million shut walhalla nd ethanol dry mill earnings income taxes included credit 10 million effect lifo inventory valuation reserves including liquidation lifo inventory layers partially offset increasing agricultural commodity prices compared charges 368 million prior year fiscal 2012 unallocated corporate expenses included 71 million charges related company’s global workforce reduction program income taxes decreased 05 billion due lower earnings income taxes lower effective income tax rate company’s effective income tax rate declined 296 compared 331 prior year primarily due income tax benefits associated foreign currency remeasurement nonmonetary assets partially offset geographic mix earnings shifted foreign jurisdictions analysis statements earnings processed volumes product years ended june 30 2012 2011 follows metric tons company continued operate production facilities overall basis near capacity adjusting facilities individually needed react current seasonal local supply demand conditions item 7 management’s discussion analysis financial condition results operations continued revenues segment follows revenues increased 70 billion due higher average selling prices primarily related higher underlying commodity prices 21 billion due increased sales volumes including sales volumes acquisitions partially offset changes foreign currency exchange rates 07 billion increase underlying commodity prices result significant increase margins gross profit higher underlying commodity prices relatively equal impact cost products sold oilseeds processing sales increased 16 347 billion due principally higher average selling prices vegetable oils merchandised commodities protein meal biodiesel increased sales volumes biodiesel protein meal peanuts part due acquisition golden peanut december 2010 corn processing sales increased 22 121 billion due principally higher average selling prices ethanol sweeteners well higher sales volumes sugar ethanol agricultural services sales increased 3 421 billion due higher average selling prices corn wheat flour partially offset lower sales volumes part due lower export volumes us cost products sold increased 12 854 billion due principally higher prices agricultural commodities lesser extent increased sales volumes changes foreign currency exchange rates reduced fiscal 2012 cost products sold 07 billion manufacturing expenses increased 02 billion due higher costs maintenance employee benefitrelated expenses energy chemicals higher costs primarily due higher production volumes acquisitions higher unit costs fuels certain chemicals partially offsetting higher costs lower depreciation expense part due company’s change estimated service lives machinery equipment second quarter fiscal 2011 selling general administrative expenses remained steady 16 billion loss provisions mainly due unfavorable arbitration award company’s agricultural services operating segment partially offset lower overhead expenses asset impairment exit restructuring costs 449 million comprised 349 million corn processing segment related company’s exit clinton ia bioplastics business ethanol dry mill walhalla nd 71 million corporate global workforce reduction 29 million corporate investment writedowns facility exitrelated costs item 7 management’s discussion analysis financial condition results operations continued interest expense decreased 9 441 million primarily due lower longterm debt balances higher interest expense capitalized construction projects progress lower interest expense related uncertain income tax positions equity earnings unconsolidated affiliates decreased 13 472 million principally due decreased equity earnings company’s equity investee gruma included 78 million gain prior year related gruma’s disposal certain assets interest income declined 18 112 million primarily related sale deconsolidation hickory point bank trust company fsb effective september 30 2011 income net declined 101 million 17 million due primarily absence income recognized prior year period 71 million golden peanut gain 30 million gains interest rate swaps operating profit segment follows corporate results follows item 7 management’s discussion analysis financial condition results operations continued oilseeds processing operating profit decreased 04 billion 13 billion crushing origination operating profit decreased 284 million 641 million primarily due weaker results european softseeds lower results north american softseeds lower north american positioning results partially offsetting lower results higher grain origination results south america driven higher volumes favorable positioning poor european softseed results driven small prior year rapeseed crop positioning losses weaker demand protein meal oils north american softseed results declined primarily result lower margins generated tight cottonseed supply refining packaging biodiesel results declined 47 million 295 million due primarily declines biodiesel margins south america europe lower margins specialty fats oils europe declines partially offset improved north american protein specialties natural health nutrition results due higher margins volumes cocoa results declined 57 million 183 million fiscal 2012 results cocoa reduced 100 million net unrealized marktomarket losses related certain forward purchase sales commitments accounted derivatives prior year included 9 million net unrealized marktomarket losses excluding timing effects cocoa results improved fiscal 2012 driven improved press margins caused strong cocoa powder demand prior year included 71 million golden peanut gain partially offset fiscal 2012 higher earnings company’s peanut business part due first full year consolidated results golden peanut reported company fiscal 2012 asia results remained steady 183 million principally reflecting company’s share results equity investee wilmar corn processing operating results decreased 818 million 261 million due principally poor ethanol margins 349 million asset impairment charges exit costs excluding asset impairment exit costs related company’s bioplastics business walhalla nd ethanol dry grind facility corn processing operating profit 610 million fiscal 2012 represented decline 469 million compared prior year processed volumes 5 percent net corn costs increased compared prior year sweeteners starches operating profit increased 5 million 335 million higher average selling prices offset higher net corn costs bioproducts profit decreased 823 million loss 74 million including 349 million asset impairment exit charges lower ethanol margins caused excess supply previously offline production restarted industry demand declined part due slowing export demand prior year bioproducts results enhanced favorable corn ownership positions lowered net corn costs period bioproducts results prior year negatively impacted startup costs 94 million related company’s new drygrind ethanol bioplastics glycol plants agricultural services operating profits decreased 376 million 947 million merchandising handling earnings decreased primarily due lower results us operations lower sales volumes principally result relatively higher cost us grains oilseeds global market due lower stocks caused smaller us harvest 2011 relatively weaker position led reduced us grain exports prior year merchandising handling results positively impacted higher quantities us grain exports company addition fiscal 2012 included 40 million increased loss provisions mainly due unfavorable arbitration award earnings transportation steady prior year’s operating results milling operations included 78 million gain related gruma’s disposal certain assets financial operating profit decreased 24 million 15 million mainly due higher loss provisions company’s captive insurance subsidiary related property crop risk reserves corporate expenses declined 356 million 760 million fiscal 2012 effects liquidation lifo inventory layers partially offset increasing commodity prices lifo inventory valuations resulted credit 10 million fiscal 2012 compared charge 368 million prior year primarily due higher prices corporate interest expense decreased 22 million primarily due lower interest expense lower longterm debt balances unallocated corporate costs include 71 million costs related global workforce reduction program excluding costs unallocated corporate costs declined 37 million due primarily lower administrative costs corporate income increased due higher investment income partially offset 29 million investment writedown facility exitrelated costs also prior year company recognized 30 million gains interest rate swaps item 7 management’s discussion analysis financial condition results operations continued liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business companys strategy involves expanding volume diversity crops merchandises processes expanding global reach core model expanding valueadded product portfolio company depends access credit markets impacted credit rating factors outside company’s control fund working capital needs capital expenditures primary source funds finance company’s operations capital expenditures advancement growth strategy cash generated operations lines credit including commercial paper borrowing facility addition company believes access funds public private equity debt capital markets us international markets cash provided operating activities 50 billion 2014 compared 52 billion 2013 working capital changes increased cash 23 billion current year 29 billion prior year inventories declined approximately 13 billion december 31 2014 compared december 31 2013 due lower prices cash used investing activities 34 billion year compared 06 billion last year primarily due capital expenditures net assets businesses acquired 37 billion year compared 10 billion last year cash used financing activities 36 billion year compared 32 billion last year current period longterm debt payments increased 115 billion convertible debt matured february 2014 paid available cash december 31 2014 company 16 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 17 1 included working capital 59 billion readily marketable commodity inventories december 31 2014 company’s capital resources included shareholders equity 196 billion lines credit totaling 66 billion unused company’s ratio longterm debt total capital sum longterm debt shareholders’ equity 22 december 31 2014 21 december 31 2013 company uses ratio measure company’s longterm indebtedness indicator financial flexibility company’s ratio net debt sum shortterm debt current maturities longterm debt longterm debt less sum cash equivalents shortterm marketable securities capital sum net debt shareholders’ equity 17 december 31 2014 14 december 31 2013 company’s total lines credit 40 billion support commercial paper borrowing facility commercial paper outstanding december 31 2014 december 31 2014 company 11 billion cash equivalents 05 billion cash held foreign subsidiaries whose undistributed earnings considered permanently reinvested based companys historical ability generate sufficient cash flows us operations unused available us credit capacity 40 billion company asserted funds permanently reinvested outside us company accounts receivable securitization programs “programs” certain commercial paper conduit purchasers committed purchasers programs provide company 16 billion funding accounts receivable transferred programs expands company’s access liquidity efficient use balance sheet assets see note 20 item 8 information disclosures programs december 31 2014 company utilized 16 billion facility programs november 5 2009 company’s board directors approved stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2010 ending december 31 2014 company acquired approximately 598 million shares program including 254 million shares acquired 2014 november 5 2014 company’s board directors approved new stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2015 ending december 31 2019 company expects capital expenditures 11 billion 13 billion 2015 company expects additional cash outlay approximately 07 billion dividends 15 billion 20 billion share repurchases target subject strategic capital requirements company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2014 item 7 management’s discussion analysis financial condition results operations continued three major credit rating agencies maintained companys credit ratings solid investment grade levels stable outlooks contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 72 million december 31 2014 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table 1 includes pension contributions 38 million fiscal 2015 company unable estimate amount pension contributions beyond fiscal year 2015 information concerning company’s pension postretirement plans see note 15 item 8 december 31 2014 company estimates spend approximately 17 billion fiscal year 2019 complete currently approved capital projects included table company also outstanding letters credit surety bonds 980 million december 31 2014 company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations december 31 2014 contingent obligations totaled approximately 27 million item 7 management’s discussion analysis financial condition results operations continued balance sheet arrangements accounts receivable securitization programs since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 12 billion amended billion additional amount upon collection accounts receivable deferred consideration program terminates june 26 2015 unless extended march 2014 company entered second accounts receivable securitization program “second program” certain commercial paper conduit purchasers committed purchasers collectively “second purchasers” second program certain nonusoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm ireland receivables company “adm ireland receivables” adm ireland receivables turn transfers purchased accounts receivable entirety second purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm ireland receivables receives cash payment 04 billion additional amount upon collection accounts receivable deferred consideration second program terminates march 20 2015 unless extended program second program collectively “programs” adm receivables adm ireland receivables use cash proceeds transfer receivables purchasers second purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2014 2013 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold december 31 2014 2013 fair value trade receivables transferred purchasers second purchasers programs derecognized company’s consolidated balance sheet 21 billion 19 billion respectively exchange transfer december 31 2014 2013 company received cash 16 billion 11 billion respectively recorded receivable deferred consideration included current assets 05 billion 08 billion respectively cash collections customers receivables sold 364 billion 398 billion 219 billion 89 billion years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 respectively amount 351 billion 398 billion 219 billion 89 billion pertain cash collections deferred consideration years ended december 31 2014 2013 respectively six months ended december 31 2012 year ended june 30 2012 respectively deferred consideration paid company cash behalf purchasers second purchasers receivables collected however revolving facilities cash collected company’s customers reinvested purchasers second purchasers daily new receivable purchases programs company’s risk loss following transfer accounts receivable program limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant transfers receivables program years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 resulted expense loss sale 5 million 4 million 4 million 4 million respectively classified selling general administrative expenses consolidated statements earnings item 7 management’s discussion analysis financial condition results operations continued company reflects cash flows related program operating activities consolidated statement cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables synthetic leasing program company party lease agreements synthetic leasing programs certain us barge trucking assets periods ranging 5 7 years december 31 2014 outstanding lease balances including value underlying assets 143 million offbalance sheet agreements provide company right use assets specified periods exchange obligation make rental payments agreements accounted operating leases rent expense recorded consolidated statement earnings future lease payments pertaining lease agreements included contractual obligations table item 7 leasing programs utilized primarily diversify funding sources retain flexibility company recorded 5 million 3 million rent expense pertaining synthetic lease payments years ended december 31 2014 2013 critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements fair value measurements inventories commodity derivatives certain company’s inventory commodity derivative assets liabilities december 31 2014 valued estimated fair values including 47 billion merchandisable agricultural commodity inventories 09 billion derivative assets 09 billion derivative liabilities 07 billion inventoryrelated payables commodity derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s inventory derivative commodity fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 2 within fair value hierarchy level 3 fair value measurements approximately 17 billion assets 03 billion liabilities represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 3 item 8 changes market values inventories commodity contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol designated hedging programs principally relate company’s corn processing operating segment assuming normal market conditions change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold revenues statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component cost products sold see note 4 item 8 additional information item 7 management’s discussion analysis financial condition results operations continued investments affiliates company applies equity method accounting investments company ability exercise significant influence including 173 investment wilmar investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may materially differ income taxes company accounts income tax positions accordance applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company frequently faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example company received tax assessments tax authorities brazil argentina challenging income tax positions taken subsidiaries company evaluated tax positions matters concluded based part upon advice legal counsel appropriate recognize tax benefits positions see note 13 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely 2014 company increased valuation allowances approximately 18 million primarily related net operating loss carryforwards extent company favorably resolve matters valuation allowances established required pay amounts excess aforementioned valuation allowances company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 86 billion december 31 2014 considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements item 7 management’s discussion analysis financial condition results operations continued property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 impairment charges property plant equipment 35 million 84 million 0 million 337 million 367 million respectively see note 19 item 8 additional information business combinations company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended assets acquired liabilities assumed based preliminary purchase price allocations adjusted fair values acquisition date remainder purchase price recorded goodwill determining fair values assets acquired liabilities assumed management makes significant estimates assumptions especially respect intangible assets critical estimates valuing certain intangible assets include limited future expected cash flows discount rates although management’s estimates fair value based upon assumptions believed reasonable actual results may differ goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level annually october 1 whenever indicators carrying value assets may fully recoverable critical estimates determination fair value reporting unit include limited future expected cash flows discount rates december 31 2014 impairment goodwill identified fiscal years ended june 30 2012 prior company performed annual goodwill impairment test april 1 see note 1 item 8 additional information regarding change accounting policy definitelived intangible assets amortized estimated useful lives 2 25 years reviewed impairment whenever indicators carrying value assets may fully recoverable management used different estimates assumptions impairment tests company could recognize different amounts expense future periods employee benefit plans company provides substantially us employees certain international subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage others provided health care reimbursement accounts order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods december 31 2014 new mortality table used estimate anticipated mortality rates contributed increase projected benefit obligations approximately 02 billion see note 15 item 8 additional information item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements company principally engaged procuring transporting storing processing merchandising agricultural commodities products company uses significant global asset base originate transport agricultural commodities connecting markets 163 countries company also processes corn oilseeds wheat products food animal feed chemical energy uses company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities company’s operations organized managed classified four reportable business segments agricultural services corn processing oilseeds processing wild flavors specialty ingredients segments organized based upon nature products services offered company’s remaining operations reportable business segments defined applicable accounting standard classified see note 17 item 8 information company’s business segments company’s recent significant portfolio actions announcements include • purchase february 2016 controlling stake harvest innovations industry leader minimally processed expellerpressed soy proteins oils glutenfree ingredients • purchase april 2016 50 interest cairobased medsofts group consolidated joint venture owns manages merchandising supply chain operations • sale may 2016 sugarcane ethanol operations limeira oeste brazilian state minas gerais • purchase may 2016 remaining 60 interest amazon flavors leading brazilian manufacturer natural extracts emulsions compounds • acquisition june 2016 casablanca moroccobased corn wet mill produces glucose native starch • purchase september 2016 caterina foods leading toll manufacturer specialty glutenfree highprotein pastas • expansion november 2016 olenex 375 joint venture wilmar sales marketing venture full function joint venture owns operates specialty oils fats palm refining tropical oils processing plants europe • sale december 2016 companys 198 ownership interest graincorp • announcement january 2017 sale companys crop risk services businesses validus holdings global group insurance reinsurance companies subject regulatory approval expected close first half 2017 • acquisition february 2017 crosswind industries inc industry leader manufacture contract private label pet treats foods well specialty ingredients part implementation company’s strategic plan company continues evaluate capital intensity operations portfolio seeking ways reduce redeploy capital efforts drive longterm returns operating performance indicators company’s agricultural services oilseeds processing operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts revenues cost products sold thus changes revenues businesses necessarily correspond changes margins gross profit company’s corn processing operations wild flavors specialty ingredients businesses also utilize agricultural commodities products derived agricultural commodities raw materials however operations agricultural commodity market price changes necessarily equal changes cost products sold thus changes revenues businesses may correspond changes margins gross profit item 7 management’s discussion analysis financial condition results operations continued company consolidated subsidiaries 76 countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil functional currency us dollar however certain transactions including taxes occur local currency require conversion functional currency changes revenues expected correlated changes expenses reported company caused fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar company measures performance using key financial metrics including net earnings segment operating profit return invested capital ebitda economic value added manufacturing expenses selling general administrative expenses company’s financial results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company undertakes responsibility updating forwardlooking information contained within “management’s discussion analysis financial condition results operations” year ended december 31 2016 compared year ended december 31 2015 agricultural commoditybased business company subject variety market factors affect companys operating results agricultural services negatively impacted first half year weak us grain export competitiveness decreased global merchandising opportunities starting third quarter export volumes margins improved due us harvest weather conditions south america corn processing global demand sweeteners starches us exports principally mexico continued grow europe raw material costs improved resulting improved margins cornbased ethanol remained competitive transportation fuel domestic blending strong us gasoline demand compared 2015 us ethanol also continued one cheapest oxygenates world driving strong export volumes throughout 2016 industry production levels remained high year limiting margins oilseeds processing global crushing operations achieved strong capacity utilization although margins weaker mainly due higher supply soybean meal argentina protein meal substitutes softseed margins improved due better seed supply oil demand vegetable oils continued maintain steady demand food industry additionally vegetable oil sales volumes benefited demand driven us 2016 biodiesel blenders credit wild flavors specialty ingredients business benefited increased demand flavor ingredients flavor systems specialty proteins natural health nutrition products polyols adversely impacted soft market conditions nonflavor food ingredient markets strong us dollar well operational issues specialty commodities unit net earnings attributable controlling interests decreased 06 billion 13 billion segment operating profit decreased 06 billion 27 billion primarily due prior year gain sale global cocoa chocolate businesses lower earnings current year due sale businesses weaker global crushing origination margins lower international merchandising results partially offset better ethanol results corporate results current year include charge 19 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 2 million prior year decrease approximately 70 million company’s share results compagnie industrielle et financiere des produits amylaces sa luxembourg cip income taxes increased 96 million due higher effective tax rate partially offset lower earnings income taxes company’s effective tax rate 2016 increased 293 compared 192 2015 due primarily low tax rates significant gains related portfolio actions 2015 71 million prior year discrete tax benefit resulting mainly release 66 million valuation allowance compared 49 million discrete tax expense current year changes geographic mix pretax earnings see note 13 item 8 information item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings processed volumes product years ended december 31 2016 2015 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react current margin environment seasonal local supply demand conditions overall decrease corn relates disposal sugar ethanol operations may 2016 partially offset volumes acquisition eaststarch cv november 2015 following sale cocoa business october 2015 remaining results cocoa combined results refining packaging biodiesel within oilseeds processing segment effective january 1 2016 prior period results reclassified conform current presentation revenues segment years ended december 31 2016 2015 follows item 7 management’s discussion analysis financial condition results operations continued revenues cost products sold commodity merchandising processing business affected underlying commodity prices volumes periods significant changes commodity prices underlying performance company better evaluated looking margins since revenues cost products sold particularly oilseeds processing agricultural services generally relatively equal impact commodity price changes generally result insignificant impact gross profit revenues decreased 54 billion 8 623 billion due lower average sales prices 35 billion including 06 billion foreign currency translation impacts lower overall sales volumes 19 billion decrease sales prices due principally lower underlying agricultural commodity prices particular prices corn soybeans soybeanrelated products decrease sales volumes due principally sale cocoa business decreased sales volumes ethanol south american grain oilseed origination agricultural services revenues decreased 6 279 billion due lower average sales prices 25 billion partially offset higher sales volumes 07 billion corn processing revenues decreased 5 95 billion due lower sales volumes 05 billion due principally ethanol sale sugar ethanol business partially offset sales volumes acquisition eaststarch cv oilseeds processing revenues decreased 12 222 billion due lower average sales prices 08 billion lower sales volumes 23 billion principally due south american grains oilseeds sale cocoa business wfsi revenues flat due lower average sales prices 02 billion offset higher sales volumes 02 billion cost products sold decreased 50 billion 587 billion due principally lower average commodity costs including 06 billion foreign currency translation impacts lower manufacturing costs included cost products sold charge 19 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 2 million prior year manufacturing expenses decreased 02 billion 52 billion primarily due sale cocoa business lower energy usage prices decreased repairs maintenance expenses gross profit decreased 03 billion 8 37 billion decrease gross profit consists principally lower soy crush margins 309 million reduced merchandising results 95 million primarily due agricultural services global trade execution positioning losses lower volumes freight rates barge operations 24 million sale cocoa business prior period 78 million partially offset contribution recent eaststarch cv acquisition 85 million higher results sweeteners starches 169 million factors explained segment operating profit discussion page 31 effect changes agricultural commodity prices lifo inventory valuation reserves 19 million negative impact gross profit compared positive impact 2 million prior year decrease underlying commodity prices result significant decrease margins gross profit lower underlying commodity prices relatively equal impact revenues cost products sold selling general administrative expenses 20 billion comparable prior year decreased expenses related sale cocoa business us retiree medical benefit plan curtailment gain offset legal settlements costs legal fees increased transaction fees due increased trading volume brokerage business expenses recently consolidated eaststarch cv asset impairment exit restructuring costs decreased 145 million 55 million prior year charges include longlived asset impairments 129 million related certain oilseeds processing facilities sugar ethanol facilities brazil facility corn processing segment capitalized software costs restructuring exit costs 71 million related principally international pension plan settlement sugar ethanol facilities brazil several individually insignificant restructuring exit costs current year charges include 11 million software impairment corporate 6 million otherthantemporary impairment charges company’s investment two available sale equity securities corporate 17 million 21 million individually insignificant fixed asset impairment restructuring charges respectively interest expense declined 15 million 293 million primarily due lower interest rates longterm debt 8 million effect revaluation mandatorily redeemable 10 interest harvest innovations equity earnings unconsolidated affiliates decreased 98 million 292 million primarily due lower earnings company’s investments wilmar cip decrease equity earnings eaststarch cv fully consolidated following acquisition remaining interest november 2015 partially offset increased earnings equity investees item 7 management’s discussion analysis financial condition results operations continued income net decreased 203 million 147 million prior year income consisted primarily gain sales 256 million related primarily sale cocoa chocolate lactic businesses gain 212 million revaluation company’s previously held equity investments north star shipping minmetal eaststarch cv conjunction acquisition remaining interests gain 62 million sale 50 interest barcarena export terminal facility brazil glencore plc partially offset 189 million loss debt extinguishment related repurchase outstanding debt loss provisions 45 million related sugar ethanol facilities brazil current year income includes 48 million realized additional consideration related sale company’s equity investment gruma sab de cv december 2012 59 million gain including recovery loss provisions related sale company’s brazilian sugar ethanol facilities 12 million gain related revaluation remaining interest settlement value conjunction acquisition amazon flavors 10 million loss sale individually immaterial assets operating profit segment earnings income taxes year ended december 31 2016 2015 follows item 7 management’s discussion analysis financial condition results operations continued corporate results follows agricultural services operating profit decreased 16 merchandising handling operating results declined primarily due compressed grain handling margins first half 2016 international merchandising results driven poor execution low market volatility limited forward merchandising opportunities strong origination results argentina addition destination marketing egypt company’s medsofts joint venture partially offset absence 27 million prior year gain revaluation company’s previously held investments north star shipping minmetal conjunction acquisition remaining interest milling results increased 12 current period results include additional realized consideration related sale company’s equity investment gruma sab de cv december 2012 48 million transportation operating profit declined due weak barge demand lower freight rates corn processing operating profit increased 25 sweeteners starches operating profit increased business continued perform well higher volumes pricing improved margins optimizing flex grind company’s corn wet mills integration recent eaststarch cv morocco acquisitions progressed smoothly significantly exceeding companys earnings accretion target bioproducts profit improved due higher ethanol margins towards end year 59 million gain including recovery loss provisions related sale company’s brazilian sugar ethanol facilities absence prior years restructuring fixed asset impairment charges 75 million related sugar ethanol business oilseeds processing operating profit decreased 45 crushing origination operating profit declined driven primarily lower global soy crush margins high last year lower south american grain origination results caused smaller soybean corn crops region yearoveryear slower farmerselling absence 62 million prior year gain related sale 50 interest barcarena export terminal facility brazil glencore plc partially offset strong softseed volumes margins north america refining packaging biodiesel results declined due gain 244 million sale global cocoa chocolate businesses october 2015 lower earnings current year due sale businesses partially offset good demand improved margins refined packaged oils improved european biodiesel results asia results declined due primarily equity losses 48 million company’s investment wilmar recorded companys results third quarter 2016 wild flavors specialty ingredients wfsi operating profit increased 2 due strong results flavors systems polyols natural health nutrition products gain 12 million related acquisition remaining interest amazon flavors increases partially offset weaker sales hydrocolloids fibers short edible beans crop impacting volumes costs operational issues specialty commodities unit financial operating profit increased higher volumes company’s futures commission brokerage business improved results captive insurance operations item 7 management’s discussion analysis financial condition results operations continued corporate results net charge 882 million current year compared 988 million prior year effect changes agricultural commodity prices lifo inventory valuation reserves resulted charge 19 million current year compared credit 2 million prior year interest expense net declined 15 million due principally lower interest rates longterm debt effect revaluation mandatorily redeemable 10 interest harvest innovations unallocated corporate costs increased 24 million due primarily increased spending company’s erp program various strategic business improvement projects charges current year included legal settlement costs legal fees software impairment charge otherthantemporary impairment charges company’s investments two available sale equity securities loss sale investment asset impairment restructuring charges partially offset gain related us retiree medical benefit plan curtailment charges prior year consisted 189 million loss debt extinguishment related repurchase outstanding debt restructuring charges 29 million related principally international pension plan settlement asset impairment settlement charges 24 million increase minority interest expense due decrease approximately 70 million company’s share results cip nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda nongaap financial measures defined securities exchange commission evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps certain specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes management believes adjusted eps adjusted ebitda useful measures company’s performance provide investors additional information companys operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda intended replace alternative diluted eps earnings income taxes respectively directly comparable amounts reported gaap table provides reconciliation diluted eps adjusted eps years ended december 31 2016 2015 1 tax effected using company’s us effective tax rate 2 tax effected using applicable tax rates item 7 management’s discussion analysis financial condition results operations continued table provides reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2016 2015 item 7 management’s discussion analysis financial condition results operations continued year ended december 31 2015 compared year ended december 31 2014 agricultural commoditybased business company subject variety market factors affect company’s operating results agricultural services negatively impacted ample global supply agricultural commodities limited merchandising opportunities reduced demand north american grain exports moderated commodity prices throughout year 2015 increase global supply due several large harvests built world grain stocks historically high levels addition us dollar continued firm weakening global currencies particularly major crop growing countries brazil argentina ukraine resulted margin pressure decreased north american export volumes 2015 partially offset higher domestic grain demand transportation also impacted decreased north american export volumes well lower global freight rates demand prices sweeteners starches remained solid coproduct prices weakened ethanol demand remained strong north america export markets due favorable gasoline blending economics ethanol’s continuing status competitive octane enhancer despite strong demand ethanol margins weak due recordhigh levels us industry production 2015 leading excess inventory overall demand global protein meal vegetable oil remained strong especially north america south american oilseeds saw significantly higher volumes margins grain origination exports due significant depreciation brazilian real us dollar lower softseed availability affected seed basis resulting lower softseed crushing volumes weaker margins particularly europe biodiesel demand resulting international biofuel standards continued support demand crude refined vegetable oil although demand biodiesel softer throughout 2015 due weaker economic conditions certain countries wild flavors specialty ingredients business continued focus cost synergies new revenue opportunities amid economic uncertainty many emerging economies softening demand customers’ interest develop innovative healthy nutritious food products response macro trends diet demographics remained strong continued grow net earnings attributable controlling interests decreased 04 billion 18 billion segment operating profit 16 due primarily weaker ethanol margins lower volumes margins north american grain exports corporate results 2015 include charge 189 million related repurchase outstanding debt addition credit 2 million effect decreasing agricultural commodity prices lifo inventory valuation reserves compared lifo credit 245 million 2014 income taxes decreased 877 million 438 million due lower earnings income taxes decreased effective tax rate company’s effective tax rate 2015 decreased 19 compared 28 2014 due primarily low tax rates significant onetime gains related portfolio actions 70 million favorable impact discrete items mainly release 66 million valuation allowance changes geographic mix pretax earnings item 7 management’s discussion analysis financial condition results operations continued analysis statements earnings processed volumes product years ended december 31 2015 2014 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react current seasonal local supply demand conditions record volumes oilseeds processed 2015 increased 2014 result strong demand environment soybean meal processed volumes corn decreased response high ethanol industry production outpaced demand throughout year 2015 following sale cocoa business october 2015 remaining results cocoa combined results refining packaging biodiesel within oilseeds processing segment effective january 1 2016 results prior january 1 2016 reclassified conform current presentation revenues segment years ended december 31 2015 2014 follows item 7 management’s discussion analysis financial condition results operations continued revenues cost products sold commodity merchandising processing business affected underlying commodity prices volumes periods significant changes commodity prices underlying performance company better evaluated looking margins since revenues cost products sold particularly oilseeds processing agricultural services generally relatively equal impact commodity price changes generally result insignificant impact gross profit revenues decreased 17 due principally lower sales prices 129 billion lower sales volumes 06 billion sales prices decreased principally due lower underlying agricultural commodity prices particular prices soybeans corn wheat 58 billion foreign currency translation impacts due strength us dollar agricultural services revenues decreased 18 primarily due lower sales prices 53 billion lower sales volumes 13 billion corn processing revenues decreased 19 due principally lower sales prices 19 billion lower sales volumes 04 billion oilseeds processing revenues decreased 18 due principally lower sales prices 55 billion lower sales volumes 02 billion wild flavors specialty ingredients revenues increased 76 due principally higher sales volumes resulting inclusion full year results wild flavors sci acquired fourth quarter fiscal 2014 12 billion partially offset lower prices 02 billion cost products sold decreased 128 billion 637 billion due principally lower average commodity prices including 56 billion foreign currency translation impacts due strength us dollar lower manufacturing costs included cost products sold credit 2 million effect decreasing agricultural commodity prices lifo inventory valuation reserves compared credit 245 million 2014 manufacturing expenses decreased 291 million 55 billion primarily due lower fuel prices partially offset increased employee benefit costs due inclusion full year costs wild flavors sci gross profit decreased 07 billion 16 40 billion due principally lower ethanol margins 06 billion foreign currency translation impacts 02 billion inclusion full year results wild flavors sci partially offset lower credit effect decreasing agricultural commodity prices lifo valuation reserves factors explained segment operating profit discussion page 38 decrease underlying commodity prices result significant decrease margins gross profit lower underlying commodity prices relatively equal impact revenues cost products sold selling general administrative expenses increased 106 million 20 billion due principally increased expenses 219 million related inclusion full year results wild flavors sci 2015 compared threemonth results 2014 partially offset decreased pension expense primarily due 98 million onetime pension settlement 2014 asset impairment exit restructuring costs recognized 2015 200 million consisted longlived asset impairments 129 million related certain oilseeds processing facilities sugar ethanol facilities brazil facility corn processing segment capitalized software costs restructuring exit costs 71 million related principally international pension plan settlement sugar ethanol facilities brazil several individually insignificant restructuring exit costs asset impairment exit restructuring costs recognized 2014 105 million consisted costs associated relocation company’s global headquarters chicago illinois 16 million restructuring charges related primarily wild flavors acquisition integration subsidiary following acquisition minority interest 48 million otherthantemporary investment writedown 6 million several individually insignificant fixed asset impairments 35 million interest expense declined 29 million 308 million primarily due lower interest rates resulting issuance eurodenominated debt repurchase certain company’s us dollardenominated outstanding debentures equity earnings unconsolidated affiliates increased 18 million 390 million primarily due higher earnings company’s investment cip item 7 management’s discussion analysis financial condition results operations continued income increased 77 million 273 million 350 million income year ended december 31 2015 consisted primarily gain sales 256 million related primarily sale cocoa chocolate lactic businesses gain 212 million revaluation company’s previously held equity investments north start shipping minmetal eaststarch cv conjunction acquisition remaining interests gain 62 million sale 50 interest barcarena export terminal facility brazil glencore plc partially offset 189 million loss debt extinguishment related repurchase outstanding debt 2015 loss provisions 45 million related sugar ethanol facilities brazil income year ended december 31 2014 consisted primarily gains 156 million upon company’s effective dilution pacificor joint venture 126 million sale fertilizer business partially offset losses 102 million euro foreign currency derivative contracts entered economically hedge wild flavors acquisition operating profit segment earnings income taxes year ended december 31 2015 2014 follows item 7 management’s discussion analysis financial condition results operations continued corporate results follows agricultural services operating profit decreased 32 merchandising handling results decreased fewer merchandising opportunities lower margins due ample global supplies grain reduced us export competitiveness second half 2015 due strong us dollar large south american harvest also contributing decrease absence 2014 gain 17 million related partial recovery loss provision 2014 gain 156 million company’s effective dilution pacificor joint venture partially offset 2015 gain 27 million revaluation company’s previously held investments north star shipping minmetal conjunction acquisition remaining interests milling results improved due higher product margins strong merchandising results transportation results declined due lower freight rates volumes driven reduced us export volumes second half 2015 corn processing operating profit decreased 44 included 2015 operating profit approximately 13 million marktomarket losses related hedge timing effects compared 25 million gains 2014 excluding items sweeteners starches operating profit increased 213 million due principally 185 million gain revaluation company’s previously held investment eaststarch cv conjunction acquisition remaining interest november 2015 also contributing increase lower raw material costs good demand relative supply products excluding hedge timing effects bioproducts operating profit declined 675 million primarily due lower industry ethanol margins strong industry production levels resulted high industry inventory levels kept industry margins considerably lower 2014 despite increased domestic export demand also contributing decrease restructuring fixed asset impairment charges 75 million loss provisions 45 million related sugar ethanol business brazil oilseeds processing operating profit increased 9 included 2015 operating profit 45 million marktomarket gains related cocoa hedge timing effects compared 17 million losses 2014 crushing origination operating profit includes 2015 gain 62 million related sale assets new barcarena export terminal joint venture brazil 2014 gain 126 million related sale fertilizer business excluding gains crushing origination operating profit increased 38 million primarily due strong north american european soybean crushing volumes margins first half 2015 driven strong demand ample global bean supply starting third quarter continuing fourth quarter 2015 global soybean crush margins declined competitive argentine meal anticipated enter already wellsupplied global markets due changes argentine policies softseed margins volumes lower particularly europe resulting weaker global demand vegetable oil large south american corn soybean harvests also helped support significant improvement south america origination results refining packaging biodiesel operating profit declined primarily due lower south american european results partially offset improved margins north american oil refining operations excluding hedge timing effects cocoa results increased 149 million 2015 gain 244 million sale global cocoa chocolate business partially offset lower earnings due sale businesses lower cocoa press margins peanut processing results asia results declined due principally longlived asset goodwill impairments partially offset increase company’s share results equity investee wilmar wild flavors specialty ingredients operating profit increased due primarily acquisitions wild flavors sci fourth quarter fiscal 2014 incremental earnings acquisitions partially offset lower overall results specialty ingredients businesses due weakness many emerging economies strong us dollar reduced volumes margins across number product lines item 7 management’s discussion analysis financial condition results operations continued corporate results net charge 988 million 2015 compared 785 million 2014 effects changing commodity prices lifo inventory valuations resulted credit 2 million 2015 compared credit 245 million 2014 interest expense net declined due principally lower interest rates unallocated corporate costs increased 19 million due primarily increased pension expense resulting adoption new mortality assumption increased spending company’s erp program various strategic business improvement projects partially offset lower employee compensation expense charges 2015 consisted 189 million loss debt extinguishment related repurchase outstanding debt restructuring charges 29 million related principally international pension plan settlement asset impairment settlement charges 24 million charges 2014 consisted 102 million loss euro foreign currency derivative contracts entered economically hedge wild flavors acquisition costs associated relocation company’s global headquarters chicago illinois 16 million restructuring charges related alfred c toepfer international integration restructuring charges 15 million pension settlement 98 million minority interest expense 2014 consisted primarily 56 million loss related company’s equity method investment cip nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda nongaap financial measures defined securities exchange commission evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps certain specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes management believes adjusted eps adjusted ebitda useful measures company’s performance provide investors additional information companys operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda intended replace alternative diluted eps earnings income taxes respectively directly comparable amounts reported gaap table provides reconciliation diluted eps adjusted eps years ended december 31 2015 2014 1 tax effected using company’s us effective tax rate 2 tax effected using us applicable tax rates item 7 management’s discussion analysis financial condition results operations continued table provides reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2015 2014 item 7 management’s discussion analysis financial condition results operations continued liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business company’s strategy involves expanding volume diversity crops merchandises processes expanding global reach core model expanding valueadded product portfolio company depends access credit markets impacted credit rating factors outside company’s control fund working capital needs capital expenditures primary source funds finance company’s operations capital expenditures advancement growth strategy cash generated operations lines credit including commercial paper borrowing facility addition company believes access funds public private equity debt capital markets us international markets cash provided operating activities 15 billion 2016 compared 25 billion 2015 working capital changes decreased cash 06 billion current year compared providing cash 02 billion prior year trade receivables increased 02 billion due principally lower receivables sold accounts receivable securitization programs inventories increased approximately 07 billion december 31 2016 compared december 31 2015 due higher inventory quantities higher prices company made 02 billion voluntary contribution us pension plans 2015 2016 cash used investing activities 12 billion year compared 21 million last year capital expenditures net assets businesses acquired 10 billion year compared 16 billion last year proceeds sale businesses assets 02 billion year compared 18 billion last year sales marketable securities net purchases 03 billion year compared 35 million last year investments advances affiliates include additional investments wilmar 06 billion year compared 01 billion last year cash used financing activities 06 billion year compared 26 billion last year longterm debt borrowings current year related 10 billion new notes issued august 11 2016 compared 12 billion prior year related €11 billion 12 billion notes issued june 24 2015 longterm debt payments prior year included purchase 935 million aggregate principal amount certain company’s outstanding debentures 11 billion pursuant cash tender offers debt redemption treasury stock purchases 10 billion current year compared 20 billion last year december 31 2016 company 09 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 16 1 included working capital 58 billion readily marketable commodity inventories december 31 2016 company’s capital resources included shareholders’ equity 172 billion lines credit totaling 69 billion 58 billion unused company’s ratio longterm debt total capital sum longterm debt shareholders’ equity 27 december 31 2016 24 december 31 2015 company uses ratio measure company’s longterm indebtedness indicator financial flexibility company’s ratio net debt sum shortterm debt current maturities longterm debt longterm debt less sum cash equivalents shortterm marketable securities capital sum net debt shareholders’ equity 26 december 31 2016 20 december 31 2015 company’s total lines credit 40 billion support commercial paper borrowing facility commercial paper outstanding december 31 2016 item 7 management’s discussion analysis financial condition results operations continued december 31 2016 company 06 billion cash equivalents 03 billion cash held foreign subsidiaries whose undistributed earnings considered permanently reinvested based company’s historical ability generate sufficient cash flows us operations unused available us credit capacity 45 billion company asserted funds permanently reinvested outside us company accounts receivable securitization programs “programs” certain commercial paper conduit purchasers committed purchasers programs provide company 15 billion funding accounts receivable transferred programs expands company’s access liquidity efficient use balance sheet assets see note 19 item 8 information disclosures programs december 31 2016 company utilized 10 billion facility programs november 5 2014 company’s board directors approved stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2015 ending december 31 2019 company acquired approximately 687 million shares program december 31 2016 company expects capital expenditures 13 billion 2017 company expects additional cash outlays approximately 07 billion dividends 10 billion 15 billion share repurchases subject strategic capital requirements company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2016 three major credit rating agencies maintained company’s credit ratings solid investment grade levels stable outlooks contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 55 million december 31 2016 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued 1 includes pension contributions 30 million fiscal 2017 company unable estimate amount pension contributions beyond fiscal year 2017 information concerning company’s pension postretirement plans see note 15 item 8 december 31 2016 company estimates spend approximately 15 billion fiscal year 2021 complete currently approved capital projects included table company also outstanding letters credit surety bonds 11 billion december 31 2016 included table company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations balance sheet arrangements accounts receivable securitization programs since march 2012 company accounts receivable securitization program certain commercial paper conduit purchasers committed purchasers march 2014 company entered second accounts receivable securitization program certain commercial paper conduit purchasers committed purchasers see note 19 item 8 information programs synthetic leasing program company party lease agreements synthetic leasing programs certain us barge trucking assets periods ranging 5 7 years december 31 2016 outstanding lease balances including value underlying assets 170 million offbalance sheet agreements provide company right use assets specified periods exchange obligation make rental payments agreements accounted operating leases rent expense recorded consolidated statement earnings future lease payments pertaining lease agreements included contractual obligations table item 7 leasing programs utilized primarily diversify funding sources retain flexibility company recorded 5 million rent expense pertaining synthetic lease payments years ended december 31 2016 2015 2014 critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements item 7 management’s discussion analysis financial condition results operations continued fair value measurements inventories commodity derivatives certain company’s inventory commodity derivative assets liabilities december 31 2016 valued estimated fair values including 44 billion merchandisable agricultural commodity inventories 06 billion derivative assets 07 billion derivative liabilities 05 billion inventoryrelated payables commodity derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s inventory derivative commodity fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 2 within fair value hierarchy level 3 fair value measurements approximately 15 billion assets 02 billion liabilities represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 3 item 8 changes market values inventories commodity contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges fix purchase price anticipated volumes commodities purchased processed future month fix purchase price company’s anticipated natural gas requirements certain production facilities fix sales price anticipated volumes ethanol designated hedging programs principally relate company’s corn processing operating segment assuming normal market conditions change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred accumulated comprehensive income net applicable income taxes recognized component cost products sold revenues statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component cost products sold see note 4 item 8 additional information investments affiliates company applies equity method accounting investments company ability exercise significant influence investments affiliates carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may materially differ income taxes company accounts income tax positions accordance applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company frequently faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example company received tax assessments tax authorities brazil argentina challenging income tax positions taken subsidiaries company evaluated tax positions matters concluded based part upon advice legal counsel appropriate recognize tax benefits positions see note 13 item 8 additional information item 7 management’s discussion analysis financial condition results operations continued deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely 2016 company decreased valuation allowances approximately 86 million primarily related divestiture impaired entity extent company favorably resolve matters valuation allowances established required pay amounts excess aforementioned valuation allowances company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 93 billion december 31 2016 considered permanently reinvested accordingly provision us income taxes provided thereon company receive distributions foreign subsidiaries affiliates determine undistributed earnings foreign subsidiaries affiliates permanently reinvested company could subject us tax liabilities provided consolidated financial statements property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods years ended december 31 2016 2015 2014 impairment charges property plant equipment 17 million 108 million 35 million respectively see note 18 item 8 additional information business combinations company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended assets acquired liabilities assumed based preliminary purchase price allocations adjusted fair values acquisition date remainder purchase price recorded goodwill determining fair values assets acquired liabilities assumed management makes significant estimates assumptions especially respect intangible assets critical estimates valuing certain intangible assets include limited future expected cash flows discount rates although management’s estimates fair value based upon assumptions believed reasonable actual results may differ goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level annually october 1 whenever indicators carrying value assets may fully recoverable critical estimates determination fair value reporting unit include limited future expected cash flows discount rates definitelived intangible assets amortized estimated useful lives 2 50 years reviewed impairment whenever indicators carrying value assets may fully recoverable company recorded impairment charge goodwill intangibles 11 million 21 million years ended december 31 2016 2015 respectively see note 18 item 8 information impairment charges recorded goodwill indefinitelived intangible assets year ended december 31 2014 management used different estimates assumptions impairment tests company could recognize different amounts expense future periods item 7 management’s discussion analysis financial condition results operations continued employee benefit plans company provides substantially us employees certain international subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage others provided health care reimbursement accounts order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements company’s vision admired global agribusiness nutrition company creating value growing responsibly company’s growth strategy spread across five key growth platforms taste nutrition animal nutrition health wellness carbohydrates company desires execute vision strategies conducting business accordance core values operating integrity treating others respect achieving excellence resourceful displaying teamwork responsible company principally engaged procuring transporting storing processing merchandising agricultural commodities products ingredients company uses significant global asset base originate transport agricultural commodities connecting markets 170 countries company also processes corn oilseeds wheat products food animal feed chemical energy uses company also engages manufacturing sale distribution specialty products including natural flavor ingredients flavor systems natural colors proteins emulsifiers soluble fiber polyols hydrocolloids natural health nutrition products specialty food feed ingredients company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities company’s operations organized managed classified four reportable business segments origination oilseeds carbohydrate solutions nutrition segments organized based upon nature products services offered company’s remaining operations reportable business segments defined applicable accounting standard classified financial information respect company’s reportable business segments set forth note 17 “notes consolidated financial statements” included item 8 effective january 1 2018 company changed segment reporting reflect changes operating structure companys new segments origination formerly agricultural services oilseeds formerly oilseeds processing carbohydrate solutions formerly corn processing nutrition formerly wild flavors specialty ingredients european origination business previously reported oilseeds managed leaders origination better coordinate continental trading activities carbohydrate solutions includes results adm milling previously reported origination addition company also moved segment reporting renewable chemicals business carbohydrate solutions oilseeds effective july 1 2018 nutrition includes results animal nutrition certain product lines previously reported carbohydrate solutions well certain product lines previously reported oilseeds prior period results reclassified conform current period presentation company’s recent significant portfolio actions announcements include • investment june 2018 50 interest soyven joint venture cargill provide soybean meal oil customers egypt • acquisition june 2018 50 equity stake starches sweeteners business russianbased aston foods food ingredients • sale july 2018 company’s oilseeds operations bolivia inversiones piuranas sa • acquisition august 2018 probiotics international limited britishbased provider probiotic supplements human pet productionanimal uses • acquisition august 2018 rodelle inc premium originator processor supplier vanilla products • announcement october 2018 launch grainbridge llc 50 joint venture cargill develop offer revolutionary new digital tools help farmers make informed grain marketing decisions based personalized production economics • acquisition december 2018 certain soybean origination crushing refining bottling assets brazilbased algar agro • acquisition january 2019 neovia frenchbased global provider valueadded animal nutrition solutions 72 production facilities presence 25 countries item 7 management’s discussion analysis financial condition results operations continued • announcement january 2019 agreement purchase florida chemical company one worlds largest providers citrus oils ingredients subject regulatory approval expected close first quarter 2019 • announcement january 2019 agreement purchase remaining 50 interest owned invivo gleadell agriculture ltd current joint venture invivo subject regulatory approval expected close first quarter 2019 company executes strategic vision three pillars optimize core drive efficiencies expand strategically supported readiness culture 2018 company launched readiness drive new efficiencies improve customer experience company’s existing businesses combination data analytics process simplification standardization behavioral cultural change building upon earlier 1adm operational excellence programs readiness also support execution companys growth strategies across five key growth platforms taste nutrition animal nutrition health wellness carbohydrates operating performance indicators company’s origination oilseeds operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials therefore changes agricultural commodity prices relatively equal impacts revenues cost products sold thus changes revenues businesses necessarily correspond changes margins gross profit company’s carbohydrate solutions operations nutrition businesses also utilize agricultural commodities products derived agricultural commodities raw materials however operations agricultural commodity market price changes necessarily correlate changes cost products sold thus changes revenues businesses may correspond changes margins gross profit company consolidated subsidiaries 80 countries majority company’s subsidiaries located outside united states local currency functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil argentina functional currency us dollar however certain transactions including taxes occur local currency require remeasurement functional currency changes revenues expected correlated changes expenses reported company caused fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar company measures performance using key financial metrics including net earnings segment operating profit return invested capital ebitda economic value added manufacturing expenses selling general administrative expenses company’s financial results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies trade policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company undertakes responsibility updating forwardlooking information contained within “management’s discussion analysis financial condition results operations” item 7 management’s discussion analysis financial condition results operations continued year ended december 31 2018 compared year ended december 31 2017 agricultural commoditybased business company subject variety market factors affect companys operating results 2018 markets volatile amid escalating global trade tensions including announcement tariffs chinese imports us soybeans origination strong demand feedstuffs light weather conditions northern europe resulted higher sales volumes margins destination markets strong basis positions across commodities resulted higher margins oilseeds dry conditions argentina resulted smaller soybean crop combined continued good global meal demand resulted strong global crushing margins volumes south american origination volumes margins benefited stronger farmer selling demand margins refined oil remained solid biodiesel margins improved excess global peanut supply resulted weak peanut margins carbohydrate solutions global demand prices starches sweeteners remained solid north america coproduct prices stable us ethanol industry production remained high levels although ethanol demand remained strong north america export markets due favorable gasoline blending economics ethanols continuing status competitive octane enhancer margins continue remain pressure nutrition benefited strong demand flavor ingredients flavor systems strong demand favorable margin development certain nonflavor food businesses net earnings attributable controlling interests increased 13 02 billion 18 billion segment operating profit increased 29 07 billion 33 billion included segment operating profit current year net charge 89 million consisting asset impairment restructuring settlement charges net gain sales assets businesses included segment operating profit prior year net charge 134 million consisting asset impairment restructuring charges net gain sales assets businesses corn hedge timing effects adjusted segment operating profit increased 07 billion 34 billion due increase sales prices volumes corn meal improved margins origination oilseeds nutrition benefits 2017 biodiesel tax credit approved received first quarter 2018 partially offset lower ethanol margins corporate results net charge 12 billion current year compared 09 billion prior year corporate results current year included pension settlement charge 117 million 49 million charge related discontinued software project restructuring charges 24 million primarily related reorganization services credit 18 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 2 million prior year corporate results prior year also included 54 million restructuring charges primarily related reduction certain positions within companys global workforce income taxes 245 million increased 238 million due higher effective tax rate higher earnings income taxes company’s effective tax rate 2018 increased 119 compared 04 2017 due primarily low rate 2017 impacted favorable tax adjustments related tax cuts jobs act totaling 379 million effective tax rate current year also included final effects us tax reform 2017 biodiesel tax credit recorded first quarter 2018 along certain favorable discrete tax items netting favorable 74 million analysis statements earnings processed volumes product years ended december 31 2018 2017 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react current margin environment seasonal local supply demand conditions processed volumes oilseeds increased due increasing global demand oilseed products particularly meal higher crushing volumes north america due reduced soybean crop argentina overall decrease corn primarily related decreased current year processing reconfiguration company’s peoria illinois ethanol complex third quarter fiscal 2017 production issues decatur illinois corn complex 2018 item 7 management’s discussion analysis financial condition results operations continued revenues segment years ended december 31 2018 2017 follows revenues cost products sold commodity merchandising processing businesses significantly correlated underlying commodity prices volumes periods significant changes commodity prices underlying performance company better evaluated looking margins since revenues cost products sold particularly oilseeds origination generally relatively equal impact commodity price changes generally result insignificant impact gross profit revenues increased 35 billion 6 643 billion due principally higher sales prices 23 billion higher sales volumes 12 billion increase sales prices volumes due primarily increases corn soybean meal origination revenues increased 4 251 billion due higher sales prices 21 billion partially offset lower sales volumes 12 billion oilseeds revenues increased 11 248 billion due higher sales volumes 20 billion higher sales prices 04 billion carbohydrate solutions revenues decreased 1 103 billion due lower sales prices 02 billion partially offset higher sales volumes 01 billion nutrition revenues increased 8 38 billion due higher sales volumes 03 billion cost products sold increased 29 billion 602 billion due principally higher sales volumes higher prices commodities included cost products sold credit 18 million effect changes agricultural commodity prices lifo inventory valuation reserves compared 2 million prior year manufacturing expenses increased 02 billion 54 billion due principally increased energy cost railroad maintenance expense offsetting benefit income tax expense individually insignificant increases certain expense categories foreign currency translation impacts increased revenues cost products sold 04 billion item 7 management’s discussion analysis financial condition results operations continued gross profit increased 07 billion 19 42 billion higher results crushing origination 490 million refining packaging biodiesel 99 million merchandising handling 204 million wild flavors specialty ingredients 76 million partially offset lower results bioproducts 103 million 36 million factors explained segment operating profit discussion page 33 effect changes agricultural commodity prices lifo inventory valuation reserves positive impact gross profit 18 million compared 2 million prior year selling general administrative expenses increased 9 22 billion due principally higher performancerelated compensation accruals increased pension projectrelated expenses asset impairment exit restructuring costs decreased 2 million 171 million current year charges consisted 56 million impairment certain longlived assets 12 million impairment equity investment 21 million impairment related longterm financing receivable 9 million individually insignificant impairment restructuring charges presented specified items within segment operating profit 49 million charge related discontinued software project 18 million restructuring charges related reorganization services 6 million individually insignificant restructuring charges corporate prior year charges consisted 63 million asset impairments related reconfiguration companys peoria illinois ethanol complex 20 million asset impairments related closure facility 36 million several individually insignificant asset impairments restructuring charges presented specified items within segment operating profit 54 million restructuring charges corporate primarily related reduction certain positions within companys global workforce interest expense increased 34 million 364 million primarily due higher interest rates shortterm debt higher borrowings equity earnings unconsolidated affiliates increased 62 million 518 million due earnings new equity investment higher earnings company’s equity investments cip olenex partially offset lower earnings equity investments expense net 101 million increased 111 million net income 10 million current year expense included foreign exchange losses noncash pension settlement charge 117 million related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain us salaried retirees companys adm retirement plan expenses partially offset gains disposals businesses equity investment individually insignificant assets ordinary course business income prior year net income included gains related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business changes contingent settlement provisions charge related early redemption companys 559 million notes due march 15 2018 foreign exchange losses item 7 management’s discussion analysis financial condition results operations continued segment operating profit adjusted segment operating profit nongaap measure earnings income taxes years ended december 31 2018 2017 follows 1 adjusted segment operating profit segment operating profit excluding listed specified items item 7 management’s discussion analysis financial condition results operations continued origination operating profit increased 35 merchandising handling significantly yearoveryear global trade delivered strong results due increased volumes strong margins improved opportunities soybean feedstuff value chain north american grain due improved margins higher volumes transportation due primarily higher freight rates oilseeds operating profit increased 79 crushing origination results increased due strong global demand margin environment reduced soybean crop argentina combined continued good global meal demand resulted strong crushing margins volumes south america saw strong origination volumes improving margins farmer selling accelerated refining packaging biodiesel results higher mainly due 2017 biodiesel tax credit approximately 120 million approved received first quarter 2018 solid biodiesel results higher earnings company’s investment olenex partially offset weaker peanut shelling margins primarily caused large peanut inventories difficult market conditions asia results increased due higher earnings company’s investment wilmar carbohydrate solutions operating profit decreased 12 starches sweeteners results decreased due lower margins volumes liquid sweeteners mainly due production issues decatur illinois corn complex partially offset improved results starches dry sweeteners bioproducts results near record industry fuel ethanol inventories pressured margins production issues decatur il corn complex increased costs partially offset effective ethanol risk management nutrition operating profit increased 9 wild flavors specialty ingredients results due improved earnings across segment higher sales volumes related contributions new acquisitions organic growth wild flavors improved portfolio mix boosted sales margins health wellness improved driven largely increased contributions bioactives specialty ingredients due improved volumes margins proteins increased sales fibers partially offset lower results polyols animal nutrition due operational issues decatur il constrained lysine production volumes increased manufacturing costs partially offset improved premix commercial feed margins operating profit increased 14 primarily due stronger results futures commission brokerage business due higher shortterm interest rates partially offset lower underwriting results company’s captive insurance operations first half 2018 corporate results follows item 7 management’s discussion analysis financial condition results operations continued corporate results net charge 12 billion current year compared 09 billion prior year effect changes agricultural commodity prices lifo inventory valuation reserves resulted credit 18 million current year compared credit 2 million prior year interest expense net increased 11 million due higher interest rates shortterm debt higher borrowings partially offset interest income related tax credit lowertax related expense unallocated corporate costs increased 190 million due principally higher performancerelated compensation accruals increased pension projectrelated expenses railroad maintenance expense offsetting benefit income tax expense acquisitionrelated expenses current year related expenses losses foreign currency derivative contracts entered economically hedge certain acquisitions loss debt extinguishment prior period related early redemption 559 million aggregate principal amount 545 notes due march 15 2018 impairment restructuring settlement charges current year included pension settlement charge 117 million 49 million charge related discontinued software project restructuring charges 24 million primarily related reorganization services compared restructuring charges related reduction certain positions within company’s global workforce 54 million prior year charges decreased 32 million primarily due improved results company’s investment cip lower nonservice cost related pension expenses nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda adjusted segment operating profit nongaap financial measures defined securities exchange commission evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes adjusted segment operating profit segment operating profit adjusted applicable specified items management believes adjusted eps adjusted ebitda adjusted segment operating profit useful measures company’s performance provide investors additional information companys operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda adjusted segment operating profit intended replace alternative diluted eps earnings income taxes segment operating profit respectively directly comparable amounts reported gaap item 7 management’s discussion analysis financial condition results operations continued table provides reconciliation diluted eps adjusted eps years ended december 31 2018 2017 1 tax effected using company’s us tax rate 2 tax effected using applicable tax rates 3 includes tax adjustments related us tax cuts jobs act tables provide reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2018 2017 item 7 management’s discussion analysis financial condition results operations continued year ended december 31 2017 compared year ended december 31 2016 agricultural commoditybased business company subject variety market factors affect companys operating results origination us export competitiveness strong first half 2017 weakened second half due large crops south america overall low market volatility continued due surplus global market carbohydrate solutions demand prices sweeteners starches remained solid north america coproduct prices stable ethanol continues face challenging environment although ethanol demand remained strong north america export markets due favorable gasoline blending economics ethanols continuing status competitive octane enhancer us industry ethanol production also remained high levels limited margins global oilseeds processing volumes remained strong ample supply competing proteins abundance argentine meal oil world markets pressured margins slow selling farmers brazil continues depress grain origination margins despite strong export volumes demand margins refined oil remained solid across regions uncertainty surrounding us biodiesel tax credit negatively impacted biodiesel margins nutrition benefited strong demand flavor ingredients flavor systems continued adversely affected startup costs margin pressure certain nonflavor food ingredient markets net earnings attributable controlling interests increased 03 billion 16 billion segment operating profit decreased 02 billion 25 billion included segment operating profit 2017 net charge 134 million consisting net gain sales assets businesses impairment restructuring settlement charges corn hedge timing effects included segment operating profit 2016 income 81 million consisting net gain sales assets businessesrevaluation impairment restructuring charges corn hedge timing effects adjusted segment operating profit increased 47 million 27 billion due solid results carbohydrate solutions partially offset weaker south american origination margins lower soybean crush margins weaker results specialty ingredients corporate results net charge 927 million 2017 compared 882 million 2016 corporate results 2017 included credit 2 million effect changes agricultural commodity prices lifo inventory valuation reserves compared charge 19 million 2016 income taxes decreased 527 million due lower earnings income taxes lower effective tax rate company’s effective tax rate 2017 decreased 04 compared 293 2016 due primarily estimated impact tax cuts jobs act “act” excluding impact act companys effective tax rate 2017 would decreased 293 approximately 240 due primarily impact changes discrete tax items including favorable resolution uncertain tax position related 2014 acquisition return provision adjustments current year partially offset changes geographic mix pretax earnings expiration us tax credits including biodiesel credit end 2016 see note 13 item 8 information analysis statements earnings processed volumes product years ended december 31 2017 2016 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react current margin environment seasonal local supply demand conditions processed volumes oilseeds increased due strong demand environment soybean meal canola oil overall increase corn due strong demand environment ethanol partially offset production disruption one company’s plants due water main break first quarter reconfiguration company’s peoria illinois ethanol complex item 7 management’s discussion analysis financial condition results operations continued revenues segment years ended december 31 2017 2016 follows revenues cost products sold commodity merchandising processing businesses significantly correlated underlying commodity prices volumes periods significant changes commodity prices underlying performance company better evaluated looking margins since revenues cost products sold particularly oilseeds origination generally relatively equal impact commodity price changes generally result insignificant impact gross profit revenues decreased 15 billion 2 608 billion due lower sales volumes 14 billion lower average sales prices 01 billion decrease sales volumes due principally decrease volumes unprocessed commodities particular volumes soybeans corn rapeseed wheat origination revenues decreased 6 241 billion due lower sales volumes 15 billion lower average sales prices 01 billion oilseeds revenues increased 2 224 billion due higher sales volumes 04 billion carbohydrate solutions revenues decreased 3 104 billion due lower sales volumes 03 billion nutrition revenues 35 billion comparable 2016 cost products sold decreased 14 billion 573 billion due principally lower sales volumes included cost products sold credit 2 million effect changes agricultural commodity prices lifo inventory valuation reserves compared charge 19 million 2016 manufacturing expenses increased 01 billion 52 billion due increased expenses energy operating maintenance supplies contracted labor higher salaries benefits item 7 management’s discussion analysis financial condition results operations continued gross profit decreased 01 billion 3 35 billion lower results soybean processing 159 million grain origination 86 million partially offset higher results canola processing 41 million sweeteners starches 44 million animal nutrition 39 million factors explained segment operating profit discussion page 40 effect changes agricultural commodity prices lifo inventory valuation reserves 2 million positive impact gross profit compared negative impact 19 million 2016 selling general administrative expenses 20 billion comparable 2016 expenses 2017 included increased salaries benefits cost related investments company’s business transformation research development innovation initiatives expenses 2016 included expenses related settlement legal matter asset impairment exit restructuring costs increased 118 million 173 million charges 2017 consisted 63 million asset impairments related reconfiguration company’s peoria illinois ethanol complex 20 million asset impairments primarily related closure facility 36 million several individually insignificant asset impairments restructuring charges presented specified items within segment operating profit 54 million restructuring charges corporate primarily related reduction certain positions within company’s global workforce charges 2016 included 32 million individually insignificant fixed asset impairment restructuring charges presented specified items within segment operating profit 11 million software impairment corporate 6 million otherthantemporary impairment charges companys investment two available sale equity securities corporate 6 million individually insignificant fixed asset impairment restructuring charges corporate interest expense increased 37 million 330 million primarily due higher interest rates shortterm debt issuance 1 billion fixedrate notes august 2016 interest related amended foreign income tax partially offset retirement 261 million bond matured april 2017 interest expense 2016 also included credit 8 million revaluation mandatorily redeemable 10 interest harvest innovations equity earnings unconsolidated affiliates increased 164 million 456 million primarily due higher earnings company’s investment wilmar resulting increased ownership stake higher results wilmar improved results company’s equity investment cip partially offset losses new equity investment decreased earnings resulting disposal equity investment income net decreased 110 million 37 million income 2016 included realized additional consideration related sale companys equity investment gruma sab de cv december 2012 recovery loss provisions gain related sale companys brazilian sugar ethanol facilities gain related revaluation remaining interest settlement value conjunction acquisition amazon flavors loss sale individually immaterial assets income 2017 included gains related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business changes contingent settlement provisions charge related full redemption companys 559 million notes due march 15 2018 foreign exchange losses item 7 management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes years ended december 31 2017 2016 follows 1 adjusted segment operating profit segment operating profit excluding specified items item 7 management’s discussion analysis financial condition results operations continued origination operating profit increased 12 merchandising handling operating results increased due improved global trade execution strong destination marketing volume growth merchandising handling results also included gain related confidential legal settlement 42 million net recovery property damage costs business interruption losses related companys new orleans louisiana export facility transportation results decreased due river conditions lower barge freight volumes margins oilseeds operating profit decreased 3 crushing origination operating profit decreased prior year higher softseed results north america europe offset weaker soybean crush margins due ample supply alternative proteins competing soybean meal addition improved south american soybean crushing results offset weak grain origination margins throughout year refining packaging biodiesel operating profit declined due weaker biodiesel specialty oils margins partially offset higher results south american packaged oils global peanut business asia results increased higher earnings company’s investment wilmar due increased ownership stake higher results wilmar carbohydrate solutions operating profit increased 8 starches sweeteners operating profit increased due improved domestic demand higher volumes margins international business bioproducts profit increased due higher trading results partially offset slightly lower ethanol margins nutrition operating profit increased 14 wild flavors specialty ingredients operating profit increased due continuing strong demand flavor ingredients flavor systems across regions partially offset lower results specialty ingredients due part operational startup costs animal nutrition operating profit increased due improved lysine margins partially offset lower volumes caused mild winter operating profit decreased 62 primarily due losses companys captive insurance operations lower results futures commission brokerage business results 2017 included settlement insurance claims companys origination segment totaling 50 million related new orleans louisiana export facility corporate results follows item 7 management’s discussion analysis financial condition results operations continued corporate results net charge 927 million 2017 compared 882 million 2016 effect changes agricultural commodity prices lifo inventory valuation reserves resulted credit 2 million 2017 compared charge 19 million 2016 interest expense net increased 28 million due principally higher interest rates shortterm debt issuance 1 billion fixedrate debt august 2016 interest related amended foreign income tax return partially offset retirement 261 million bond matured april 2017 absence original harvest innovation adjustment buyout liability may 2016 unallocated corporate costs increased 13 million due principally increased investments company’s business transformation research development innovation initiatives partially offset absence railroad maintenance expense 2016 loss debt extinguishment related early redemption company’s 559 million aggregate principal amount 545 notes due march 15 2018 asset impairment restructuring settlement charges 2017 related reduction certain positions within company’s global workforce compared charges 2016 consisted legal settlement costs legal fees software impairment charge otherthantemporary impairment charges company’s investments two available sale equity securities asset impairment restructuring charges postretirement benefit adjustment related us retiree medical benefit curtailment gain loss sale asset related sale investment partially offset gain related us retiree medical benefit plan curtailment charges increased 12 million due principally lower results companys equity investment cip nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda adjusted segment operating profit nongaap financial measures defined securities exchange commission evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes adjusted segment operating profit segment operating profit adjusted applicable specified items management believes adjusted eps adjusted ebitda adjusted segment operating profit useful measures company’s performance provide investors additional information companys operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda adjusted segment operating profit intended replace alternative diluted eps earnings income taxes segment operating profit respectively directly comparable amounts reported gaap item 7 management’s discussion analysis financial condition results operations continued table provides reconciliation diluted eps adjusted eps years ended december 31 2017 2016 1 tax effected using company’s us effective tax rate 2 tax effected using us applicable tax rates 3 includes tax adjustments related 2017 us tax cuts jobs act tables provide reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2017 2016 item 7 management’s discussion analysis financial condition results operations continued liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business company depends access credit markets impacted credit rating factors outside company’s control fund working capital needs capital expenditures primary source funds finance company’s operations capital expenditures advancement growth strategy cash generated operations lines credit including commercial paper borrowing facility addition company believes access funds public private equity debt capital markets us international markets cash used operating activities 48 billion 2018 compared 60 billion 2017 working capital changes including increase deferred consideration decreased cash 75 billion current year compared 79 billion prior year trade receivables increased 04 billion due higher revenues inventories decreased 02 billion due lower inventory quantities increase deferred consideration securitized receivables 78 billion 82 billion 2018 2017 respectively offset amount net consideration received beneficial interest obtained selling trade receivables previously classified operating activities prior year classified investing activities accordance amended guidance topic 230 cash provided investing activities 66 billion year compared 73 billion last year capital expenditures net assets businesses acquired 08 billion 05 billion respectively year compared 10 billion 02 billion respectively last year proceeds sale businesses assets 02 billion current year comparable prior year immaterial marketable securities sales transactions year compared sales marketable securities net purchases 04 billion prior year investments advances affiliates 02 billion current year related joint venture cargill investment aston foods compared 03 billion additional investment wilmar prior year net consideration received beneficial interest obtained selling trade receivables 78 billion 82 billion 2018 2017 respectively cash provided financing activities 02 billion year compared use 10 billion last year longterm debt borrowings current year consisted €650 million 744 million december 31 2018 aggregate principal amount 10 notes issued september 12 2018 december 3 2018 issuance 600 million 400 million aggregate principal amounts 45 3375 notes respectively longterm debt borrowings prior year related 500 million aggregate principal amount 375 notes issued september 14 2017 longterm debt payments current year 30 million compared 08 billion prior year primarily related full redemption 559 million notes due 2018 retirement 261 million bond matured april 2017 company issued debt current year general corporate expenses pay commercial paper borrowings commercial paper payments current year 07 billion compared borrowings 07 billion prior year share repurchases current year 01 billion compared 08 billion prior year december 31 2018 company 20 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 17 1 included working capital 56 billion readily marketable commodity inventories december 31 2018 company’s capital resources included shareholders’ equity 190 billion lines credit including accounts receivable securitization programs described totaling 104 billion 89 billion unused company’s ratio longterm debt total capital sum longterm debt shareholders’ equity 29 december 31 2018 27 december 31 2017 company uses ratio measure company’s longterm indebtedness indicator financial flexibility company’s ratio net debt sum shortterm debt current maturities longterm debt longterm debt less sum cash equivalents shortterm marketable securities capital sum net debt shareholders’ equity 25 december 31 2018 27 december 31 2017 company’s total lines credit 50 billion supported combined us european commercial paper borrowing programs commercial paper outstanding december 31 2018 december 31 2018 company 20 billion cash equivalents 04 billion cash held foreign subsidiaries whose undistributed earnings considered indefinitely reinvested based company’s historical ability generate sufficient cash flows us operations unused available us credit capacity 52 billion company asserted funds indefinitely reinvested outside us item 7 management’s discussion analysis financial condition results operations continued company accounts receivable securitization programs “programs” certain commercial paper conduit purchasers committed purchasers programs provide company 18 billion funding accounts receivable transferred programs expands company’s access liquidity efficient use balance sheet assets see note 19 item 8 information disclosures programs december 31 2018 company utilized 15 billion facility programs due terminate first half 2019 however company currently expects extend programs upon termination november 5 2014 company’s board directors approved stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2015 ending december 31 2019 company acquired approximately 879 million shares program december 31 2018 company expects capital expenditures 09 billion 10 billion 2019 company expects additional cash outlays approximately 08 billion dividends company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2018 three major credit rating agencies maintained company’s credit ratings solid investment grade levels stable outlooks january 2019 company completed acquisition neovia frenchbased global provider valueadded animal nutrition solutions 72 production facilities presence 25 countries 18 billion €15 billion company funded transaction using operating cash flows sources liquidity contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 107 million december 31 2018 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued 1 includes pension contributions 27 million fiscal 2019 company unable estimate amount pension contributions beyond fiscal year 2019 information concerning company’s pension postretirement plans see note 15 item 8 december 31 2018 company estimates spend approximately 13 billion fiscal year 2023 complete currently approved capital projects included table company also outstanding letters credit surety bonds 17 billion december 31 2018 included table company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations balance sheet arrangements accounts receivable securitization programs since march 2012 company accounts receivable securitization program certain commercial paper conduit purchasers committed purchasers march 2014 company entered second accounts receivable securitization program certain commercial paper conduit purchasers committed purchasers see note 19 item 8 information programs synthetic leasing program company party lease agreements synthetic leasing programs certain us barge tugboat assets expiration dates ranging 2020 2024 agreements accounted operating leases rent expense recorded consolidated statement earnings december 31 2018 outstanding lease balances including value underlying assets 164 million offbalance sheet agreements provide company right use assets specified periods exchange obligation make rental payments future lease payments pertaining lease agreements included contractual obligations table item 7 leasing programs utilized primarily diversify funding sources retain flexibility company recorded 10 million 10 million 5 million rent expense pertaining synthetic lease payments years ended december 31 2018 2017 2016 respectively item 7 management’s discussion analysis financial condition results operations continued critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements fair value measurements inventories commodity derivatives certain company’s inventory commodity derivative assets liabilities december 31 2018 valued estimated fair values including 45 billion merchandisable agricultural commodity inventories 06 billion derivative assets 08 billion derivative liabilities 06 billion inventoryrelated payables commodity derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s inventory derivative commodity fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 2 within fair value hierarchy level 3 fair value measurements approximately 17 billion assets 03 billion liabilities represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 4 item 8 changes market values inventories commodity contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges hedge purchase sales price anticipated volumes commodities purchased processed future month hedge purchase price company’s anticipated natural gas requirements certain production facilities hedge sales price anticipated volumes ethanol assuming normal market conditions change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred accumulated comprehensive income net applicable income taxes recognized component cost products sold revenues statement earnings hedged item recognized determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component revenues andor cost products sold see note 5 item 8 additional information investments affiliates company applies equity method accounting investments company ability exercise significant influence investments carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may materially differ item 7 management’s discussion analysis financial condition results operations continued income taxes company accounts income taxes accordance applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company frequently faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example company received tax assessments tax authorities brazil argentina challenging income tax positions taken subsidiaries company evaluated tax positions matters concluded based part upon advice legal counsel appropriate recognize tax benefits positions see note 13 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely 2018 company increased valuation allowances approximately 25 million primarily related certain realized foreign capital losses extent company favorably resolve matters valuation allowances established required pay amounts excess aforementioned valuation allowances company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 105 billion december 31 2018 considered indefinitely reinvested tax cuts jobs act “act” enacted december 22 2017 included onetime transition tax accumulated foreign earnings result company recorded 369 million provisional impact transition tax 220 million beneficial impact reserves previously established accounting standards codification subtopic 74030 income taxes considerations special areas net provisional impact 149 million company performed quarterly review provisional tax liability recorded 2017 new guidance act issued 2018 company finalized calculation transition tax recorded tax benefit 29 million fourth quarter 2018 company currently assessing impact pending treasury regulations company’s transition tax calculation record adjustment 2019 company elected pay onetime transition tax eight years company’s undistributed foreign earnings outside basis differences inherent foreign entities continue indefinitely reinvested foreign operations income taxes provided practicable determine amount unrecognized deferred tax liability related remaining undistributed foreign earnings subject transition tax additional outside basis difference entities act also contains new provisions related global intangible low taxed income gilti foreign derived intangible income fdii effective fiscal year 2018 company made accounting policy election treat gilti period cost 2018 us tax authorities issued proposed treasury regulations addressing tax reform items effective 2018 final treasury regulations issued company record impact changes 2019 also reasonable expect global taxing authorities reviewing current legislation potential modifications reaction implementation act additional guidance along potential additional global tax legislation changes may affect significant deductions income inclusions could material adverse effect companys net income cash flow item 7 management’s discussion analysis financial condition results operations continued property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods years ended december 31 2018 2017 2016 impairment charges property plant equipment 100 million 101 million 17 million respectively asset abandonment impairment charges 2018 included 49 million discontinued software project see note 18 item 8 additional information business combinations company’s acquisitions accounted purchases accordance accounting standards codification asc topic 805 business combinations amended assets acquired liabilities assumed recorded fair values acquisition date remainder purchase price recorded goodwill determining fair values assets acquired liabilities assumed management makes significant estimates assumptions especially respect intangible assets critical estimates valuing certain intangible assets include limited future expected cash flows discount rates although management’s estimates fair value based upon assumptions believed reasonable actual results may differ goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level annually october 1 whenever indicators carrying value may fully recoverable company adopted provisions asc 350 intangibles goodwill permits require company qualitatively assess indicators reporting units fair value completing qualitative assessment company believes likely reporting unit impaired discounted cash flow analysis prepared estimate fair value critical estimates determination fair value reporting unit include limited future expected cash flows discount rates definitelived intangible assets amortized estimated useful lives 2 50 years reviewed impairment whenever indicators carrying values may fully recoverable company recorded impairment charges totaling 9 million related customer lists 11 million related computer software years ended december 31 2018 2016 respectively impairment charges recorded goodwill intangible assets year ended december 31 2017 see note 18 item 8 information management used different estimates assumptions impairment tests company could recognize different amounts expense future periods employee benefit plans company provides substantially us employees certain international subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides certain eligible us employees retire qualifying conditions subsidized postretirement health care coverage health care reimbursement accounts item 7 management’s discussion analysis financial condition results operations continued order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods company uses corridor approach amortizing actuarial losses corridor approach net unrecognized actuarial losses excess 10 greater projected benefit obligation market related value plan assets amortized future periods plans little active participants amortization period remaining average life expectancy participants plans active participants amortization period remaining average service period active participants amortization periods range 4 39 years companys defined benefit pension plans 6 24 years companys postretirement benefit plans item 7aitem 7 management’s discussion analysis financial condition results operations company overview mda read conjunction accompanying consolidated financial statements adm global leader human animal nutrition one world’s premier agricultural origination processing company one world’s leading producers ingredients human animal nutrition products made nature company uses significant global asset base originate transport agricultural commodities connecting markets 190 countries company also processes corn oilseeds wheat products food animal feed chemical energy uses company also engages manufacturing sale distribution specialty products including natural flavor ingredients flavor systems natural colors proteins emulsifiers soluble fiber polyols hydrocolloids natural health nutrition products specialty food feed ingredients company uses global asset network business acumen relationships suppliers customers efficiently connect harvest home thereby generating returns shareholders principally margins earned activities effective july 1 2019 company changed segment reporting reflect creation combined ag services oilseeds segment former origination oilseeds businesses merged combined ag services oilseeds segment enables company better respond market changes integrating supply value chains risk management delivering significant simplification efficiency daytoday business part company’s efforts streamlined management structure combined segment led former president oilseeds expanding role president ag services oilseeds prior period results reclassified conform current period segment presentation company’s operations organized managed classified three reportable business segments ag services oilseeds carbohydrate solutions nutrition segments organized based upon nature products services offered company’s remaining operations reportable business segments defined applicable accounting standard classified financial information respect company’s reportable business segments set forth note 17 “notes consolidated financial statements” included item 8 herein “financial statements supplementary data” item 8 company’s recent significant portfolio actions announcements include • acquisition february 2019 neovia frenchbased global provider valueadded animal nutrition solutions 72 production facilities presence 25 countries • purchase february 2019 remaining 50 interest owned invivo group gleadell agriculture ltd joint venture united kingdom • acquisition march 2019 fcc one world’s largest producers citrus oils ingredients • formal launch march 2019 grainbridge llc 50 joint venture cargill develop digital tools help north american farmers consolidate information production economics grain marketing activities single digital platform • acquisition may 2019 ziegler leading european provider natural citrus flavor ingredients • sale december 2019 equity investment cip • acquisition january 2020 yerbalatina natural plantbased extracts ingredients manufacturer brazil company executes strategic vision three pillars optimize core drive efficiencies expand strategically supported readiness effort 2018 company launched readiness drive new efficiencies improve customer experience company’s existing businesses combination data analytics process simplification standardization behavioral cultural change building upon earlier 1adm operational excellence programs readiness also support execution companys growth strategies across five key growth platforms taste nutrition animal nutrition health wellness carbohydrates item 7 management’s discussion analysis financial condition results operations continued operating performance indicators company’s ag services oilseeds operations principally agricultural commoditybased businesses changes selling prices move relationship changes prices commoditybased agricultural raw materials result changes agricultural commodity prices relatively equal impacts revenues cost products sold therefore changes revenues businesses necessarily correspond changes margins gross profit thus gross margins per volume metric ton meaningful gross margins percentage revenues company’s carbohydrate solutions operations nutrition businesses also utilize agricultural commodities products derived agricultural commodities raw materials however operations agricultural commodity market price changes necessarily correlate changes cost products sold therefore changes revenues businesses may correspond changes margins gross profit thus gross margin rates meaningful performance indicator businesses company consolidated subsidiaries 70 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland euro functional currency brazil argentina us dollar functional currency revenues expenses denominated foreign currencies translated us dollars weighted average exchange rates applicable periods majority company’s business activities brazil argentina functional currency us dollar however certain transactions including taxes occur local currency require remeasurement functional currency changes revenues expected correlated changes expenses reported company caused fluctuations exchange rates foreign currencies primarily euro british pound canadian dollar brazilian real compared us dollar company measures performance using key financial metrics including net earnings gross margins segment operating profit return invested capital ebitda economic value added manufacturing expenses selling general administrative expenses company’s financial results vary significantly due changes factors fluctuations energy prices weather conditions crop plantings government programs policies trade policies changes global demand general global economic conditions changes standards living global production similar competitive crops due unpredictable factors company undertakes responsibility updating forwardlooking information contained within “management’s discussion analysis financial condition results operations” item 7 management’s discussion analysis financial condition results operations continued market factors influencing operations results twelve months ended december 31 2019 company subject variety market factors affect companys operating results ag services oilseeds sales volumes margins negatively impacted challenging north american weather conditions particular high water mississippi river system first half year continuing global trade tensions china handling volumes north america impacted late harvest planting delayed due spring flooding continued good global meal demand resulted strong global crushing volumes solid margins south american origination volumes benefited uschina trade dispute also impacted softer chinese demand due african swine fever impact local feed demand intermittent farmer selling global demand margins refined oil biodiesel remained solid carbohydrate solutions demand prices sweeteners starches remained solid north america coproduct prices stable although ethanol demand remained steady north america margins severely pressured us industry ethanol production stocks remained high levels us exports china ceased trade dispute severe weather conditions north america also adversely impacted operations carbohydrate solutions business unit nutrition benefited growing demand flavors systems human pet health wellness products plantbased proteins negatively impacted african swine fever asia pacific also resulted pricing pressures global lysine market year ended december 31 2019 compared year ended december 31 2018 net earnings attributable controlling interests decreased 24 04 billion 14 billion segment operating profit decreased 10 03 billion 29 billion included net charge 134 million consisting asset impairment restructuring settlement charges gains sale certain assets stepup gain equity investment included segment operating profit prior year net charge 89 million consisting asset impairment restructuring settlement charges net gain sales assets businesses adjusted segment operating profit decreased 03 billion 31 billion due lower results ag services crushing carbohydrate solutions lower equity earnings wilmar partially offset higher results refined products nutrition refined products current year included 270 million related biodiesel tax credit 2018 2019 compared 120 million 2017 recorded prior year corporate results net charge 14 billion current year included restructuring pension settlement remeasurement charges 159 million primarily related early retirement reorganization initiatives loss sale companys equity investment cip 101 million charge 37 million effect changes agricultural commodity prices lastin firstout lifo inventory valuation reserves compared credit 18 million prior year corporate results prior year 12 billion included pension settlement charge 117 million 49 million charge related discontinued software project restructuring charges 24 million primarily related reorganization services income taxes 209 million decreased 36 million company’s effective tax rate 2019 132 compared 119 2018 low 2019 tax rate primarily due impact us tax credits including 2018 2019 biodiesel tax credit railroad maintenance tax credit signed law december 2019 effective tax rate 2018 included 2017 biodiesel tax credit recorded first quarter 2018 additional trueup adjustments related 2017 us tax reform along certain favorable discrete tax items netting favorable 74 million analysis statements earnings processed volumes product years ended december 31 2019 2018 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react local supply demand conditions processed volumes corn decreased slightly prior year levels primarily related production disruptions columbus nebraska corn processing plant due flooding production issues decatur illinois corn complex item 7 management’s discussion analysis financial condition results operations continued revenues segment years ended december 31 2019 2018 follows revenues cost products sold agricultural merchandising processing businesses significantly correlated underlying commodity prices volumes periods significant changes market prices underlying performance company better evaluated looking margins since revenues cost products sold particularly ag services oilseeds generally relatively equal impact market price changes generally result insignificant impact gross profit revenues increased 315 million 647 billion due overall higher sales volumes 32 billion partially offset lower sales prices 29 billion increase sales volumes due principally soybeans wheat cotton higher sales volumes feed ingredients related acquisitions decrease sales prices due principally soybeans meal wheat ag services oilseeds revenues decreased 2 487 billion due lower sales prices 30 billion partially offset higher sales volumes 18 billion carbohydrate solutions revenues decreased 4 99 billion due lower sales volumes 04 billion nutrition revenues increased 50 57 billion due higher sales volumes 18 billion primarily related acquisitions higher sales prices 01 billion cost products sold increased 03 billion 605 billion due overall higher sales volumes partially offset lower prices commodities included cost products sold current year charge 37 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 18 million prior year manufacturing expenses increased 03 billion 57 billion due principally new acquisitions foreign currency translation impacts decreased revenues cost products sold 08 billion gross profit decreased 34 million 1 41 billion lower results ag services oilseeds 40 million carbohydrate solutions 301 million 6 million offset higher results nutrition 400 million factors explained discussions segment operating profit page 32 selling general administrative expenses effect changes agricultural commodity prices lifo inventory valuation reserves negative impact gross profit 37 million compared positive impact 18 million prior year item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses increased 15 25 billion due principally new acquisitions primarily nutrition segment higher spending business transformation growthrelated investments readinessrelated projects partially offset lower variable performancerelated stock compensation expenses asset impairment exit restructuring costs increased 132 million 303 million current year charges consisted asset impairments 131 million related certain facilities vessels longlived assets 11 million related goodwill intangible assets presented specified items within segment operating profit 159 million restructuring pension settlement remeasurement charges corporate primarily related early retirement reorganization initiatives several individually insignificant restructuring charges presented specified items within segment operating profit prior year charges totaling 171 million consisted 56 million impairment certain longlived assets 12 million impairment equity investment 21 million impairment related longterm financing receivable 9 million individually insignificant impairment restructuring charges presented specified items within segment operating profit 49 million charge related discontinued software project 18 million restructuring charges related reorganization services 6 million individually insignificant restructuring charges corporate interest expense increased 38 million 402 million due higher borrowings fund recent acquisitions partially offset lower interest rates equity earnings unconsolidated affiliates decreased 64 million 454 million due lower earnings company’s investments wilmar cip partially offset higher earnings company’s investments olenex equity investees expense net 7 million decreased 94 million current year expense included loss sale companys equity investment cip foreign exchange loss partially offset gains sale certain assets stepup gains equity investments gains disposals individually insignificant assets ordinary course business income prior year expense included foreign exchange losses noncash pension settlement charge 117 million related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain us salaried retirees companys adm retirement plan expenses partially offset gains disposals businesses equity investment individually insignificant assets ordinary course business income item 7 management’s discussion analysis financial condition results operations continued segment operating profit adjusted segment operating profit nongaap measure earnings income taxes years ended december 31 2019 2018 follows 1 adjusted segment operating profit segment operating profit excluding listed specified items item 7 management’s discussion analysis financial condition results operations continued ag services oilseeds operating profit decreased 4 ag services results lower due weaker north american grain margins lower volumes part due challenging weather conditions uschina trade tensions results current period negatively impacted high water conditions first half year limited grain movement sales north america slow farmer selling lower chinese demand south american origination part due african swine fever also impacted results crushing results strong compared prior year lower executed crush margins around globe drove lower results partially offset favorable timing effects approximately 102 million hedges entered prior year refined products results compared prior period primarily due retroactive biodiesel tax credit 270 million 2018 2019 recorded current year compared 120 million 2017 recorded prior year strong demand higher results equity investments wilmar results lower year carbohydrate solutions operating profit decreased 32 starches sweeteners results primarily due lower results emea margins pressured due low sugar prices turkish quota starchbased sweeteners higher manufacturing costs decatur il complex weaker margins flour milling also contributed decrease bioproducts results due significantly lower ethanol margins amid continued unfavorable ethanol industry environment exacerbated lack chinese demand ethanol due uschina trade dispute nutrition operating profit increased 23 wild flavors specialty ingredients results higher year strong sales margin growth north america europe middle east africa india emeai contributions acquisitions animal nutrition results driven largely contributions acquisition neovia partially offset additional expenses related inventory valuation newlyacquired neovia weaker lysine results operating profit increased 47 primarily due improved results companys futures commission brokerage business captive insurance underwriting performance corporate results follows corporate results net charge 14 billion current year compared 12 billion prior year effect changes agricultural commodity prices lifo inventory valuation reserves resulted charge 37 million current year compared credit 18 million prior year interest expense net increased 27 million due higher borrowings fund recent acquisitions partially offset interest savings crosscurrency swaps unallocated corporate costs decreased 13 million due principally decreased performancerelated compensation accruals partially offset higher spending business transformation growthrelated investments readinessrelated projects loss sale asset related sale companys equity investment cip expenses related acquisitions current year consisted expenses primarily related neovia acquisition compared prior year’s expenses losses foreign currency derivative contracts entered economically hedge certain acquisitions impairment restructuring settlement charges current year included restructuring pension settlement remeasurement charges related early retirement reorganization initiatives impairment restructuring settlement charges prior year included pension settlement charge 117 million related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain us salaried retirees companys adm retirement plan 49 million charge related discontinued software project restructuring charges 24 million primarily related reorganization services charges current year included railroad maintenance expenses 51 million charges prior year included foreign exchange losses partially offset earnings companys equity investment cip item 7 management’s discussion analysis financial condition results operations continued nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda adjusted segment operating profit nongaap financial measures defined sec evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes adjusted segment operating profit segment operating profit adjusted applicable specified items management believes adjusted eps adjusted ebitda adjusted segment operating profit useful measures company’s performance provide investors additional information companys operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda adjusted segment operating profit intended replace alternative diluted eps earnings income taxes segment operating profit respectively directly comparable amounts reported gaap table provides reconciliation diluted eps adjusted eps years ended december 31 2019 2018 1 tax effected using company’s us tax rate 2 tax effected using applicable tax rates 3 includes tax adjustments related us tax cuts jobs act discrete items item 7 management’s discussion analysis financial condition results operations continued tables provide reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2019 2018 item 7 management’s discussion analysis financial condition results operations continued market factors influencing operations results twelve months ended december 31 2018 company subject variety market factors affect companys operating results 2018 markets volatile amid escalating global trade tensions including announcement tariffs chinese imports us soybeans ag services oilseeds strong demand feedstuffs light weather conditions northern europe resulted higher sales volumes margins destination markets strong basis positions across commodities resulted higher margins south american origination volumes margins benefited stronger farmer selling dry conditions argentina resulted smaller soybean crop combined continued good global meal demand resulted strong global crushing margins volumes demand margins refined oil remained solid biodiesel margins improved excess global peanut supply resulted weak peanut margins carbohydrate solutions global demand prices starches sweeteners remained solid north america coproduct prices stable us ethanol industry production remained high levels although ethanol demand remained strong north america export markets due favorable gasoline blending economics ethanols continuing status competitive octane enhancer margins continued remain pressure nutrition benefited strong demand flavor ingredients flavor systems strong demand favorable margin development certain nonflavor food businesses year ended december 31 2018 compared year ended december 31 2017 net earnings attributable controlling interests increased 13 02 billion 18 billion segment operating profit increased 29 07 billion 33 billion included segment operating profit 2018 net charge 89 million consisting asset impairment restructuring settlement charges net gain sales assets businesses included segment operating profit 2017 net charge 134 million consisting asset impairment restructuring charges net gain sales assets businesses corn hedge timing effects adjusted segment operating profit increased 07 billion 34 billion due increase sales prices volumes corn meal improved margins ag services oilseeds nutrition benefits 2017 biodiesel tax credit approved received first quarter 2018 partially offset lower ethanol margins corporate results net charge 12 billion 2018 compared 09 billion 2017 corporate results 2018 included pension settlement charge 117 million 49 million charge related discontinued software project restructuring charges 24 million primarily related reorganization services credit 18 million effect changes agricultural commodity prices lifo inventory valuation reserves compared credit 2 million 2017 corporate results 2017 also included 54 million restructuring charges primarily related reduction certain positions within companys global workforce income taxes 245 million increased 238 million due higher effective tax rate higher earnings income taxes company’s effective tax rate 2018 increased 119 compared 04 2017 due primarily low rate 2017 impacted favorable tax adjustments related tax cuts jobs act 2017 totaling 379 million effective tax rate 2018 also included final effects us tax reform 2017 biodiesel tax credit recorded first quarter 2018 along certain favorable discrete tax items netting favorable 74 million analysis statements earnings processed volumes product years ended december 31 2018 2017 follows metric tons company generally operates production facilities overall basis near capacity adjusting facilities individually needed react local supply demand conditions processed volumes oilseeds increased due increasing global demand oilseed products particularly meal higher crushing volumes north america due reduced soybean crop argentina overall decrease corn primarily related decreased current year processing reconfiguration company’s peoria illinois ethanol complex third quarter fiscal 2017 production issues decatur illinois corn complex 2018 item 7 management’s discussion analysis financial condition results operations continued revenues segment years ended december 31 2018 2017 follows revenues cost products sold commodity merchandising processing businesses significantly correlated underlying commodity prices volumes periods significant changes commodity prices underlying performance company better evaluated looking margins since revenues cost products sold particularly ag services oilseeds generally relatively equal impact commodity price changes generally result insignificant impact gross profit revenues increased 35 billion 6 643 billion due principally higher sales prices 23 billion higher sales volumes 12 billion increase sales prices volumes due primarily increases corn soybean meal ag services oilseeds revenues increased 7 499 billion due higher sales prices 25 billion higher sales volumes 08 billion carbohydrate solutions revenues decreased 1 103 billion due lower sales prices 02 billion partially offset higher sales volumes 01 billion nutrition revenues increased 8 38 billion due higher sales volumes 03 billion cost products sold increased 29 billion 602 billion due principally higher sales volumes higher prices commodities included cost products sold 2018 credit 18 million effect changes agricultural commodity prices lifo inventory valuation reserves compared 2 million 2017 manufacturing expenses increased 02 billion 54 billion due principally increased energy cost railroad maintenance expense offsetting benefit income tax expense individually insignificant increases certain expense categories foreign currency translation impacts increased revenues cost products sold 04 billion gross profit increased 07 billion 19 42 billion higher results ag services oilseeds 815 million nutrition 58 million partially offset lower results carbohydrate solutions 126 million 36 million factors explained segment operating profit discussion page 39 effect changes agricultural commodity prices lifo inventory valuation reserves positive impact gross profit 18 million 2018 compared 2 million 2017 item 7 management’s discussion analysis financial condition results operations continued selling general administrative expenses increased 9 22 billion due principally higher performancerelated compensation accruals increased pension projectrelated expenses asset impairment exit restructuring costs decreased 2 million 171 million charges 2018 consisted 56 million impairment certain longlived assets 12 million impairment equity investment 21 million impairment related longterm financing receivable 9 million individually insignificant impairment restructuring charges presented specified items within segment operating profit 49 million charge related discontinued software project 18 million restructuring charges related reorganization services 6 million individually insignificant restructuring charges corporate charges 2017 consisted 63 million asset impairments related reconfiguration companys peoria illinois ethanol complex 20 million asset impairments related closure facility 36 million several individually insignificant asset impairments restructuring charges presented specified items within segment operating profit 54 million restructuring charges corporate primarily related reduction certain positions within companys global workforce interest expense increased 34 million 364 million primarily due higher interest rates shortterm debt higher borrowings equity earnings unconsolidated affiliates increased 62 million 518 million due earnings new equity investment higher earnings company’s equity investments cip olenex partially offset lower earnings equity investments expense net 101 million increased 111 million net income 10 million expense 2018 included foreign exchange losses noncash pension settlement charge 117 million related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain us salaried retirees companys adm retirement plan expenses partially offset gains disposals businesses equity investment individually insignificant assets ordinary course business income 2017 included gains related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business changes contingent settlement provisions charge related early redemption companys 559 million notes due march 15 2018 foreign exchange losses item 7 management’s discussion analysis financial condition results operations continued operating profit segment earnings income taxes years ended december 31 2018 2017 follows 1 adjusted segment operating profit segment operating profit excluding specified items item 7 management’s discussion analysis financial condition results operations continued ag services oilseeds operating profit increased 64 ag services significantly yearoveryear global trade delivered strong results due increased volumes strong margins improved opportunities soybean feedstuff value chain north american grain due improved margins higher volumes south america saw strong origination volumes improving margins farmer selling accelerated crushing results increased due strong global demand margin environment reduced soybean crop argentina combined continued good global meal demand resulted strong crushing margins volumes refined products results higher mainly due 2017 biodiesel tax credit approximately 120 million approved received first quarter 2018 solid biodiesel results higher earnings company’s investment olenex partially offset weaker peanut shelling margins primarily caused large peanut inventories difficult market conditions wilmar results higher year carbohydrate solutions operating profit decreased 12 starches sweeteners results decreased due lower margins volumes liquid sweeteners mainly due production issues decatur illinois corn complex partially offset improved results starches dry sweeteners bioproducts results near record industry fuel ethanol inventories pressured margins production issues decatur il corn complex increased costs partially offset effective ethanol risk management nutrition operating profit increased 9 wild flavors specialty ingredients results due improved earnings across segment higher sales volumes related contributions new acquisitions organic growth wild flavors improved portfolio mix boosted sales margins health wellness improved driven largely increased contributions bioactives specialty ingredients due improved volumes margins proteins increased sales fibers partially offset lower results polyols animal nutrition due operational issues decatur il constrained lysine production volumes increased manufacturing costs partially offset improved premix commercial feed margins operating profit increased 14 primarily due stronger results futures commission brokerage business due higher shortterm interest rates partially offset lower underwriting results company’s captive insurance operations first half 2018 corporate results follows corporate results net charge 12 billion 2018 compared 09 billion 2017 effect changes agricultural commodity prices lifo inventory valuation reserves resulted credit 18 million 2018 compared credit 2 million 2017 interest expense net increased 11 million due higher interest rates shortterm debt higher borrowings partially offset interest income related tax credit lowertax related expense unallocated corporate costs increased 190 million due principally higher performancerelated compensation accruals increased pension projectrelated expenses railroad maintenance expense offsetting benefit income tax expense adjustments related acquisitions 2018 related expenses losses foreign currency derivative contracts entered economically hedge certain acquisitions loss debt extinguishment 2017 related early redemption 559 million aggregate principal amount 545 notes due march 15 2018 impairment restructuring settlement charges 2018 included pension settlement charge 117 million 49 million charge related discontinued software project restructuring charges 24 million primarily related reorganization services compared restructuring charges related reduction certain positions within company’s global workforce 54 million 2017 charges decreased 32 million primarily due improved results company’s investment cip lower nonservice cost related pension expenses item 7 management’s discussion analysis financial condition results operations continued nongaap financial measures company uses adjusted earnings per share eps adjusted earnings taxes interest depreciation amortization ebitda adjusted segment operating profit nongaap financial measures defined sec evaluate company’s financial performance measures defined accounting principles generally accepted united states considered addition lieu gaap financial measures adjusted eps defined diluted eps adjusted effects reported diluted eps specified items adjusted ebitda defined earnings taxes interest depreciation amortization adjusted specified items company calculates adjusted ebitda removing impact specified items adding back amounts interest expense depreciation amortization earnings income taxes adjusted segment operating profit segment operating profit adjusted applicable specified items management believes adjusted eps adjusted ebitda adjusted segment operating profit useful measures company’s performance provide investors additional information companys operations allowing better evaluation underlying business performance better periodtoperiod comparability adjusted eps adjusted ebitda adjusted segment operating profit intended replace alternative diluted eps earnings income taxes segment operating profit respectively directly comparable amounts reported gaap table provides reconciliation diluted eps adjusted eps years ended december 31 2018 2017 1 tax effected using company’s us effective tax rate 2 tax effected using us applicable tax rates 3 includes tax adjustments related us tax cuts jobs act 2017 item 7 management’s discussion analysis financial condition results operations continued tables provide reconciliation earnings income taxes adjusted ebitda adjusted ebitda segment years ended december 31 2018 2017 item 7 management’s discussion analysis financial condition results operations continued liquidity capital resources company objective sufficient liquidity balance sheet strength financial flexibility fund operating capital requirements capital intensive agricultural commoditybased business company depends access credit markets impacted credit rating factors outside adm’s control fund working capital needs capital expenditures primary source funds finance adm’s operations capital expenditures advancement growth strategy cash generated operations lines credit including commercial paper borrowing facility accounts receivable securitization programs addition company believes access funds public private equity debt capital markets us international markets cash used operating activities 55 billion 2019 compared 48 billion 2018 working capital changes including increase deferred consideration decreased cash 77 billion current year compared 75 billion prior year trade receivables decreased 03 billion due lower revenues net acquisitions deferred consideration securitized receivables 77 billion 78 billion 2019 2018 respectively offset amounts net consideration received beneficial interest obtained selling trade receivables cash provided investing activities 53 billion year compared 66 billion last year capital expenditures net assets businesses acquired 08 billion 19 billion respectively year compared 08 billion 05 billion respectively last year proceeds sale businesses assets 03 billion current year compared 02 billion prior year sales marketable securities net purchases 01 billion current year compared immaterial marketable securities sales transactions prior year investments advances affiliates immaterial current year compared 02 billion prior year net consideration received beneficial interest obtained selling trade receivables 77 billion 78 billion 2019 2018 respectively cash used financing activities 07 billion year compared cash provided 02 billion last year longterm debt borrowings current year 8 million longterm debt borrowings prior year 18 billion consisted €650 million 744 million december 31 2018 aggregate principal amount 1000 notes issued september 12 2018 december 3 2018 issuance 600 million 400 million aggregate principal amounts 45 3375 notes respectively longterm debt payments current year 626 million primarily related €500 million floating rate notes matured june 2019 compared 30 million prior year commercial paper borrowings current year 09 billion used fund acquisitions general corporate expenses compared payments 07 billion prior year share repurchases current year 02 billion compared 01 billion prior year december 31 2019 adm 09 billion cash equivalents shortterm marketable securities current ratio defined current assets divided current liabilities 16 1 included working capital 57 billion readily marketable commodity inventories december 31 2019 company’s capital resources included shareholders’ equity 192 billion lines credit including accounts receivable securitization programs described totaling 90 billion 64 billion unused adm’s ratio longterm debt total capital sum longterm debt shareholders’ equity 29 december 31 2019 december 31 2018 company uses ratio measure adm’s longterm indebtedness indicator financial flexibility company’s ratio net debt sum shortterm debt current maturities longterm debt longterm debt less sum cash equivalents shortterm marketable securities capital sum net debt shareholders’ equity increased 25 december 31 2018 29 december 31 2019 due acquisitions company’s total lines credit 50 billion supported combined us european commercial paper borrowing programs 10 billion us european commercial paper outstanding december 31 2019 december 31 2019 company 09 billion cash equivalents 03 billion cash held foreign subsidiaries whose undistributed earnings considered indefinitely reinvested based company’s historical ability generate sufficient cash flows us operations unused available us credit capacity 43 billion company asserted funds indefinitely reinvested outside us item 7 management’s discussion analysis financial condition results operations continued company accounts receivable securitization programs “programs” certain commercial paper conduit purchasers committed purchasers programs provide company 19 billion funding accounts receivable transferred programs expands company’s access liquidity efficient use balance sheet assets see note 19 item 8 information disclosures programs december 31 2019 company utilized 14 billion facility programs due terminate first half 2020 however company currently expects extend programs upon termination november 5 2014 company’s board directors approved stock repurchase program authorizing company repurchase 100000000 shares company’s common stock period commencing january 1 2015 ending december 31 2019 august 7 2019 company’s board directors approved extension stock repurchase program december 31 2024 repurchase additional 100000000 shares extended program company acquired approximately 917 million shares program december 31 2019 2020 company expects capital expenditures 09 billion 10 billion additional cash outlays approximately 08 billion dividends 01 billion share repurchases company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2019 three major credit rating agencies maintained company’s credit ratings solid investment grade levels stable outlooks contractual obligations normal course business company enters contracts commitments obligate company make payments future following table sets forth company’s significant future obligations time period purchases include commoditybased contracts entered normal course business described item 7a “quantitative qualitative disclosures market risk” energyrelated purchase contracts entered normal course business purchase obligations related company’s normal business activities following table include unrecognized income tax benefits 130 million december 31 2019 company unable reasonably estimate timing settlement applicable information included company’s consolidated financial statements notes crossreferenced table item 7 management’s discussion analysis financial condition results operations continued 1 includes pension contributions 27 million fiscal 2020 company unable estimate amount pension contributions beyond fiscal year 2020 information concerning company’s pension postretirement plans see note 15 item 8 december 31 2019 company estimates spend approximately 11 billion fiscal year 2024 complete currently approved capital projects included table company also outstanding letters credit surety bonds 14 billion december 31 2019 included table company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments company’s liability agreements arises primary entity fails perform contractual obligation company collateral portion contingent obligations balance sheet arrangements accounts receivable securitization programs september 2019 company amended accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “first purchasers” increased facility 12 billion 13 billion program terminates june 18 2020 unless extended see note 19 “notes consolidated financial statements” included item 8 herein “financial statements supplementary data” information disclosures programs material changes company’s balance sheet arrangements year critical accounting policies process preparing financial statements requires management make estimates judgments affect carrying values company’s assets liabilities well recognition revenues expenses estimates judgments based company’s historical experience management’s knowledge understanding current facts circumstances certain company’s accounting policies considered critical policies important depiction company’s financial statements require significant complex judgment management discussed company’s audit committee development selection disclosure application critical accounting policies following accounting policies management considers critical company’s financial statements fair value measurements inventories commodity derivatives certain company’s inventory commodity derivative assets liabilities december 31 2019 valued estimated fair values including 47 billion merchandisable agricultural commodity inventories 05 billion commodity derivative assets 06 billion commodity derivative liabilities 07 billion inventoryrelated payables commodity derivative assets liabilities include forward fixedprice purchase sale contracts agricultural commodities merchandisable agricultural commodities freely traded quoted market prices may sold without significant additional processing management estimates fair value commodityrelated assets liabilities based exchangequoted prices adjusted differences local markets company’s inventory derivative commodity fair value measurements mainly based observable market quotations without significant adjustments therefore reported level 2 within fair value hierarchy level 3 fair value measurements approximately 17 billion assets 02 billion liabilities represent fair value estimates unobservable price components represent 10 total fair value price information concerning amounts reported level 3 see note 4 item 8 changes market values inventories commodity contracts recognized statement earnings component cost products sold management used different methods factors estimate market value amounts reported inventories cost products sold could differ materially additionally market conditions change subsequent yearend amounts reported future periods inventories cost products sold could differ materially item 7 management’s discussion analysis financial condition results operations continued derivatives designated hedging activities company time uses derivative contracts designated cash flow hedges hedge purchase sales price anticipated volumes commodities purchased processed future month assuming normal market conditions change market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred accumulated comprehensive income net applicable income taxes recognized component cost products sold revenues statement earnings hedged item recognized earnings determined derivative instruments used longer effective offsetting changes price hedged item changes market value exchangetraded futures exchangetraded overthecounter option contracts would recorded immediately statement earnings component revenues andor cost products sold see note 5 item 8 additional information investments affiliates company applies equity method accounting investments company ability exercise significant influence investments carried cost plus equity undistributed earnings adjusted appropriate amortizable basis differences investment balance underlying net assets investee generally minimum ownership threshold asserting significant influence 20 ownership investee however company considers relevant factors determining ability assert significant influence including limited ownership percentage board membership customer vendor relationships arrangements management used different accounting method investments amount earnings affiliates company recognizes may materially differ income taxes company accounts income taxes accordance applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company faces challenges us foreign tax authorities regarding amount taxes due challenges include questions regarding timing amount deductions allocation income among various tax jurisdictions evaluating exposure associated various tax filing positions company records reserves estimates potential additional tax owed company example company received tax assessments tax authorities brazil argentina netherlands challenging income tax positions taken subsidiaries company evaluated tax positions matters concluded based part upon advice legal counsel appropriate recognize tax benefits positions see note 13 item 8 additional information deferred tax assets represent items used tax deductions credits future tax returns related tax benefit already recognized company’s income statement realization company’s deferred tax assets dependent upon future taxable income specific tax jurisdictions timing amount uncertain company evaluates available positive negative evidence including estimated future reversals existing temporary differences projected future taxable income tax planning strategies recent financial results valuation allowances related deferred tax assets established extent realization tax benefit likely 2019 company increased valuation allowances approximately 20 million primarily related newlygenerated foreign tax loss carryforwards extent company favorably resolve matters valuation allowances established required pay amounts excess aforementioned valuation allowances company’s effective tax rate given financial statement period may impacted undistributed earnings company’s foreign subsidiaries amounting approximately 116 billion december 31 2019 considered indefinitely reinvested item 7 management’s discussion analysis financial condition results operations continued tax cuts jobs act “act” enacted december 22 2017 included onetime transition tax accumulated foreign earnings result company recorded 369 million provisional impact transition tax 220 million beneficial impact reserves previously established accounting standards codification subtopic 74030 income taxes considerations special areas net provisional impact 149 million 2017 company performed quarterly review provisional tax liability recorded 2017 new guidance act issued 2018 company finalized calculation transition tax recorded immaterial expense 2019 benefit 29 million 2018 company elected pay onetime transition tax eight years company’s undistributed foreign earnings outside basis differences inherent foreign entities continue indefinitely reinvested foreign operations income taxes provided practicable determine amount unrecognized deferred tax liability related remaining undistributed foreign earnings subject transition tax additional outside basis difference entities act also contains new provisions related global intangible low taxed income gilti foreign derived intangible income fdii effective fiscal year 2018 company made accounting policy election treat gilti period cost 2018 us tax authorities issued proposed treasury regulations addressing tax reform items effective 2018 company recorded continue record impact tax reform items us tax authorities issue treasury regulations guidance addressing tax reformrelated changes also reasonable expect global taxing authorities reviewing current legislation potential modifications reaction implementation act additional guidance us along potential additional global tax legislation changes may affect significant deductions income inclusions could material adverse effect companys net income cash flow property plant equipment asset abandonments writedowns company principally engaged business procuring transporting storing processing merchandising agricultural commodities products business global nature highly capitalintensive availability company’s raw materials demand company’s finished products driven factors weather plantings government programs policies changes global demand changes standards living global production similar competitive crops aforementioned factors may cause shift supplydemand dynamics company’s raw materials finished products shift cause management evaluate efficiency cash flows company’s assets terms geographic location size age facilities company time also invest equipment technology companies related new valueadded products produced agricultural commodities products new products always successful either commercial production marketing perspective management evaluates company’s property plant equipment impairment whenever indicators impairment exist assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value management used different estimates assumptions evaluation assets company could recognize different amounts expense future periods years ended december 31 2019 2018 2017 impairment charges property plant equipment 131 million 100 million 101 million respectively business combinations company’s acquisitions accounted accordance accounting standards codification asc topic 805 business combinations amended consideration transferred allocated various assets acquired liabilities assumed estimated fair values acquisition date residual allocated goodwill fair values allocated assets acquired liabilities assumed business combinations require management make significant judgments estimates assumptions especially respect intangible assets management makes estimates fair values based upon assumptions believes reasonable estimates based upon historical experience information obtained management acquired companies inherently uncertain estimated fair values related intangible assets primarily consist customer relationships trademarks developed technology determined primarily using discounted cash flow models estimates discounted cash flow models include limited certain assumptions form basis forecasted results eg revenue growth rates customer attrition rates royalty rates significant assumptions forward looking could affected future economic market conditions measurement period may take one year acquisition date adjustments due changes estimated fair value assets acquired liabilities assumed may recorded adjustments consideration transferred related allocations upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first adjustments charged consolidated statements earnings item 7 management’s discussion analysis financial condition results operations continued goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill impairment reporting unit level annually october 1 whenever indicators carrying value may fully recoverable company adopted provisions asc 350 intangibles goodwill permits require company qualitatively assess indicators reporting units fair value completing qualitative assessment company believes likely reporting unit impaired discounted cash flow analysis prepared estimate fair value critical estimates determination fair value reporting unit include limited future expected cash flows discount rates definitelived intangible assets including capitalized expenses related companys 1adm program amortized estimated useful lives 2 50 years reviewed impairment whenever indicators carrying values may fully recoverable company recorded impairment charges totaling 11 million related goodwill intangibles 9 million related customer lists years ended december 31 2019 2018 respectively impairment charges recorded goodwill intangible assets year ended december 31 2017 see note 18 item 8 information management used different estimates assumptions impairment tests company could recognize different amounts expense future periods employee benefit plans company provides substantially us employees certain international subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides certain eligible us employees retire qualifying conditions subsidized postretirement health care coverage health care reimbursement accounts order measure expense funded status employee benefit plans management makes several estimates assumptions including interest rates used discount certain liabilities rates return assets set aside fund plans rates compensation increases employee turnover rates anticipated mortality rates anticipated future health care costs estimates assumptions based company’s historical experience combined management’s knowledge understanding current facts circumstances management also uses thirdparty actuaries assist measuring expense funded status employee benefit plans management used different estimates assumptions regarding plans funded status plans could vary significantly company could recognize different amounts expense future periods company uses corridor approach amortizing actuarial losses corridor approach net unrecognized actuarial losses excess 10 greater projected benefit obligation market related value plan assets amortized future periods plans little active participants amortization period remaining average life expectancy participants plans active participants amortization period remaining average service period active participants amortization periods range 3 38 years companys defined benefit pension plans 6 22 years companys postretirement benefit plans item 7a nannannanitem 7aquantitative qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 1997 incorporated herein referenceitem 8item 7aquantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 1998 incorporated herein reference item 8item 7aquantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 1999 incorporated herein reference item 8item 7aquantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2000 incorporated herein reference item 8item 7a quantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2001 incorporated herein reference item 8item 7a quantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2003 incorporated herein reference item 8item 7a quantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2004 incorporated herein reference item 8item 7a quantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2005 incorporated herein reference item 8item 7a quantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2006 incorporated herein reference item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability price agricultural commodities subject wide fluctuations due unpredictable factors weather plantings government programs policies changes global demand resulting population growth changes standards living global production similar competitive crops reduce price risk caused market fluctuations company generally follows policy using exchangetraded futures exchangetraded overthecounter options contracts minimize net position merchandisable agricultural commodity inventories forward cash purchase sales contracts company also use exchangetraded futures exchangetraded overthecounter options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contracts defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold statement earnings hedged item recognized sensitivity analysis prepared estimate company’s exposure market risk daily net commodity position company’s daily net commodity position consists merchandisable agricultural commodity inventories related purchase sale contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements fair value daily net commodity position summation fair values calculated commodity valuing net position quoted futures prices market risk estimated potential loss fair value resulting hypothetical 10 adverse change prices actual results may differ change fair value average position 2008 compared 2007 principally result increases commodity prices lesser extent quantities underlying daily net commodity position item 7a quantitative qualitative disclosures market risk continued currencies order reduce risk foreign currency exchange rate fluctuations except amounts permanently invested described company follows policy entering currency exchange forward contracts mitigate foreign currency risk related transactions denominated currency functional currencies applicable various entities instruments used forward contracts swaps banks exchangetraded futures contracts changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 70 billion june 30 2008 54 billion june 30 2007 increase due increase retained earnings foreign subsidiaries affiliates appreciation foreign currencies versus us dollar potential loss fair value resulting hypothetical 10 adverse change quoted foreign currency exchange rates 695 million 543 million 2008 2007 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 5 decrease interest rates actual results may differ increase fair value longterm debt 2008 resulted principally company’s issuance approximately 31 billion longterm debt 2008 item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability price agricultural commodities subject wide fluctuations due factors weather plantings government programs policies changes global demand resulting population growth changes standards living global production similar competitive crops item 7a quantitative qualitative disclosures market risk continued reduce price risk caused market fluctuations company generally follows policy using exchangetraded futures exchangetraded overthecounter options contracts minimize net position merchandisable agricultural commodity inventories forward cash purchase sales contracts company also use exchangetraded futures exchangetraded overthecounter options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contracts defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold net sales operating income statement earnings hedged item recognized sensitivity analysis prepared estimate company’s exposure market risk daily net commodity position company’s daily net commodity position consists merchandisable agricultural commodity inventories related purchase sale contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements fair value daily net commodity position summation fair values calculated commodity valuing net position quoted futures prices market risk estimated potential loss fair value resulting hypothetical 10 adverse change prices actual results may differ change fair value average position 2009 compared 2008 principally result decreases quantities underlying daily net commodity position currencies company conducts business many countries majority company’s subsidiaries located outside united states local currency functional currency order reduce risks associated foreign currency exchange rate fluctuations except amounts permanently invested described company follows policy entering currency exchange contracts mitigate foreign currency risk related transactions denominated currency functional currencies applicable various entities primarily euro british pound canadian dollar instruments used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material item 7a quantitative qualitative disclosures market risk continued amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 66 billion june 30 2009 70 billion june 30 2008 decrease due depreciation foreign currencies versus us dollar partially offset increase retained earnings foreign subsidiaries affiliates potential loss fair value resulting hypothetical 10 adverse change quoted foreign currency exchange rates 664 million 695 million 2009 2008 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 5 decrease interest rates actual results may differ increase fair value longterm debt 2009 resulted principally decreased interest rates item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions disease plantings government programs policies competition changes global demand resulting population growth changes standards living global production similar competitive crops reduce price risk caused market fluctuations company generally follows policy using exchangetraded futures exchangetraded overthecounter options contracts minimize net position merchandisable agricultural commodity inventories forward cash purchase sales contracts company also use exchangetraded futures exchangetraded overthecounter options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contracts defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold net sales operating income statement earnings hedged item recognized item 7a quantitative qualitative disclosures market risk continued sensitivity analysis prepared estimate company’s exposure market risk daily net commodity position company’s daily net commodity position consists merchandisable agricultural commodity inventories related purchase sale contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements fair value daily net commodity position summation fair values calculated commodity valuing net position quoted futures prices market risk estimated potential loss fair value resulting hypothetical 10 adverse change prices actual results may differ change fair value average position 2010 compared 2009 principally result changes average quantities underlying daily net commodity position currencies company conducts business 60 countries majority company’s subsidiaries located outside united states local currency functional currency order reduce risks associated foreign currency exchange rate fluctuations except amounts permanently invested described company follows policy entering currency exchange contracts mitigate foreign currency risk related transactions denominated currency functional currencies applicable various entities primarily euro british pound canadian dollar brazilian real instruments used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 64 billion june 30 2010 66 billion june 30 2009 decrease due depreciation foreign currencies versus us dollar partially offset increase retained earnings foreign subsidiaries affiliates potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 639 million 664 million 2010 2009 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 5 decrease interest rates actual results may differ decrease fair value longterm debt 2010 resulted principally repurchase 500 million aggregate principal amount company’s outstanding debentures item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions disease plantings government programs policies competition changes global demand resulting population growth changes standards living global production similar competitive crops company enters derivative nonderivative contracts primary objective managing company’s exposure adverse price movements agricultural commodities used produced business operations company also use exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contracts defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold net sales operating income statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position last two years together market risk hypothetical 10 adverse price change follows change fair value average position 2011 compared 2010 principally result changes average quantities underlying weekly commodity position item 7a quantitative qualitative disclosures market risk continued currencies company conducts business 75 countries majority company’s subsidiaries located outside united states local currency functional currency reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company use currency exchange contracts hedges amounts permanently invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 82 billion june 30 2011 64 billion june 30 2010 increase due appreciation foreign currencies versus us dollar increase retained earnings foreign subsidiaries affiliates potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 837 million 639 million 2011 2010 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ increase fair value longterm debt 2011 resulted principally issuance 15 billion 18month floating rate notes february 2011 item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold net sales operating income statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position last two years together market risk hypothetical 10 adverse price change follows decline fair value average position 2012 compared 2011 principally result decline average quantities underlying weekly commodity position item 7a quantitative qualitative disclosures market risk continued currencies company consolidated subsidiaries 75 countries majority company’s subsidiaries located outside united states local currency functional currency reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company use currency exchange contracts hedges amounts permanently invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 72 billion june 30 2012 82 billion june 30 2011 decrease due depreciation foreign currencies versus us dollar partially offset increase retained earnings foreign subsidiaries affiliates potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 722 million 823 million 2012 2011 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ decrease fair value longterm debt 2012 resulted principally reclassification 15 billion floating rate notes shortterm debt partially offset decreased interest rates item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described item 7a quantitative qualitative disclosures market risk continued commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold revenues statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position years ended december 31 2013 2012 together market risk hypothetical 10 adverse price change follows decrease fair value average position december 31 2013 result decrease commodity prices decrease average quantities underlying weekly commodity position currencies company consolidated subsidiaries 74 countries majority company’s subsidiaries located outside united states local currency functional currency reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company use currency exchange contracts hedges amounts permanently invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material item 7a quantitative qualitative disclosures market risk continued amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 75 billion december 31 2013 77 billion december 31 2012 decrease due depreciation foreign currencies versus us dollar partially offset increase retained earnings foreign subsidiaries affiliates potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 751 million 773 million december 31 2013 2012 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ decrease fair value longterm debt december 31 2013 due increased current maturities repayments interest rates item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops item 7a quantitative qualitative disclosures market risk continued company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold revenues statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position years ended december 31 2015 2014 together market risk hypothetical 10 adverse price change follows decrease fair value average position december 31 2015 result decrease average quantities underlying weekly commodity position also decrease prices currencies company consolidated subsidiaries 82 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland brazil euro us dollar functional currencies respectively reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company use currency exchange contracts hedges amounts permanently invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material item 7a quantitative qualitative disclosures market risk continued amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 80 billion december 31 2015 2014 depreciation foreign currencies versus us dollar 10 billion offset increase retained earnings foreign subsidiaries affiliates potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 809 million 802 million december 31 2015 2014 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ decrease fair value longterm debt december 31 2015 primarily due debt repurchase increased interest rates partially offset issuance new eurodenominated bonds item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold revenues statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position years ended december 31 2017 2016 together market risk hypothetical 10 adverse price change follows item 7a quantitative qualitative disclosures market risk continued change fair value average position principally result increase prices underlying weekly commodity position lesser extent increase quantities currencies company consolidated subsidiaries 80 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland brazil euro us dollar functional currencies respectively reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company use currency exchange contracts hedges amounts indefinitely invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers indefinitely invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 82 billion 73 billion 94 billion 93 billion historical rates december 31 2017 2016 respectively increase due appreciation foreign currencies versus us dollar 08 billion increase retained earnings foreign subsidiaries affiliates 01 billion potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 820 million 728 million december 31 2017 2016 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ increase fair value longterm debt december 31 2017 primarily due decreased interest rates item 8item 7aquantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops item 7aquantitative qualitative disclosures market risk continued company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold revenues statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position years ended december 31 2020 2019 together market risk hypothetical 10 adverse price change follows change fair value average position principally result decrease quantities currencies company consolidated subsidiaries 70 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland euro functional currency brazil argentina us dollar functional currency reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company also uses currency exchange contracts hedges amounts indefinitely invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material item 7aquantitative qualitative disclosures market risk continued amount company considers indefinitely invested foreign subsidiaries corporate joint ventures translated dollars using yearend exchange rates 105 billion 96 billion 125 billion 116 billion historical rates december 31 2020 2019 respectively increase due increase retained earnings foreign subsidiaries 10 billion potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 13 billion 12 billion december 31 2020 2019 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ increase fair value longterm debt december 31 2020 primarily due decreased interest rates increased borrowings item 8item 7a quantitive qualitative disclosures market risk information responsive item set forth managements discussion operations financial condition annual shareholders report year ended june 30 2002 incorporated herein reference item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodities futures prices marketable equity security prices market prices limited partnerships’ investments foreign currency exchange rates interest rates described commodities availability price agricultural commodities subject wide fluctuations due unpredictable factors weather plantings government domestic foreign farm programs policies changes global demand resulting population growth changes standards living global production similar competitive crops reduce price risk caused market fluctuations company generally follows policy using exchangetraded futures options contracts minimize net position merchandisable agricultural commodity inventories forward cash purchase sales contracts company also use exchangetraded futures options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contracts defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold statement earnings hedged item recognized item 7a quantitative qualitative disclosures market risk continued sensitivity analysis prepared estimate company’s exposure market risk daily net commodity position company’s daily net commodity position consists inventories related purchase sale contracts exchangetraded futures contracts including contracts used hedge portions production requirements fair value daily net commodity position summation fair values calculated commodity valuing net position quoted futures prices market risk estimated potential loss fair value resulting hypothetical 10 adverse change prices actual results may differ change fair value average position 2007 compared 2006 principally result changes daily net commodity position commodity prices marketable equity securities marketable equity securities recorded fair value exposure price risk fair value marketable equity securities based quoted market prices risk estimated potential loss fair value resulting hypothetical 10 adverse change quoted market prices actual results may differ decrease fair value 2007 compared 2006 resulted primarily disposals securities partially offset increases fair market value certain securities limited partnerships company limited partner various private equity funds invest primarily emerging markets company accounts limited partnerships using equity method accounting therefore company recording consolidated statement earnings proportional share limited partnerships’ net income loss limited partnerships value investments fair value risk estimated potential loss fair value resulting hypothetical 10 adverse change market prices limited partnerships’ investments actual results may differ decrease fair value 2007 compared 2006 resulted primarily returns capital item 7a quantitative qualitative disclosures market risk continued currencies order reduce risk foreign currency exchange rate fluctuations except amounts permanently invested described company follows policy entering currency exchange forward contracts mitigate foreign currency risk related transactions denominated currency functional currencies applicable various entities instruments used readily marketable exchangetraded futures contracts forward contracts banks changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 54 billion june 30 2007 45 billion june 30 2006 increase due increase retained earnings foreign subsidiaries affiliates appreciation foreign currency exchange rates potential loss fair value resulting hypothetical 10 adverse change quoted foreign currency exchange rates 543 million 454 million 2007 2006 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 5 decrease interest rates actual results may differ increase fair value longterm debt 2007 resulted principally company’s issuance 12 billion convertible senior notes partially offset repayment 400 million debentures principal payments longterm debt item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold revenues statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position years ended december 31 2014 2013 together market risk hypothetical 10 adverse price change follows decrease fair value average position december 31 2014 result decrease commodity prices decrease average quantities underlying weekly commodity position item 7a quantitative qualitative disclosures market risk continued currencies company consolidated subsidiaries 79 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland brazil euro us dollar functional currencies respectively reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company use currency exchange contracts hedges amounts permanently invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 80 billion december 31 2014 78 billion december 31 2013 increase due increase retained earnings foreign subsidiaries affiliates partially offset depreciation foreign currencies versus us dollar 09 billion potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 802 million 779 million december 31 2014 2013 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ increase fair value longterm debt december 31 2014 primarily due decreased interest rates item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold revenues statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position years ended december 31 2016 2015 together market risk hypothetical 10 adverse price change follows item 7a quantitative qualitative disclosures market risk continued change fair value average position principally result decrease average quantities underlying weekly commodity position currencies company consolidated subsidiaries 76 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland brazil euro us dollar functional currencies respectively reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company use currency exchange contracts hedges amounts permanently invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers permanently invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 73 billion 80 billion december 31 2016 2015 respectively decrease due depreciation foreign currencies versus us dollar 04 billion decrease retained earnings foreign subsidiaries affiliates 03 billion potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 728 million 809 million december 31 2016 2015 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ fair value longterm debt increased primarily due 10 billion new debt issued august 11 2016 item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold revenues statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position years ended december 31 2018 2017 together market risk hypothetical 10 adverse price change follows item 7a quantitative qualitative disclosures market risk continued change fair value average position principally result increase prices underlying weekly commodity position partially offset decrease quantities currencies company consolidated subsidiaries 80 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland euro functional currency brazil argentina us dollar functional currency reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company use currency exchange contracts hedges amounts indefinitely invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material amount company considers indefinitely invested foreign subsidiaries affiliates translated dollars using yearend exchange rates 87 billion 82 billion 105 billion 94 billion historical rates december 31 2018 2017 respectively increase due increase retained earnings foreign subsidiaries affiliates 11 billion partially offset depreciation foreign currencies versus us dollar 06 billion potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 870 million 820 million december 31 2018 2017 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ increase fair value longterm debt december 31 2018 primarily due increased borrowings item 8item 7a quantitative qualitative disclosures market risk market risk inherent company’s market risk sensitive instruments positions potential loss arising adverse changes commodity market prices relate company’s net commodity position foreign currency exchange rates interest rates described commodities availability prices agricultural commodities subject wide fluctuations due factors changes weather conditions crop disease plantings government programs policies competition changes global demand changes customer preferences standards living global production similar competitive crops item 7a quantitative qualitative disclosures market risk continued company manages exposure adverse price movements agricultural commodities used produced business operations entering derivative nonderivative contracts reduce company’s overall short long commodity position additionally company uses exchangetraded futures exchangetraded overthecounter option contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets addition company timetotime enters derivative contracts designated hedges specific volumes commodities purchased processed sold future month changes market value futures contracts historically expected continue highly effective offsetting changes price movements hedged item gains losses arising open closed designated hedging transactions deferred comprehensive income net applicable taxes recognized component cost products sold revenues statement earnings hedged item recognized company’s commodity position consists merchandisable agricultural commodity inventories related purchase sales contracts energy freight contracts exchangetraded futures exchangetraded overthecounter option contracts including contracts used hedge portions production requirements net sales fair value company’s commodity position summation fair values calculated commodity valuing commodity positions quoted market prices period available utilizing close proxy company established metrics monitor amount market risk exposure consist volumetric limits valueatrisk var limits var measures potential loss 95 confidence level could incurred one year period volumetric limits monitored daily var calculations sensitivity analysis monitored weekly addition measuring hypothetical loss resulting adverse two standard deviation move market prices assuming correlations one year period using var sensitivity analysis performed measuring potential loss fair value resulting hypothetical 10 adverse change market prices highest lowest average weekly position years ended december 31 2019 2018 together market risk hypothetical 10 adverse price change follows change fair value average position principally result increase prices underlying weekly commodity position currencies company consolidated subsidiaries 70 countries majority company’s subsidiaries located outside united states local currency functional currency except certain significant subsidiaries switzerland euro functional currency brazil argentina us dollar functional currency reduce risks associated foreign currency exchange rate fluctuations company enters currency exchange contracts minimize foreign currency position related transactions denominated primarily euro british pound canadian dollar brazilian real currencies represent major functional local currencies recurring business transactions occur company also uses currency exchange contracts hedges amounts indefinitely invested foreign subsidiaries affiliates currency exchange contracts used forward contracts swaps banks exchangetraded futures contracts overthecounter options changes market value contracts high correlation price changes currency related transactions potential loss fair value net currency position resulting hypothetical 10 adverse change foreign currency exchange rates material item 7a quantitative qualitative disclosures market risk continued amount company considers indefinitely invested foreign subsidiaries translated dollars using yearend exchange rates 96 billion 87 billion 116 billion 105 billion historical rates december 31 2019 2018 respectively increase due increase retained earnings foreign subsidiaries affiliates 11 billion partially offset depreciation foreign currencies versus us dollar 02 billion potential loss fair value would principally recognized comprehensive income resulting hypothetical 10 adverse change quoted foreign currency exchange rates 957 million 870 million december 31 2019 2018 respectively actual results may differ interest fair value company’s longterm debt estimated using quoted market prices available discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements fair value exceeded longterm debt carrying value market risk estimated potential increase fair value resulting hypothetical 50 basis points decrease interest rates actual results may differ increase fair value longterm debt december 31 2019 primarily due decreased interest rates item 8 item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 1994 incorporated herein reference pages annual shareholders report consolidated financial statements summary significant accounting policies notes consolidated financial statements pages 26 report independent auditors page 35 quarterly financial data unaudited page 36 item 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 1995 incorporated herein reference consolidated balance sheetsjune 30 1995 1994 consolidated statements earningsyears ended june 30 1995 1994 1993 consolidated statements shareholders equityyears ended june 30 1995 1994 1993 consolidated statements cash flowsyears ended june 30 1995 1994 1993 notes consolidated financial statementsjune 30 1995 summary significant accounting policies report independent auditors quarterly financial data unauditeditem 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 1996 incorporated herein reference consolidated balance sheetsjune 30 1996 1995 consolidated statements earningsyears ended june 30 1996 1995 1994 consolidated statements shareholders equityyears ended june 30 1996 1995 1994 consolidated statements cash flowsyears ended june 30 1996 1995 1994 notes consolidated financial statementsjune 30 1996 summary significant accounting policies report independent auditors quarterly financial data unaudited recent developments see item 3 form 10k report update recent developments related antitrust investigation related litigation including companys agreement settle consolidated securities class action lawsuit 30 million class action lawsuit involving sale citric acid 35 million item 9nanitem 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 1998 incorporated herein reference consolidated balance sheetsjune 30 1998 1997 consolidated statements earningsyears ended june 30 1998 1997 1996 consolidated statements shareholders equityyears ended june 30 1998 1997 1996 consolidated statements cash flowsyears ended june 30 1998 1997 1996 notes consolidated financial statementsjune 30 summary significant accounting policies report independent auditors quarterly financial data unauditeditem 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 1999 incorporated herein reference consolidated balance sheetsjune 30 1999 1998 consolidated statements earningsyears ended june 30 1999 1998 1997 consolidated statements shareholders equityyears ended june 30 1999 1998 1997 consolidated statements cash flowsyears ended june 30 1999 1998 1997 notes consolidated financial statementsjune 30 summary significant accounting policies report independent auditors quarterly financial data unauditeditem 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 2000 incorporated herein reference consolidated balance sheetsjune 30 2000 1999 consolidated statements earningsyears ended june 30 2000 1999 1998 consolidated statements shareholders equityyears ended june 30 2000 1999 1998 consolidated statements cash flowsyears ended june 30 2000 1999 1998 notes consolidated financial statementsjune 30 2000 summary significant accounting policies report independent auditors quarterly financial data unauditeditem 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 2001 incorporated herein reference consolidated balance sheetsjune 30 2001 2000 consolidated statements earningsyears ended june 30 2001 2000 1999 consolidated statements shareholders equityyears ended june 30 2001 2000 1999 consolidated statements cash flowsyears ended june 30 2001 2000 1999 notes consolidated financial statementsjune 30 2001 summary significant accounting policies report independent auditors quarterly financial data unaudited item 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 2003 incorporated herein reference consolidated balance sheetsjune 30 2003 2002 consolidated statements earningsyears ended june 30 2003 2002 2001 consolidated statements shareholders equityyears ended june 30 2003 2002 2001 consolidated statements cash flowsyears ended june 30 2003 2002 2001 notes consolidated financial statementsjune 30 2003 summary significant accounting policies report independent auditors quarterly financial data unaudited item 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 2004 incorporated herein reference consolidated balance sheetsjune 30 2004 2003 consolidated statements earningsyears ended june 30 2004 2003 2002 consolidated statements shareholders equityyears ended june 30 2004 2003 2002 consolidated statements cash flowsyears ended june 30 2004 2003 2002 notes consolidated financial statementsjune 30 2004 summary significant accounting policies report independent registered public accounting firm quarterly financial data unaudited item 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 2005 incorporated herein reference consolidated balance sheetsjune 30 2005 2004 consolidated statements earningsyears ended june 30 2005 2004 2003 consolidated statements shareholders equityyears ended june 30 2005 2004 consolidated statements cash flowsyears ended june 30 2005 2004 2003 notes consolidated financial statementsjune 30 2005 summary significant accounting policies report management internal control financial reporting reports independent registered public accounting firm quarterly financial data unaudited item 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 2006 incorporated herein reference consolidated balance sheetsjune 30 2006 2005 consolidated statements earningsyears ended june 30 2006 2005 2004 consolidated statements shareholders equityyears ended june 30 2006 2005 consolidated statements cash flowsyears ended june 30 2006 2005 2004 notes consolidated financial statementsjune 30 2006 summary significant accounting policies management’s report internal control financial reporting reports independent registered public accounting firm quarterly financial data unaudited item 9item 8 financial statements supplementary data archer daniels midland company consolidated statements earnings see notes consolidated financial statements archer daniels midland company consolidated balance sheets see notes consolidated financial statements archer daniels midland company consolidated statements cash flows see notes consolidated financial statements archer daniels midland company consolidated statements shareholders’ equity archer daniels midland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements june 30 2008 three years ended include accounts company majorityowned subsidiaries significant intercompany accounts transactions eliminated investments affiliates carried cost plus equity undistributed earnings since acquisition adjusted appropriate amortizable basis differences investment balance underlying net assets investee certain majorityowned subsidiaries whose fiscal periods differ company’s consolidated using recent available financial statements case within 93 days company’s year end consistent period company evaluates consolidates appropriate less majorityowned investments pursuant financial accounting standards board fasb interpretation 46 consolidation variable interest entities interpretation accounting research bulletin 51 fin 46 variable interest entity vie corporation partnership trust legal structure used business purposes equity investors proportionate voting rights equity investors provide sufficient financial resources entity support activities fin 46 requires vie consolidated company primary beneficiary vie primary beneficiary vie entity subject majority risk loss vie’s activities entitled receive majority entity’s residual returns use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance certain regulatory requirements commodity exchange requirements insurance arrangements segregated balances represent deposits received customers trading exchangetraded commodity instruments securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds receivables company records trade accounts receivable net realizable value includes appropriate allowance estimated uncollectible accounts 89 million 69 million june 30 2008 2007 respectively reflect loss anticipated trade accounts receivable balances company calculates allowance based history writeoffs level pastdue accounts relationships economic status customers archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued credit risk trade receivables minimized result large diversified nature company’s worldwide customer base company controls exposure credit risk credit approvals credit limits monitoring procedures collateral generally required company’s trade receivables trade accounts receivable due unconsolidated affiliates june 30 2008 2007 199 million 260 million respectively inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market marketable securities company classifies marketable securities availableforsale except certain designated securities classified trading securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component comprehensive income unrealized gains losses related trading securities included income current basis company uses specific identification method securities sold reclassified accumulated comprehensive income earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 40 years machinery equipment 3 30 years asset abandonments writedowns company recorded 32 million 21 million 71 million charge cost products sold 2008 2007 2006 respectively principally related abandonment writedown certain longlived assets majority assets idle related underperforming product lines decision abandon writedown finalized consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value writedowns carrying value assets immaterial net sales company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates 2008 2007 2006 68 billion 37 billion 31 billion respectively archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued stock compensation company adopted fair value recognition provisions statement financial accounting standards sfas 123r sharebased payment sfas 123 r using modified prospective transition method modified prospective transition method compensation expense includes compensation expense sharebased payments granted prior yet vested july 1 2005 based grant date fair value estimated accordance original provisions sfas 123 b compensation expense sharebased payments granted subsequent july 1 2005 based grant date fair value estimated accordance provisions sfas 123r company recognizes expense sharebased compensation based fair value awards granted fair value stock options estimated date grant using blackscholes option valuation model requires input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related sharebased compensation award research development costs associated research development expensed incurred costs incurred 49 million 45 million 45 million years ended june 30 2008 2007 2006 respectively per share data basic earnings per common share determined dividing net earnings weighted average number common shares outstanding computing diluted earnings per share weighted average number common shares outstanding increased common stock options outstanding exercise prices lower average market prices common shares 2008 2007 2006 diluted average shares outstanding included incremental shares related outstanding common stock options 2 million 5 million 2 million respectively new accounting standards july 2006 fasb issued interpretation 48 accounting uncertainty income taxes interpretation fasb statement 109 fin 48 fin 48 clarifies accounting income taxes prescribing minimum requirements tax position must meet recognized financial statements addition fin 48 prohibits use sfas 5 accounting contingencies evaluating recognition measurement uncertain tax positions company adopted fin 48 july 1 2007 adoption material effect company’s financial statements see note 11 information september 2006 fasb issued sfas 157 fair value measurements sfas 157 sfas 157 establishes framework measuring fair value within generally accepted accounting principles clarifies definition fair value within framework expands disclosures use fair value measurements sfas 157 require new fair value measurements generally accepted accounting principles company adopt sfas 157 items recognized disclosed fair value financial statements recurring basis least annually effective july 1 2008 company completed evaluation impact adopting sfas 157 company’s financial statements adoption sfas 157 may require modification company’s fair value measurements require expanded disclosures notes company’s consolidated financial statements archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued february 2007 fasb issued sfas 159 fair value option financial assets financial liabilities sfas 159 sfas 159 allows entities voluntarily choose specified election dates measure many financial assets financial liabilities fair value election made instrumentbyinstrument basis irrevocable fair value option elected instrument sfas 159 specifies subsequent changes fair value instrument shall reported earnings company adopt sfas 159 july 1 2008 believe adoption significant impact company’s financial statements company expect make additional fair value measurement elections december 2007 fasb issued sfas 141r business combinations sfas 141r sfas 160 accounting reporting noncontrolling interests consolidated financial statements amendment arb 51 sfas 160 sfas 141r replaces sfas 141 business combinations sfas 141r sfas 160 change financial accounting reporting business combination transactions noncontrolling minority interests consolidated financial statements sfas 141r requires recognizing certain exceptions 100 percent fair values assets acquired liabilities assumed noncontrolling interests acquisitions less 100 percent controlling interest acquisition constitutes change control acquired entity measuring acquirer shares issued contingent consideration arrangements connection business combination fair value acquisition date subsequent changes fair value reflected earnings expensing incurred acquisitionrelated transaction costs sfas 160 establishes accounting reporting standards noncontrolling interest subsidiary deconsolidation subsidiary also amends consolidation procedures accounting research bulletin 51 consolidated financial statements arb 51 consistency requirements sfas 141r company required adopt sfas 141r business combination transactions acquisition date july 1 2009 company also required adopt sfas 160 july 1 2009 company yet assessed impact adoption standards financial statements march 2008 fasb issued sfas 161 disclosures derivative instruments hedging activities amendment fasb statement 133 sfas 161 sfas 161 expands disaggregates disclosure requirements sfas 133 accounting derivative instruments hedging activities sfas 133 disclosure provisions sfas 161 apply entities derivative instruments subject sfas 133 also apply related hedged items bifurcated derivatives nonderivative instruments designated qualify hedging instruments sfas 161 requires entity derivatives disclose uses derivative instruments derivative instruments related hedged items accounted sfas 133 derivative instruments related hedged items affect entity’s financial position financial performance cash flows entities must provide tabular disclosures location line item amounts gains losses reported statement earnings company required adopt sfas 161 january 1 2009 adoption standard require expanded disclosure notes company’s consolidated financial statements impact financial results may 2008 fasb issued fasb staff position fsp apb 141 accounting convertible debt instruments may settled cash upon conversion including partial cash settlement fsp apb 141 fsp apb 141 addresses accounting convertible debt securities upon conversion may settled issuer fully partially cash currently forms convertible debt securities treated solely debt fsp issuers convertible debt securities within scope must separate securities two accounting components debt component representing issuer’s contractual obligation pay principal interest equity component representing holder’s option convert debt security equity issuer elects equivalent amount cash company required adopt fsp apb 141 july 1 2009 connection outstanding convertible debt must apply retrospectively past periods presented even instrument matured converted otherwise extinguished fsp’s effective date company yet assessed impact adoption standard financial statements archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued june 2008 fasb issued fsp emerging issues task force eitf 0361 determining whether instruments granted sharebased payment transactions participating securities fsp eitf0361 fsp eitf 0361 addresses whether instruments granted sharebased payment transactions participating securities prior vesting therefore need included earnings allocation computing earnings per share eps twoclass method fsp clarifies outstanding unvested sharebased payment awards contain rights nonforfeitable dividends participate undistributed earnings common shareholders considered participating securities issuing entity required apply twoclass method computing basic diluted eps company required adopt fsp eitf 0361 july 1 2009 yet assessed impact adoption standard company’s financial statements note 2 acquisitions company’s 2008 2007 2006 acquisitions accounted purchases accordance sfas 141 business combinations accordingly tangible assets liabilities adjusted fair values remainder purchase price recorded goodwill identifiable intangible assets acquired part acquisitions material acquisitions 2008 company acquired six businesses total cost 15 million satisfied 2 million company stock 13 million cash recorded preliminary allocation purchase price related acquisitions purchase price allocation resulted goodwill purchase price 15 million allocated current assets property plant equipment liabilities 18 million 10 million 13 million respectively acquisitions 2007 company acquired seven businesses total cost 103 million one acquisitions resulted obtaining remaining outstanding shares unconsolidated affiliate company held 50 interest company recorded goodwill 5 million related acquisitions cash purchase price 103 million plus 100 million carrying value previously unconsolidated affiliate allocated current assets property plant equipment current liabilities debt 82 million 206 million 33 million 52 million respectively acquisitions 2006 company acquired twelve businesses total cost 182 million company recorded goodwill related acquisitions archer daniels midland company notes consolidated financial statements continued note 3 marketable securities cash equivalents archer daniels midland company notes consolidated financial statements continued note 3 marketable securities cash equivalents continued 25 million unrealized losses june 30 2008 5 million arose within last 12 months market value investments unrealized loss position less 12 months 12 months longer 292 million 148 million respectively market value united states government obligations governmentsponsored mortgagebacked securities debt securities unrealized losses june 30 2008 383 million 7 million unrealized losses associated united states government obligations governmentsponsored mortgagebacked securities debt securities considered otherthantemporary unrealized losses related changes interest rates affect expected cash flows received upon maturity investments credit quality issuer market value availableforsale equity securities unrealized losses june 30 2008 57 million 18 million unrealized losses associated availableforsale equity securities principally related longterm strategic investments company intent ability hold debt equity securities period time sufficient recover unrealized losses company recognized otherthantemporary impairments debt equity securities note 4 inventories derivatives reduce price risk caused market fluctuations company generally follows policy using exchangetraded futures exchangetraded overthecounter options contracts minimize net position merchandisable agricultural commodity inventories forward cash purchase sales contracts company also use exchangetraded futures exchangetraded overthecounter options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contracts defaults volatility freight markets inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value exchangetraded futures exchangetraded overthecounter options contracts forward cash purchase sales contracts certain merchandisable agricultural commodities none designated fair value hedges valued market price changes market value inventories merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded overthecounter options contracts recognized earnings immediately resulting cost goods sold approximating firstin firstout fifo cost unrealized gains forward cash purchase contracts forward cash sales contracts exchangetraded futures exchangetraded overthecounter options contracts represent fair value instruments classified company’s balance sheet receivables unrealized losses forward cash purchase contracts forward cash sales contracts exchangetraded futures exchangetraded overthecounter options contracts represent fair value instruments classified company’s balance sheet accounts payable archer daniels midland company notes consolidated financial statements continued note 4 inventories derivatives continued company also values certain inventories using lower cost determined either lifo fifo method market 2008 reductions certain lifo inventory quantities resulted liquidations previously established lifo cost layer thereby decreasing impact lifo valuation reserve adjustment earnings 112 million income tax company time uses futures options contracts fix purchase price anticipated volumes commodities purchased processed future month company also uses futures options swaps fix purchase price company’s anticipated natural gas requirements certain production facilities addition certain company’s ethanol sales contracts indexed gasoline prices company uses futures options fix sales price anticipated volumes ethanol sales future months derivatives designated cash flow hedges changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item amounts representing ineffectiveness cash flow hedges immaterial gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold statement earnings hedged item recognized june 30 2008 company recorded 81 million aftertax gains accumulated comprehensive income related gains losses cash flow hedge transactions company expects recognize aftertax gains statement earnings principally fiscal year 2009 june 30 2008 accumulated comprehensive income included 5 million aftertax gains related treasurylock agreements treasurylock agreements designated cash flow hedges anticipated proceeds company’s issuance debentures 2005 2008 company recognize 5 million aftertax gain statement earnings terms debentures june 30 2008 accumulated comprehensive income also included 4 million aftertax gains representing company’s share derivative gains reported unconsolidated affiliates company archer daniels midland company notes consolidated financial statements continued note 5 investments advances affiliates company ownership interests nonmajorityowned affiliates accounted equity method company 80 79 unconsolidated affiliates june 30 2008 2007 respectively located north south america africa europe asia following table summarizes combined balance sheets combined statements earnings company’s unconsolidated affiliates three years ended june 30 2008 2007 2006 undistributed earnings company’s unconsolidated affiliates june 30 2008 10 billion company limited partner various private equity funds carrying value june 30 2008 129 million company future capital commitments related partnerships 137 million june 30 2008 two foreign affiliates company carrying value 12 billion market value 19 billion based quoted market prices exchange rates june 30 2008 company provides credit facilities totaling 240 million two unconsolidated affiliates one facility due demand bears interest equal monthly average commercial paper rate applicable company’s commercial paper borrowing facility second facility 90 day term bears interest libor plus one outstanding advances credit facilities 195 million june 30 2008 included receivables accompanying consolidated balance sheet 2007 company sold 28 ownership interest agricore united cash 321 million recognized gain 153 million june 2007 company exchanged ownership interests eleven asian joint venture companies shares wilmar international limited wil singapore publicly listed company exchange ownership interests joint ventures company received 366 million wil shares fair value 756 million immediately prior exchange carrying value company’s interests joint ventures exchanged wil shares 231 million company recognized 286 million aftertax gain 2007 related exchange transaction gain represents difference fair value wil shares received carrying value company’s interests joint ventures exchanged wil shares less elimination portion gain representing company’s retained direct indirect ownership interests wil 2008 company finalized accounting exchange using purchase method accounting result company reduced investment wil recorded goodwill 176 million company accounts direct indirect interests wil using equity method accounting company believes ability exercise significant influence operating financial policies wil june 30 2008 one joint venture company subject wil exchange transaction regulatory approval pending company recognized gain related exchange joint venture wil june 30 2008 exchange transaction related gain joint venture recognized final regulatory approval obtained archer daniels midland company notes consolidated financial statements continued note 6 goodwill company accounts goodwill intangible assets accordance sfas 142 goodwill intangible assets standard goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company record goodwill impairment charges 2008 2007 carrying value company’s intangible assets material goodwill balances attributable consolidated businesses investments affiliates segment set forth following table 2008 company finalized accounting exchange company’s interests certain asian joint ventures shares wilmar international ltd using purchase method accounting result company recorded 176 million goodwill reduced investments advances affiliates company’s balance sheet 176 million increase goodwill represents difference preadjustment carrying value company’s investment company’s interest estimated fair value wil’s net assets acquisition date changes goodwill 2008 related foreign currency translation adjustments archer daniels midland company notes consolidated financial statements continued note 7 debt financing arrangements archer daniels midland company notes consolidated financial statements continued note 7 debt financing arrangements continued fiscal year 2008 company issued 310 billion additional longterm debt including 500 million debentures issued december 2007 700 million notes issued march 2008 175 billion debentures issued june 2008 debentures connection issuance debentures june 2008 company issued 175 billion equity units equity units combination debt b forward purchase contract holder purchase company’s common stock debt equity instruments deemed separate instruments investor may transfer settle equity instrument separately debt instrument forward purchase contract obligate buyer purchase company later june 1 2011 price 50 cash following number shares company’s common stock subject antidilution adjustments “applicable market value” amv company’s common stock average closing price company’s common stock 20trading day period ending third trading day prior june 1 2011 equals exceeds 4783 10453 shares company’s common stock amv less 4783 greater 3986 number shares company’s common stock value based amv equal 50 amv less equal 3986 12544 shares company’s common stock debentures bear interest rate 470 per year payable quarterly due june 1 2041 debentures remarketed three years remarketing successful interest rate debentures reset thereafter interest payable semiannually reset rate addition following successful remarketing company may modify certain terms debentures including adjusting frequency interest payments adjusting ranking debentures changing stated maturity successful remarketing interest rate debentures reset holder equity unit right put interest debentures company june 1 2011 put price equal 100 principal amount plus accrued unpaid interest proceeds put right deemed applied holder’s obligations forward purchase contracts company also pay equity unit holder quarterly contract adjustment payments rate 155 per year stated amount 50 per equity unit 0775 per year present value future contract adjustment payments 75 million paid next three years recorded reduction shareholders’ equity company also recorded 35 million decrease shareholders’ equity issuance costs related equity portion equity units remaining issuance costs allocated debt recognized earnings life debt forward purchase contracts issued connection issuance debentures june 2008 settled company’s common stock june 1 2011 settlement forward purchase contract shares stock underlying forward purchase contract outstanding forward purchase contracts included computation diluted earnings per share extent dilutive june 30 2008 forward purchase contracts considered dilutive therefore included computation diluted earnings per share basic earnings per share affected forward purchase contracts settled holders thereof become stockholders archer daniels midland company notes consolidated financial statements continued note 7 debt financing arrangements continued february 2007 company issued 115 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually notes convertible based conversion rate 228423 shares per 1000 principal amount notes equal conversion price approximately 4378 per share notes may converted subject adjustment following circumstances 1 calendar quarter beginning march 31 2007 closing price company’s common stock least 20 trading days 30 consecutive trading days ending last trading day immediately preceding quarter 140 applicable conversion price per share 1000 divided applicable conversion rate 2 five consecutive business day period immediately five consecutive trading day period note measurement period average trading price per 1000 principal amount notes equal less 98 average product closing price company’s common stock conversion rate date note measurement period 3 company makes specified distributions common stockholders specified corporate transactions occur 4 time january 15 2014 business day preceding maturity date upon conversion holder would receive amount cash equal lesser 1 1000 2 conversion value defined conversion value exceeds 1000 company deliver company’s election cash common stock combination cash common stock conversion value excess 1000 notes converted connection change control defined company may required provide makewhole premium form increase conversion rate subject stated maximum amount addition event change control holders may require company purchase portion notes purchase price equal 100 principal amount notes plus accrued unpaid interest concurrent issuance notes company purchased call options private transactions cost 299 million purchased call options allow company receive shares common stock andor cash counterparties equal amounts common stock andor cash related excess current market price company’s common stock exercise price purchased call options addition company sold warrants private transactions acquire subject customary antidilution adjustments 263 million shares common stock exercise price 6256 per share received proceeds 170 million average price company’s common stock defined period ending respective settlement dates exceeds exercise price warrants settled company’s option cash shares common stock purchased call options warrants intended reduce potential dilution upon future conversions notes effectively increasing initial conversion price 6256 per share net cost purchased call options warrant transactions 130 million recorded reduction shareholders’ equity company also recorded 114 million increase shareholders’ equity deferred tax assets recognized related purchased call options upon closing sale notes 370 million net proceeds note issuance proceeds warrant transactions used repurchase 103 million shares company’s common stock company’s stock repurchase program june 30 2008 none conditions permitting conversion notes satisfied addition june 30 2008 market price company’s common stock greater exercise price purchased call options warrants june 30 2008 share amounts related conversion notes exercise warrants included diluted average shares outstanding archer daniels midland company notes consolidated financial statements continued note 7 debt financing arrangements continued june 30 2008 fair value company’s longterm debt exceeded carrying value 99 million estimated using quoted market prices discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements aggregate maturities longterm debt five years june 30 2008 232 million 43 million 283 million 118 million 261 million respectively june 30 2008 company pledged certain property plant equipment carrying value 359 million security certain longterm debt obligations june 30 2008 company lines credit totaling 74 billion 43 billion unused weighted average interest rates shortterm borrowings outstanding june 30 2008 2007 283 618 respectively company’s total lines credit 51 billion support commercial paper borrowing facility 22 billion borrowed june 30 2008 company outstanding standby letters credit surety bonds june 30 2008 2007 totaling 500 million 339 million respectively note 8 shareholders equity company authorized one billion shares common stock 500000 shares preferred stock without par value preferred stock issued june 30 2008 2007 company approximately 278 million 286 million shares respectively treasury stock 719 million june 30 2008 723 million june 30 2007 recorded cost reduction common stock company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 1999 incentive compensation plan 2002 incentive compensation plan options issued market value date grant vest three nine years expire five ten years date grant company’s 1999 2002 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees awards made common stock units equivalent rights vest end threeyear restriction period 2008 2007 2006 13 million 11 million 24 million common shares units respectively granted restricted stock awards june 30 2008 15 million 79 million shares available future grants pursuant 1999 2002 plans respectively compensation expense option grants restricted stock awards granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirement eligible employees recognized earnings date grant total compensation expense option grants restricted stock awards recognized 2008 2007 2006 70 million 70 million 67 million respectively archer daniels midland company notes consolidated financial statements continued note 8 shareholders equity continued fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock eight year period immediately prior date grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows summary option activity 2008 presented weightedaverage remaining contractual term options outstanding exercisable june 30 2008 7 years 5 years respectively aggregate intrinsic value options outstanding exercisable june 30 2008 89 million 45 million respectively weightedaverage grantdate fair values options granted 2008 2007 2006 1260 1642 752 respectively total intrinsic values options exercised 2008 2007 2006 34 million 41 million 60 million respectively cash proceeds received options exercised 2008 2007 2006 20 million 20 million 30 million respectively june 30 2008 35 million total unrecognized compensation expense related option grants amounts recognized compensation expense next five fiscal years 13 million 10 million 7 million 4 million 1 million respectively archer daniels midland company notes consolidated financial statements continued note 8 shareholders equity continued fair value restricted stock awards determined based market value company’s shares grant date weightedaverage grantdate fair values awards granted 2008 2007 3445 4175 respectively summary restricted stock awards activity 2008 presented june 30 2008 22 million total unrecognized compensation expense related restricted stock awards amounts recognized compensation expense next three fiscal years 14 million 7 million 1 million respectively total fair value restricted stock awards vested 2008 38 million archer daniels midland company notes consolidated financial statements continued note 9 accumulated comprehensive income following table sets forth information respect accumulated comprehensive income archer daniels midland company notes consolidated financial statements continued note 10 income net interest expense net interest capitalized 52 million 24 million 11 million 2008 2007 2006 respectively company made interest payments 485 million 425 million 365 million 2008 2007 2006 respectively realized gains sales availableforsale marketable securities totaled 39 million 394 million 41 million 2008 2007 2006 respectively annual realized losses 1 million 2008 2007 2006 note 11 income taxes financial reporting purposes earnings income taxes include following components archer daniels midland company notes consolidated financial statements continued note 11 income taxes continued reconciliation statutory federal income tax rate company’s effective tax rate earnings follows company made income tax payments 859 million 794 million 508 million 2008 2007 2006 respectively archer daniels midland company notes consolidated financial statements continued note 11 income taxes continued company 69 million 82 million tax assets net operating loss carryforwards related certain international subsidiaries june 30 2008 2007 respectively june 30 2008 approximately 54 million assets expiration date remaining 15 million expire various times fiscal 2017 annual usage certain assets limited percentage taxable income respective international subsidiary year company recorded valuation allowance 60 million 52 million tax assets june 30 2008 2007 respectively due uncertainty realization company also 41 million tax assets related excess foreign tax credits begin expire fiscal 2013 25 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal benefit expire various times fiscal 2012 company recorded valuation allowance 24 million excess foreign tax credits june 30 2008 due uncertainty realization company also recorded valuation allowance state income tax attributes 1 million june 30 2008 june 30 2007 company 15 million valuation allowance recorded related excess foreign tax credits 1 million valuation allowance related state income tax incentive credits due uncertainty realization company remains subject examination us calendar tax years 2007 2008 undistributed earnings company’s foreign subsidiaries affiliated corporate joint venture companies accounted equity method approximately 49 billion june 30 2008 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings company adopted provisions fin 48 effective july 1 2007 fin 48 clarifies accounting income tax positions prescribing minimum threshold tax position required meet recognized consolidated financial statements interpretation requires company recognize consolidated financial statements tax positions determined likely sustained upon examination based technical merits position upon adoption fin 48 material changes required taken account income statement balance sheet company additionally 2008 changes unrecognized tax benefits material effect company’s net income cash flow total amounts unrecognized tax benefits july 1 2007 june 30 2008 follows archer daniels midland company notes consolidated financial statements continued note 11 income taxes continued company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits required recognized company one time would positive impact 26 million tax expense period company classifies interest income taxrelated balances interest expense interest income classifies taxrelated penalties operating expense july 1 2007 june 30 2008 respectively company accrued 144 million 175 million liabilities interest penalties unrecognized tax benefits note 12 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases expire various dates year 2076 rent expense 2008 2007 2006 201 million 166 million 129 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans company provides substantially domestic employees certain international subsidiaries pension benefits company also provides substantially domestic salaried employees postretirement health care life insurance benefits company savings investment plans available employees company also maintains stock ownership plans qualifying employees company contributes shares stock plans match qualifying employee contributions employees choice retaining company stock accounts diversifying shares investment options expense measured recorded based upon fair market value stock contributed plans month number shares designated use plans significant compared shares outstanding periods presented assets company’s defined contribution savings plans consist primarily listed common stocks pooled funds company’s defined contribution savings plans held 164 million shares company common stock june 30 2008 market value 555 million cash dividends received shares company common stock held plans year ended june 30 2008 9 million june 30 2007 company adopted recognition disclosure provisions sfas 158 sfas 158 required company recognize funded status pension plans june 30 2007 consolidated balance sheet corresponding adjustment accumulated comprehensive income adjustment accumulated comprehensive income adoption represented net unrecognized actuarial losses unrecognized prior service costs unrecognized transition obligation remaining initial adoption sfas 87 employers’ accounting pensions previously netted plans’ funded status company’s consolidated balance sheet pursuant provisions sfas 87 amounts subsequently recognized net periodic pension cost pursuant company’s historical accounting policy amortizing amounts actuarial gains losses arise subsequent periods recognized net periodic pension cost periods recognized component comprehensive income amounts subsequently recognized component net periodic pension cost basis amounts recognized accumulated comprehensive income pursuant provisions sfas 158 archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued incremental effects adopting provisions sfas 158 company’s consolidated balance sheet june 30 2007 presented following table adoption sfas 158 effect company’s consolidated statement earnings year ended june 30 2007 prior period presented expected material effect company’s operating results future periods company required adopt sfas 158 june 30 2007 would recognized additional minimum liability pursuant provisions sfas 87 effects recognizing additional minimum liability included table column labeled “prior adopting sfas 158” sfas 158 also requires companies measure funded status defined benefit postretirement plans end fiscal year instead date three months prior end fiscal year company required adopt measurement date provisions sfas 158 2009 record impact measurement date change expected significant adjustment opening retained earnings archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued company uses march 31 measurement date substantially defined benefit plans following tables set forth changes defined benefit obligation fair value defined benefit plan assets archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued included accumulated comprehensive income pension benefits june 30 2008 following amounts yet recognized net periodic pension cost unrecognized transition obligation 4 million unrecognized prior service costs 43 million unrecognized actuarial losses 204 million prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost fiscal year ended june 30 2009 6 million 2 million respectively included accumulated comprehensive income postretirement benefits june 30 2008 following amounts yet recognized net periodic benefit costs unrecognized prior service credit 8 million unrecognized actuarial losses 30 million prior service credit actuarial loss included accumulated comprehensive income expected recognized net periodic benefit costs fiscal year ended june 30 2009 1 million 1 million respectively following table sets forth principal assumptions used developing net periodic expense following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 12 billion 12 billion 10 billion respectively june 30 2008 17 billion 15 billion 14 billion respectively une 30 2007 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 484 million 474 million 282 million respectively june 30 2008 491 million 481 million 284 million respectively june 30 2007 accumulated benefit obligation pension plans june 30 2008 2007 17 billion postretirement benefit measurement purposes 90 annual rate increase per capita cost covered health care benefits assumed 2008 rate assumed decrease gradually 50 2012 remain level thereafter assumed health care cost trend rates significant impact amounts reported health care plans 1 change assumed health care cost trend rates would following effect archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued plan assets following table sets forth actual asset allocation company’s global pension plan assets measurement date company’s us pension plans contain approximately 60 company’s global pension plan assets target asset allocation company’s us pension plans consists 60 equity securities 30 debt securities 10 real estate actual asset allocation us pension plans measurement date consists 61 equity securities 28 debt securities 11 real estate actual asset allocation company’s foreign pension plans measurement date consists 37 equity securities 61 debt securities 2 investments target asset allocation company’s foreign pension plans approximately actual asset allocation company’s pension plans held 31 million shares company common stock measurement date march 31 2008 market value 129 million cash dividends received shares company common stock plans twelvemonth period ended march 31 2008 2 million investment objectives company’s plan assets · optimize longterm return plan assets acceptable level risk · maintain broad diversification across asset classes among investment managers · maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study concluded january 2005 investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued external consultants monitor investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets expected longterm rate return assumption used computing 2008 net periodic pension cost pension plans 76 contributions expected future benefit payments company expects contribute 36 million pension plans 8 million postretirement benefit plan 2009 following benefit payments reflect expected future service expected paid note 14 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products beginning july 1 2007 company reclassified certain operations within reportable segments reflect company manages businesses following realignment organizational structure company reflect activities company viewed company’s chief operating decision maker prior period segment information reclassified conform new presentation company’s operations classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations aggregated classified reclassification certain operations company’s reportable segments principally resulted movement certain food feed industrial operations previously classified respective segment produces raw material feedstock used operations oilseeds processing segment includes company’s natural health nutrition protein specialties operations corn processing segment includes company’s industrial bioproducts operations agricultural services segment includes company’s formula feed processing edible bean origination operations archer daniels midland company notes consolidated financial statements continued note 14 segment geographic information continued oilseeds processing segment includes activities related crushing origination oilseeds soybeans cottonseed sunflower seeds canola peanuts flaxseed vegetable oils protein meals principally food feed industries addition oilseeds oilseed products may processed internally resold marketplace raw materials processing crude vegetable oil sold processed refining bleaching deodorizing salad oils salad oils processed hydrogenating andor interesterifying margarine shortening food products partially refined oil sold use chemicals paints industrial products refined oil processed use production biodiesel oilseed meals primary ingredients used manufacture commercial livestock poultry feeds oilseeds processing includes activities related production natural health nutrition products production specialty food feed ingredients segment also includes activities related company’s interests unconsolidated affiliates asia principally wilmar international limited corn processing segment includes activities related production sweeteners starches dextrose syrups primarily food beverage industry well activities related production fermentation bioproducts ethanol amino acids food feed industrial products agricultural services segment utilizes company’s extensive grain elevator transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats barley edible beans resells processes commodities primarily food feed ingredients agricultural processing industry agricultural services’ grain sourcing transportation network provides reliable efficient services company’s agricultural processing operations also included agricultural services activities ac toepfer international global merchandiser agricultural commodities processed products includes company’s remaining processing operations consisting activities related processing agricultural commodities food ingredient products wheat flour cocoa chocolate cocoa products barley malt also includes financial activities related banking captive insurance private equity fund investments futures commission merchant activities intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses including interest charge related working capital usage also included segment operating profit equity earnings affiliates based equity method accounting general corporate expenses investment income unallocated interest expense marketable securities transactions fifo lifo inventory adjustments minority interest eliminations excluded segment operations classified corporate archer daniels midland company notes consolidated financial statements continued note 14 segment geographic information continued segment information archer daniels midland company notes consolidated financial statements continued note 14 segment geographic information continued archer daniels midland company notes consolidated financial statements continued note 14 segment geographic information continued geographic information following geographic area data include net sales operating income attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent sum net book value property plant equipment plus goodwill related consolidated businesses note 15 guarantees commitments company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 135 million june 30 2008 amounts outstanding primary entity contingent obligations 62 million june 30 2008 june 30 2008 company construction new ethanol propyleneethylene glycol pha cocoa production facilities two cogeneration facilities date company entered purchase commitments totaling 557 million third parties related construction facilities archer daniels midland company notes consolidated financial statements continued note 16 quarterly financial data unaudited net earnings three months year ended june 30 2007 include credits income gains 440 million 286 million tax equal 044 per share related exchanging shares certain unconsolidated affiliates shares wil 357 million 225 million tax equal 034 per share related company’s sale equity securities tyson foods inc overseas shipholding group inc 157 million 99 million tax equal 015 per share related sale businesses net earnings three months year ended june 30 2007 also includes charge income 46 million 29 million tax equal 004 per share related repurchase 400 million company’s outstanding debentures charge cost products sold 19 million 12 million tax equal 002 per share related abandonment writedown longlived assets year ended june 30 2007 net earnings include credit income 209 million 132 million tax equal 020 per share related sale businesses report independent registered public accounting firm board directors shareholders archer daniels midland company decatur illinois audited accompanying consolidated balance sheets archer daniels midland company june 30 2008 2007 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2008 audits also included financial statement schedule listed index item 15a financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archer daniels midland company june 30 2008 2007 consolidated results operations cash flows three years period ended june 30 2008 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein discussed note 13 consolidated financial statements 2007 archer daniels midland company adopted statement financial accounting standards 158 related defined benefit pension postretirement plans also audited accordance standards public company accounting oversight board united states archer daniels midland company’s internal control financial reporting june 30 2008 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission report dated august 22 2008 expressed unqualified opinion thereon ernst young llp st louis missouri august 22 2008 report independent registered public accounting firm board directors shareholders archer daniels midland company decatur illinois audited archer daniels midland company’s internal control financial reporting june 30 2008 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso criteria archer daniels midland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion archer daniels midland company maintained material respects effective internal control financial reporting june 30 2008 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archer daniels midland company june 30 2008 2007 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2008 archer daniels midland company report dated august 22 2008 expressed unqualified opinion thereon ernst young llp st louis missouri august 22 2008 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archer daniels midland company consolidated statements earnings see notes consolidated financial statements archer daniels midland company consolidated balance sheets see notes consolidated financial statements archer daniels midland company consolidated statements cash flows see notes consolidated financial statements archer daniels midland company consolidated statements shareholders’ equity archer daniels midland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements june 30 2009 three years ended include accounts company majorityowned subsidiaries significant intercompany accounts transactions eliminated investments affiliates carried cost plus equity undistributed earnings since acquisition adjusted appropriate amortizable basis differences investment balance underlying net assets investee certain majorityowned subsidiaries whose fiscal periods differ company’s consolidated using recent available financial statements case within 93 days company’s year end consistent period company evaluates consolidates appropriate less majorityowned investments pursuant financial accounting standards board fasb interpretation 46 consolidation variable interest entities interpretation accounting research bulletin 51 fin 46 use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassifications certain items prior years’ consolidated statements cash flows reclassified conform current year’s presentation impact total cash provided used operating investing financing activities cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance certain regulatory requirements commodity exchange requirements insurance arrangements segregated balances represent deposits received customers trading exchangetraded commodity instruments securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued receivables company records trade accounts receivable net realizable value includes appropriate allowance estimated uncollectible accounts 103 million 89 million june 30 2009 2008 respectively reflect loss anticipated trade accounts receivable balances company calculates allowance based history writeoffs level pastdue accounts relationships economic status customers credit risk trade receivables minimized result large diversified nature company’s worldwide customer base company controls exposure counter party credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s trade receivables trade accounts receivable due unconsolidated affiliates june 30 2009 2008 301 million 199 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market marketable securities company classifies marketable securities availableforsale except certain designated securities classified trading securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component comprehensive income unrealized gains losses related trading securities included income current basis company uses specific identification method securities sold reclassified accumulated comprehensive income earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 40 years machinery equipment 3 30 years asset abandonments writedowns company recorded 13 million 32 million 21 million charge cost products sold 2009 2008 2007 respectively principally related abandonment writedown certain longlived assets majority assets idle related underperforming product lines decision abandon writedown finalized consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value writedowns carrying value assets immaterial archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued net sales company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates 2009 2008 2007 73 billion 85 billion 37 billion respectively stock compensation company recognizes expense sharebased compensation based fair value awards granted company’s sharebased compensation plans provide granting restricted stock restricted stock units restricted stock awards stock options fair value stock options estimated date grant using blackscholes option valuation model requires input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related sharebased compensation award research development costs associated research development expensed incurred costs incurred 50 million 49 million 45 million years ended june 30 2009 2008 2007 respectively per share data basic earnings per common share determined dividing net earnings weighted average number common shares outstanding computing diluted earnings per share weighted average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares 2009 2008 2007 diluted average shares outstanding included incremental shares related outstanding common stock options 1 million 2 million 5 million respectively new accounting standards december 2007 financial accounting standards board fasb issued statement financial accounting standards sfas 141r business combinations sfas 141r sfas 141r replaces sfas 141 business combinations change financial accounting reporting business combination transactions sfas 141r requires recognizing certain exceptions 100 percent fair values assets acquired liabilities assumed noncontrolling interests acquisitions less 100 percent controlling interest acquisition constitutes change control acquired entity measuring acquirer shares issued contingent consideration arrangements connection business combination fair value acquisition date subsequent changes fair value reflected earnings expensing incurred acquisitionrelated transaction costs april 2009 fasb issued fasb staff position fsp fas 141r1 amends sfas 141r establishing model account certain preacquisition contingencies fsp acquirer required recognize fair value asset acquired liability assumed business combination arises contingency acquisitiondate fair value asset liability determined measurement period acquisitiondate fair value cannot determined acquirer follow recognition criteria sfas 5 accounting contingencies fasb interpretation 14 reasonable estimation amount loss interpretation fasb statement 5 company required adopt sfas 141r fsp fas 141r1 july 1 2009 apply prospectively business combinations completed date impact adoption sfas 141r fsp fas 141r1 depend nature acquisitions completed date adoption archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued december 2007 fasb issued sfas 160 accounting reporting noncontrolling interests consolidated financial statements amendment arb 51 sfas 160 sfas 160 establishes accounting reporting standards noncontrolling interest subsidiary deconsolidation subsidiary also amends consolidation procedures accounting research bulletin 51 consolidated financial statements arb 51 consistency requirements sfas 141r company required adopt sfas 160 july 1 2009 apply prospectively except presentation disclosure requirements apply retrospectively company believes adoption sfas 160 material impact consolidated financial statements may 2008 fasb issued fsp accounting principles board apb opinion 141 accounting convertible debt instruments may settled cash upon conversion including partial cash settlement fsp apb 141 fsp apb 141 addresses accounting convertible debt securities upon conversion may settled issuer fully partially cash previously forms convertible debt securities treated solely debt fsp issuers convertible debt securities within scope must separate securities two accounting components debt component representing issuer’s contractual obligation pay principal interest equity component representing holder’s option convert debt security equity issuer elects equivalent amount cash company required adopt fsp apb 141 july 1 2009 connection outstanding convertible debt must apply retrospectively past periods presented even instrument matured converted otherwise extinguished fsp’s effective date upon adoption fsp apb 141 company record debt discount equivalent fair value embedded equity conversion feature july 1 2009 thereby reducing long term debt 208 million increasing shareholders’ equity 128 million debt discount amortized seven year term convertible debt using effective interest rate method increasing annual interest expense approximately 13 million fiscal year 2007 37 million 48 million fiscal years 2008 2013 31 million fiscal year 2014 june 2008 fasb issued fsp emerging issues task force eitf 0361 determining whether instruments granted sharebased payment transactions participating securities fsp eitf 0361 fsp eitf 0361 addresses whether instruments granted sharebased payment transactions participating securities prior vesting therefore need included earnings allocation computing earnings per share eps twoclass method fsp clarifies outstanding unvested sharebased payment awards contain rights nonforfeitable dividends participate undistributed earnings common shareholders considered participating securities issuing entity required apply twoclass method computing basic diluted eps company required adopt fsp eitf 0361 july 1 2009 adoption fsp eitf 0361 material impact company’s consolidated financial statements december 2008 fasb issued fsp fas 132r1 employers’ disclosures postretirement benefit plan assets amendment fasb statement 132r fsp fas 132r1 fsp fas 132r1 expands disclosure requirements sfas 132r employers’ disclosures pensions postretirement benefits sfas 132r fsp fas 132r1 requires entities disclose investment policies strategies major categories plan assets fair value measurements major category plan assets segregated fair value hierarchy level defined sfas 157 fair value measurements sfas 157 effect fair value measurements using level 3 inputs changes plan assets period significant concentrations risk within plan assets company required adopt fsp fas 132r1 june 30 2010 adoption standard require expanded disclosure notes company’s consolidated financial statements impact financial results archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued april 2009 fasb issued three fsps intended provide additional application guidance enhance disclosures fair value measurements impairments securities fsp fas 1574 determining whether market active transaction distressed fsp fas 1574 clarifies objective method fair value measurement even significant decrease market activity asset measured fsp fas 1152 fas 1242 recognition presentation otherthantemporary impairments fsp fas 1152 fas 1242 establishes new model measuring otherthantemporary impairments debt securities including establishing criteria recognize writedown debt securities earnings versus comprehensive income fsp fas 1071 apb 281 interim disclosures fair value financial instruments fsp fas 1071 apb 281 expands fair value disclosures required financial instruments within scope sfas 107 disclosures fair value financial instruments interim periods addition annual periods proposal also amends apb opinion 28 interim financial reporting require disclosures interim financial statements fsp fas 1071 apb 281 requires company expand disclosure notes company’s interim consolidated financial statements impact financial results company adopted fsps june 30 2009 may 2009 fasb issued sfas 165 subsequent events sfas 165 sfas 165 establishes evaluation principles disclosure requirements subsequent events upon implementation sfas 165 entity required disclose date subsequent events evaluated well whether date financial statements issued date financial statements available issued company evaluated events occurring end recent fiscal year date financial statements issued june 2008 fasb issued sfas 167 amendments fasb interpretation fin 46r sfas 167 sfas 167 changes reporting entity determines entity insufficiently capitalized controlled voting similar rights consolidated determination whether reporting entity required consolidate another entity based among things entity’s purpose design reporting entity’s ability direct activities entity significantly impact entity’s economic performance sfas 167 require number new disclosures including disclosures reporting entity’s involvement variable interest entities significant changes risk exposure due involvement reporting entity required disclose involvement variable interest entity affects reporting entity’s financial statements company required adopt sfas 167 july 1 2010 yet assessed impact adoption standard company’s financial statements note 2 acquisitions company’s 2009 2008 2007 acquisitions accounted purchases accordance sfas 141 business combinations accordingly tangible assets liabilities adjusted fair values remainder purchase price recorded goodwill identifiable intangible assets acquired part acquisitions material archer daniels midland company notes consolidated financial statements continued note 2 acquisitions continued 2009 acquisitions 2009 company acquired ten businesses total cost 198 million recorded preliminary allocation purchase price related acquisitions purchase price allocations resulted goodwill 31 million purchase price 198 million allocated current assets property plant equipment longterm assets liabilities 176 million 82 million 111 million 171 million respectively 2008 acquisitions 2008 company acquired six businesses total cost 15 million paid 2 million company stock 13 million cash final purchase price allocations resulted goodwill 5 million purchase price 15 million allocated current assets property plant equipment longterm assets liabilities 14 million 10 million 5 million 14 million respectively 2007 acquisitions 2007 company acquired seven businesses total cost 103 million one acquisitions resulted obtaining remaining outstanding shares unconsolidated affiliate company held 50 interest company recorded goodwill 5 million related acquisitions cash purchase price 103 million plus 100 million carrying value previously unconsolidated affiliate allocated current assets property plant equipment current liabilities debt 82 million 206 million 33 million 52 million respectively note 3 fair value measurements effective july 1 2008 company adopted sfas 157 establishes framework measuring fair value clarifies definition fair value within framework sfas 157 defines fair value exit price would received asset paid transfer liability company’s principal advantageous market asset liability orderly transaction market participants measurement date fair value hierarchy established sfas 157 generally requires entity maximize use observable inputs minimize use unobservable inputs measuring fair value observable inputs reflect assumptions market participants would use pricing asset liability developed based market data obtained sources independent reporting entity unobservable inputs reflect entity’s assumptions based market data entity’s judgments assumptions market participants would use pricing asset liability developed based best information available circumstances october 2008 fasb issued fsp fas 1573 determining fair value financial asset market active clarifies active market exist may appropriate use unobservable inputs determine fair value company determines fair market value certain inventories agricultural commodities derivative contracts marketable securities based fair value definition hierarchy levels established sfas 157 sfas 157 establishes three levels within hierarchy may used measure fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 1 assets liabilities include exchangetraded derivative contracts us treasury securities certain publicly traded equity securities archer daniels midland company notes consolidated financial statements continued note 3 fair value measurements continued level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation following table sets forth level company’s assets liabilities accounted fair value recurring basis june 30 2009 pursuant fsp fas 1572 effective date fasb statement 157 company delayed adoption sfas 157 nonfinancial assets liabilities recognized nonrecurring basis including goodwill intangible assets asset retirement obligations july 1 2009 many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification assets liabilities within fair value hierarchy levels archer daniels midland company notes consolidated financial statements continued note 3 fair value measurements continued company uses market approach valuation technique measure majority assets liabilities carried fair value estimated fair market values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets cases inventory classified level 2 certain inventories may require management judgment estimation significant component fair value amount cases inventory classified level 3 changes fair market value inventories recognized consolidated statements earnings component cost products sold company’s derivative contracts measured fair value include forward commodity purchase sale contracts exchangetraded commodity futures option contracts otc instruments related primarily agricultural commodities energy foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cash settled daily basis therefore included table fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term asset liability derivative contracts classified level 2 unobservable inputs significant impact measurement fair value contract’s fair value classified level 3 based historical experience company’s suppliers customers company’s credit risk company’s knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however situations company believes nonperformance risk significant input company records estimated fair value adjustments classifies contracts level 3 fair value hierarchy changes fair market value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair market value foreign currencyrelated derivatives recognized consolidated statements earnings component net sales operating income cost products sold income expensenet effective portions changes fair market value derivatives designated cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income hedged items recorded earnings company’s availableforsale securities comprised us treasury securities obligations us government agencies corporate municipal debt securities equity investments us treasury securities certain publicly traded equity investments valued using quoted market prices classified level 1 us government agency obligations corporate municipal debt securities certain equity investments valued using thirdparty pricing services substantially classified level 2 security values determined using pricing models classified level 3 unrealized changes fair market value availableforsale marketable securities recognized consolidated balance sheets component accumulated comprehensive income unless decline value deemed temporary point decline recorded earnings company’s assessment significance particular input fair value measurement requires judgment may affect classification assets liabilities within fair value hierarchy archer daniels midland company notes consolidated financial statements continued note 3 fair value measurements continued following table presents reconciliation assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 year ended june 30 2009 includes unrealized losses 35 million attributable change level 3 derivative assets still held june 30 2009 unrealized losses 76 million attributable change level 3 inventories carried market still held june 30 2009 note 4 inventories derivative instruments hedging activities company values certain inventories using lower cost determined either lifo fifo method market 2009 reductions certain lifo inventory quantities resulted liquidations previously established lifo cost layer thereby decreasing impact lifo valuation reserve adjustment earnings 13 million income tax archer daniels midland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued sfas 133 accounting derivatives hedging activities sfas 133 requires company recognize derivative instruments either assets liabilities consolidated balance sheet fair value accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship derivative instruments designated qualify hedging instruments company must designate hedging instrument based upon exposure hedged fair value hedge cash flow hedge net investment foreign operation company currently derivatives designated fair value hedges derivatives designated hedges net investment foreign operations company certain derivatives designated cash flow hedges however majority company’s derivatives designated hedging instruments derivatives designated hedging instruments sfas 133 reduce price risk caused market fluctuations agricultural commodities foreign currencies company generally follows policy using exchangetraded futures exchangetraded overthecounter otc options contracts minimize net position merchandisable agricultural commodity inventories forward cash purchase sales contracts foreign exchange risk company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets exchangetraded futures exchangetraded otc options contracts forward cash purchase sales contracts certain merchandisable agricultural commodities valued fair value inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore included tables changes market value inventories merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately resulting cost products sold approximating fifo cost unrealized gains unrealized losses forward cash purchase contracts forward foreign currency exchange fx contracts forward cash sales contracts exchangetraded otc options contracts represent fair value instruments classified company’s consolidated balance sheet receivables accrued expenses respectively following table sets forth fair value derivatives designated hedging instruments sfas 133 june 30 2009 archer daniels midland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments sfas 133 included consolidated statement earnings six months ended june 30 2009 following adoption sfas 161 disclosures derivative instruments hedging activities amendment fasb statement 133 sfas 161 january 1 2009 derivatives designated cash flow hedging strategies derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk effective portion gain loss derivative instrument reported component comprehensive income oci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings remaining gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period hedging programs described derivatives designated cash flow hedges changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified accumulated comprehensive income aoci either net sales operating income cost products sold june 30 2009 company 25 million aftertax losses aoci related gains losses commodity cash flow hedge transactions company expects recognize aftertax losses statement earnings next 18 months current period company amounts recognized earnings cash flow hedges discontinued archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued company time uses futures options contracts fix purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants grind approximately 60 million bushels corn per month finished goods produced corn grind sold fixed prices many finished goods unable hedged company fix purchase price corn used thereby economically protecting margin finished goods sales past 12 months company hedged 25 95 monthly anticipated grind june 30 2009 company hedged portions anticipated monthly purchases corn next 18 months ranging 1 50 anticipated monthly grind company time also uses futures options swaps fix purchase price company’s anticipated natural gas requirements certain production facilities objective hedging program reduce variability cash flows associated company’s forecasted purchases natural gas production facilities use approximately 35 million mmbtus natural gas per month past 12 months company hedged 18 65 quantity anticipated monthly natural gas purchases june 30 2009 company hedged portions anticipated monthly purchases natural gas next 12 months ranging 4 60 anticipated monthly natural gas purchases protect fluctuations cash flows due changes foreign currency exchange rates company time use forward foreign exchange contracts banks foreign currency cash flow hedge programs certain production facilities manufacturing expenses sales contracts denominated nonfunctional currency reduce risk fluctuations cash flows due changes exchange rate functional versus nonfunctional currency company hedge portion forecasted foreign currency expenditures andor receipts fair value foreign exchange contracts designated cash flow hedging instruments june 30 2009 immaterial june 30 2009 aoci included 12 million aftertax gains related treasurylock agreements interest rate swaps instruments executed order lock company’s interest rate prior issuance remarketing debentures treasury lock agreements interest rate swaps designated cash flow hedges risk changes future interest payments attributable changes benchmark interest rate objective hedges protect company changes benchmark date company decided issue debt date debt actually issued company recognize 12 million gains consolidated statement earnings terms hedged items archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments sfas 133 june 30 2009 following table sets forth pretax gains losses derivatives designated hedging instruments sfas 133 included consolidated statement earnings six months ended june 30 2009 following adoption sfas 161 consolidated statement earnings location amount millions fx contracts effective amount recognized earnings income expense net 1 commodity contracts effective amount recognized earnings cost products sold 293 net sales operating income ineffective amount recognized earnings cost products sold 9 total amount recognized earnings 287 archer daniels midland company notes consolidated financial statements continued note 5 marketable securities cash equivalents description changed conform current year classification archer daniels midland company notes consolidated financial statements continued note 5 marketable securities cash equivalents continued 33 million unrealized losses june 30 2009 7 million arose within last 12 months market value investments unrealized loss position less 12 months 12 months longer 215 million 34 million respectively market value united states government obligations governmentsponsored enterprise obligations debt securities unrealized losses june 30 2009 210 million 4 million unrealized losses associated united states government obligations government sponsored enterprise obligations debt securities considered otherthantemporary present value expected cash flows collected equivalent exceeds amortized cost basis securities market value availableforsale equity securities unrealized losses june 30 2009 39 million 29 million unrealized losses associated availableforsale equity securities 25 million related company’s investment one security june 2009 company recognized 18 million otherthantemporary impairment related investment availableforsale equity security based company’s assessment underlying market conditions company intend sell impaired debt equity securities based upon evaluation company believe likely company required sell investments recovery amortized cost bases note 6 investments advances affiliates company applies equity method investments investees company ability exercise significant influence company 72 80 unconsolidated affiliates june 30 2009 2008 respectively located north south america africa europe asia following table summarizes combined balance sheets june 30 2009 2008 combined statements earnings company’s unconsolidated affiliates three years ended june 30 2009 2008 2007 undistributed earnings company’s unconsolidated affiliates june 30 2009 938 million company limited partner various private equity funds carrying value june 30 2009 83 million company future capital commitments related partnerships 114 million june 30 2009 company direct investment two foreign affiliates carrying value 963 million june 30 2009 market value 31 billion based quoted market prices exchange rates august 26 2009 archer daniels midland company notes consolidated financial statements continued note 6 investments advances affiliates continued company provides credit facilities totaling 175 million three unconsolidated affiliates one facility due demand bears interest equal monthly average commercial paper rate applicable company’s commercial paper borrowing facility second facility matures december 31 2011 bears interest one month libor rate third facility fixed maturity date repayable within 90 days advance bears interest libor plus one percent outstanding advances credit facilities 50 million june 30 2009 included receivables accompanying consolidated balance sheet 2007 company sold 28 ownership interest agricore united cash 321 million recognized gain 153 million june 2007 company exchanged ownership interests eleven asian joint venture companies shares wilmar international limited wil singapore publicly listed company exchange ownership interests joint ventures company received 366 million wil shares fair value 756 million immediately prior exchange carrying value company’s interests joint ventures exchanged wil shares 231 million company recognized 286 million aftertax gain 2007 related exchange transaction gain represents difference fair value wil shares received carrying value company’s interests joint ventures exchanged wil shares less elimination portion gain representing company’s retained direct indirect ownership interests wil 2008 company finalized accounting exchange using purchase method accounting result company reduced investment wil recorded goodwill 176 million company accounts direct indirect interests wil using equity method accounting due ability exercise significant influence wil note 7 goodwill company accounts goodwill intangible assets accordance sfas 142 goodwill intangible assets standard goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company recorded 6 million goodwill impairment charge 2009 goodwill impairment 2008 changes goodwill 2009 related acquisitions investment joint venture foreign currency translation adjustments carrying value company’s intangible assets material goodwill balances attributable consolidated businesses investments affiliates segment set forth following table archer daniels midland company notes consolidated financial statements continued note 8 debt financing arrangements archer daniels midland company notes consolidated financial statements continued note 8 debt financing arrangements continued fiscal year 2008 company issued 310 billion additional longterm debt including 500 million debentures issued december 2007 700 million notes issued march 2008 175 billion debentures issued june 2008 debentures connection issuance debentures june 2008 company issued 175 billion equity units equity units combination debt forward purchase contract holder purchase company’s common stock debt equity instruments deemed separate instruments investor may transfer settle equity instrument separately debt instrument forward purchase contract obligate buyer purchase company later june 1 2011 price 50 cash following number shares company’s common stock subject antidilution adjustments • “applicable market value” amv company’s common stock average closing price company’s common stock 20trading day period ending third trading day prior june 1 2011 equals exceeds 4783 10453 shares company’s common stock • amv less 4783 greater 3986 number shares company’s common stock value based amv equal 50 • amv less equal 3986 12544 shares company’s common stock debentures bear interest rate 470 per year payable quarterly due june 1 2041 debentures remarketed 2011 remarketing successful interest rate debentures reset thereafter interest payable semiannually reset rate addition following successful remarketing company may modify certain terms debentures including adjusting frequency interest payments adjusting ranking debentures changing stated maturity successful remarketing interest rate debentures reset holder equity unit right put interest debentures company june 1 2011 put price equal 100 principal amount plus accrued unpaid interest proceeds put right deemed applied holder’s obligations forward purchase contracts company also pay equity unit holder quarterly contract adjustment payments rate 155 per year stated amount 50 per equity unit 0775 per year present value future contract adjustment payments 75 million paid three years date issuance recorded reduction shareholders’ equity company also recorded 35 million decrease shareholders’ equity issuance costs related equity portion equity units remaining issuance costs allocated debt recognized earnings life debt forward purchase contracts issued connection issuance debentures june 2008 settled company’s common stock june 1 2011 settlement forward purchase contract shares stock underlying forward purchase contract outstanding forward purchase contracts included computation diluted earnings per share extent dilutive june 30 2009 forward purchase contracts considered dilutive therefore included computation diluted earnings per share basic earnings per share affected forward purchase contracts settled holders thereof become stockholders archer daniels midland company notes consolidated financial statements continued note 8 debt financing arrangements continued february 2007 company issued 115 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually notes convertible based conversion rate 228423 shares per 1000 principal amount notes equal conversion price approximately 4378 per share notes may converted subject adjustment following circumstances 1 calendar quarter beginning march 31 2007 closing price company’s common stock least 20 trading days 30 consecutive trading days ending last trading day immediately preceding quarter 140 applicable conversion price per share 1000 divided applicable conversion rate 2 five consecutive business day period immediately five consecutive trading day period note measurement period average trading price per 1000 principal amount notes equal less 98 average product closing price company’s common stock conversion rate date note measurement period 3 company makes specified distributions common stockholders specified corporate transactions occur 4 time january 15 2014 business day preceding maturity date upon conversion holder would receive amount cash equal lesser 1 1000 2 conversion value defined conversion value exceeds 1000 company deliver company’s election cash common stock combination cash common stock conversion value excess 1000 notes converted connection change control defined company may required provide makewhole premium form increase conversion rate subject stated maximum amount addition event change control holders may require company purchase portion notes purchase price equal 100 principal amount notes plus accrued unpaid interest concurrent issuance notes company purchased call options private transactions cost 299 million purchased call options allow company receive shares common stock andor cash counterparties equal amounts common stock andor cash related excess current market price company’s common stock exercise price purchased call options addition company sold warrants private transactions acquire subject customary antidilution adjustments 263 million shares common stock exercise price 6256 per share received proceeds 170 million average price company’s common stock defined period ending respective settlement dates exceeds exercise price warrants settled company’s option cash shares common stock purchased call options warrants intended reduce potential dilution upon future conversions notes effectively increasing initial conversion price 6256 per share net cost purchased call options warrant transactions 130 million recorded reduction shareholders’ equity company also recorded 114 million increase shareholders’ equity deferred tax asset recognized related purchased call options upon closing sale notes 370 million net proceeds note issuance proceeds warrant transactions used repurchase 103 million shares company’s common stock company’s stock repurchase program june 30 2009 none conditions permitting conversion notes satisfied addition june 30 2009 market price company’s common stock greater exercise price purchased call options warrants june 30 2009 share amounts related conversion notes exercise warrants included diluted average shares outstanding archer daniels midland company notes consolidated financial statements continued note 8 debt financing arrangements continued june 30 2009 fair value company’s longterm debt exceeded carrying value 303 million estimated using quoted market prices discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements aggregate maturities longterm debt five years june 30 2009 48 million 328 million 151 million 268 million 1215 million respectively june 30 2009 company pledged certain property plant equipment carrying value 340 million security certain longterm debt obligations june 30 2009 company lines credit totaling 66 billion 65 billion unused weighted average interest rates shortterm borrowings outstanding june 30 2009 2008 286 283 respectively company’s total lines credit 42 billion support commercial paper borrowing facility borrowings june 30 2009 company outstanding standby letters credit surety bonds june 30 2009 2008 totaling 398 million 500 million respectively note 9 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock without par value preferred stock issued june 30 2009 2008 company approximately 300 million 278 million shares respectively treasury stock 765 million june 30 2009 719 million june 30 2008 recorded cost reduction common stock company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 1999 incentive compensation plan 2002 incentive compensation plan options issued market value date grant vest incrementally five nine years expire ten years date grant company’s 1999 2002 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees awards made common stock units equivalent rights vest end threeyear restriction period 2009 2008 2007 11 million 13 million 11 million common shares units respectively granted restricted stock awards june 30 2009 15 million 35 million shares available future grants pursuant 1999 2002 plans respectively compensation expense option grants restricted stock awards granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirement eligible employees recognized earnings date grant total compensation expense option grants restricted stock awards recognized 2009 2008 2007 65 million 70 million 70 million respectively archer daniels midland company notes consolidated financial statements continued note 9 shareholders’ equity continued fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows summary option activity 2009 presented weightedaverage remaining contractual term options outstanding exercisable june 30 2009 7 years 6 years respectively aggregate intrinsic value options outstanding exercisable june 30 2009 8 million 10 million respectively weightedaverage grantdate fair values options granted 2009 2008 2007 781 1260 1642 respectively total intrinsic values options exercised 2009 2008 2007 17 million 34 million 41 million respectively cash proceeds received options exercised 2009 2008 2007 11 million 20 million 20 million respectively june 30 2009 33 million total unrecognized compensation expense related option grants amounts recognized compensation expense next five fiscal years 14 million 10 million 6 million 2 million 1 million respectively archer daniels midland company notes consolidated financial statements continued note 9 shareholders’ equity continued fair value restricted stock awards determined based market value company’s shares grant date weightedaverage grantdate fair values awards granted 2009 2008 2603 3445 respectively summary restricted stock awards activity 2009 presented june 30 2009 19 million total unrecognized compensation expense related restricted stock awards amounts recognized compensation expense next three fiscal years 13 million 5 million 1 million respectively total fair value restricted stock awards vested 2009 49 million archer daniels midland company notes consolidated financial statements continued note 10 accumulated comprehensive income following table sets forth information respect accumulated comprehensive income archer daniels midland company notes consolidated financial statements continued note 11 income expense net interest expense net interest capitalized 95 million 52 million 24 million 2009 2008 2007 respectively company made interest payments 522 million 485 million 425 million 2009 2008 2007 respectively realized gains sales availableforsale marketable securities totaled 17 million 39 million 394 million 2009 2008 2007 respectively annual realized losses sales availableforsale marketable securities 1 million 2009 2008 2007 impairment losses securities totaled 22 million 2009 note 12 income taxes financial reporting purposes earnings income taxes include following components archer daniels midland company notes consolidated financial statements continued note 12 income taxes continued reconciliation statutory federal income tax rate company’s effective tax rate earnings follows company made income tax payments 10 billion 859 million 794 million 2009 2008 2007 respectively archer daniels midland company notes consolidated financial statements continued note 12 income taxes continued company 55 million 69 million tax assets net operating loss carryforwards related certain international subsidiaries june 30 2009 2008 respectively june 30 2009 approximately 48 million assets expiration date remaining 7 million expire various times fiscal 2018 annual usage certain assets limited percentage taxable income respective international subsidiary year company recorded valuation allowance 51 million 60 million tax assets june 30 2009 2008 respectively due uncertainty realization company also 38 million tax assets related excess foreign tax credits begin expire fiscal 2013 12 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal benefit expire various times fiscal 2015 company recorded valuation allowance 11 million excess foreign tax credits june 30 2009 due uncertainty realization company recorded valuation allowance state income tax assets 2 million june 30 2009 june 30 2008 company 24 million valuation allowance recorded related excess foreign tax credits 1 million valuation allowance related state income tax incentive credits due uncertainty realization company remains subject examination us calendar tax years 2007 2008 2009 undistributed earnings company’s foreign subsidiaries affiliated corporate joint venture companies accounted equity method amounting approximately 6 billion june 30 2009 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings 2009 approximately 158 million income tax expense incurred related company’s investment wilmar international holdings limited wihl subsidiary adm asia pacific limited admap whollyowned subsidiary company wihl admap holds indirect ownership interest wilmar international ltd wil historically company considered retained earnings investment admap permanently reinvested outside us therefore company provided deferred tax liability associated undistributed earnings investment prior third quarter 2009 february 3 2009 shareholders wihl approved plan voluntary liquidation followed partial liquidating distribution april 1 2009 pursuant distribution admap received publicly traded shares wil represented approximately 40 wil shares indirectly held wihl liquidation caused difference market value wil shares received tax basis admap’s investment wihl subject us income tax deemed distribution admap company consequently march 31 2009 company concluded portion investment admap related investment wihl permanently reinvested accordingly company recorded approximately 97 million income tax expense deferred income tax liability third quarter 2009 reflect booktax basis difference investment wihl march 31 2009 april 1 2009 income tax gain generated partial liquidating distribution wihl triggered additional us income tax expense approximately 61 million recorded company’s fourth quarter 2009 established new tax basis us company’s wihl investment finalization liquidation process expected take 15 months contingent certain regulatory approvals ultimate impact transaction uncertain based august 26 2009 market value wil shares certain assumptions including applicable foreign currency exchange rate us income tax rate finalization liquidation could result additional income tax expense company approximately 560 million periods occurs archer daniels midland company notes consolidated financial statements continued note 12 income taxes continued company adopted provisions fin 48 effective july 1 2007 fin 48 clarifies accounting income tax positions prescribing minimum threshold tax position required meet recognized consolidated financial statements interpretation requires company recognize consolidated financial statements tax positions determined likely sustained upon examination based technical merits position upon adoption fin 48 material changes required taken account income statement balance sheet company total amounts unrecognized tax benefits june 30 2008 2009 follows additions reductions unrecognized tax benefits shown table include effects related net income shareholders’ equity timing differences ultimate deductibility highly certain uncertainty timing deductibility 2009 changes unrecognized tax benefits material effect company’s net income cash flow company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits required recognized company one time would positive impact 33 million tax expense period company classifies interest income tax related balances interest expense interest income classifies taxrelated penalties selling general administrative expenses june 30 2009 2008 company accrued interest penalties unrecognized tax benefits 22 million 175 million respectively archer daniels midland company notes consolidated financial statements continued note 13 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2026 rent expense 2009 2008 2007 217 million 201 million 166 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows note 14 employee benefit plans company provides substantially domestic employees certain international subsidiaries pension benefits eligible domestic employees five years service prior january 1 2009 participate defined benefit pension plan eligible domestic employees hired january 1 2009 eligible salaried employees less five years service prior january 1 2009 participate “cash balance” pension formula company provides eligible domestic employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage company also maintains 401k plans covering substantially domestic employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest adm stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 173 million shares company common stock june 30 2009 market value 462 million cash dividends received shares company common stock plans year ended june 30 2009 9 million archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued company historically used march 31 measurement date july 1 2008 company adopted measurement date provisions sfas 158 employers’ accounting defined benefit pension postretirement plans amendment fasb statements 87 88 106 132r sfas 158 sfas 158 requires companies measure funded status defined benefit postretirement plans end fiscal year instead date three months prior end fiscal year result company recorded decrease retained earnings 21 million net tax increase accumulated comprehensive income 2 million net tax representing periodic benefit cost period april 1 2008 june 30 2008 company uses june 30 measurement date substantially defined benefit plans following tables set forth changes defined benefit obligation fair value defined benefit plan assets archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued included accumulated comprehensive income pension benefits june 30 2009 following amounts yet recognized net periodic pension cost unrecognized transition obligation 4 million unrecognized prior service costs 32 million unrecognized actuarial losses 753 million prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost fiscal year ended june 30 2010 5 million 31 million respectively included accumulated comprehensive income postretirement benefits june 30 2009 following amounts yet recognized net periodic pension cost unrecognized prior service credit 7 million unrecognized actuarial losses 77 million prior service credit actuarial loss included accumulated comprehensive income expected recognized net periodic benefit costs fiscal year ended june 30 2010 1 million 5 million respectively following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 19 billion 17 billion 13 billion respectively june 30 2009 12 billion 12 billion 10 billion respectively june 30 2008 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 16 billion 15 billion 11 billion respectively june 30 2009 484 million 474 million 282 million respectively june 30 2008 accumulated benefit obligation pension plans june 30 2009 2008 18 billion 17 billion respectively postretirement benefit measurement purposes 85 annual rate increase per capita cost covered health care benefits assumed 2009 rate assumed decrease gradually 50 2016 remain level thereafter assumed health care cost trend rates significant impact amounts reported health care plans 1 change assumed health care cost trend rates would following effect archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued plan assets following table sets forth actual asset allocation company’s global pension plan assets measurement date company’s us pension plans contain approximately 62 company’s global pension plan assets target asset allocation company’s us pension plans consists 60 equity securities 30 debt securities 10 real estate actual asset allocation us pension plans measurement date consists 58 equity securities 33 debt securities 9 real estate actual asset allocation company’s foreign pension plans measurement date consists 32 equity securities 66 debt securities 2 investments target asset allocation company’s foreign pension plans approximately actual asset allocation company’s pension plans held 30 million shares company common stock measurement date june 30 2009 market value 81 million cash dividends received shares company common stock plans twelvemonth period ended june 30 2009 17 million investment objectives company’s plan assets · optimize longterm return plan assets acceptable level risk · maintain broad diversification across asset classes among investment managers · maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued external consultants monitor investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets expected longterm rate return assumption used computing 2009 net periodic pension cost pension plans 72 contributions expected future benefit payments company expects contribute 38 million pension plans 8 million postretirement benefit plan 2010 following benefit payments reflect expected future service expected paid note 15 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations aggregated classified archer daniels midland company notes consolidated financial statements continued note 15 segment geographic information continued oilseeds processing segment includes activities related crushing origination oilseeds soybeans cottonseed sunflower seeds canola rapeseed peanuts flaxseed vegetable oils protein meals principally food feed industries addition oilseeds oilseed products may processed internally resold marketplace raw materials processing crude vegetable oil sold processed refining bleaching deodorizing salad oils salad oils processed hydrogenating andor interesterifying margarine shortening food products partially refined oil sold use paints industrial products refined oil processed use production biodiesel oilseed meals primary ingredients used manufacture commercial livestock poultry feeds oilseeds processing includes activities related production natural health nutrition products production specialty food feed ingredients segment also includes activities related company’s interests unconsolidated affiliate asia wilmar international limited corn processing segment includes activities related production sweeteners starches dextrose syrups primarily food beverage industry well activities related production fermentation bioproducts ethanol amino acids food feed industrial products agricultural services segment utilizes company’s extensive grain elevator transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients agricultural processing industry addition agricultural services’ segment includes activities related edible bean procurement rice milling formula feed animal health nutrition agricultural services’ grain sourcing transportation network also provides reliable efficient services company’s agricultural processing operations also included agricultural services activities ac toepfer international global merchant agricultural commodities processed products includes company’s remaining processing operations consisting activities related processing agricultural commodities food ingredient products wheat flour cocoa chocolate cocoa products barley malt sugarcane sugar ethanol also includes financial activities related banking captive insurance private equity fund investments futures commission merchant activities intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses including interest charge related working capital usage also included segment operating profit equity earnings affiliates based equity method accounting unallocated corporate expenses investment income unallocated interest expense marketable securities transactions fifo lifo inventory adjustments minority interest eliminations excluded segment operations classified corporate archer daniels midland company notes consolidated financial statements continued note 15 segment geographic information continued segment information archer daniels midland company notes consolidated financial statements continued note 15 segment geographic information continued archer daniels midland company notes consolidated financial statements continued note 15 segment geographic information continued geographic information following geographic area data include net sales operating income attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent sum net book value property plant equipment plus goodwill related consolidated businesses note 16 guarantees commitments company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 137 million june 30 2009 amounts outstanding primary entity contingent obligations 82 million june 30 2009 fiscal year 2009 company construction new ethanol propyleneethylene glycol pha cocoa production facilities two cogeneration facilities june 30 2009 company entered purchase commitments totaling 252 million third parties related construction facilities archer daniels midland company notes consolidated financial statements continued note 17 quarterly financial data unaudited net earnings second quarter ended december 31 2008 third quarter ended march 31 2009 fourth quarter year ended june 30 2009 include charges income 51 million 32 million tax equal 005 per share 212 million 132 million tax equal 021 per share 12 million 7 million tax equal 001 per share 275 million 171 million tax equal 027 per share respectively related equity losses resulting currency derivative losses company’s investee gruma sab de cv net earnings third quarter ended march 31 2009 fourth quarter year ended june 30 2009 include income tax charges 97 million 015 per share 61 million 009 per share 158 million 024 per share respectively resulting reorganization holding company structure company holds portion equity investment wilmar international limited report independent registered public accounting firm board directors shareholders archer daniels midland company decatur illinois audited accompanying consolidated balance sheets archer daniels midland company june 30 2009 2008 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2009 audits also included financial statement schedule listed index item 15a financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archer daniels midland company june 30 2009 2008 consolidated results operations cash flows three years period ended june 30 2009 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein also audited accordance standards public company accounting oversight board united states archer daniels midland company’s internal control financial reporting june 30 2009 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission report dated august 26 2009 expressed unqualified opinion thereon ernst young llp st louis missouri august 26 2009 report independent registered public accounting firm board directors shareholders archer daniels midland company decatur illinois audited archer daniels midland company’s internal control financial reporting june 30 2009 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso criteria archer daniels midland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion archer daniels midland company maintained material respects effective internal control financial reporting june 30 2009 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archer daniels midland company june 30 2009 2008 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2009 archer daniels midland company report dated august 26 2009 expressed unqualified opinion thereon ernst young llp st louis missouri august 26 2009 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archer daniels midland company consolidated statements earnings see notes consolidated financial statements archer daniels midland company consolidated balance sheets see notes consolidated financial statements archer daniels midland company consolidated statements cash flows see notes consolidated financial statements archer daniels midland company consolidated statements shareholders’ equity see notes consolidated financial statements archer daniels midland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements june 30 2010 three years ended include accounts company majorityowned subsidiaries significant intercompany accounts transactions eliminated investments affiliates carried cost plus equity undistributed earnings since acquisition adjusted appropriate amortizable basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain majorityowned subsidiaries included using recent available financial statements case financial statements within 93 days company’s year end consistent period company evaluates consolidates appropriate less majorityowned investments pursuant financial accounting standards board fasb accounting standards codification asc topic 810 consolidation use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassifications certain items prior years’ consolidated statements cash flows reclassified conform current year’s presentation impact total cash provided used operating investing financing activities addition certain items prior years’ consolidated statements shareholders’ equity reclassified conform current year’s presentation cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance certain regulatory requirements commodity exchange requirements insurance arrangements segregated balances represent deposits received customers trading exchangetraded commodity instruments securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued receivables company records trade accounts receivable net realizable value includes allowance estimated uncollectible accounts 97 million 103 million june 30 2010 2009 respectively reflect loss anticipated trade accounts receivable balances company calculates allowance based history writeoffs level pastdue accounts relationships economic status customers credit risk trade receivables minimized result large diversified nature company’s worldwide customer base company controls exposure counter party credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s trade receivables trade accounts receivable due unconsolidated affiliates june 30 2010 2009 304 million 301 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market marketable securities company classifies marketable securities availableforsale except certain designated securities classified trading securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component comprehensive income company monitors investments impairment periodically recognizes impairment charge decline fair value investment judged otherthantemporary unrealized gains losses related trading securities included income current basis company uses specific identification method securities sold reclassified accumulated comprehensive income earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 40 years machinery equipment 3 30 years asset abandonments writedowns company recorded 9 million 13 million 32 million charge cost products sold 2010 2009 2008 respectively principally related abandonment writedown fair value certain longlived assets majority assets idle related underperforming product lines decision abandon writedown finalized consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value writedowns carrying value assets immaterial archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued net sales company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates 2010 2009 2008 84 billion 73 billion 85 billion respectively stock compensation company recognizes expense sharebased compensation based fair value awards granted company’s sharebased compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related sharebased compensation award research development costs associated research development expensed incurred costs incurred 56 million 50 million 49 million years ended june 30 2010 2009 2008 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share weighted average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method 2010 2009 2008 diluted average shares outstanding included incremental shares related outstanding common stock options 1 million 1 million 2 million respectively described note 8 certain potentially dilutive securities excluded diluted average shares calculation impact antidilutive new accounting standards july 1 2009 company adopted fasb amended guidance asc topic 805 business combinations changes financial accounting reporting business combination transactions guidance applied prospectively business combinations completed adoption date amended guidance requires recognizing certain exceptions 100 percent fair values assets acquired liabilities assumed noncontrolling interests acquisitions less 100 percent controlling interest acquisition constitutes change control acquired entity measuring acquirer shares issued contingent consideration arrangements connection business combination fair value acquisition date subsequent changes fair value reflected earnings expensing incurred acquisitionrelated transaction costs amended guidance also includes requirements relating accounting assets acquired liabilities assumed business combination arise contingencies establishes model account certain preacquisition contingencies amended guidance acquirer required recognize fair value asset acquired liability assumed business combination arises contingency acquisitiondate fair value asset liability determined measurement period acquisitiondate fair value cannot determined acquirer follow recognition criteria asc topic 450 contingencies material effect company’s consolidated financial statements result adoption amended guidance archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued july 1 2009 company adopted amended guidance asc topic 47020 debt conversion options specifies issuers convertible debt instruments may settle cash upon conversion must bifurcate proceeds debt issuance debt equity components manner reflects entity’s nonconvertible debt borrowing rate interest cost recognized subsequent periods equity component reflects fair value conversion feature notes adoption amended guidance retrospectively applied company’s 115 billion 0875 convertible series notes periods presented described note 8 july 1 2009 company adopted amended guidance asc topic 810 consolidation pertaining accounting reporting noncontrolling interests financial statements amended guidance establishes accounting reporting standards noncontrolling interest subsidiary deconsolidation subsidiary required amended guidance company retrospectively applied guidance periods presented net earnings attributable noncontrolling interests presented separate line item consolidated statements earnings addition company consolidates certain subsidiaries associated mandatorily redeemable instruments outside company’s control accordance guidance contained sec accounting series release 268 redeemable preferred stock asc topic 480 distinguishing liabilities equity noncontrolling interests associated mandatorily redeemable instruments outside company’s control classified long term liabilities income loss attributable mandatorily redeemable interests consolidated subsidiaries adjusts redeemable value redeemable instruments included income expense net july 1 2009 company adopted amended guidance asc topic 260 earnings per share addresses whether instruments granted sharebased payment transactions participating securities prior vesting therefore need included earnings allocation computing earnings per share eps twoclass method also clarifies outstanding unvested sharebased payment awards contain rights nonforfeitable dividends participate undistributed earnings common shareholders considered participating securities thus requiring issuing entity apply twoclass method computing basic diluted eps material effect company’s consolidated financial statements result adoption amended guidance july 1 2009 company adopted guidance asc topic 820 fair value measurements disclosures nonfinancial assets liabilities recognized fair value nonrecurring basis including goodwill intangible assets asset retirement obligations company recorded significant new remeasured fair values period nonfinancial assets liabilities recognized nonrecurring basis october 1 2009 company adopted amended guidance asc topic 820 fair value measurements disclosures amendment permits certain entities use net asset value nav practical expedient estimate fair value investments within scope provided nav calculated company’s reporting date amendment also indicates investments within scope would classified fair value hierarchy requires enhanced disclosures nature risks investments disclosure requirements apply investments within scope amendment regardless whether company elects measure investment using nav practical expedient adoption amendment requires expanded disclosure notes company’s consolidated financial statements materially impact financial results archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued october 1 2009 company adopted amendment asc topic 820 fair value measurements disclosures provides guidance fair value measurement liabilities clarifies circumstances quoted price active market identical liability available fair value must measured using specified valuation techniques clarifies quoted price active market identical liability measurement date b quoted price identical liability traded asset active market bonds adjustments quoted price asset required level 1 fair value measurements material effect company’s consolidated financial statements result adoption amended guidance effective march 31 2010 company adopted first phase amended guidance asc topic 820 fair value measurements disclosures requires company disclose amounts reasons significant transfers levels 1 2 fair value hierarchy well reasons transfers level 3 amended guidance also requires company provide fair value measurement disclosures class assets liabilities disclose information valuation techniques inputs used estimating level 2 level 3 fair value measurements adoption amendment requires expanded disclosure notes company’s consolidated financial statements impact financial results effective june 30 2010 company adopted amended guidance asc topic 715 compensation retirement benefits expands disclosure requirements requires entities disclose investment policies strategies major categories plan assets fair value measurements major category plan assets segregated fair value hierarchy level defined asc topic 820 effect fair value measurements using level 3 inputs changes plan assets period significant concentrations risk within plan assets adoption amended guidance requires expanded disclosure notes company’s consolidated financial statements impact financial results effective july 1 2010 company required adopt amended guidance asc topic 810 consolidations change reporting entity determines entity insufficiently capitalized controlled voting similar rights known variable interest entities vies consolidated determination whether reporting entity required consolidate another entity based among things entity’s purpose design reporting entity’s ability direct activities entity significantly impact entity’s economic performance amended guidance require number new disclosures including disclosures reporting entity’s involvement vies involvement vies affects reporting entity’s financial statements significant changes risk exposure due involvement company expect material effect consolidated financial statements result adoption amended guidance effective july 1 2011 company required adopt second phase amended guidance asc topic 820 fair value measurements disclosures requires company disclose information reconciliation recurring level 3 measurements purchases sales issuances settlements gross basis separately assets liabilities adoption amended guidance require expanded disclosure notes company’s consolidated financial statements impact financial results archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective october 1 2010 january 1 2011 company required adopt amended guidance asc topic 310 receivables requires robust disaggregated disclosures credit quality entity’s financing receivables excluding trade receivables allowances credit losses new disclosures require additional information nonaccrual past due accounts allowance credit losses impaired loans credit quality account modifications financing receivable defined contractual right receive money demand fixed determinable dates recognized asset entity’s statement financial position company yet assessed impact amended guidance consolidated financial statements note 2 acquisitions company’s 2010 acquisitions accounted purchases accordance asc topic 805 business combinations amended company’s 2009 2008 acquisitions accounted purchases accordance statement financial accounting standards 141 tangible assets liabilities adjusted fair values remainder purchase price recorded goodwill identifiable intangible assets acquired part acquisitions material operating results acquisitions included company’s financial statements date acquisition significant company’s operating results 2010 acquisitions 2010 company acquired two businesses total cost 62 million cash recorded preliminary allocation purchase price related acquisitions preliminary purchase price allocations resulted goodwill 3 million purchase price 62 million allocated current assets property plant equipment longterm assets 2 million 57 million 3 million respectively 2009 acquisitions 2009 company acquired ten businesses total cost 198 million cash recorded preliminary allocation purchase price related acquisitions preliminary purchase price allocations resulted goodwill 31 million purchase price 198 million allocated current assets property plant equipment longterm assets liabilities 176 million 82 million 111 million 171 million respectively final valuations resulted 13 million reduction cost one acquisition corresponding decrease amount previously allocated current assets finalization purchase price allocations related acquisitions resulted 7 million increase goodwill corresponding decrease longterm assets 2008 acquisitions 2008 company acquired six businesses total cost 15 million paid 2 million company stock 13 million cash final purchase price allocations resulted goodwill 5 million purchase price 15 million allocated current assets property plant equipment longterm assets liabilities 14 million 10 million 5 million 14 million respectively archer daniels midland company notes consolidated financial statements continued note 3 fair value measurements company determines fair value certain inventories agricultural commodities derivative contracts marketable securities based fair value definition hierarchy levels established guidance asc topic 820 fair value measurements disclosures three levels established within hierarchy may used measure fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 1 assets liabilities include exchangetraded derivative contracts us treasury securities certain publicly traded equity securities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period ended june 30 2010 company transfers levels 1 2 archer daniels midland company notes consolidated financial statements continued note 3 fair value measurements continued following tables set forth level company’s assets liabilities accounted fair value recurring basis june 30 2010 2009 archer daniels midland company notes consolidated financial statements continued note 3 fair value measurements continued archer daniels midland company notes consolidated financial statements continued note 3 fair value measurements continued company uses market approach valuation technique measure majority assets liabilities carried fair value estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets cases inventory classified level 2 certain inventories may require management judgment estimation significant component fair value amount cases inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold company’s derivative contracts measured fair value include forward commodity purchase sale contracts exchangetraded commodity futures option contracts otc instruments related primarily agricultural commodities ocean freight energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cash settled daily basis therefore included table fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact measurement fair value contract classified level 3 based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies contract level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component net sales operating income cost products sold income expensenet effective portions changes fair value derivatives designated cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income hedged items recorded earnings hedged transaction longer probable occur company’s marketable securities comprised us treasury securities obligations us government agencies corporate municipal debt securities equity investments us treasury securities certain publicly traded equity investments valued using quoted market prices classified level 1 us government agency obligations corporate municipal debt securities certain equity investments valued using thirdparty pricing services substantially classified level 2 security values determined using pricing models classified level 3 unrealized changes fair value availableforsale marketable securities recognized consolidated balance sheets component accumulated comprehensive income loss unless decline value deemed otherthantemporary point decline recorded earnings archer daniels midland company notes consolidated financial statements continued note 3 fair value measurements continued following tables present reconciliation assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 twelve months ended june 30 2010 2009 includes gains 6 million attributable change unrealized gains losses relating level 3 assets liabilities still held june 30 2010 includes unrealized losses 35 million attributable change level 3 derivative assets still held june 30 2009 unrealized losses 76 million attributable change level 3 inventories carried market still held june 30 2009 transfers level 3 previously classified level 2 due relative value unobservable inputs total fair value measurement certain derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products falling 10 threshold thus permitting reclassification level 2 archer daniels midland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities company values certain inventories using lower cost determined either lifo fifo method market inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments derivative instruments designated qualify hedging instruments reporting entity must designate hedging instrument based upon exposure hedged fair value hedge cash flow hedge net investment foreign operation company certain derivatives designated cash flow hedges within note 4 tables zeros represent minimal amounts derivatives designated hedging instruments company generally follows policy using exchangetraded futures exchangetraded otc options contracts minimize net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets exchangetraded futures exchangetraded otc options contracts forward cash purchase sales contracts certain merchandisable agricultural commodities accounted derivatives company stated fair value inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore included tables changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately unrealized gains unrealized losses forward cash purchase contracts forward foreign currency exchange fx contracts forward cash sales contracts exchangetraded otc options contracts represent fair value instruments classified company’s consolidated balance sheet receivables accrued expenses respectively march 31 2010 company dedesignated discontinued hedge accounting treatment certain interest rate swaps date dedesignation hedges 21 million aftertax gains deferred accumulated comprehensive income aoci gains remain aoci hedged transactions occur probable hedged transaction occur fourth quarter 2010 company recognized 59 million beforetax losses earnings interest rate swaps archer daniels midland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments june 30 2010 2009 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings indicated time periods amended disclosure requirements asc topic 815 first implemented period ended march 31 2009 result comparative yeartodate information available fiscal year 2009 derivatives designated cash flow hedging strategies derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk effective portion gain loss derivative instrument reported component comprehensive income oci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings remaining gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued commodity hedge programs described derivatives designated cash flow hedges changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either net sales operating income cost products sold june 30 2010 company 5 million aftertax gains aoci related gains losses commodity cash flow hedge transactions company expects recognize aftertax gains statement earnings next 12 months company time uses futures options contracts fix purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 75 million bushels corn per month past 12 months company hedged 21 100 monthly anticipated grind june 30 2010 company hedged portions anticipated monthly purchases corn next 8 months ranging 1 13 anticipated monthly grind company time also uses futures options swaps fix purchase price company’s anticipated natural gas requirements certain production facilities objective hedging program reduce variability cash flows associated company’s forecasted purchases natural gas production facilities use approximately 35 million mmbtus natural gas per month past 12 months company hedged 47 77 quantity anticipated monthly natural gas purchases june 30 2010 company hedged portions anticipated monthly purchases natural gas next 12 months ranging 37 58 anticipated monthly natural gas purchases protect fluctuations cash flows due foreign currency exchange rates company time use forward foreign exchange contracts cash flow hedges certain production facilities manufacturing expenses sales contracts denominated nonfunctional currency reduce risk fluctuations cash flows due changes exchange rate functional versus nonfunctional currency company hedge portion forecasted foreign currency expenditures andor receipts fair value foreign exchange contracts designated cash flow hedging instruments june 30 2010 immaterial company using treasury lock agreements interest rate swaps order lock company’s interest rate prior issuance remarketing debentures treasurylock agreements interest rate swaps designated cash flow hedges risk changes future interest payments attributable changes benchmark interest rate objective treasurylock agreements interest rate swaps protect company changes benchmark rate date company decided issue debt date debt actually issued june 30 2010 aoci included 25 million aftertax gains related treasurylock agreements interest rate swaps company recognize 25 million gains consolidated statement earnings terms hedged items probable hedged transactions occur archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments june 30 2010 2009 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings indicated periods amended disclosure requirements asc topic 815 first implemented quarter ended march 31 2009 result comparative yeartodate information available fiscal year 2009 archer daniels midland company notes consolidated financial statements continued note 5 marketable securities cash equivalents archer daniels midland company notes consolidated financial statements continued note 5 marketable securities cash equivalents continued none 15 million unrealized losses june 30 2010 arose within last 12 months market value investments unrealized loss position 12 months longer 15 million 15 million unrealized losses associated availableforsale equity securities related company’s investment one security june 2010 company recorded 15 million otherthantemporary impairment related investment availableforsale equity security based company’s assessment underlying market conditions company intend sell impaired equity security based upon evaluation company believe likely company required sell investment recovery amortized cost basis note 6 investments advances affiliates company applies equity method investments investees company ability exercise significant influence including company’s 164 share ownership equity investment wilmar company 73 72 unconsolidated affiliates june 30 2010 2009 respectively located north south america africa europe asia following table summarizes combined balance sheets june 30 2010 2009 combined statements earnings company’s unconsolidated affiliates three years ended june 30 2010 2009 2008 undistributed earnings company’s unconsolidated affiliates june 30 2010 12 billion company direct investments two foreign equity method investees carrying value 15 billion june 30 2010 market value 33 billion based active market quoted prices converted us dollars applicable exchange rates august 20 2010 archer daniels midland company notes consolidated financial statements continued note 6 investments advances affiliates continued company provides credit facilities totaling 336 million nine unconsolidated affiliates one facility matures december 31 2011 bears interest one month libor rate facility outstanding balance 110 million june 30 2010 included noncurrent assets accompanying consolidated balance sheet two facilities outstanding balance six credit facilities outstanding balances 17 million june 30 2010 included receivables accompanying consolidated balance sheet note 7 goodwill company accounts goodwill intangible assets accordance asc topic 350 intangibles goodwill standard goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company recorded 6 million goodwill impairment charge 2009 goodwill impairment charges recorded 2010 2008 changes goodwill 2010 related acquisitions foreign currency translation adjustments carrying value company’s intangible assets material goodwill balances attributable consolidated businesses investments affiliates segment set forth following table archer daniels midland company notes consolidated financial statements continued note 8 debt financing arrangements 1 343 million face amount 2009 2 400 million face amount 2009 3 500 million face amount 2009 archer daniels midland company notes consolidated financial statements continued note 8 debt financing arrangements continued fiscal year 2008 company issued 310 billion additional longterm debt including 500 million debentures issued december 2007 700 million notes issued march 2008 175 billion debentures issued june 2008 debentures connection issuance debentures june 2008 company issued 175 billion equity units equity units combination debt forward purchase contract holder purchase company’s common stock debt equity instruments deemed separate instruments investor may transfer settle equity instrument separately debt instrument forward purchase contract obligate buyer purchase company later june 1 2011 price 50 cash following number shares company’s common stock subject antidilution adjustments • “applicable market value” amv company’s common stock average closing price company’s common stock 20trading day period ending third trading day prior june 1 2011 equals exceeds 4783 10453 shares company’s common stock • amv less 4783 greater 3986 number shares company’s common stock value based amv equal 50 • amv less equal 3986 12544 shares company’s common stock debentures bear interest rate 470 per year payable quarterly due june 1 2041 debentures remarketed 2011 remarketing successful interest rate debentures reset thereafter interest payable semiannually reset rate addition following successful remarketing company may modify certain terms debentures including adjusting frequency interest payments adjusting ranking debentures changing stated maturity successful remarketing interest rate debentures reset holder equity unit right put interest debentures company june 1 2011 put price equal 100 principal amount plus accrued unpaid interest proceeds put right deemed applied holder’s obligations forward purchase contracts company also pay equity unit holder quarterly contract adjustment payments rate 155 per year stated amount 50 per equity unit 0775 per year present value future contract adjustment payments 75 million paid three years date issuance recorded reduction shareholders’ equity company also recorded 35 million decrease shareholders’ equity issuance costs related equity portion equity units remaining issuance costs allocated debt recognized earnings life debt forward purchase contracts issued connection issuance debentures june 2008 settled company’s common stock june 1 2011 settlement forward purchase contract shares stock underlying forward purchase contract outstanding forward purchase contracts included computation diluted earnings per share extent dilutive june 30 2010 2009 2008 forward purchase contracts considered dilutive therefore included computation diluted earnings per share basic earnings per share affected forward purchase contracts settled holders thereof become stockholders archer daniels midland company notes consolidated financial statements continued note 8 debt financing arrangements continued february 2007 company issued 115 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually notes convertible based conversion rate 228423 shares per 1000 principal amount notes equal conversion price approximately 4378 per share notes may converted subject adjustment following circumstances 1 calendar quarter beginning march 31 2007 closing price company’s common stock least 20 trading days 30 consecutive trading days ending last trading day immediately preceding quarter 140 applicable conversion price per share 1000 divided applicable conversion rate 2 five consecutive business day period immediately five consecutive trading day period note measurement period average trading price per 1000 principal amount notes equal less 98 average product closing price company’s common stock conversion rate date note measurement period 3 company makes specified distributions common stockholders specified corporate transactions occur 4 time january 15 2014 business day preceding maturity date upon conversion holder would receive amount cash equal lesser 1 1000 2 conversion value defined conversion value exceeds 1000 company deliver company’s election cash common stock combination cash common stock conversion value excess 1000 notes converted connection change control defined company may required provide makewhole premium form increase conversion rate subject stated maximum amount addition event change control holders may require company purchase portion notes purchase price equal 100 principal amount notes plus accrued unpaid interest accordance asc topic 47020 company recognized notes proceeds received 2007 longterm debt 853 million equity 297 million discount amortized life notes using effective interest method discount amortization expense 40 million 39 million 37 million 2010 2009 2008 respectively included interest expense related notes concurrent issuance notes company purchased call options private transactions cost 300 million purchased call options allow company receive shares common stock andor cash counterparties equal amounts common stock andor cash related excess current market price company’s common stock exercise price purchased call options addition company sold warrants private transactions acquire subject customary antidilution adjustments 263 million shares common stock exercise price 6256 per share received proceeds 170 million average price company’s common stock defined period ending respective settlement dates exceeds exercise price warrants settled company’s option cash shares common stock purchased call options warrants intended reduce potential dilution upon future conversions notes effectively increasing initial conversion price 6256 per share net cost purchased call options warrant transactions 130 million recorded reduction shareholders’ equity upon closing sale notes 370 million net proceeds note issuance proceeds warrant transactions used repurchase 103 million shares company’s common stock company’s stock repurchase program june 30 2010 none conditions permitting conversion notes satisfied addition june 30 2010 market price company’s common stock greater exercise price purchased call options warrants june 30 2010 share amounts related conversion notes exercise warrants included diluted average shares outstanding archer daniels midland company notes consolidated financial statements continued note 8 debt financing arrangements continued march 2010 company repurchased aggregate principal amount 500 million outstanding debentures accordance announced tender offers resulting charges early extinguishment debt 75 million consisted 71 million premium related expenses 4 million writeoff debt issuance costs june 30 2010 fair value company’s longterm debt exceeded carrying value 870 million estimated using quoted market prices discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements aggregate maturities longterm debt five years june 30 2010 344 million 156 million 272 million 105 billion 25 million respectively june 30 2010 company pledged certain property plant equipment carrying value 344 million security certain longterm debt obligations june 30 2010 company lines credit totaling 60 billion 57 billion unused weighted average interest rates shortterm borrowings outstanding june 30 2010 2009 229 286 respectively company’s total lines credit 42 billion support commercial paper borrowing facility borrowings june 30 2010 company outstanding standby letters credit surety bonds june 30 2010 2009 totaling 459 million 398 million respectively note 9 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock without par value preferred stock issued june 30 2010 2009 company approximately 326 million 300 million shares respectively treasury stock 838 million june 30 2010 765 million june 30 2009 recorded cost reduction common stock company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 1999 incentive compensation plan 2002 incentive compensation plan 2009 incentive compensation plan options issued market value date grant vest incrementally five nine years expire ten years date grant company’s 1999 2002 2009 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2002 2009 incentive compensation plans also provide granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock vest end threeyear vesting period subject attainment certain future performance criteria 2010 2009 2008 10 million 11 million 13 million common stock units respectively granted restricted stock awards psus june 30 2010 309 million shares available future grants pursuant 2009 plan archer daniels midland company notes consolidated financial statements continued note 9 shareholders’ equity continued compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant total compensation expense option grants restricted stock awards psus recognized 2010 2009 2008 45 million 65 million 70 million respectively fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows summary option activity 2010 presented weightedaverage remaining contractual term options outstanding exercisable june 30 2010 7 years 6 years respectively aggregate intrinsic value options outstanding exercisable june 30 2010 25 million 40 million respectively weightedaverage grantdate fair values options granted 2010 2009 2008 850 781 1260 respectively total intrinsic values options exercised 2010 2009 2008 11 million 17 million 34 million respectively cash proceeds received options exercised 2010 2009 2008 11 million 11 million 20 million respectively june 30 2010 24 million total unrecognized compensation expense related option grants amounts recognized compensation expense next five fiscal years 11 million 7 million 4 million 1 million 1 million respectively archer daniels midland company notes consolidated financial statements continued note 9 shareholders’ equity continued fair value restricted stock awards determined based market value company’s shares grant date fair value psus estimated date grant using lattice valuation model weightedaverage grantdate fair values awards granted 2010 2009 2655 2603 respectively summary restricted stock awards psus activity 2010 presented june 30 2010 16 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three fiscal years 10 million 5 million 1 million respectively vesting date total fair value restricted stock awards vested 2010 30 million archer daniels midland company notes consolidated financial statements continued note 10 accumulated comprehensive income loss following table sets forth information respect accumulated comprehensive income archer daniels midland company notes consolidated financial statements continued note 11 income expense net interest expense net interest capitalized 75 million 95 million 52 million 2010 2009 2008 respectively company made interest payments 453 million 522 million 485 million 2010 2009 2008 respectively realized gains sales availableforsale marketable securities totaled 12 million 17 million 39 million 2010 2009 2008 respectively annual realized losses sales availableforsale marketable securities 3 million 2010 1 million 2009 1 million 2008 impairment losses securities totaled 15 million 22 million 2010 2009 respectively note 12 income taxes financial reporting purposes earnings income taxes include following components archer daniels midland company notes consolidated financial statements continued note 12 income taxes continued reconciliation statutory federal income tax rate company’s effective tax rate earnings follows company made income tax payments 604 million 10 billion 859 million 2010 2009 2008 respectively archer daniels midland company notes consolidated financial statements continued note 12 income taxes continued company 135 million 55 million tax assets net operating loss carryforwards related certain international subsidiaries june 30 2010 2009 respectively june 30 2010 approximately 132 million assets expiration date remaining 3 million expire various times fiscal 2019 annual usage certain assets limited percentage taxable income respective international subsidiary year company recorded valuation allowance 38 million 51 million tax assets june 30 2010 2009 respectively due uncertainty realization company 41 million 38 million tax assets related excess foreign tax credits june 30 2010 2009 respectively begin expire fiscal 2013 company 50 million 9 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal benefit june 30 2010 2009 respectively expire various times fiscal 2016 company recorded valuation allowance 7 million excess foreign tax credits june 30 2010 due uncertainty realization company recorded valuation allowance state income tax assets 26 million net federal benefit june 30 2010 june 30 2009 company 11 million valuation allowance recorded related excess foreign tax credits 2 million valuation allowance related state income tax attributes due uncertainty realization company remains subject examination us calendar tax years 2007 2008 2009 undistributed earnings company’s foreign subsidiaries affiliated corporate joint venture companies accounted equity method amounting approximately 66 billion june 30 2010 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings 2009 approximately 158 million income tax expense incurred related company’s investment wilmar international holdings limited wihl subsidiary adm asia pacific limited admap whollyowned subsidiary company wihl admap holds indirect ownership interest wilmar historically company considered retained earnings investment admap permanently reinvested outside us therefore company provided deferred tax liability associated undistributed earnings investment prior third quarter 2009 february 3 2009 shareholders wihl approved plan voluntary liquidation followed partial liquidating distribution april 1 2009 pursuant distribution admap received publicly traded shares wilmar represented approximately 40 wilmar shares indirectly held wihl distribution caused market value wilmar shares received subject us income tax deemed distribution admap company consequently company concluded portion investment admap related investment wihl permanently reinvested accordingly company recorded approximately 97 million income tax expense deferred income tax liability third quarter 2009 reflect booktax basis difference investment wihl march 31 2009 april 1 2009 income tax gain generated distribution wihl triggered additional us income tax expense approximately 61 million recorded company’s fourth quarter 2009 established new tax basis us company’s wihl investment fiscal 2010 liquidation process wihl terminated without liquidating distributions result formal termination proceedings 2010 company recognized 12 million additional income tax expense 2010 related original 2009 deemed liquidating distributions previously company anticipated liquidation wihl could resulted additional income tax expense approximately 590 million period liquidation would occurred result termination liquidation proceedings currently anticipate distributions would result additional income tax expense however event distributions occur future could result material expense payment income taxes company archer daniels midland company notes consolidated financial statements continued note 12 income taxes continued company accounts income tax positions provisions asc topic 740 income taxes asc topic 740 prescribes minimum threshold tax position required meet recognized consolidated financial statements interpretation requires company recognize consolidated financial statements tax positions determined likely sustained upon examination based technical merits position total amounts unrecognized tax benefits june 30 2010 2009 follows additions reductions unrecognized tax benefits shown table include effects related net income shareholders’ equity timing differences ultimate deductibility highly certain uncertainty timing deductibility 2010 changes unrecognized tax benefits material effect company’s net income cash flow company classifies interest income tax related balances interest expense interest income classifies taxrelated penalties selling general administrative expenses june 30 2010 2009 company accrued interest penalties unrecognized tax benefits 27 million 22 million respectively company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits required recognized company one time would positive impact 53 million tax expense period december 2009 company’s whollyowned subsidiary adm brasil ltda “adm brasil” received tax assessment amount 456 million subject variation currency exchange rates consisting tax penalty interest brazilian federal revenue service “bfrs” challenging tax deductibility commodity hedging losses incurred adm brasil 2004 commodity hedging transactions result gains included adm brasil’s calculations taxable income brazil losses adm brasil deducts taxable income brazil june 2010 adm brasil notified bfrs tax years 2005 2006 2007 would also audited yet additional assessments received years bfrs challenge commodity hedging deductions tax years still open assessment 20052010 company estimates could receive additional claims approximately 160 million june 30 2010 subject variation currency exchange rates archer daniels midland company notes consolidated financial statements continued january 2010 adm brasil filed appeal bfrs adm brasil unsuccessful administrative appellate process appeals available brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition significant additional payments expense income tax associated interest penalties company evaluated tax position regarding hedging transactions concluded based part upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs company intends vigorously defend position current assessment similar assessments may issued years subsequent 2004 note 13 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2031 rent expense 2010 2009 2008 241 million 217 million 201 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans company provides substantially domestic employees certain international subsidiaries pension benefits eligible domestic employees five years service prior january 1 2009 participate defined benefit pension plan eligible domestic employees hired january 1 2009 eligible salaried employees less five years service prior january 1 2009 participate “cash balance” pension formula company provides eligible domestic employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage company also maintains 401k plans covering substantially domestic employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest adm stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 172 million shares company common stock june 30 2010 market value 443 million cash dividends received shares company common stock plans year ended june 30 2010 10 million archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued company uses june 30 measurement date defined benefit plans following tables set forth changes defined benefit obligation fair value defined benefit plan assets archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued included accumulated comprehensive income pension benefits june 30 2010 following amounts yet recognized net periodic pension cost unrecognized transition obligation 3 million unrecognized prior service costs 26 million unrecognized actuarial losses 906 million prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost fiscal year ended june 30 2011 5 million 58 million respectively included accumulated comprehensive income postretirement benefits june 30 2010 following amounts yet recognized net periodic pension cost unrecognized prior service credit 7 million unrecognized actuarial losses 21 million prior service credit included accumulated comprehensive income expected recognized net periodic benefit costs fiscal year ended june 30 2011 1 million following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 22 billion 20 billion 16 billion respectively june 30 2010 19 billion 17 billion 13 billion respectively june 30 2009 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 21 billion 19 billion 15 billion respectively june 30 2010 16 billion 15 billion 11 billion respectively june 30 2009 accumulated benefit obligation pension plans june 30 2010 2009 21 billion 18 billion respectively postretirement benefit measurement purposes 80 annual rate increase per capita cost covered health care benefits assumed 2010 rate assumed decrease gradually 50 2016 remain level thereafter assumed health care cost trend rates significant impact amounts reported health care plans 1 change assumed health care cost trend rates would following effects archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments adm common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts based cumulative net asset value underlying investments ccts comprised international equity funds small cap us equity fund large cap us equity funds fixed income funds fund units valued nav based closing market value units bought sold valuation date classified level 2 fair value hierarchy ccts seek primarily provide investment results approximating aggregate price dividend performance total return income stream underlying investments funds issuances redemptions certain cct investments may restricted date andor amount corporate debt instruments corporate debt instruments valued closing price reported active market traded classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date following table sets forth level within fair value hierarchy fair value plan assets june 30 2010 level 3 gains losses plan assets classified level 3 fair value hierarchy therefore associated gains losses archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date company’s us pension plans contain approximately 66 company’s global pension plan assets target asset allocation company’s us pension plans consists 60 equity securities 40 debt securities actual asset allocation us pension plans measurement date consists 55 equity securities 45 debt securities actual asset allocation company’s foreign pension plans measurement date consists 33 equity securities 65 debt securities 2 investments target asset allocation company’s foreign pension plans approximately actual asset allocation company’s pension plans held 07 million shares company common stock measurement date june 30 2010 market value 19 million cash dividends received shares company common stock plans twelvemonth period ended june 30 2010 07 million investment objectives company’s plan assets · optimize longterm return plan assets acceptable level risk · maintain broad diversification across asset classes among investment managers · maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments archer daniels midland company notes consolidated financial statements continued note 14 employee benefit plans continued company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments company expects contribute 38 million pension plans 7 million postretirement benefit plan 2011 following benefit payments reflect expected future service expected paid note 15 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations include wheat processing cocoa processing financial business units reportable segments defined asc topic 280 segment reporting classified oilseeds processing segment includes activities related origination merchandising crushing processing oilseeds soybeans cottonseed sunflower seeds canola rapeseed peanuts flaxseed palm vegetable oils protein meals oilseeds processing segment principally produces markets processed oilseed products ingredients food feed energy industrial products industries crude vegetable oil sold processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oil used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds oilseeds processing segment also produces natural health nutrition products specialty food feed ingredients north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets south america oilseeds processing segment utilizes network grain elevators port facilities transportation assets buy store clean transport agricultural commodities operates fertilizer blending facilities segment also includes company’s share results equity method investment wilmar golden peanut company llc edible oils limited stratas foods llc joint ventures archer daniels midland company notes consolidated financial statements continued note 15 segment geographic information continued company‘s corn processing segment engaged corn wet milling dry milling activities primarily united states related production ingredients used use food beverage industry including syrup starch glucose dextrose sweeteners dextrose also used company feedstock bioproducts operations corn gluten feed meal well distillers grains produced use animal feed ingredients corn germ byproduct wet milling process processed oilseed vegetable oil protein meal fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company beverage grade industrial use ethanol gasoline ethanol increases octane used extender oxygenate amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn processing segment also produces fermentation astaxanthin product used aquaculture enhance flesh coloration corn processing segment produces citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities company’s brazilian sugarcane operations propylene ethylene glycol facility investments renewable plastics segment also includes company’s share results equity method investments almidones mexicanos sa eaststarch cv red star yeast company llc agricultural services segment utilizes company’s extensive grain elevator transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing transportation network provides reliable efficient services company’s agricultural processing operations customers agricultural services’ transportation network capabilities include ground rail river ocean freight services agricultural services segment also includes activities related procuring processing distributing edible beans processing distributing formula feeds animal health nutrition products addition agricultural services segment includes activities alfred c toepfer international global merchant agricultural commodities processed products company’s share results kalama export company joint venture includes company’s remaining processing operations consisting activities related processing agricultural commodities food ingredient products wheat flour cocoa chocolate cocoa products also includes financial activities related banking captive insurance private equity fund investments futures commission merchant activities company’s share results equity method investment gruma sab de c v intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses including interest charge related working capital usage also included segment operating profit equity earnings affiliates based equity method accounting certain corporate items allocated company’s reportable business segments corporate results include impact liforelated adjustments aftertax elimination income attributable mandatorily redeemable interests consolidated subsidiaries unallocated corporate expenses unallocated net interest costs archer daniels midland company notes consolidated financial statements continued note 15 segment geographic information continued segment information archer daniels midland company notes consolidated financial statements continued note 15 segment geographic information continued archer daniels midland company notes consolidated financial statements continued note 15 segment geographic information continued geographic information following geographic area data include net sales operating income attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent sum net book value property plant equipment plus goodwill related consolidated businesses note 16 guarantees commitments company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 131 million june 30 2010 amounts outstanding primary entity contingent obligations 74 million june 30 2010 archer daniels midland company notes consolidated financial statements continued note 17 quarterly financial data unaudited net earnings attributable controlling interests first second third fourth quarters fiscal year 2010 includes aftertax start costs company’s new greenfield plants 6 million 20 million 18 million 24 million equal 01 03 04 per share respectively net earnings attributable controlling interests third quarter ended march 31 2010 include charges income expense net 75 million 47 million tax equal 007 per share related loss extinguishment debt resulting repurchase 500 million aggregate principal amount company’s outstanding debentures net earnings attributable controlling interests fourth quarter ended june 30 2010 include charges income expense net 59 million 37 million tax equal 006 per share related losses interest rate swaps discussed note 4 net earnings attributable controlling interests second quarter ended december 31 2008 third quarter ended march 31 2009 fourth quarter year ended june 30 2009 include charges income expense net 51 million 32 million tax equal 005 per share 212 million 132 million tax equal 021 per share 12 million 7 million tax equal 001 per share 275 million 171 million tax equal 027 per share respectively related currency derivative losses company’s equity investee gruma sab de cv net earnings attributable controlling interests third quarter ended march 31 2009 fourth quarter year ended june 30 2009 include income tax charges 97 million 015 per share 61 million 009 per share 158 million 024 per share respectively resulting reorganization holding company structure company holds portion equity investment wilmar report independent registered public accounting firm board directors shareholders archer daniels midland company decatur illinois audited accompanying consolidated balance sheets archer daniels midland company june 30 2010 2009 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2010 audits also included financial statement schedule listed index item 15a2 financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archer daniels midland company june 30 2010 2009 consolidated results operations cash flows three years period ended june 30 2010 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein also audited accordance standards public company accounting oversight board united states archer daniels midland company’s internal control financial reporting june 30 2010 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission report dated august 27 2010 expressed unqualified opinion thereon ernst young llp st louis missouri august 27 2010 report independent registered public accounting firm board directors shareholders archer daniels midland company decatur illinois audited archer daniels midland company’s internal control financial reporting june 30 2010 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso criteria archer daniels midland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion archer daniels midland company maintained material respects effective internal control financial reporting june 30 2010 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archer daniels midland company june 30 2010 2009 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2010 archer daniels midland company report dated august 27 2010 expressed unqualified opinion thereon ernst young llp st louis missouri august 27 2010 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements june 30 2011 three years ended include accounts company majorityowned subsidiaries significant intercompany accounts transactions eliminated investments affiliates carried cost plus equity undistributed earnings since acquisition adjusted appropriate amortizable basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain majorityowned subsidiaries included using recent available financial statements case financial statements within 93 days company’s year end consistent period except described company evaluates consolidates appropriate less majorityowned investments pursuant financial accounting standards board fasb accounting standards codification asc topic 810 consolidation effective second quarter fiscal year 2011 one company’s majorityowned subsidiaries changed accounting period resulting elimination onemonth lag reporting consolidated subsidiary’s financial results effect change aftertax earnings year ended june 30 2011 immaterial use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates second quarter fiscal year 2011 company updated estimates service lives certain machinery equipment assets order better match company’s depreciation expense periods assets expected generate revenue based planned historical service periods new estimated service lives established based manufacturing engineering data external benchmark data new information obtained result company’s recent major construction projects new estimated service lives also supported biofuels legislation mandates many countries driving requirements time greater future usage higher blend rates biofuels company accounted service life update change accounting estimate october 1 2010 accordance guidance asc topic 250 accounting changes error corrections thereby impacting quarter change occurred future quarters effect change aftertax earnings diluted earnings per share increase 83 million 013 respectively year ended june 30 2011 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued reclassifications income expense net prior years’ consolidated statement earnings reclassified conform current year’s presentation corresponding changes certain items prior year’s note 4 addition inventories accrued expenses prior year’s consolidated balance sheet reclassified conform current year’s presentation corresponding changes prior year’s consolidated statement cash flows impact total cash provided used operating investing financing activities consolidated balance sheet reclassification also resulted changes certain items prior year’s notes 4 16 cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance certain regulatory requirements commodity exchange requirements insurance arrangements segregated balances represent deposits received customers company’s registered futures commission merchant securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 100 million 97 million june 30 2011 2010 respectively reflect loss anticipated accounts receivable balances company calculates allowance based history writeoffs level pastdue accounts relationships economic status customers credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates june 30 2011 2010 367 million 304 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued marketable securities company classifies marketable securities availableforsale except certain designated securities classified trading securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component comprehensive income company monitors investments impairment periodically recognizes impairment charge decline fair value investment judged otherthantemporary trading securities carried fair value unrealized gains losses included income current basis company uses specific identification method securities sold reclassified accumulated comprehensive income earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 40 years machinery equipment 3 30 years company capitalized interest major construction projects progress 7 million 75 million 95 million 2011 2010 2009 respectively goodwill intangible assets company accounts goodwill intangible assets accordance asc topic 350 intangibles goodwill standard goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill intangible assets indefinite lives impairment fourth quarter fiscal year whenever indicators carrying value assets may fully recoverable company recorded 6 million goodwill impairment charge 2009 goodwill impairment charges recorded 2011 2010 carrying value company’s intangible assets material asset abandonments writedowns company recorded 2 million 9 million 13 million charge cost products sold 2011 2010 2009 respectively principally related abandonment writedown fair value certain longlived assets majority assets idle related underperforming product lines decision abandon writedown finalized consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value writedowns carrying value assets immaterial net sales company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates 2011 2010 2009 71 billion 71 billion 65 billion respectively archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued stock compensation company recognizes expense sharebased compensation based fair value awards granted company’s sharebased compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related sharebased compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 60 million 56 million 50 million years ended june 30 2011 2010 2009 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method described note 8 certain potentially dilutive securities excluded diluted average shares calculation impact antidilutive except third quarter fiscal 2011 see note 9 earnings per share calculation new accounting standards effective july 1 2010 company adopted amended guidance accounting standards codification asc topic 810 consolidations changes reporting entity determines entity insufficiently capitalized controlled voting similar rights known variable interest entities vies consolidated determination whether reporting entity required consolidate another entity based among things reporting entity’s ability direct activities entity significantly impact entity’s economic performance entity’s purpose design vies company holds variable interests considered material company’s consolidated results result adoption guidance company deconsolidated one vie material effect company’s consolidated financial statements effective october 1 2010 company adopted amended guidance asc topic 310 receivables requires robust disaggregated disclosures credit quality entity’s financing receivables excluding trade receivables allowances credit losses new disclosures require additional information nonaccrual past due accounts allowance credit losses impaired loans credit quality account notifications financing receivable defined contractual right receive money demand fixed determinable dates recognized asset entity’s statement financial position company seasonal interestbearing inventory financing arrangements farmers certain countries around world typically advances occur planting season repaid harvest june 30 2011 220 million receivables financing arrangements outstanding majority secured various forms collateral receivables placed nonaccrual status accounts legal dispute interest income losses inventory financing arrangements material archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued company’s whollyowned subsidiary hickory point bank trust also loans receivable june 30 2011 290 million loans outstanding accrual interest loans discontinued loan 90 days past due interest income losses bank loans material company’s financing receivables june 30 2011 immaterial effective july 1 2011 company required adopt second phase amended guidance asc topic 820 fair value measurements disclosures requires company disclose information reconciliation recurring level 3 measurements purchases sales issuances settlements gross basis separately assets liabilities adoption amended guidance require expanded disclosure notes company’s consolidated financial statements impact financial results effective july 1 2012 company required adopt amended guidance asc topic 220 comprehensive income requires company present total comprehensive income components net income components comprehensive income either single continuous statement comprehensive income two separate consecutive statements amended guidance eliminates option present components comprehensive income part statement shareholders’ equity company required apply presentation disclosure requirements amended guidance retrospectively adoption amended guidance change financial statement presentation require expanded disclosures company’s consolidated financial statements impact financial results note 2 acquisitions company’s 2011 2010 acquisitions accounted purchases accordance asc topic 805 business combinations amended company’s 2009 acquisitions accounted purchases accordance statement financial accounting standards 141 tangible assets liabilities based preliminary purchase price allocations 2011 acquisitions adjusted fair values acquisition date remainder purchase price recorded goodwill identifiable intangible assets acquired part acquisitions material operating results acquisitions included company’s financial statements date acquisition significant company’s consolidated operating results 2011 acquisitions 2011 company made four acquisitions total cost 218 million cash recorded preliminary allocation purchase price related acquisitions net cash purchase price four acquisitions 218 million plus acquisitiondate fair value equity interest company previously held golden peanut preliminarily allocated working capital property plant equipment goodwill longterm assets longterm liabilities 113 million 235 million 63 million 11 million 36 million respectively acquisition alimenta usa inc company’s former 50 percent partner golden peanut significant acquisition year transaction resulted company obtaining control remaining outstanding shares golden peanut largest us handler processor exporter peanuts operator one facility argentina business fits well company’s existing us oilseed export operations global oilseed business pretax gain 71 million recognized second quarter result revaluing company’s previously held investment golden peanut conjunction acquisition remaining 50 percent interest based guidance asc topic 805 business combinations archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued 2010 acquisitions 2010 company acquired two businesses total cost 62 million cash final purchase price allocations resulted goodwill 3 million purchase price 62 million allocated current assets property plant equipment longterm assets 2 million 57 million 3 million respectively 2009 acquisitions 2009 company acquired ten businesses total cost 198 million cash recorded preliminary allocation purchase price related acquisitions preliminary purchase price allocations resulted goodwill 31 million purchase price 198 million allocated current assets property plant equipment longterm assets liabilities 176 million 82 million 111 million 171 million respectively final valuations resulted 13 million reduction cost one acquisition corresponding decrease amount previously allocated current assets finalization purchase price allocations related acquisitions resulted 7 million increase goodwill corresponding decrease longterm assets note 3 fair value measurements company determines fair value certain inventories agricultural commodities derivative contracts marketable securities based fair value definition hierarchy levels established guidance asc topic 820 fair value measurements disclosures three levels established within hierarchy may used measure fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 1 assets liabilities include exchangetraded derivative contracts us treasury securities certain publicly traded equity securities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period ended june 30 2011 company transfers levels 1 2 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued following tables set forth level company’s assets liabilities accounted fair value recurring basis june 30 2011 2010 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued company uses market approach valuation technique measure majority assets liabilities carried fair value estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets cases inventory classified level 2 certain inventories may require management judgment estimation significant component fair value amount cases inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold company’s derivative contracts measured fair value include forward commodity purchase sale contracts exchangetraded commodity futures option contracts otc instruments related primarily agricultural commodities ocean freight energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included table fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact measurement fair value contract classified level 3 based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies contract level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component net sales operating income cost products sold income expensenet effective portions changes fair value derivatives designated cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss hedged items recorded earnings probable hedged transaction longer occur company’s marketable securities comprised us treasury securities obligations us government agencies corporate municipal debt securities equity investments us treasury securities certain publicly traded equity investments valued using quoted market prices classified level 1 us government agency obligations corporate municipal debt securities certain equity investments valued using thirdparty pricing services substantially classified level 2 security values determined using pricing models classified level 3 unrealized changes fair value availableforsale marketable securities recognized consolidated balance sheets component accumulated comprehensive income loss unless decline value deemed otherthantemporary point decline recorded earnings archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued following tables present reconciliation assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 twelve months ended june 30 2011 2010 includes gains 109 million attributable change unrealized gains losses relating level 3 assets liabilities still held june 30 2011 includes gains 6 million attributable change unrealized gains losses relating level 3 assets liabilities still held june 30 2010 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus requiring reclassification level 2 archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities company values certain inventories using lower cost determined either lifo fifo method market inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments derivative instruments designated qualify hedging instruments reporting entity must designate hedging instrument based upon exposure hedged fair value hedge cash flow hedge net investment foreign operation june 30 2011 2010 company certain derivatives designated cash flow hedges within note 4 tables zeros represent minimal amounts derivatives designated hedging instruments company generally follows policy using exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contract defaults volatility freight markets exchangetraded futures exchangetraded otc options contracts forward cash purchase sales contracts certain merchandisable agricultural commodities accounted derivatives company stated fair value inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore included tables changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately unrealized gains unrealized losses forward cash purchase contracts forward foreign currency exchange fx contracts forward cash sales contracts exchangetraded otc options contracts represent fair value instruments classified company’s consolidated balance sheets receivables accrued expenses respectively march 31 2010 company dedesignated discontinued hedge accounting treatment certain interest rate swaps date dedesignation hedges 21 million aftertax gains deferred accumulated comprehensive income aoci gains remain aoci amortized 30 years company recognized earnings 30 million pretax gains 59 million pretax losses interest rate swaps year ended june 30 2011 2010 respectively archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments june 30 2011 2010 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended june 30 2011 2010 inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore included table changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately derivatives designated cash flow hedging strategies derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk effective portion gain loss derivative instrument reported component aoci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings remaining gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued commodity hedge programs described derivatives designated cash flow hedges changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either net sales operating income cost products sold interest expense income expense net applicable june 30 2011 company 1 million aftertax gains aoci related gains losses commodity cash flow hedge transactions company expects recognize 1 million gains consolidated statement earnings next 12 months company time uses futures options contracts fix purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 75 million bushels corn per month past 12 months company hedged 1 100 monthly anticipated grind june 30 2011 company designated hedges representing 1 anticipated monthly grind corn next 6 months company time also uses futures options swaps fix purchase price company’s anticipated natural gas requirements certain production facilities objective hedging program reduce variability cash flows associated company’s forecasted purchases natural gas production facilities use approximately 38 million mmbtus natural gas per month past 12 months company hedged 48 58 quantity anticipated monthly natural gas purchases june 30 2011 company designated hedges representing 13 37 anticipated monthly natural gas purchases next 12 months company time also uses futures options swaps fix sales price certain ethanol sales contracts objective hedging program reduce variability cash flows associated company’s sales ethanol sales contracts indexed unleaded gasoline prices past 12 months company hedged 7 million 17 million gallons ethanol per month program june 30 2011 company designated hedges representing 1 million 14 million gallons contracted ethanol sales per month next 9 months protect fluctuations cash flows due foreign currency exchange rates company time use forward foreign exchange contracts cash flow hedges certain production facilities manufacturing expenses equipment purchases denominated nonfunctional currencies reduce risk fluctuations cash flows due changes exchange rate functional versus nonfunctional currencies company hedge portion forecasted foreign currency expenditures june 30 2011 company 2 million aftertax gains aoci related foreign exchange contracts designated cash flow hedging instruments company recognize 2 million gains consolidated statement earnings life hedged transactions company time uses treasury lock agreements interest rate swaps order lock company’s interest rate prior issuance remarketing longterm debt treasurylock agreements interest rate swaps designated cash flow hedges risk changes future interest payments attributable changes benchmark interest rate objective treasurylock agreements interest rate swaps protect company changes benchmark rate date hedge designation date debt actually issued june 30 2011 aoci included 22 million aftertax gains related treasurylock agreements interest rate swaps 21 million relates interest rate swaps dedesignated march 31 2010 discussed earlier note 4 company recognize 22 million gains consolidated statement earnings terms hedged items range 10 30 years archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued following tables set forth fair value derivatives designated hedging instruments june 30 2011 2010 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended june 30 2011 2010 archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities cash equivalents archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities cash equivalents continued 4 million unrealized losses june 30 2011 arose within last 12 months market value investments unrealized loss position less 12 months 9 million 4 million unrealized losses associated availableforsale equity securities related company’s investment one security company evaluated nearterm prospects issuer relation severity duration impairment based evaluation company’s ability intent hold investment reasonable period time sufficient forecasted recovery fair value company consider investment otherthantemporarily impaired june 30 2011 note 6 investments advances affiliates company applies equity method investments investees company ability exercise significant influence including company’s 164 share ownership wilmar company 68 73 unconsolidated affiliates june 30 2011 2010 respectively located north south america africa europe australia asia following table summarizes combined balance sheets june 30 2011 2010 combined statements earnings company’s unconsolidated affiliates three years ended june 30 2011 2010 2009 company’s share undistributed earnings unconsolidated affiliates june 30 2011 13 billion company direct investments two foreign equity method investees carrying value 19 billion june 30 2011 market value 47 billion based active market quoted prices converted us dollars applicable exchange rates august 18 2011 company provides credit facilities totaling 607 million ten unconsolidated affiliates one facility matures december 9 2011 bears interest australian dollar libor rate plus 2 outstanding balance 206 million another facility matures december 31 2011 bears interest one month libor rate outstanding balance 72 million one facility outstanding balance seven credit facilities individually insignificant outstanding balances totaling 64 million june 30 2011 outstanding balances included receivables accompanying consolidated balance sheet archerdanielsmidland company notes consolidated financial statements continued note 7 goodwill balances attributable consolidated businesses investments affiliates segment set forth following table changes goodwill 2011 principally related golden peanut acquisition discussed note 2 foreign currency translation adjustments archerdanielsmidland company notes consolidated financial statements continued note 8 debt financing arrangements archerdanielsmidland company notes consolidated financial statements continued note 8 debt financing arrangements continued june 2008 company issued 175 billion equity units combination debt forward contract holder purchase company’s common stock debt equity instruments deemed separate instruments investor may transfer settle equity instrument separately debt instrument march 30 2011 company initiated remarketing 175 billion 47 debentures underlying equity units two tranches 075 billion principal amount 4479 notes due 2021 10 billion principal amount 5765 debentures due 2041 result remarketing company required use “ifconverted” method calculating diluted earnings per share respect forward contracts quarter ended march 31 2011 see note 9 company incurred early extinguishment debt charges 8 million result debt remarketing forward purchase contracts underlying equity units settled june 1 2011 44 million shares company’s common stock exchange receipt 175 billion cash february 11 2011 company issued 15 billion aggregate principal amount floating rate notes due august 13 2012 interest notes accrues floating rate threemonth libor reset quarterly plus 016 paid quarterly june 30 2011 interest rate notes 042 march 2010 company repurchased aggregate principal amount 500 million outstanding debentures accordance announced tender offers resulting charges early extinguishment debt 75 million consisted 71 million premium related expenses 4 million writeoff debt issuance costs february 2007 company issued 115 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually notes convertible based initial conversion rate 228423 shares per 1000 principal amount notes equal conversion price approximately 4378 per share notes may converted subject adjustment following circumstances 1 calendar quarter beginning march 31 2007 closing price company’s common stock least 20 trading days 30 consecutive trading days ending last trading day immediately preceding quarter 140 applicable conversion price per share 1000 divided applicable conversion rate 2 five consecutive business day period immediately five consecutive trading day period note measurement period average trading price per 1000 principal amount notes equal less 98 average product closing price company’s common stock conversion rate date note measurement period 3 company makes specified distributions common stockholders specified corporate transactions occur 4 time january 15 2014 business day preceding maturity date upon conversion holder would receive amount cash equal lesser 1 1000 2 conversion value defined conversion value exceeds 1000 company deliver company’s election cash common stock combination cash common stock conversion value excess 1000 notes converted connection change control defined company may required provide makewhole premium form increase conversion rate subject stated maximum amount addition event change control holders may require company purchase portion notes purchase price equal 100 principal amount notes plus accrued unpaid interest accordance asc topic 47020 company recognized notes proceeds received 2007 longterm debt 853 million equity 297 million discount longterm debt amortized life notes using effective interest method discount amortization expense 43 million 40 million 39 million 2011 2010 2009 respectively included interest expense related notes archerdanielsmidland company notes consolidated financial statements continued note 8 debt financing arrangements continued concurrent issuance notes company purchased call options private transactions cost 300 million purchased call options allow company receive shares common stock andor cash counterparties equal amounts common stock andor cash related excess current market price company’s common stock exercise price purchased call options addition company sold warrants private transactions acquire subject customary antidilution adjustments 263 million shares common stock exercise price 6256 per share received proceeds 170 million average price company’s common stock defined period ending respective settlement dates exceeds exercise price warrants settled company’s option cash shares common stock purchased call options warrants intended reduce potential dilution upon future conversions notes effectively increasing initial conversion price 6256 per share net cost purchased call options warrant transactions 130 million recorded reduction shareholders’ equity june 30 2011 none conditions permitting conversion notes satisfied addition june 30 2011 market price company’s common stock greater exercise price purchased call options warrants june 30 2011 share amounts related conversion notes exercise warrants included diluted average shares outstanding june 30 2011 fair value company’s longterm debt exceeded carrying value 842 million estimated using quoted market prices discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements aggregate maturities longterm debt five years june 30 2011 178 million 18 billion 11 billion 28 million 17 million respectively june 30 2011 company pledged certain property plant equipment carrying value 344 million security certain longterm debt obligations june 30 2011 company lines credit totaling 69 billion 57 billion unused weighted average interest rates shortterm borrowings outstanding june 30 2011 2010 065 229 respectively company’s total lines credit 46 billion support commercial paper borrowing facility 620 million commercial paper outstanding june 30 2011 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants june 30 2011 company outstanding standby letters credit surety bonds june 30 2011 2010 totaling 620 million 459 million respectively july 1 2011 company entered 364day accounts receivable securitization facility provides company 10 billion liquidity facility company’s usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity sells undivided interest receivable collateral borrowings facility borrowings facility recorded secured borrowings august 24 2011 company used facility expands company’s access liquidity efficient use balance sheet assets archerdanielsmidland company notes consolidated financial statements continued note 9 earnings per share computation basic diluted earnings per share follows average shares outstanding 2011 include 44 million shares beginning june 1 2011 related equity unit conversion adjusted net earnings attributable controlling interests 2011 includes 13 million adjustment aftertax interest quarter ended march 31 2011 adjusted average shares outstanding 2011 include 44 million shares assumed issued january 1 2011 quarter ended march 31 2011 11 million shares year ended june 30 2011 adjustments relate 175 billion equity units made result requirement use “ifconverted” method calculating diluted earnings per share quarter ended march 31 2011 archerdanielsmidland company notes consolidated financial statements continued note 10 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued june 30 2011 2010 company approximately 403 million 326 million shares respectively treasury stock 11 billion june 30 2011 838 million june 30 2010 recorded cost reduction common stock company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 1999 incentive compensation plan 2002 incentive compensation plan 2009 incentive compensation plan options issued market value date grant vest incrementally five nine years expire ten years date grant company’s 1999 2002 2009 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2002 2009 incentive compensation plans also provide granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock vest end threeyear vesting period subject attainment certain future performance criteria 2011 2010 2009 11 million 10 million 11 million common stock units respectively granted restricted stock awards psus june 30 2011 281 million shares available future grants pursuant 2009 plan compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant total compensation expense option grants restricted stock awards psus recognized 2011 2010 2009 47 million 45 million 65 million respectively fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows archerdanielsmidland company notes consolidated financial statements continued note 10 shareholders’ equity continued summary option activity 2011 presented weightedaverage remaining contractual term options outstanding exercisable june 30 2011 6 years 5 years respectively aggregate intrinsic value options outstanding exercisable june 30 2011 43 million 16 million respectively weightedaverage grantdate fair values options granted 2011 2010 2009 882 850 781 respectively total intrinsic values options exercised 2011 2010 2009 21 million 11 million 17 million respectively cash proceeds received options exercised 2011 2010 2009 21 million 11 million 11 million respectively june 30 2011 18 million total unrecognized compensation expense related option grants amounts recognized compensation expense next four fiscal years 9 million 5 million 3 million 1 million respectively fair value restricted stock awards determined based market value company’s shares grant date fair value psus estimated date grant using lattice valuation model weightedaverage grantdate fair values awards granted 2011 2010 2009 3219 2655 2603 respectively summary restricted stock awards psus activity 2011 presented june 30 2011 22 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three fiscal years 11 million 8 million 3 million respectively vesting date total fair value restricted stock awards vested 2011 43 million archerdanielsmidland company notes consolidated financial statements continued note 11 accumulated comprehensive income loss following table sets forth information respect accumulated comprehensive income archerdanielsmidland company notes consolidated financial statements continued note 12 income expense net following table sets forth items income expense realized gains sales availableforsale marketable securities totaled 13 million 12 million 17 million 2011 2010 2009 respectively realized losses sales availableforsale marketable securities 1 million 2011 3 million 2010 1 million 2009 impairment losses securities 15 million 2010 22 million 2009 note 13 income taxes financial reporting purposes earnings income taxes include following components archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued reconciliation statutory federal income tax rate company’s effective tax rate earnings follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company 220 million 135 million tax assets related net operating loss carryforwards certain international subsidiaries june 30 2011 2010 respectively june 30 2011 approximately 211 million assets expiration date remaining 9 million expire various times fiscal 2024 annual usage certain assets limited percentage taxable income respective international subsidiary year company recorded valuation allowance 52 million 38 million tax assets june 30 2011 2010 respectively due uncertainty realization company 46 million 41 million tax assets related excess foreign tax credits june 30 2011 2010 respectively begin expire fiscal 2013 company 57 million 50 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit june 30 2011 2010 respectively expire various times fiscal 2017 company recorded valuation allowance 7 million excess foreign tax credits june 30 2011 due uncertainty realization company recorded valuation allowance state income tax assets 36 million net federal tax benefit june 30 2011 june 30 2010 company 7 million valuation allowance recorded related excess foreign tax credits 26 million valuation allowance related state income tax attributes due uncertainty realization company remains subject federal examination us calendar tax year 2010 undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 82 billion june 30 2011 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings 2009 approximately 158 million income tax expense incurred related company’s investment wilmar international holdings limited wihl subsidiary adm asia pacific limited admap whollyowned subsidiary company april 1 2009 wihl distributed publicly traded shares wilmar admap triggered 158 million income tax expense additionally company recognized 12 million income tax expense fiscal year 2010 related 2009 distribution wihl admap holds direct ownership interest wilmar archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company accounts income tax positions provisions asc topic 740 income taxes asc topic 740 prescribes minimum threshold tax position required meet recognized consolidated financial statements interpretation requires company recognize consolidated financial statements tax positions determined likely sustained upon examination based technical merits position total amounts unrecognized tax benefits june 30 2011 2010 follows additions reductions unrecognized tax benefits shown table include effects related net income shareholders’ equity 2011 changes unrecognized tax benefits material effect company’s net income cash flow company classifies interest income tax related balances interest expense interest income classifies taxrelated penalties selling general administrative expenses june 30 2011 2010 company accrued interest penalties unrecognized tax benefits 27 million years company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would positive impact 45 million tax expense period archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company’s whollyowned subsidiary adm brasil ltda “adm brasil” received three separate tax assessments brazilian federal revenue service “bfrs” challenging tax deductibility commodity hedging losses related expenses incurred adm brasil tax assessments income tax penalties interest tax years 2004 2006 2007 amounts 549 million 22 million 94 million respectively adjusted interest variation currency exchange rates adm brasil’s tax return 2005 also audited assessment received statute limitations 2005 expired bfrs challenge commodity hedging deductions tax years 2007 company estimates could receive additional claims approximately 114 million june 30 2011 subject variation currecy exchange rates adm brasil enters commodity hedging transactions result gains included adm brasil’s calculations taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs adm brasil filed administrative appeal assessments second quarter fiscal 2011 decision favor bfrs 2004 assessment received second level administrative appeal filed decisions initial appeal related 2006 2007 assessments adm brasil continues unsuccessful administrative appellate process appeals available brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company intends vigorously defend position current assessments similar assessments may issued years subsequent 2007 note 14 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2031 rent expense 2011 2010 2009 251 million 241 million 217 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans company provides substantially us employees certain international subsidiaries pension benefits eligible us employees five years service prior january 1 2009 participate defined benefit pension plan eligible us employees hired january 1 2009 eligible salaried employees less five years service prior january 1 2009 participate “cash balance” pension formula company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage company also maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest adm stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 163 million shares company common stock june 30 2011 market value 490 million cash dividends received shares company common stock plans year ended june 30 2011 10 million archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued company uses june 30 measurement date defined benefit plans following tables set forth changes defined benefit obligation fair value defined benefit plan assets archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued included accumulated comprehensive income pension benefits june 30 2011 following amounts yet recognized net periodic pension cost unrecognized transition obligation 3 million unrecognized prior service cost 15 million unrecognized actuarial loss 655 million transition obligation prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost fiscal year ended june 30 2012 1 million 4 million 49 million respectively included accumulated comprehensive income postretirement benefits june 30 2011 following amounts yet recognized net periodic pension cost unrecognized prior service credit 6 million unrecognized actuarial gain 11 million prior service credit included accumulated comprehensive income expected recognized net periodic benefit cost fiscal year ended june 30 2012 1 million following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 21 billion 19 billion 17 billion respectively june 30 2011 22 billion 20 billion 16 billion respectively june 30 2010 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 671 million 657 million 425 million respectively june 30 2011 21 billion 19 billion 15 billion respectively june 30 2010 accumulated benefit obligation pension plans june 30 2011 2010 23 billion 21 billion respectively postretirement benefit measurement purposes 75 annual rate increase per capita cost covered health care benefits assumed 2011 rate assumed decrease gradually 5 2022 remain level thereafter 1 change assumed health care cost trend rates would following effects archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments adm common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts based cumulative net asset value nav underlying investments ccts comprised international equity funds small cap us equity fund large cap us equity funds fixed income funds fund units valued nav based closing market value units bought sold valuation date classified level 2 fair value hierarchy ccts seek primarily provide investment results approximating aggregate price dividend performance total return income stream underlying investments funds issuances redemptions certain cct investments may restricted date andor amount corporate debt instruments corporate debt instruments valued closing price reported active market traded classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date following tables set forth level within fair value hierarchy fair value plan assets june 30 2011 2010 archerdanielsmidland company notes consolidated financial statements continued level 3 gains losses plan assets classified level 3 fair value hierarchy therefore associated gains losses archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date company’s us pension plans contain approximately 66 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt securities target asset allocation company’s us pension plans actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 36 equity securities 62 debt securities 2 investments target asset allocation company’s foreign pension plans approximately actual asset allocation company’s pension plans hold shares company common stock june 30 2011 measurement date cash dividends received shares company common stock plans twelvemonth period ended june 30 2011 01 million investment objectives company’s plan assets · optimize longterm return plan assets acceptable level risk · maintain broad diversification across asset classes among investment managers · maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued contributions expected future benefit payments based actuarial calculations company expects contribute 47 million pension plans 8 million postretirement benefit plan 2012 company may elect make discretionary contributions 2012 following benefit payments reflect expected future service expected paid note 16 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations organized managed classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations include wheat processing cocoa processing financial business units reportable segments defined asc topic 280 segment reporting classified oilseeds processing segment includes activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds oilseeds processing segment also produces natural health nutrition products specialty food feed ingredients north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets europe south america oilseeds processing segment includes origination merchandising activities network grain elevators port facilities transportation assets used buy store clean transport agricultural commodities adjuncts oilseeds processing assets south america oilseeds processing segment operates fertilizer blending facilities effective december 31 2010 company acquired alimenta usa inc result transaction owns 100 golden peanut leading us peanut sheller oil refiner operator one facility argentina oilseeds processing segment began consolidating operating results golden peanut previously 50 owned joint venture third quarter fiscal 2011 oilseeds processing segment also includes company’s share results equity investment wilmar share results edible oils limited stratas foods llc joint ventures archerdanielsmidland company notes consolidated financial statements continued note 16 segment geographic information continued company’s corn processing segment engaged corn wet milling dry milling activities asset base primarily located central part united states corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing products include citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities company’s brazilian sugarcane operations propylene ethylene glycol facility bioplastic facility equity investments renewable plastics segment includes company’s share results equity investments almidones mexicanos sa eaststarch cv red star yeast company llc agricultural services segment utilizes extensive us grain elevator global transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include truck rail barge port oceangoing vessel handling freight services agricultural services segment includes activities alfred c toepfer international 80 owned global merchant agricultural commodities processed products agricultural services segment also includes company’s share results kalama export company joint venture activities related processing distributing formula feeds animal health nutrition products procuring processing distributing edible beans includes company’s remaining processing operations consisting activities related processing agricultural commodities food ingredient products wheat flour cocoa chocolate cocoa products also includes financial activities related banking captive insurance futures commission merchant activities private equity fund investments company’s share results equity investment gruma sab de cv intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses including interest charge related working capital usage also included segment operating profit equity earnings affiliates based equity method accounting certain corporate items allocated company’s reportable business segments corporate results include impact liforelated adjustments aftertax elimination income attributable mandatorily redeemable interests consolidated subsidiaries unallocated corporate expenses unallocated net interest costs prior year sales external customers segment intersegment sales reclassified conform current year’s presentation resulting reclassified net sales segment level impact total net sales operating profit segment addition inventories accrued expenses prior year’s consolidated balance sheet reclassified conform current year’s presentation corresponding change prior year’s identifiable assets segment archerdanielsmidland company notes consolidated financial statements continued note 16 segment geographic information continued segment information archerdanielsmidland company notes consolidated financial statements continued note 16 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 16 segment geographic information continued geographic information following geographic data include net sales operating income attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent sum net book value property plant equipment plus goodwill related consolidated businesses note 17 contingencies guarantees commitments since august 2008 company conducting internal review policies procedures internal controls pertaining adequacy anticorruption compliance program certain transactions conducted company affiliates joint ventures primarily relating grain feed exports may violated company policies us foreign corrupt practices act us foreign laws company initially disclosed review us department justice securities exchange commission certain foreign regulators march 2009 subsequently provided periodic updates agencies company engaged outside counsel advisors assist review matters implemented continuing implement appropriate remedial measures connection review government agencies could impose civil penalties criminal fines andor order company disgorge profits derived contracts involving inappropriate payments events expected material impact company’s business financial condition company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 121 million june 30 2011 amounts outstanding primary entity contingent obligations 69 million june 30 2011 archerdanielsmidland company notes consolidated financial statements continued note 18 quarterly financial data unaudited net earnings attributable controlling interests first second third fourth quarters fiscal year 2011 include aftertax start costs company’s new greenfield plants 20 million 14 million 14 million 11 million equal 003 002 per share respectively net earnings attributable controlling interests fourth quarter ended june 30 2011 include debt buyback costs 15 million 9 million tax equal 001 per share net earnings attributable controlling interests fourth quarter ended june 30 2011 include gain 78 million 49 million tax equal 007 per share related sale bank securities held company’s equity investee gruma sab de cv net earnings attributable controlling interests second quarter ended december 31 2010 include gain 71 million 44 million tax equal 007 per share related acquisition remaining interest golden peanut net earnings attributable controlling interests first second third quarters fiscal year 2011 include aftertax losses gains interest rate swaps 19 million 34 million 4 million equal 003 005 001 per share respectively discussed note 4 second quarter fiscal year 2011 company updated estimates service lives certain machinery equipment assets effect change net earnings attributable controlling interests second third fourth quarters fiscal year 2011 aftertax increase 24 million 31 million 28 million equal 004 005 004 per share respectively net earnings attributable controlling interests first second third fourth quarters fiscal year 2010 include aftertax start costs company’s new greenfield plants 6 million 20 million 18 million 24 million equal 001 003 004 per share respectively net earnings attributable controlling interests third quarter ended march 31 2010 include charges 75 million 47 million tax equal 007 per share related loss extinguishment debt resulting repurchase 500 million aggregate principal amount company’s outstanding debentures net earnings attributable controlling interests fourth quarter ended june 30 2010 include charges 59 million 37 million tax equal 006 per share related losses interest rate swaps discussed note 4 report independent registered public accounting firm board directors shareholders archerdanielsmidland company decatur illinois audited accompanying consolidated balance sheets archerdanielsmidland company june 30 2011 2010 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2011 audits also included financial statement schedule listed index item 15a2 financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archerdanielsmidland company june 30 2011 2010 consolidated results operations cash flows three years period ended june 30 2011 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein also audited accordance standards public company accounting oversight board united states archerdanielsmidland company’s internal control financial reporting june 30 2011 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission report dated august 24 2011 expressed unqualified opinion thereon ernst young llp st louis missouri august 24 2011 report independent registered public accounting firm board directors shareholders archerdanielsmidland company decatur illinois audited archerdanielsmidland company’s internal control financial reporting june 30 2011 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso criteria archerdanielsmidland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion archerdanielsmidland company maintained material respects effective internal control financial reporting june 30 2011 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archerdanielsmidland company june 30 2011 2010 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2011 archerdanielsmidland company report dated august 24 2011 expressed unqualified opinion thereon ernst young llp st louis missouri august 24 2011 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows cash paid interest income taxes follows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements june 30 2012 three years ended include accounts company majorityowned subsidiaries significant intercompany accounts transactions eliminated investments affiliates carried cost plus equity undistributed earnings since acquisition adjusted appropriate amortizable basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain majorityowned subsidiaries included using recent available financial statements case financial statements within 93 days company’s year end consistent period except described company evaluates consolidates appropriate less majorityowned investments effective second quarter fiscal year 2011 one company’s majorityowned subsidiaries changed accounting period resulting elimination onemonth lag reporting consolidated subsidiary’s financial results effect change aftertax earnings year ended june 30 2011 immaterial first quarter fiscal 2012 company sold majority ownership interest hickory point bank trust company fsb bank previously whollyowned subsidiary result accounts bank deconsolidated material effect aftertax earnings company accounts remaining ownership interest bank equity method company consolidates certain less whollyowned subsidiaries minority interest subject mandatorily redeemable put option result associated minority interest included longterm liabilities december 31 2011 put option expired result company reclassified 174 million minority interest longterm liabilities noncontrolling interests shareholders’ equity date use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates second quarter fiscal year 2011 company updated estimates service lives certain machinery equipment assets order better match company’s depreciation expense periods assets expected generate revenue based planned historical service periods new estimated service lives established based manufacturing engineering data external benchmark data new information obtained result company’s recent major construction projects new estimated service lives also supported biofuels legislation mandates many countries driving requirements time greater future usage higher blend rates biofuels archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued company accounted service life update change accounting estimate october 1 2010 accordance guidance accounting standards codification asc topic 250 accounting changes error corrections thereby impacting quarter change occurred future quarters effect change aftertax earnings diluted earnings per share increase 83 million 013 respectively year ended june 30 2011 change fiscal year may 3 2012 board directors company determined accordance bylaws upon recommendation audit committee company’s fiscal year shall begin january 1 end december 31 year starting january 1 2013 company’s current fiscal year ended june 30 2012 required transition period july 1 2012 december 31 2012 included form 10k transition report reclassifications receivables accounts payables prior year consolidated balance sheet reclassified conform current year’s presentation trade receivables trade payables shown separately receivables payables respectively receivables payables included current assets accrued expenses payables respectively see notes 6 7 changes total current assets total current liabilities total assets total liabilities result reclassifications changes also reflected prior year consolidated statement cash flows impact total cash provided used operating investing financing activities effective april 2012 company reorganized streamlined business unit reporting structure broadened management spans control starting annual report form 10k oilseeds processing reportable segment includes cocoa processing operations agricultural services reportable segment includes wheat processing operations corn processing reportable segment includes sweeteners starches bioproducts remains unchanged company’s remaining operations include financial business units continue classified previously cocoa wheat processing operations included throughout annual report form 10k prior periods reclassified conform current period segment presentation also effective april 2012 interest charge related working capital usage previously charged segment operating profit reflected corporate result changes prior years’ segment disclosures notes 9 18 reclassified conform current year presentation cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements segregated balances represent deposits received customers company’s registered futures commission merchant securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 92 million 100 million june 30 2012 2011 respectively reflect loss anticipated accounts receivable balances company calculates allowance based history writeoffs level pastdue accounts relationships economic status customers portions allowance uncollectible accounts recorded trade receivables current assets credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates june 30 2012 2011 263 million 367 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market marketable securities company classifies marketable securities availableforsale except certain designated securities classified trading securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component comprehensive income company monitors investments impairment periodically recognizes impairment charge decline fair value investment judged otherthantemporary trading securities carried fair value unrealized gains losses included income current basis company uses specific identification method securities sold reclassified accumulated comprehensive income earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 40 years machinery equipment 3 30 years company capitalized interest major construction projects progress 21 million 7 million 75 million 2012 2011 2010 respectively goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company evaluates goodwill intangible assets indefinite lives impairment fourth quarter fiscal year whenever indicators carrying value assets may fully recoverable goodwill impairment charges recorded 2012 2011 2010 carrying value company’s intangible assets material archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued asset abandonments writedowns company records asset impairment exit restructuring charges abandonment writedown fair value certain longlived assets majority asset writedowns related idle underperforming product lines decision abandon writedown finalized consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value writedowns carrying value assets immaterial net sales company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured company sales contracts allow pricing occur title goods passed customer cases company continues report goods inventory recognizes sales revenue price determined freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates 2012 2011 2010 77 billion 71 billion 71 billion respectively stock compensation company recognizes expense sharebased compensation based fair value awards granted company’s sharebased compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related sharebased compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 56 million 60 million 56 million years ended june 30 2012 2011 2010 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method described note 10 certain potentially dilutive securities excluded diluted average shares calculation impact antidilutive except third quarter fiscal 2011 see note 11 earnings per share calculations archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued adoption new accounting standards effective july 1 2011 company adopted amended guidance asc topic 820 fair value measurements disclosures requires company disclose information reconciliation recurring level 3 measurements purchases sales issuances settlements gross basis separate assets liabilities adoption amended guidance requires expanded disclosure notes company’s consolidated financial statements impact financial results see note 3 disclosures required guidance effective march 31 2012 company adopted amended guidance asc topic 820 fair value measurements disclosures clarifies changes certain fair value measurement principles enhances disclosure requirements particularly level 3 fair value measurements adoption amended guidance requires expanded disclosure notes company’s consolidated financial statements impact financial results see note 3 disclosures required guidance effective april 1 2012 company adopted amended guidance asc topic 350 intangibles goodwill changes process entities test goodwill impairment amended guidance permits entity first assess qualitative factors determine whether likely fair value reporting unit less carrying amount basis determining whether necessary perform twostep goodwill impairment test described topic 350 adoption amended guidance impact financial results pending accounting standards effective july 1 2012 company required adopt amended guidance asc topic 220 comprehensive income requires company present total comprehensive income components net income components comprehensive income either single continuous statement comprehensive income two separate consecutive statements amended guidance eliminates option present components comprehensive income part statement shareholders’ equity company required apply presentation disclosure requirements amended guidance retrospectively adoption amended guidance change financial statement presentation require expanded disclosures company’s consolidated financial statements impact financial results note 2 acquisitions company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended tangible assets liabilities based preliminary purchase price allocations 2012 acquisitions adjusted fair values acquisition date remainder purchase price recorded goodwill identifiable intangible assets acquired part acquisitions material operating results acquisitions included company’s financial statements date acquisition significant company’s consolidated operating results 2012 acquisitions 2012 company made nine acquisitions total cost 241 million cash recorded preliminary allocation purchase price related acquisitions net cash purchase price nine acquisitions 241 million preliminarily allocated working capital property plant equipment goodwill longterm assets longterm liabilities 12 million 199 million 51 million 6 million 3 million respectively single material acquisition year archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued 2011 acquisitions 2011 company made four acquisitions total cost 218 million cash recorded preliminary allocation purchase price related acquisitions net cash purchase price four acquisitions 218 million plus acquisitiondate fair value equity interest company previously held golden peanut allocated working capital property plant equipment goodwill longterm assets longterm liabilities 113 million 235 million 63 million 11 million 36 million respectively finalization purchase price allocations related acquisitions result material adjustments acquisition alimenta usa inc company’s former 50 percent partner golden peanut significant acquisition fiscal year 2011 transaction resulted company obtaining control remaining outstanding shares golden peanut largest us handler processor exporter peanuts operator one facility argentina business fits well company’s existing us oilseed export operations global oilseed business pretax gain 71 million recognized second quarter fiscal year 2011 result revaluing company’s previously held investment golden peanut conjunction acquisition remaining 50 percent 2010 acquisitions 2010 company acquired two businesses total cost 62 million cash purchase price 62 million allocated current assets property plant equipment goodwill 2 million 57 million 3 million respectively archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis june 30 2012 2011 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 1 assets liabilities include exchangetraded derivative contracts us treasury securities certain publicly traded equity securities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period ended june 30 2012 company transfers levels 1 2 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 company uses market approach valuation technique measure majority assets liabilities carried fair value estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets market valuations company’s inventories adjusted location quality exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade generally valuations based price information observable market participants rely insignificant unobservable information cases inventory classified level 2 certain inventories may require management judgment estimation significant component fair value amount inventories availability sufficient thirdparty information limited cases inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued company’s derivative contracts measured fair value including forward commodity purchase sale contracts exchangetraded commodity futures option contracts otc instruments related primarily agricultural commodities ocean freight energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact measurement fair value contract classified level 3 based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies contract level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component net sales operating income cost products sold income expensenet effective portions changes fair value derivatives designated cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss hedged items recorded earnings probable hedged transaction longer occur company’s marketable securities comprised us treasury securities obligations us government agencies corporate municipal debt securities equity investments us treasury securities certain publicly traded equity investments valued using quoted market prices classified level 1 us government agency obligations corporate municipal debt securities certain equity investments valued using thirdparty pricing services substantially classified level 2 security values determined using pricing models classified level 3 unrealized changes fair value availableforsale marketable securities recognized consolidated balance sheets component accumulated comprehensive income loss unless decline value deemed otherthantemporary point decline recorded earnings company deferred consideration accounts receivable securitization program “program” represents note receivable purchasers program amount reflected current assets consolidated balance sheet see note 20 company carries deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 twelve months ended june 30 2012 2011 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued includes gains 109 million attributable change unrealized gains losses relating level 3 assets liabilities still held june 30 2011 fair values inventories commodity purchase sale contracts generally estimated based observable exchangequoted futures prices adjusted needed arrive prices local markets exchangequoted futures prices represent quotes contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade cases price components result differences exchangetraded prices local prices observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components determined specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations june 30 2012 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component weighted average 88 total price assets 23 liabilities certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations company considers price quotes 100 percent unobservable therefore fair value items reported level 3 note 4 inventories derivative instruments hedging activities company values certain inventories using lower cost determined either lifo fifo method market inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value fiscal year 2012 lifo inventory quantities declined resulting liquidation effect lifo reserves increased aftertax earnings 59 million 009 per share archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments derivative instruments designated qualify hedging instruments reporting entity must designate hedging instrument based upon exposure hedged fair value hedge cash flow hedge net investment foreign operation june 30 2012 2011 company certain derivatives designated cash flow hedges within note 4 tables zeros represent minimal amounts derivatives designated hedging instruments company generally follows policy using exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets exchangetraded futures exchangetraded otc options contracts forward cash purchase sales contracts certain merchandisable agricultural commodities accounted derivatives company stated fair value inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore included tables changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately unrealized gains unrealized losses forward cash purchase contracts forward foreign currency exchange fx contracts forward cash sales contracts exchangetraded otc options contracts represent fair value instruments classified company’s consolidated balance sheets current assets accrued expenses payables respectively march 31 2010 company dedesignated discontinued hedge accounting treatment certain interest rate swaps date dedesignation hedges 21 million aftertax gains deferred accumulated comprehensive income aoci march 2011 interest rate swaps terminated upon remarketing associated longterm debt discontinuing hedge accounting company recognized earnings 30 million pretax gains 59 million pretax losses changes fair value interest rate swaps years ended june 30 2011 2010 respectively 21 million gains deferred aoci amortized 30 years period term related debt following table sets forth fair value derivatives designated hedging instruments june 30 2012 2011 archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended june 30 2012 2011 2010 inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore included table changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued derivatives designated cash flow hedging strategies derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk effective portion gain loss derivative instrument reported component aoci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings remaining gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period commodity hedge programs described derivatives designated cash flow hedges changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either net sales operating income cost products sold interest expense income expense net applicable june 30 2012 company 28 million aftertax gains aoci related gains losses commodity cash flow hedge transactions company expects recognize 28 million gains consolidated statement earnings next 12 months company time uses futures options contracts fix purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 76 million bushels corn per month past 12 months company hedged 1 100 monthly anticipated grind june 30 2012 company designated hedges representing 1 26 anticipated monthly grind corn next 20 months company time also uses futures options swaps fix purchase price company’s anticipated natural gas requirements certain production facilities objective hedging program reduce variability cash flows associated company’s forecasted purchases natural gas production facilities use approximately 38 million mmbtus natural gas per month past 12 months company hedged 19 38 quantity anticipated monthly natural gas purchases june 30 2012 company designated hedges representing 8 19 anticipated monthly natural gas purchases next 12 months company time also uses futures options swaps fix sales price certain ethanol sales contracts objective hedging program reduce variability cash flows associated company’s sales ethanol sales contracts indexed unleaded gasoline prices past 12 months company hedged 10 million 21 million gallons ethanol per month program june 30 2012 company designated hedges representing 7 million 15 million gallons contracted ethanol sales per month next 6 months archerdanielsmidland company notes consolidated financial statements continued note 4 inventories derivative instruments hedging activities continued protect fluctuations cash flows due foreign currency exchange rates company time use forward foreign exchange contracts cash flow hedges certain production facilities manufacturing expenses equipment purchases denominated nonfunctional currencies reduce risk fluctuations cash flows due changes exchange rate functional versus nonfunctional currencies company hedge portion forecasted foreign currency expenditures past 12 months company hedged 24 million 30 million forecasted foreign currency expenditures june 30 2012 company designated hedges 24 million forecasted foreign currency expenditures june 30 2012 company 3 million aftertax losses aoci related foreign exchange contracts designated cash flow hedging instruments company recognize 3 million losses consolidated statement earnings life hedged transactions company time uses treasury lock agreements interest rate swaps order lock company’s interest rate prior issuance remarketing longterm debt treasurylock agreements interest rate swaps designated cash flow hedges risk changes future interest payments attributable changes benchmark interest rate objective treasurylock agreements interest rate swaps protect company changes benchmark rate date hedge designation date debt actually issued june 30 2012 aoci included 22 million aftertax gains related treasurylock agreements interest rate swaps 20 million relates interest rate swaps dedesignated march 31 2010 discussed earlier note 4 company recognize 22 million gains consolidated statement earnings terms hedged items range 10 30 years following tables set forth fair value derivatives designated hedging instruments june 30 2012 2011 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended june 30 2012 2011 2010 archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities cash equivalents archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities cash equivalents continued 4 million unrealized losses june 30 2012 arose within last 12 months related company’s investment one security market value availableforsale equity security unrealized loss position less 12 months 97 million company evaluated nearterm prospects issuer relation severity duration impairment based evaluation company’s ability intent hold investment reasonable period time sufficient forecasted recovery fair value company consider investment otherthantemporarily impaired june 30 2012 december 2011 company recorded 13 million otherthantemporary impairment related availableforsale equity security investment metabolix inc see note 19 additional information impairment charge included asset impairment exit restructuring costs consolidated statements earnings june 2012 company recorded 12 million otherthantemporary impairment charge related availableforsale investment one equity security based company’s assessment underlying market conditions impairment charge recorded income expense net consolidated statements earnings note 6 current assets following table sets forth items current assets note 7 accrued expenses payables following table sets forth items accrued expenses payables archerdanielsmidland company notes consolidated financial statements continued note 8 investments advances affiliates company applies equity method investments investees company ability exercise significant influence including company’s 164 share ownership wilmar company 69 68 unconsolidated domestic foreign affiliates june 30 2012 2011 respectively following table summarizes combined balance sheets june 30 2012 2011 combined statements earnings company’s unconsolidated affiliates three years ended june 30 2012 2011 2010 company’s share undistributed earnings unconsolidated affiliates june 30 2012 16 billion company direct investments two foreign equity method investees carrying value 21 billion june 30 2012 market value 33 billion based active market quoted prices converted us dollars applicable exchange rates june 30 2012 company provides credit facilities totaling 340 million eight unconsolidated affiliates one facility due demand bears interest 278 outstanding balance 25 million another facility also due demand bears interest one month british pound libor rate plus 15 outstanding balance 22 million three facilities outstanding balances three credit facilities individually insignificant outstanding balances totaling 15 million june 30 2012 outstanding balances included current assets accompanying consolidated balance sheet note 9 goodwill balances attributable consolidated businesses investments affiliates segment set forth following table changes goodwill 2012 principally related acquisitions foreign currency translation adjustments archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued september 26 2011 company issued 528 million 4535 senior debentures due 2042 new debentures exchange 404 million previously issued outstanding 645 6625 675 695 7 75 debentures company paid 32 million debt premium certain bondholders associated exchanges discount new debentures amortized life new debentures using effective interest method june 2008 company issued 175 billion equity units combination debt forward contract holder purchase company’s common stock debt equity instruments deemed separate instruments investor may transfer settle equity instrument separately debt instrument march 30 2011 company initiated remarketing 175 billion 47 debentures underlying equity units two tranches 075 billion principal amount 4479 notes due 2021 10 billion principal amount 5765 debentures due 2041 result remarketing company required use “ifconverted” method calculating diluted earnings per share respect forward contracts quarter ended march 31 2011 see note 11 company incurred early extinguishment debt charges 8 million result debt remarketing forward purchase contracts underlying equity units settled june 1 2011 44 million shares company’s common stock exchange receipt 175 billion cash february 11 2011 company issued 15 billion aggregate principal amount floating rate notes due august 13 2012 interest notes accrues floating rate threemonth libor reset quarterly plus 016 paid quarterly june 30 2012 interest rate notes 063 august 2012 company paid notes funds available shortterm borrowings february 2007 company issued 115 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually notes convertible based initial conversion rate 228423 shares per 1000 principal amount notes equal conversion price approximately 4378 per share notes may converted subject adjustment following circumstances 1 calendar quarter beginning march 31 2007 closing price company’s common stock least 20 trading days 30 consecutive trading days ending last trading day immediately preceding quarter 140 applicable conversion price per share 1000 divided applicable conversion rate 2 five consecutive business day period immediately five consecutive trading day period note measurement period average trading price per 1000 principal amount notes equal less 98 average product closing price company’s common stock conversion rate date note measurement period 3 company makes specified distributions common stockholders specified corporate transactions occur 4 time january 15 2014 business day preceding maturity date upon conversion holder would receive amount cash equal lesser 1 1000 2 conversion value defined conversion value exceeds 1000 company deliver company’s election cash common stock combination cash common stock conversion value excess 1000 notes converted connection change control defined company may required provide makewhole premium form increase conversion rate subject stated maximum amount addition event change control holders may require company purchase portion notes purchase price equal 100 principal amount notes plus accrued unpaid interest accordance asc topic 47020 company recognized notes proceeds received 2007 longterm debt 853 million equity 297 million discount longterm debt amortized life notes using effective interest method discount amortization expense 45 million 43 million 40 million 2012 2011 2010 respectively included interest expense related notes archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued concurrent issuance notes company purchased call options private transactions cost 300 million purchased call options allow company receive shares common stock andor cash counterparties equal amounts common stock andor cash related excess current market price company’s common stock exercise price purchased call options addition company sold warrants private transactions acquire subject customary antidilution adjustments 263 million shares common stock exercise price 6256 per share received proceeds 170 million average price company’s common stock defined period ending respective settlement dates exceeds exercise price warrants settled company’s option cash shares common stock purchased call options warrants intended reduce potential dilution upon future conversions notes effectively increasing initial conversion price 6256 per share net cost purchased call options warrant transactions 130 million recorded reduction shareholders’ equity purchased call options expire maturity date notes warrants expire shortly thereafter june 30 2012 none conditions permitting conversion notes satisfied addition june 30 2012 market price company’s common stock greater exercise price purchased call options warrants june 30 2012 share amounts related conversion notes exercise warrants included diluted average shares outstanding june 30 2012 fair value company’s longterm debt exceeded carrying value 15 billion estimated using quoted market prices level 2 measurement asc 820 aggregate maturities longterm debt five years june 30 2012 17 billion 11 billion 21 million 17 million 304 million respectively june 30 2012 company pledged certain property plant equipment carrying value 324 million security certain longterm debt obligations june 30 2012 company lines credit totaling 65 billion 44 billion unused weighted average interest rates shortterm borrowings outstanding june 30 2012 2011 078 065 respectively company’s total lines credit 43 billion support commercial paper borrowing facility 13 billion commercial paper outstanding june 30 2012 august 2012 company added 20 billion credit facility support commercial paper borrowings company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants june 30 2012 company outstanding standby letters credit surety bonds june 30 2012 2011 totaling 644 million 729 million respectively march 27 2012 company entered amendment accounts receivable securitization program “program” program provides company 10 billion funding resulting sale accounts receivable june 30 2012 company utilized 10 billion facility program see note 20 information program archerdanielsmidland company notes consolidated financial statements continued note 11 earnings per share computation basic diluted earnings per share follows average shares outstanding 2011 include 44 million shares beginning june 1 2011 related equity unit conversion adjusted net earnings attributable controlling interests 2011 includes 13 million adjustment aftertax interest adjusted average shares outstanding 2011 include 44 million shares assumed issued january 1 2011 quarter ended march 31 2011 11 million shares year ended june 30 2011 adjustments relate 175 billion equity units made result requirement use “ifconverted” method calculating diluted earnings per share quarter ended march 31 2011 archerdanielsmidland company notes consolidated financial statements continued note 12 shareholder’s equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued june 30 2012 2011 company approximately 575 million 403 million shares respectively treasury stock 16 billion june 30 2012 11 billion june 30 2011 recorded cost reduction common stock company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2002 2009 incentive compensation plans options issued market value date grant vest incrementally five nine years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows summary option activity 2012 presented weightedaverage remaining contractual term options outstanding exercisable june 30 2012 6 years 5 years respectively aggregate intrinsic value options outstanding exercisable june 30 2012 39 million 6 million respectively weightedaverage grantdate fair values options granted 2012 2011 2010 698 882 850 respectively total intrinsic values options exercised 2012 2011 2010 5 million 21 million 11 million respectively cash proceeds received options exercised 2012 2011 2010 7 million 21 million 11 million respectively archerdanielsmidland company notes consolidated financial statements continued note 12 shareholder’s equity continued june 30 2012 16 million total unrecognized compensation expense related option grants amounts recognized compensation expense next four fiscal years 7 million 4 million 3 million 2 million respectively company’s 2002 2009 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2002 2009 incentive compensation plans also provide granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock vest end threeyear vesting period subject attainment certain future performance criteria 2012 2011 2010 12 million 11 million 10 million common stock units respectively granted restricted stock awards psus june 30 2012 245 million shares available future grants pursuant 2009 plan fair value restricted stock awards determined based market value company’s shares grant date fair value psus estimated date grant using lattice valuation model weightedaverage grantdate fair values awards granted 2012 2011 2010 2675 3219 2655 respectively summary restricted stock awards psus activity 2012 presented june 30 2012 25 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three fiscal years 15 million 9 million 1 million respectively vesting date total fair value restricted stock awards vested 2012 30 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant total compensation expense option grants restricted stock awards psus recognized 2012 2011 2010 48 million 47 million 45 million respectively archerdanielsmidland company notes consolidated financial statements continued note 13 accumulated comprehensive income loss following table sets forth information respect accumulated comprehensive income archerdanielsmidland company notes consolidated financial statements continued note 14 income expense net following table sets forth items income expense 71 million gain golden peanut revaluation recognized result revaluing company’s previously held investment golden peanut conjunction acquisition remaining 50 percent interest “golden peanut gain” realized gains sales availableforsale marketable securities totaled 38 million 13 million 12 million 2012 2011 2010 respectively realized losses sales availableforsale marketable securities 1 million 2012 1 million 2011 3 million 2010 impairment losses securities 12 million 2012 15 million 2010 additional impairment losses securities 12 million 2012 classified asset impairment exit restructuring charges consolidated statement earnings note 15 income taxes following table sets forth geographic split earnings income taxes significant components income tax follows archerdanielsmidland company notes consolidated financial statements continued note 15 income taxes continued significant components deferred tax liabilities assets follows reconciliation statutory federal income tax rate company’s effective tax rate earnings follows archerdanielsmidland company notes consolidated financial statements continued note 15 income taxes continued company 241 million 220 million tax assets related net operating loss carryforwards certain international subsidiaries june 30 2012 2011 respectively june 30 2012 approximately 231 million assets expiration date remaining 10 million expire various times fiscal 2025 annual usage certain assets limited percentage taxable income respective international subsidiary year company recorded valuation allowance 96 million 52 million tax assets june 30 2012 2011 respectively due uncertainty realization company 31 million 46 million tax assets related excess foreign tax credits june 30 2012 2011 respectively begin expire fiscal 2013 company 67 million 57 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit june 30 2012 2011 respectively expire various times fiscal 2018 company recorded valuation allowance 4 million excess foreign tax credits june 30 2012 due uncertainty realization company recorded valuation allowance state income tax assets 45 million net federal tax benefit june 30 2012 june 30 2011 company 7 million valuation allowance recorded related excess foreign tax credits 36 million valuation allowance related state income tax attributes due uncertainty realization company remains subject federal examination us calendar tax year 2011 undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 72 billion june 30 2012 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings company accounts income tax positions provisions asc topic 740 income taxes asc topic 740 prescribes minimum threshold tax position required meet recognized consolidated financial statements interpretation requires company recognize consolidated financial statements tax positions determined likely sustained upon examination based technical merits position rollforward activity unrecognized tax benefits year ended june 30 2012 2011 follows additions reductions unrecognized tax benefits shown table include effects related net income shareholders’ equity 2012 changes unrecognized tax benefits material effect company’s net income cash flow archerdanielsmidland company notes consolidated financial statements continued note 15 income taxes continued company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses june 30 2012 2011 company accrued interest penalties unrecognized tax benefits 16 million 27 million respectively company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 53 million tax expense period company’s whollyowned subsidiary adm brasil ltda adm brasil received three separate tax assessments brazilian federal revenue service bfrs challenging tax deductibility commodity hedging losses related expenses tax years 2004 2006 2007 amounts 468 million 20 million 82 million respectively inclusive interest adjusted variation currency exchange rates adm brasil’s tax return 2005 also audited assessment received statute limitations 2005 expired bfrs challenge commodity hedging deductions tax years 2007 company estimates could receive additional claims approximately 100 million june 30 2012 subject variation currency exchange rates adm brasil enters commodity hedging transactions result gains included adm brasil’s calculations taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs adm brasil filed administrative appeal assessments second quarter fiscal 2011 decision favor bfrs 2004 assessment received second level administrative appeal filed january 2012 decision favor bfrs 2006 2007 assessments received second level administrative appeal filed adm brasil continues unsuccessful administrative appellate process appeals available brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company intends vigorously defend position current assessments similar assessments may issued years subsequent 2007 company’s subsidiaries argentina received tax assessments challenging transfer prices used price grain exports totaling 10 million interest tax years 2004 2005 argentine tax authorities conducting review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion adm’s subsidiaries subject continuous tax audits possible assessments may made company believes complied argentine tax laws intends vigorously defend position company recorded tax liability assessments archerdanielsmidland company notes consolidated financial statements continued note 16 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2031 rent expense 2012 2011 2010 209 million 251 million 241 million respectively additional amounts incurred charges pertaining time charters ocean going vessels accounted leases 2012 2011 2010 217 million 194 million 192 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows archerdanielsmidland company notes consolidated financial statements continued note 17 employee benefit plans company provides substantially us employees certain international subsidiaries pension benefits eligible us employees five years service prior january 1 2009 participate defined benefit pension plan eligible us employees hired january 1 2009 eligible salaried employees less five years service prior january 1 2009 participate “cash balance” pension formula company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage company also maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest adm stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 150 million shares company common stock june 30 2012 market value 443 million cash dividends received shares company common stock plans year ended june 30 2012 11 million 1 see note 19 archerdanielsmidland company notes consolidated financial statements continued note 17 employee benefit plans continued company uses june 30 measurement date defined benefit plans following tables set forth changes defined benefit obligation fair value defined benefit plan assets included accumulated comprehensive income pension benefits june 30 2012 following amounts yet recognized net periodic pension cost unrecognized transition obligation 2 million unrecognized prior service cost 12 million unrecognized actuarial loss 12 billion prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost six months ending december 31 2012 2 million 42 million respectively included accumulated comprehensive income postretirement benefits june 30 2012 following amounts yet recognized net periodic pension cost unrecognized prior service credit 16 million unrecognized actuarial loss 63 million prior service credit actuarial loss included accumulated comprehensive income expected recognized net periodic benefit cost six months ending december 31 2012 2 million 2 million respectively archerdanielsmidland company notes consolidated financial statements continued note 17 employee benefit plans continued following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 28 billion 25 billion 19 billion respectively june 30 2012 21 billion 19 billion 17 billion respectively june 30 2011 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 27 billion 25 billion 18 billion respectively june 30 2012 671 million 657 million 425 million respectively june 30 2011 accumulated benefit obligation pension plans june 30 2012 2011 27 billion 23 billion respectively postretirement benefit measurement purposes 75 annual rate increase per capita cost covered health care benefits assumed 2012 rate assumed decrease gradually 5 2022 remain level thereafter 1 change assumed health care cost trend rates would following effects plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy archerdanielsmidland company notes consolidated financial statements continued note 17 employee benefit plans continued common collective trust cct funds fair values ccts based cumulative net asset value nav underlying investments ccts comprised international equity funds small cap us equity fund large cap us equity funds fixed income funds fund units valued nav based closing market value units bought sold valuation date classified level 2 fair value hierarchy ccts seek primarily provide investment results approximating aggregate price dividend performance total return income stream underlying investments funds issuances redemptions certain cct investments may restricted date andor amount corporate debt instruments corporate debt instruments valued closing price reported active market traded classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date archerdanielsmidland company notes consolidated financial statements continued note 17 employee benefit plans continued following tables set forth level within fair value hierarchy fair value plan assets june 30 2012 2011 archerdanielsmidland company notes consolidated financial statements continued note 17 employee benefit plans continued level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets archerdanielsmidland company notes consolidated financial statements continued note 17 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 68 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt securities target asset allocation company’s us pension plans actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 32 equity securities 65 debt securities 3 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans hold shares company common stock june 30 2012 2011 measurement dates cash dividends received shares company common stock plans twelvemonth period ended june 30 2012 2011 0 01 million respectively investment objectives company’s plan assets · optimize longterm return plan assets acceptable level risk · maintain broad diversification across asset classes among investment managers · maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets archerdanielsmidland company notes consolidated financial statements continued note 17 employee benefit plans continued contributions expected future benefit payments based actuarial calculations company expects contribute 26 million pension plans 5 million postretirement benefit plan six months ending december 31 2012 company may elect make additional discretionary contributions period following benefit payments reflect expected future service expected paid benefit plans note 18 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations organized managed classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations reportable segments defined asc topic 280 segment reporting classified fiscal 2012 company reorganized streamlined business unit reporting structure broadened management spans control starting annual report form 10k oilseeds processing reportable segment includes cocoa processing operations agricultural services reportable segment includes wheat processing operations corn processing reportable segment includes sweeteners starches bioproducts remains unchanged company’s remaining operations primarily include financial business units continue classified previously cocoa wheat processing operations included also fiscal 2012 company discontinued allocation interest expense corporate operating segments throughout annual report form 10k prior periods reclassified conform current period segment presentation archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds oilseeds processing segment also includes activities related procurement transportation processing cocoa beans cocoa liquor cocoa butter cocoa powder chocolate various compounds north america south america europe asia africa food processing industry europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment produces natural health nutrition products specialty food feed ingredients oilseeds processing segment major supplier peanuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets south america oilseeds processing segment operates fertilizer blending facilities oilseeds processing segment also includes company’s share results equity investment wilmar share results stratas foods llc edible oils limited joint ventures company’s corn processing segment engaged corn wet milling dry milling activities asset base primarily located central part united states corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing products include citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities propylene ethylene glycol facility company’s brazilian sugarcane ethanol plant related operations fiscal 2012 company ended commercial alliance metabolix inc result decision telles llc sales marketing commercial alliance created commercialize mirel™ biobased plastic dissolved production mirel™ behalf telles llc ended segment also includes company’s share results equity investments almidones mexicanos sa eaststarch cv red star yeast company llc archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued agricultural services segment utilizes extensive us grain elevator global transportation network port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail freight services agricultural services segment also includes activities related processing wheat flour processing distribution formula feeds animal health nutrition products procurement processing distribution edible beans agricultural services segment includes activities alfred c toepfer international 80 owned global merchant agricultural commodities processed products agricultural services segment also includes company’s share results kalama export company joint venture equity investment gruma sab de cv includes company’s remaining operations primarily financial business units related principally futures commission merchant activities captive insurance september 30 2011 company sold majority ownership interest bank deconsolidated company’s consolidated financial statements first quarter fiscal 2012 resulting material effect adm’s earnings company accounts remaining ownership interest bank equity method intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included segment operating profit equity earnings affiliates based equity method accounting certain corporate items allocated company’s reportable business segments corporate results principally include impact liforelated adjustments unallocated corporate expenses interest cost net investment income prior january 1 2012 corporate results also included aftertax elimination income attributable mandatorily redeemable interests consolidated subsidiaries archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued segment information archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued geographic information following geographic data include net sales operating income attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment note 19 asset impairment charges exit costs second quarter fiscal 2012 company determined carrying values clinton ia bioplastic facility’s longlived assets greater future net undiscounted cash flows accordingly company recorded charges corn processing segment related impairment clinton ia bioplastic facility’s property plant equipment inventories addition company recognized otherthantemporary impairment charge corporate related investment metabolix inc june 30 2012 carrying amounts impaired property plant equipment inventories approximate estimated fair values company estimated fair value assets based limited market data available ability redeploy assets within operations third quarter fiscal 2012 company recorded corn processing segment 14 million facility exit related costs related closure ethanol facility walhalla nd partially offset 3 million recovery prior quarter bioplasticrelated charges addition company incurred 3 million facility exit related costs corporate archerdanielsmidland company notes consolidated financial statements continued note 19 asset impairment charges exit costs continued january 2012 company announced plan streamline organizational structure reducing global workforce enhance cost structure company 1200 positions primarily salaried eliminated help achieve reduction company offered voluntary early retirement incentive us company expects actions concert targeted cost reductions fully implemented march 2013 reduce annual pretax expenses approximately 150 million significant portion savings realized end fiscal year 2012 company achieved significant portion position reductions voluntary early retirement incentive us offered severance outplacement assistance affected employees following table summarizes company’s significant asset impairment exit restructuring costs fiscal year ended june 30 2012 1 costs primarily consist onetime termination benefits provided employees involuntarily terminated 34 million pension remeasurement charges triggered amendment us plans due voluntary early retirement program 2 facility exit related costs consist asset impairment charges costs related exit clinton ia bioplastic walhalla nd ethanol facilities 349 million corn processing segment investment writedown facility exitrelated costs 17 million corporate significant asset impairment charges exit costs recognized fiscal years 2011 2010 note 20 sale accounts receivable march 27 2012 company entered amendment accounts receivable securitization program amended “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 10 billion additional amount upon collection accounts receivable deferred consideration adm receivables uses cash proceeds transfer receivables purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration june 30 2012 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold program terminates june 28 2013 archerdanielsmidland company notes consolidated financial statements continued note 20 sale accounts receivable continued june 30 2012 fair value trade receivables transferred purchasers program derecognized company’s consolidated balance sheet 16 billion exchange transfer company received cash 10 billion recorded receivable deferred consideration included current assets cash collections customers receivables sold 89 billion four months ended june 30 2012 amount 89 billion pertains cash collections deferred consideration deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases program company’s risk loss following transfer accounts receivable program limited deferred consideration outstanding classified current assets 06 billion june 30 2012 company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement asc 820 consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant transfers receivables program year ended june 30 2012 resulted expense loss sale 4 million classified selling general administrative expenses consolidated statements earnings company reflects cash flows related program operating activities consolidated statement cash flows year ended june 30 2012 cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables note 21 contingencies guarantees commitments since august 2008 company conducting internal review policies procedures internal controls pertaining adequacy anticorruption compliance program certain transactions conducted company affiliates joint ventures primarily relating grain feed exports may violated company policies us foreign corrupt practices act us foreign laws company initially disclosed review us department justice securities exchange commission certain foreign regulators march 2009 subsequently provided periodic updates agencies company engaged outside counsel advisors assist review matters implemented continuing implement appropriate remedial measures connection review government agencies could impose civil penalties criminal fines andor order company disgorge profits derived contracts involving inappropriate payments events expected material impact company’s business financial condition company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 30 million june 30 2012 archerdanielsmidland company notes consolidated financial statements continued note 22 quarterly financial data unaudited net earnings attributable controlling interests second third quarters fiscal year 2012 include aftertax exit costs asset impairment charges related primarily bioplastics facility global workforce reduction program 222 million 52 million equal 033 008 per share respectively discussed note 19 net earnings attributable controlling interests first second third fourth quarters fiscal year 2011 include aftertax start costs company’s new greenfield plants 20 million 14 million 14 million 11 million equal 003 002 per share respectively net earnings attributable controlling interests fourth quarter ended june 30 2011 include debt buyback costs 15 million 9 million tax equal 001 per share net earnings attributable controlling interests fourth quarter ended june 30 2011 include gain 78 million 49 million tax equal 007 per share related sale bank securities held company’s equity investee gruma sab de cv net earnings attributable controlling interests second quarter ended december 31 2010 include gain 71 million 44 million tax equal 007 per share related acquisition remaining interest golden peanut net earnings attributable controlling interests first second third quarters fiscal year 2011 include aftertax losses gains interest rate swaps 19 million 34 million 4 million equal 003 005 001 per share respectively discussed note 4 second quarter fiscal year 2011 company updated estimates service lives certain machinery equipment assets effect change net earnings attributable controlling interests second third fourth quarters fiscal year 2011 aftertax increase 24 million 31 million 28 million equal 004 005 004 per share respectively report independent registered public accounting firm board directors shareholders archerdanielsmidland company decatur illinois audited accompanying consolidated balance sheets archerdanielsmidland company june 30 2012 2011 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2012 audits also included financial statement schedule listed index item 15a2 financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archerdanielsmidland company june 30 2012 2011 consolidated results operations cash flows three years period ended june 30 2012 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein also audited accordance standards public company accounting oversight board united states archerdanielsmidland company’s internal control financial reporting june 30 2012 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission report dated august 24 2012 expressed unqualified opinion thereon ernst young llp st louis missouri august 24 2012 report independent registered public accounting firm board directors shareholders archerdanielsmidland company decatur illinois audited archerdanielsmidland company’s internal control financial reporting june 30 2012 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission coso criteria archerdanielsmidland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying anagement’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion archerdanielsmidland company maintained material respects effective internal control financial reporting june 30 2012 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archerdanielsmidland company june 30 2012 2011 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2012 archerdanielsmidland company report dated august 24 2012 expressed unqualified opinion thereon ernst young llp st louis missouri august 24 2012 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated statements comprehensive income loss consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated statements comprehensive income loss see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products change fiscal year may 3 2012 board directors company determined accordance bylaws upon recommendation audit committee company’s fiscal year shall begin january 1 end december 31 year starting january 1 2013 required transition period july 1 2012 december 31 2012 included form 10k report amounts included report year ended december 31 2012 six months ended december 31 2011 unaudited purposes preparing form 10k companys management believes calendar 2012 directly comparable period calendar year 2013 results calendar year ended december 31 2012 data unaudited compiled companys quarterly reports quarters ended march 31 2012 june 30 2012 september 30 2012 december 31 2012 principles consolidation consolidated financial statements include accounts company subsidiaries significant intercompany accounts transactions eliminated company consolidates entities including variable interest entities vies controlling financial interest vies company assesses whether primary beneficiary defined applicable accounting standard investments affiliates including vies company exercises significant influence control investee primary beneficiary investees activities carried cost plus equity undistributed earnings since acquisition adjusted appropriate basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain vies included using recent available financial statements case financial statements within 93 days company’s year end consistent period company consolidates alfred c toepfer international toepfer company 80 interest minority interest subject mandatorily redeemable put option result put option associated minority interest reported longterm liabilities december 31 2011 put option expired company reclassified 174 million minority interest longterm liabilities noncontrolling interests shareholders’ equity date 2013 toepfer became subject new mandatorily redeemable put option result company reclassified 180 million noncontrolling interest shareholders equity longterm liabilities use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates second quarter fiscal year 2011 company updated estimates service lives certain machinery equipment assets order better match company’s depreciation expense periods assets expected generate revenue based planned historical service periods company accounted service life update change accounting estimate october 1 2010 accordance guidance accounting standards codification asc topic 250 accounting changes error corrections thereby impacting quarter change occurred future quarters effect change aftertax earnings diluted earnings per share increase 83 million 013 respectively year ended june 30 2011 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued reclassifications income expense net consolidated statements earnings years ended december 31 2012 june 30 2012 reclassified conform current years presentation impairment losses securities shown asset impairment exit restructuring costs change earnings income taxes result reclassification change also reflected notes 13 19 intangible assets previously included assets reclassified goodwill intangible assets change total investments assets result reclassification accrued expenses payables prior years consolidated balance sheet reclassified conform current years presentation payables brokerage customers shown separately accrued expenses payables change total current liabilities result reclassification change also reflected note 7 prior years consolidated statements cash flows impact total cash provided used operating investing financing activities certain items prior years consolidated statements cash flows reclassified conform current years presentation impact total cash provided used operating investing financing activities certain items notes 3 4 6 7 prior year reclassified conform current years presentation change current assets accrued expenses payables prior years consolidated balance sheet result reclassifications cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements lending arrangements segregated balances represent deposits received customers company’s registered futures commission merchant securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance lending arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 81 million 87 million december 31 2013 2012 respectively reflect loss anticipated accounts receivable balances company estimates allowance based history writeoffs level pastdue accounts relationships economic status customers portions allowance uncollectible accounts recorded trade receivables current assets credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates december 31 2013 2012 73 million 175 million respectively archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market following table sets forth companys inventories december 31 2013 2012 fair value measurements company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date company uses market approach valuation technique measure majority assets liabilities carried fair value three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies contract level 3 many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period derivatives company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet unrealized gains reported current assets unrealized losses reported accrued expenses payables accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments changes fair value derivatives recognized earnings immediately derivative instruments designated qualify hedging instruments company designates hedging instrument based upon exposure hedged fair value hedge cash flow hedge derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk effective portion gain loss derivative instrument reported component accumulated comprehensive income aoci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings remaining gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value underlying recognized consolidated statement earnings current period marketable securities company classifies marketable securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component comprehensive income company monitors investments impairment periodically recognizes impairment charge decline fair value investment judged otherthantemporary company uses specific identification method securities sold reclassified accumulated comprehensive income earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 40 years machinery equipment 3 30 years company capitalized interest major construction projects progress 16 million 24 million 12 million 9 million 21 million 7 million years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 respectively income taxes company accounts income tax positions accordance applicable accounting standards liability method used accounting income taxes deferred tax assets liabilities recorded temporary differences tax basis assets liabilities reported amounts consolidated financial statements using statutory rates effect year differences expected reverse effect deferred tax assets liabilities change tax rates recorded results operations period includes enactment date law applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests prior fiscal year end change transition period company’s accounting policy evaluate goodwill intangible assets indefinite lives impairment april 1 fiscal year whenever indicators carrying value assets may fully recoverable effective transition period ended december 31 2012 company voluntarily changed accounting policy begin conducting annual goodwill indefinite life intangible assets impairment tests october 1 change annual goodwill indefinite life intangible assets impairment testing date preferable circumstances new impairment testing date better aligned timing company’s annual strategic planning budgeting process timing closely aligned company’s annual financial reporting process result change year end resulting change accounting principle related annual testing date delay accelerate avoid impairment charge company’s goodwill impracticable objectively determine estimates assumptions necessary perform annual goodwill impairment test october 1 periods prior october 1 2012 company prospectively applied annual goodwill impairment testing date effective october 1 2012 year ended december 31 2013 company recorded impairment charge goodwill 9 million related companys brazilian sugar milling business impairment charges recorded goodwill indefinitelived intangible assets six months year ended december 31 2012 years ended june 30 2012 2011 asset abandonments writedowns company evaluates longlived assets impairment whenever indicators impairment exist assets written fair value consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 impairment charges 84 million 30 million 0 million 337 million 367 million 2 million respectively see note 19 additional information payables brokerage customers payables brokerage customers represent total customer accounts companys futures commission merchant credit positive balances customer accounts used primarily connection commodity transactions include gains losses open commodity trades well securities deposits made margins purpose required company exchangeclearing organizations counterparties payables brokerage customers corresponding balance segregated cash investments customer omnibus receivable current assets revenues company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured company sales contracts allow pricing occur title goods passed customer cases company continues report goods inventory recognizes sales revenue price determined freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 69 billion 72 billion 40 billion 45 billion 77 billion 71 billion respectively archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued stock compensation company recognizes expense stock compensation based fair value awards granted company’s stock compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related stock compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 59 million 55 million 28 million 29 million 56 million 60 million years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method described note 10 certain potentially dilutive securities 175 billion equity units excluded diluted average shares calculation impact antidilutive except third quarter fiscal 2011 see note 11 earnings per share calculations adoption new accounting standards effective january 1 2013 company adopted amended guidance accounting standards codification asc topic 220 comprehensive income requires company present either face consolidated statement earnings notes effect line items net income significant amounts reclassified accumulated comprehensive income adoption amended guidance requires expanded disclosures companys consolidated financial statements impact results see note 17 effective july 17 2013 company adopted amended guidance asc topic 815 derivatives hedging topic 815 permits company use overnight index swap us benchmark interest rate hedge accounting purposes topic 815 addition us treasury interest rates london interbank offered rate amended guidance also removes restriction using different benchmark rates similar hedges adoption amended guidance impact current period results expected material impact companys financial results pending accounting standards effective january 1 2014 company required adopt amended guidance asc topic 740 income taxes requires company present unrecognized tax benefit financial statements reduction deferred tax asset net operating loss carryforward similar tax loss tax credit carryforward situations net operating loss carryforward similar tax loss tax credit carryforward available reporting date tax law applicable jurisdiction company intend use deferred tax asset purpose unrecognized tax benefit presented liability financial statements combined deferred tax assets company expect material impact financial results result adoption amended guidance archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective january 1 2014 company required adopt amended guidance asc topic 830 foreign currency matters topic 830 requires company transfer currency translation adjustments comprehensive income net income certain circumstances amended guidance aims resolve diversity practice whether asc topic 810 consolidation topic 830 applies release cumulative translation adjustment net income parent either sells part investment foreign entity longer holds controlling financial interest subsidiary group assets nonprofit activity business company required apply amended guidance prospectively company disposes part qualifying foreign entity required release portion cumulative translation adjustment applicable disposed entity effective january 1 2014 company required adopt amended guidance asc topic 405 liabilities addresses recognition measurement disclosure obligations resulting joint several liability arrangements total amount arrangement fixed reporting date amended guidance aims resolve diversity practice among companies subject joint several liabilities company required apply amended guidance retrospectively prior periods presented company expect material impact financial results result adoption amended guidance note 2 acquisitions company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended tangible assets liabilities based preliminary purchase price allocations 2013 acquisitions adjusted fair values acquisition date remainder purchase price recorded goodwill identifiable intangible assets acquired part acquisitions material operating results acquisitions included company’s financial statements date acquisition significant company’s consolidated operating results status application acquire graincorp limited graincorp december 31 2013 company held 198 common equity interest graincorp 2013 company took steps acquire remaining outstanding common shares graincorp company made allcash offmarket takeover offer australian 1220 per share subject conditions including regulatory approvals november 2013 australian federal treasurer issued order prohibiting companys proposed acquisition graincorp result company recognized 155 million otherthantemporary impairment investment reflecting trading market value december 31 2013 company continues classify investment longterm marketable security fiscal year 2013 acquisitions year ended december 31 2013 company acquired four businesses total cost 44 million recorded preliminary allocation purchase price related acquisitions net cash purchase price acquisitions 44 million preliminarily allocated working capital property plant equipment goodwill longterm assets 6 million 29 million 2 million 7 million respectively transition period 2012 acquisitions six months ended december 31 2012 company made eight acquisitions total cost 26 million cash recorded preliminary allocation purchase price related acquisitions net cash purchase price eight acquisitions 26 million preliminarily allocated working capital property plant equipment goodwill longterm assets 4 million 24 million 2 million 4 million respectively finalization purchase price allocations related acquisitions result material adjustments archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued fiscal year 2012 acquisitions fiscal year 2012 company made nine acquisitions total cost 241 million cash recorded preliminary allocation purchase price related acquisitions net cash purchase price nine acquisitions 241 million allocated working capital property plant equipment goodwill longterm assets longterm liabilities 12 million 199 million 51 million 6 million 3 million respectively finalization purchase price allocations related acquisitions result material adjustments single material acquisition year fiscal year 2011 acquisitions fiscal year 2011 company made four acquisitions total cost 218 million cash recorded preliminary allocation purchase price related acquisitions net cash purchase price four acquisitions 218 million plus acquisitiondate fair value equity interest company previously held golden peanut allocated working capital property plant equipment goodwill longterm assets longterm liabilities 113 million 235 million 63 million 11 million 36 million respectively finalization purchase price allocations related acquisitions result material adjustments acquisition alimenta usa inc company’s former 50 percent partner golden peanut significant acquisition fiscal year 2011 transaction resulted company obtaining control remaining outstanding shares golden peanut largest us handler processor exporter peanuts operator facility argentina business fits well company’s existing us oilseed export operations global oilseed business pretax gain 71 million recognized second quarter fiscal year 2011 result revaluing company’s previously held investment golden peanut conjunction acquisition remaining 50 percent archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis december 31 2013 2012 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets market valuations company’s inventories adjusted location quality exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade unobservable inputs significant impact measurement fair value inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued derivative contracts include exchangetraded commodity futures option contracts forward commodity purchase sale contracts otc instruments related primarily agricultural commodities energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact measurement fair value contract classified level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component revenues cost products sold income expensenet effective portions changes fair value derivatives designated cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss hedged items recorded earnings probable hedged transaction longer occur companys cash equivalents comprised money market funds valued using quoted market prices classified level 1 company’s marketable securities comprised equity investments us treasury securities obligations us government agencies debt securities publicly traded equity investments us treasury securities valued using quoted market prices classified level 1 us government agency obligations corporate municipal debt securities valued using thirdparty pricing services substantially classified level 2 unrealized changes fair value availableforsale marketable securities recognized consolidated balance sheets component accumulated comprehensive income loss unless decline value deemed otherthantemporary point decline recorded earnings companys segregated investments comprised us treasury securities us treasury securities valued using quoted market prices classified level 1 company deferred consideration accounts receivable securitization program “program” represents note receivable purchasers program amount reflected current assets consolidated balance sheet see notes 6 20 company carries deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 year ended december 31 2013 six months ended december 31 2012 includes gains 700 million attributable change unrealized gains relating level 3 assets still held december 31 2013 includes losses 380 million attributable change unrealized losses relating level 3 liabilities still held december 31 2013 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued includes gains 130 million attributable change unrealized gains relating level 3 assets still held december 31 2012 includes losses 165 million attributable change unrealized losses relating level 3 liabilities still held december 31 2012 periods presented company transfers levels 1 2 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued cases price components inventories commodity purchase sale contracts observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components determined specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations december 31 2013 2012 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component weighted average 219 total price assets 132 liabilities certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations company considers price quotes 100 percent unobservable therefore fair value items reported level 3 note 4 derivative instruments hedging activities within note 4 tables zeros represent minimal amounts derivatives designated hedging instruments majority companys derivative instruments designated hedging instruments company uses exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets derivatives including exchange traded contracts physical purchase sale contracts inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore fair values changes fair values inventories included tables archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments december 31 2013 2012 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 company recognized earnings 30 million pretax gains changes fair value interest rate swaps year ended june 30 2011 december 2012 company entered two transactions investment bank counterparties resulting economic interest graincorp shares purpose transactions facilitate company’s planned acquisition graincorp rejected australian federal treasurer november 2013 one transactions accounted unfunded derivative instrument transaction hybrid financial instrument defined applicable accounting standards whereby accounting rules required company account funded host instrument separate embedded derivative instrument december 2012 company settled derivative instruments known “total return swaps” recognized pretax gains reported “other contracts” tables settlement transactions interest graincorp recorded longterm marketable security archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately derivatives designated cash flow fair value hedging strategies december 31 2013 2012 company certain derivatives designated cash flow hedges december 31 2013 company certain derivatives designated fair value hedges company uses interest rate swaps designated fair value hedges protect fair value fixedrate debt due changes interest rates changes fair value interest rate swaps underlying fixedrate debt recorded income expense net terms interest rate swaps match terms underlying debt resulting ineffectiveness december 31 2013 company 9 million accrued expenses payables representing fair value interest rate swaps corresponding decrease underlying debt amount impact earnings commodity hedge programs described derivatives designated cash flow hedges assuming normal market conditions changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either revenues cost products sold interest expense income expense net applicable december 31 2013 company 15 million aftertax losses aoci related gains losses commodity cash flow hedge transactions company expects recognize 15 million losses consolidated statement earnings next 12 months company uses futures options contracts fix purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 76 million bushels corn per month past 12 months company hedged 15 25 monthly anticipated grind december 31 2013 company designated hedges representing 2 23 anticipated monthly grind corn next 12 months company uses futures options swaps fix purchase price company’s anticipated natural gas requirements certain production facilities objective hedging program reduce variability cash flows associated company’s forecasted purchases natural gas production facilities use approximately 38 million mmbtus natural gas per month past 12 months company hedged 13 66 quantity anticipated monthly natural gas purchases december 31 2013 company designated hedges representing 17 21 anticipated monthly natural gas purchases next 3 months company uses futures options swaps fix sales price certain ethanol sales contracts objective hedging program reduce variability cash flows associated company’s sales ethanol sales contracts indexed unleaded gasoline prices past 12 months company hedged 1 million 14 million gallons ethanol per month program december 31 2013 company designated hedges representing 1 million 12 million gallons contracted ethanol sales per month next 6 months archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued company uses forward foreign exchange contracts cash flow hedges protect fluctuations cash flows due changes foreign currency exchange rates company may revenues associated sales contracts costs associated commodity purchase contracts manufacturing expenses equipment purchases denominated nonfunctional currencies reduce risk fluctuations cash flows due changes exchange rate functional versus nonfunctional currencies company hedge portion qualifying forecasted nonfunctional currency expenditures past 12 months company hedged 12 million 18 million forecasted foreign currency expenditures december 31 2013 company designated hedges 12 million forecasted foreign currency expenditures december 31 2013 company 03 million aftertax losses aoci related foreign exchange contracts designated cash flow hedging instruments company recognize 03 million losses consolidated statement earnings life hedged transactions company used treasury lock agreements interest rate swaps order lock company’s interest rate prior issuance remarketing longterm debt instrument treasurylock agreements interest rate swaps designated cash flow hedges risk changes future interest payments attributable changes benchmark interest rate objective treasurylock agreements interest rate swaps protect company changes benchmark rate date hedge designation date debt actually issued december 31 2013 aoci included 21 million aftertax gains related treasurylock agreements interest rate swaps company recognize 21 million aftertax gains consolidated statement earnings terms hedged items range 10 30 years following tables set forth fair value derivatives designated hedging instruments december 31 2013 2012 archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 hedge ineffectiveness commodity contracts results change price underlying commodity specific cash market differs change price derivative financial instrument used establish hedging relationship example change price corn futures contract strongly correlated change cash price paid corn gain loss derivative instrument deferred recognized time corn grind occurs change price derivative strongly correlate change cash price corn example portion derivative gains losses may required recognized earnings prior corn grind occurring archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities following table sets forth items shortterm longterm investments archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities continued 2 million unrealized losses december 31 2013 arose within last 12 months related company’s investment one security market value availableforsale equity security unrealized loss position less 12 months 5 million company evaluated nearterm prospects issuer relation severity duration impairment based evaluation company’s ability intent hold investment reasonable period time sufficient forecasted recovery fair value company consider investment otherthantemporarily impaired december 31 2013 information otherthantemporary impairment charges see note 19 note 6 current assets following table sets forth items current assets 1 company provides financing suppliers primarily brazilian farmers finance portion suppliers’ production costs company bear costs risks associated related growing crops receivables largely collateralized future crops physical assets suppliers carry local market interest rate settle farmers’ crops harvested sold amounts reported net allowances 15 million 16 million december 31 2013 2012 respectively changes allowance 2013 included increase 2 million additional bad debt provisions reduction allowance writeoffs adjustments 1 million 2 million respectively changes allowance 2012 included increase 3 million additional bad debt provisions reduction allowance adjustments 2 million interest earned financing receivables 26 million 29 million 15 million 12 million 26 million 22 million years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 respectively included interest income consolidated statements earnings note 7 accrued expenses payables following table sets forth items accrued expenses payables archerdanielsmidland company notes consolidated financial statements continued note 8 investments advances affiliates company applies equity method investments investees company ability exercise significant influence including company’s 164 share ownership wilmar company 60 unconsolidated domestic foreign affiliates december 31 2013 2012 respectively following table summarizes combined balance sheets december 31 2013 2012 combined statements earnings company’s unconsolidated affiliates years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 company’s share undistributed earnings unconsolidated affiliates december 31 2013 18 billion company direct investment foreign equity method investee carrying value 21 billion december 31 2013 market value 28 billion based active market quoted prices converted us dollars applicable exchange rates december 31 2013 company provides credit facilities totaling 313 million seven unconsolidated affiliates one facility due demand bears interest one month british pound libor rate plus 15 outstanding balance 24 million six facilities outstanding balances december 31 2013 outstanding balance included current assets accompanying consolidated balance sheet information company’s former equity method interest gruma see note 19 archerdanielsmidland company notes consolidated financial statements continued note 9 goodwill intangible assets goodwill balances attributable consolidated businesses investments affiliates segment set forth following table changes goodwill year ended december 31 2013 related acquisitions impairment disclosed notes 1 2 19 following table sets forth intangible assets change gross carrying amount intangible assets year ended december 31 2013 primarily related foreign currency translation adjustments aggregate amortization expense 22 million 24 million 10 million 14 million 28 million 10 million years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 respectively estimated future aggregate amortization expense next five years 22 million 22 million 18 million 15 million 12 million archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued october 2012 company issued 570 million 4016 debentures due 2043 2012 debentures exchange previously issued outstanding debentures company paid 196 million debt premium certain bondholders associated exchanges discount debt premium paid bondholders amortized life 2012 debentures using effective interest method discount amortization expense 2 million year ended december 31 2013 included interest expense related 2012 debentures february 2007 company issued 115 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually notes convertible based initial conversion rate 228423 shares per 1000 principal amount notes equal conversion price approximately 4378 per share notes may converted subject adjustment following circumstances 1 calendar quarter beginning march 31 2007 closing price company’s common stock least 20 trading days 30 consecutive trading days ending last trading day immediately preceding quarter 140 applicable conversion price per share 1000 divided applicable conversion rate 2 five consecutive business day period immediately five consecutive trading day period note measurement period average trading price per 1000 principal amount notes equal less 98 average product closing price company’s common stock conversion rate date note measurement period 3 company makes specified distributions common stockholders specified corporate transactions occur 4 time january 15 2014 business day preceding maturity date upon conversion holder would receive amount cash equal lesser 1 1000 2 conversion value defined conversion value exceeds 1000 company deliver company’s election cash common stock combination cash common stock conversion value excess 1000 notes converted connection change control defined company may required provide makewhole premium form increase conversion rate subject stated maximum amount addition event change control holders may require company purchase portion notes purchase price equal 100 principal amount notes plus accrued unpaid interest accordance applicable accounting standards company recognized notes proceeds received 2007 longterm debt 853 million equity 297 million discount longterm debt amortized life notes using effective interest method discount amortization expense 49 million 47 million 24 million 22 million 45 million 43 million years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 respectively included interest expense related notes concurrent issuance notes company purchased call options private transactions cost 300 million purchased call options allow company receive shares common stock andor cash counterparties equal amounts common stock andor cash related excess current market price company’s common stock exercise price purchased call options addition company sold warrants private transactions acquire subject customary antidilution adjustments 263 million shares common stock exercise price 6256 per share received proceeds 170 million average price company’s common stock defined period ending respective settlement dates exceeds exercise price warrants settled company’s option cash shares common stock purchased call options warrants intended reduce potential dilution upon future conversions notes effectively increasing initial conversion price 6256 per share net cost purchased call options warrant transactions 130 million recorded reduction shareholders’ equity purchased call options expire maturity date notes warrants expire shortly thereafter december 31 2013 none conditions permitting conversion notes satisfied december 31 2013 share amounts related conversion notes exercise warrants included diluted average shares outstanding february 18 2014 convertible senior notes repaid available funds discount amortization expense net premium 54 million 46 million 23 million 26 million 49 million 50 million years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 respectively included interest expense related companys longterm debt december 31 2013 fair value company’s longterm debt exceeded carrying value 09 billion estimated using quoted market prices level 2 measurement applicable accounting standards archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued aggregate maturities longterm debt five years december 31 2013 12 billion 19 million 15 million 305 million 709 million respectively december 31 2013 company lines credit totaling 69 billion 66 billion unused weighted average interest rates shortterm borrowings outstanding december 31 2013 2012 424 070 respectively company’s total lines credit 40 billion support commercial paper borrowing facility commercial paper outstanding december 31 2013 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2013 company outstanding standby letters credit surety bonds december 31 2013 2012 totaling 795 million 911 million respectively company accounts receivable securitization program “program” program provides company 11 billion funding resulting sale accounts receivable december 31 2013 company utilized 11 billion facility program see note 20 information program note 11 earnings per share computation basic diluted earnings per share follows average shares outstanding 2011 include 44 million shares beginning june 1 2011 related equity unit conversion archerdanielsmidland company notes consolidated financial statements continued note 11 earnings per share continued adjusted net earnings attributable controlling interests 2011 include 13 million adjustment aftertax interest adjusted average shares outstanding 2011 include 44 million shares assumed issued january 1 2011 quarter ended march 31 2011 11 million shares year ended june 30 2011 adjustments made result requirement use “ifconverted” method calculating diluted earnings per share quarter ended march 31 2011 note 12 stock compensation company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2002 2009 incentive compensation plans options issued market value date grant vest incrementally one five years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows summary option activity 2013 presented archerdanielsmidland company notes consolidated financial statements continued note 12 stock compensation continued weightedaverage remaining contractual term options outstanding exercisable december 31 2013 6 years 4 years respectively aggregate intrinsic value options outstanding exercisable december 31 2013 203 million 128 million respectively weightedaverage grantdate fair values options granted year ended december 31 2013 six months ended december 31 2012 years ended june 30 2012 2011 1002 589 698 882 respectively total intrinsic values options exercised year ended december 31 2013 six months ended december 31 2012 years ended june 30 2012 2011 29 million 1 million 5 million 21 million respectively cash proceeds received options exercised year ended december 31 2013 six months ended december 31 2012 years ended june 30 2012 2011 73 million 2 million 7 million 21 million respectively december 31 2013 17 million total unrecognized compensation expense related option grants amounts recognized compensation expense next four years 8 million 5 million 3 million 1 million respectively company’s 2002 2009 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2002 2009 incentive compensation plans also provide granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock units vest end threeyear vesting period subject attainment certain future performance criteria year ended december 31 2013 six months ended december 31 2012 years ended june 30 2012 2011 09 million 13 million 12 million 11 million common stock units respectively granted restricted stock awards psus december 31 2013 198 million shares available future grants pursuant 2009 plan fair value restricted stock awards psus determined based market value company’s shares grant date weightedaverage grantdate fair values awards granted year ended december 31 2013 six months ended december 31 2012 years ended june 30 2012 2011 3296 2634 2675 3219 respectively summary restricted stock awards psus activity 2013 presented december 31 2013 35 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three years 21 million 13 million 1 million respectively vesting date total fair value restricted stock awards vested year ended december 31 2013 27 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant compensation expense psus based probability meeting performance criteria archerdanielsmidland company notes consolidated financial statements continued note 12 stock compensation continued total compensation expense option grants restricted stock awards psus recognized years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 43 million 45 million 31 million 34 million 48 million 47 million respectively note 13 income expense net following table sets forth items income expense individually significant items included table gain golden peanut revaluation recognized year ended june 30 2011 result revaluing company’s previously held investment golden peanut conjunction acquisition remaining 50 percent interest “golden peanut gain” loss graincorp year ended december 31 2013 relates losses foreign exchange hedges pertaining foreign currency derivative contracts entered economically hedge substantially remaining us dollar cost proposed graincorp acquisition november 2013 australian federal treasurer issued order prohibiting acquisition december 31 2013 graincorprelated foreign currency derivative contracts settled gain graincorp six months year ended december 31 2012 relates settlement total return swap instruments related companys investment graincorp see note 4 information gain sale assets year six months ended december 31 2012 includes 39 million gain related sale certain company’s exchange membership interests realized gains sales availableforsale marketable securities totaled 8 million 29 million 8 million 17 million 38 million 13 million years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 respectively realized losses sales availableforsale marketable securities immaterial periods presented impairment losses securities 166 million 12 million 13 million 25 million year ended december 31 2013 2012 six months ended december 31 2011 year ended june 30 2012 classified asset impairment exit restructuring charges consolidated statements earnings see note 19 information archerdanielsmidland company notes consolidated financial statements continued note 14 income taxes following table sets forth geographic split earnings income taxes significant components income tax follows archerdanielsmidland company notes consolidated financial statements continued note 14 income taxes continued significant components deferred tax liabilities assets follows archerdanielsmidland company notes consolidated financial statements continued note 14 income taxes continued reconciliation statutory federal income tax rate company’s effective income tax rate earnings follows company historically included amounts received us government form biodiesel credit taxable income federal state income tax returns fourth quarter 2013 internal revenue service released chief counsel advice stipulating biodiesel credits included taxable income based upon chief counsel advice company changed position related credits excluded taxable income years 2011 current year total tax benefit recorded 107 million 55 million relates years prior 2013 company 329 million 344 million tax assets related net operating loss carryforwards certain international subsidiaries december 31 2013 2012 respectively december 31 2013 approximately 306 million assets expiration date remaining 23 million expire various times fiscal 2030 annual usage certain assets limited percentage taxable income respective foreign subsidiary year company recorded valuation allowance 196 million 102 million tax assets december 31 2013 2012 respectively due uncertainty realization fourth quarter 2013 company recorded full valuation allowance net deferred tax assets german subsidiary amount 103 million 82 million equal 012 per share adjusted income attributable minority interest holders management’s establishment valuation allowance resulted combination matters including increasing cumulative book net tax losses absence evidence financial performance subsidiary improved year assure management sufficient taxable income would generated future order utilize losses expire german tax law fourth quarter 2013 company placed full valuation allowance deferred tax asset related impairment investment graincorp amount 41 million company also placed full valuation allowance impairment assets related sugar business brazil amount 17 million company 24 million tax assets related foreign domestic capital loss carryforwards december 31 2013 company recorded valuation allowance 22 million tax assets december 31 2013 archerdanielsmidland company notes consolidated financial statements continued note 14 income taxes continued company 26 million 32 million tax assets related excess foreign tax credits december 31 2013 2012 respectively begin expire 2015 company 74 million 79 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit december 31 2013 2012 respectively expire various times fiscal 2033 company recorded valuation allowance excess foreign tax credits december 31 2013 due uncertainty realization company recorded valuation allowance 53 million 56 million related state income tax assets net federal tax benefit december 31 2013 2012 respectively company remains subject federal examination us calendar tax years 2012 2013 undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 75 billion december 31 2013 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings following table sets forth rollforward activity unrecognized tax benefits year ended december 31 2013 six months ended december 31 2012 follows additions reductions unrecognized tax benefits shown table include effects related net income shareholders’ equity changes unrecognized tax benefits material effect company’s net income cash flow december 31 2013 2012 company accrued interest penalties unrecognized tax benefits 18 million 17 million respectively company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 46 million tax expense period archerdanielsmidland company notes consolidated financial statements continued note 14 income taxes continued company subject routine examination domestic foreign tax authorities frequently faces challenges regarding amount taxes due challenges include positions taken company related timing nature amount deductions allocation income among various tax jurisdictions resolution related tax positions negotiation relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions routine evaluations exposure associated various tax filing positions company recognizes liability necessary estimated potential additional tax owed company accordance applicable accounting standard however company cannot predict provide assurance ultimate outcome ongoing future examinations company’s whollyowned subsidiary adm brasil ltda adm brasil received three separate tax assessments brazilian federal revenue service bfrs challenging tax deductibility commodity hedging losses related expenses tax years 2004 2006 2007 december 31 2013 assessments updated estimated penalties interest variation currency exchange rates totaled approximately 528 million adm brasil’s tax return 2005 also audited assessment received statute limitations 2005 2008 expired bfrs challenge commodity hedging deductions tax years 2008 company estimates could receive additional tax assessments approximately 35 million based currency exchange rates december 31 2013 adm brasil enters commodity hedging transactions result gains included adm brasils calculations taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs adm brasil filed administrative appeal assessments second quarter fiscal 2011 decision favor bfrs 2004 assessment received second level administrative appeal filed still ongoing date report january 2012 decision favor bfrs 2006 2007 assessments received second level administrative appeal filed still ongoing date report adm brasil continues unsuccessful administrative appellate process appeals available brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company intends vigorously defend position current assessments similar assessments may issued years subsequent 2008 company’s subsidiaries argentina received tax assessments challenging transfer prices used price grain exports totaling 44 million inclusive interest adjusted variation currency exchange rates tax years 2004 2005 argentine tax authorities conducting review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion company believes complied argentine tax laws cannot rule receiving additional assessments challenging transfer prices used price grain exports years subsequent 2005 estimates potential assessments 534 million december 31 2013 subject variation currency exchange rates company intends vigorously defend position current assessments similar assessments may issued years subsequent 2005 company believes appropriately evaluated transactions underlying assessments concluded based argentine tax law tax position would sustained accordingly company recorded tax liability assessments accordance accounting requirements uncertain tax positions company concluded likely prevail brazil argentina matters based upon technical merits company recorded uncertain tax liability assessments partly taxing jurisdictions processes provide mechanism settling less full amount assessment companys consideration tax assessments requires judgments application income tax regulations specific facts circumstances final outcome matters cannot reliably predicted may take many years resolve could result financial impacts entire amount assessments archerdanielsmidland company notes consolidated financial statements continued note 15 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2044 rent expense years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 199 million 212 million 106 million 103 million 209 million 251 million respectively additional amounts incurred charges pertaining time charters ocean going vessels accounted leases years ended december 31 2013 2012 six months ended december 31 2012 2011 years ended june 30 2012 2011 147 million 150 million 62 million 76 million 164 million 176 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows note 16 employee benefit plans company provides substantially us employees certain foreign subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage others provided health care reimbursement accounts described september 2012 company amended us qualified pension plans began notifying certain former employees offer pay employees’ pension benefit lump sum lump sum payment offer expired december 2012 former employees eligible voluntary lump sum payment option generally vested traditional formula participants us qualified pension plans terminated employments prior august 1 2012 started receiving monthly payments pension benefits voluntary lump sum payments amounted 134 million reduced company’s global projected benefit obligations 174 million resulting net improvement pension underfunding 40 million company incurred noncash pretax charge 53 million result requirement expense unrealized actuarial losses recognized accumulated comprehensive income loss pertaining liabilities settled december 31 2012 november 2012 company amended us postretirement benefit plan providing participants health care reimbursement accounts funded credits based years service used access post65 supplemental medicare insurance markets credit indexes annually maximum rate 3 per year result amendment company recognized prior service credit 109 million accumulated comprehensive income loss quarter ended december 31 2012 prior service credit amortized 8 years starting 2013 archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued company maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest adm stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 13 million shares company common stock december 31 2013 market value 549 million cash dividends received shares company common stock plans year ended december 31 2013 10 million archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued 1 see note 19 archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued prior december 31 2012 company used june 30 measurement date defined benefit plans result change fiscal year end see note 1 company changed measurement date defined benefit plans december 31 effective transition period ended december 31 2012 following tables set forth changes defined benefit obligation fair value defined benefit plan assets year ended december 31 2013 six months ended december 31 2012 included accumulated comprehensive income pension benefits december 31 2013 following amounts yet recognized net periodic pension cost unrecognized transition obligation 1 million unrecognized prior service cost 6 million unrecognized actuarial loss 589 million prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost 2014 3 million 35 million respectively archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued included accumulated comprehensive income postretirement benefits december 31 2013 following amounts yet recognized net periodic pension cost unrecognized prior service credit 106 million unrecognized actuarial loss 28 million prior service credit 18 million actuarial loss 1 million included accumulated comprehensive income expected recognized net periodic benefit cost 2014 following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 22 billion 20 billion 16 billion respectively december 31 2013 24 billion 22 billion 16 billion respectively december 31 2012 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 21 billion 19 billion 16 billion respectively december 31 2013 24 billion 22 billion 16 billion respectively december 31 2012 accumulated benefit obligation pension plans december 31 2013 2012 26 billion 27 billion respectively postretirement benefit measurement purposes 7 annual rate increase per capita cost covered health care benefits assumed year ended december 31 2013 rate assumed decrease gradually 5 2022 remain level thereafter credits used fund certain retirees health reimbursement accounts indexed maximum 3 per year 1 change assumed health care cost trend rates would following effects 1 increase 1 decrease millions effect combined service interest cost components effect accumulated postretirement benefit obligations 4 archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts based cumulative net asset value nav underlying investments ccts comprised international equity funds small cap us equity fund large cap us equity funds fixed income funds fund units valued nav based closing market value units bought sold valuation date classified level 2 fair value hierarchy ccts seek primarily provide investment results approximating aggregate price dividend performance total return income stream underlying investments funds issuances redemptions certain cct investments may restricted date andor amount corporate debt instruments corporate debt instruments valued closing price reported active market traded classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued following tables set forth level within fair value hierarchy fair value plan assets december 31 2013 2012 archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 67 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt securities target asset allocation company’s us pension plans approximately actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 41 equity securities 56 debt securities 3 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans hold shares company common stock december 31 2013 2012 measurement dates investment objectives company’s plan assets • optimize longterm return plan assets acceptable level risk • maintain broad diversification across asset classes among investment managers • maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments based actuarial calculations company expects contribute 41 million pension plans 11 million postretirement benefit plan 2014 company may elect make additional discretionary contributions period archerdanielsmidland company notes consolidated financial statements continued note 16 employee benefit plans continued following benefit payments reflect expected future service expected paid benefit plans note 17 shareholders equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued december 31 2013 2012 company approximately 575 million shares common shares treasury stock 16 billion december 31 2013 december 31 2012 recorded cost reduction common stock following tables set forth changes aoci component reclassifications aoci year ended december 31 2013 archerdanielsmidland company notes consolidated financial statements continued note 17 shareholders equity continued note 18 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations organized managed classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations reportable segments defined asc topic 280 segment reporting classified archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds oilseeds processing segment also includes activities related procurement transportation processing cocoa beans cocoa liquor cocoa butter cocoa powder chocolate various compounds north america south america europe asia africa food processing industry europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment produces natural health nutrition products specialty food feed ingredients oilseeds processing segment major supplier peanuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets south america oilseeds processing segment operates fertilizer blending facilities oilseeds processing segment also includes company’s share results equity investment wilmar share results stratas foods llc edible oils limited joint ventures company’s corn processing segment engaged corn wet milling dry milling activities asset base primarily located central part united states corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing products include citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities propylene ethylene glycol facility company’s brazilian sugarcane ethanol plant related operations segment also includes company’s share results equity investments almidones mexicanos sa eaststarch cv red star yeast company llc agricultural services segment utilizes extensive us grain elevator global transportation network port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail freight services agricultural services segment also includes activities related processing wheat flour processing distribution formula feeds animal health nutrition products procurement processing distribution edible beans agricultural services segment includes activities alfred c toepfer international 80 owned global merchant agricultural commodities processed products agricultural services segment also includes company’s share results kalama export company llc joint venture graincorp dividends december 2012 company sold equity investment gruma sab de cv includes company’s remaining operations primarily financial business units related principally futures commission merchant activities captive insurance archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included segment operating profit equity earnings affiliates based equity method accounting certain corporate items allocated company’s reportable business segments corporate results principally include impact liforelated adjustments unallocated corporate expenses interest cost net investment income corporate results also include aftertax elimination income attributable mandatorily redeemable interests consolidated subsidiaries except calendar year 2012 put options related interests expired results included noncontrolling interest archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued segment information 1 see note 19 total asset impairment exit restructuring costs archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 18 segment geographic information continued geographic information following geographic data include revenues attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment note 19 asset impairment exit restructuring costs following table sets forth charges included asset impairment exit restructuring costs significant asset impairment exit restructuring costs recognized fiscal year ended june 30 2011 1 costs primarily consist 37 million onetime termination benefits provided employees involuntarily terminated 34 million pension postretirement remeasurement charges triggered amendment companys us plans due voluntary early retirement program archerdanielsmidland company notes consolidated financial statements continued note 19 asset impairment exit restructuring costs continued 2 part company’s ongoing portfolio management company decided divest interests gruma sab de cv related joint ventures “gruma” result company’s equity method investments gruma evaluated impairment quarter ended september 30 2012 company recorded 146 million pretax asset impairment charge 016 per share tax investments gruma comparing carrying value including 123 million cumulative unrealized foreign currency translation losses estimated fair value fair value estimated based negotiations resulted company entering nonbinding letter intent sell interests gruma third party october 16 2012 company sold interest gruma december 2012 3 asset impairment charge equity securities fiscal year ended december 31 2013 consist otherthantemporary impairment charges 155 million companys graincorp investment agricultural services segment 11 million one available sale security corporate asset impairment charge equity securities year ended december 31 2012 six months ended december 31 2011 year ended june 30 2012 consist otherthantemporary investment writedowns corporate 4 company recognized goodwill impairment charge related brazilian sugar milling business corn processing segment fiscal year ended december 31 2013 5 asset impairments fiscal year ended december 31 2013 consist property plant equipment asset impairments 4 million oilseeds processing segment 62 million corn processing segment 3 million agricultural services segment 15 million corporate asset impairments year ended december 31 2012 consist asset impairment charges costs primarily related exit walhalla nd ethanol facility corn processing segment asset impairments six months ended december 31 2011 consist asset impairment charges costs related exit clinton ia bioplastics facility corn processing segment asset impairment charges fiscal year ended june 30 2012 consist asset impairment charges costs 349 million related exit clinton ia bioplastics walhalla nd ethanol facilities corn processing segment facility exitrelated costs 4 million corporate asset impairment exit restructuring costs 259 million year ended december 31 2013 comprised otherthantemporary impairment charges 155 million companys graincorp investment 11 million one available sale security asset impairment charges 51 million related companys brazilian sugar milling business impairment charges principally certain property plant equipment assets totaling 42 million company recorded charges 339 million corn processing segment related impairment clinton ia bioplastics facility’s property plant equipment inventories addition company recognized otherthantemporary impairment charge 13 million corporate related investment metabolix inc quarter ended march 31 2012 company recorded corn processing segment 14 million facility exit related costs related closure ethanol facility walhalla nd partially offset 4 million recovery prior quarter bioplasticrelated charges addition company incurred 4 million facility exit related costs corporate quarter ended june 30 2012 company recognized otherthantemporary impairment charge 12 million corporate related investment global biochem archerdanielsmidland company notes consolidated financial statements continued note 20 sale accounts receivable since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 11 billion additional amount upon collection accounts receivable deferred consideration adm receivables uses cash proceeds transfer receivables purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2013 2012 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold program terminates june 28 2014 unless extended december 31 2013 fair value trade receivables transferred purchasers program derecognized company’s consolidated balance sheet 19 billion exchange transfer company received cash 11 billion recorded 08 billion receivable deferred consideration included current assets cash collections customers receivables sold 398 billion 308 billion 219 billion 89 billion years ended december 31 2013 2012 six months ended december 31 2012 year ended june 30 2012 respectively cash collections customers receivables sold applied deferred consideration deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases program company’s risk loss following transfer accounts receivable program limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant transfers receivables program years ended december 31 2013 2012 six months ended december 31 2012 year ended june 30 2012 resulted expense loss sale 4 million 8 million 4 million 4 million respectively classified selling general administrative expenses consolidated statements earnings company reflects cash flows related program operating activities consolidated statements cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables archerdanielsmidland company notes consolidated financial statements continued note 21 legal proceedings guarantees commitments company routinely involved number actual threatened legal actions including involving alleged personal injuries employment law product liability intellectual property environmental issues alleged tax liability class actions company also routinely receives inquiries regulators government authorities relating various aspects business outcomes matters within complete control may known prolonged periods time actions claimants seek damages well relief including injunctive relief could require significant expenditures result lost revenues accordance applicable accounting standards company records liability consolidated financial statements material loss contingencies loss known considered probable amount reasonably estimated reasonable estimate known probable loss range amount within range better estimate minimum amount range accrued material loss contingency reasonably possible known probable reasonably estimated loss range loss disclosed notes consolidated financial statements determining estimated loss range loss significant judgment required estimate amount timing loss recorded estimates probable losses resulting litigation governmental proceedings involving company inherently difficult predict particularly matters early procedural stages incomplete facts legal discovery involve unsubstantiated indeterminate claims damages potentially involve penalties fines disgorgement punitive damages could result change business practice beginning august 2008 company engaged outside counsel advisers conduct comprehensive review us foreign corrupt practices act fcpa us foreign laws certain transactions conducted company affiliates joint ventures company voluntarily disclosed matter us department justice doj us securities exchange commission sec certain foreign regulators march 2009 since company provided periodic updates agencies december 20 2013 company reached comprehensive settlement doj sec resolve matters settlement company entered nonprosecution agreement doj consent decree sec agreed agencies monetary relief totaling approximately 54 million amount company established reserve included selling general administrative expenses year ended december 31 2013 54 million monetary relief includes 36 million disgorgement prejudgment interest paid company sec 18 million fine paid alfred c toepfer international ukraine ltd “acti ukraine” majority owned subsidiary company doj part comprehensive settlement acti ukraine also entered guilty plea one count conspiracy violate antibribery provisions fcpa us district court central district illinois alfred c toepfer international gmbh also agreed pay fine 1 million german authorities connection matter included companys selling general administrative expenses year ended december 31 2013 company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 37 million december 31 2013 archerdanielsmidland company notes consolidated financial statements continued note 22 quarterly financial data unaudited archerdanielsmidland company notes consolidated financial statements continued note 22 quarterly financial data unaudited continued net earnings attributable controlling interests first quarter fiscal year ended december 31 2013 include aftertax fcpa charge 17 million equal 003 per share discussed note 21 net earnings attributable controlling interests second quarter fiscal year ended december 31 2013 include aftertax fcpa charge 20 million equal 003 per share discussed note 21 aftertax loss australian dollar foreign exchange hedges 32 million equal 005 per share discussed note 13 net earnings attributable controlling interests third quarter fiscal year ended december 31 2013 include aftertax gain australian dollar foreign exchange hedges 16 million equal 002 per share discussed note 13 aftertax asset impairment charges related certain fixed assets 8 million equal 001 per share discussed note 19 aftertax otherthantemporary writedown investment 7 million equal 001 per share discussed note 19 net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2013 include aftertax loss australian dollar foreign exchange hedges 9 million equal 001 per share discussed note 13 aftertax asset impairment charges related certain fixed assets 61 million equal 009 per share discussed note 19 aftertax goodwill impairment charge 9 million equal 002 per share discussed note 19 aftertax otherthantemporary writedown graincorp 155 million equal 023 per share discussed note 19 aftertax graincorprelated charges 3 million equal 001 per share valuation allowance certain deferred tax assets 82 million equal 012 per share income tax benefit recognized current period 84 million equal 013 per share related biodiesel blending credits prior periods effective tax rate adjustment 21 million equal 003 per share due change annual effective tax rate prior yeartodate earnings aftertax charges 3 million equal 001 per share net earnings attributable controlling interests first quarter transition period ended december 31 2012 include aftertax asset impairment charge related gruma investment writedown 107 million equal 016 per share discussed note 19 net earnings attributable controlling interests second quarter transition period ended december 31 2012 include aftertax gain 49 million equal 007 per share related company’s interest graincorp aftertax gain 24 million equal 004 per share related sale certain company’s exchange membership interests aftertax charge 44 million equal 007 per share related pension settlements net earnings attributable controlling interests second third quarters fiscal year ended june 30 2012 include aftertax exit costs asset impairment charges related primarily bioplastics facility global workforce reduction program 222 million 52 million equal 033 008 per share respectively discussed note 19 report independent registered public accounting firm board directors shareholders archerdanielsmidland company decatur illinois audited accompanying consolidated balance sheets archerdanielsmidland company december 31 2013 2012 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows year ended december 31 2013 sixmonth period ended december 31 2012 years ended june 30 2012 2011 audits also included financial statement schedule listed index item 15a2 financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archerdanielsmidland company december 31 2013 2012 consolidated results operations cash flows year ended december 31 2013 sixmonth period ended december 31 2012 years ended june 30 2012 2011 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein also audited accordance standards public company accounting oversight board united states archerdanielsmidland company’s internal control financial reporting december 31 2013 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 1992 framework report dated february 26 2014 expressed unqualified opinion thereon ernst young llp st louis missouri february 26 2014 report independent registered public accounting firm board directors shareholders archerdanielsmidland company decatur illinois audited archerdanielsmidland company’s company internal control financial reporting december 31 2013 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 1992 framework coso criteria archerdanielsmidland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion archerdanielsmidland company maintained material respects effective internal control financial reporting december 31 2013 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archerdanielsmidland company december 31 2013 2012 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows year ended december 31 2013 sixmonth period ended december 31 2012 years ended june 30 2012 2011 archerdanielsmidland company report dated february 26 2014 expressed unqualified opinion thereon ernst young llp st louis missouri february 26 2014 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated statements comprehensive income loss consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated statements comprehensive income loss see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements include accounts company subsidiaries significant intercompany accounts transactions eliminated company consolidates entities including variable interest entities vies controlling financial interest vies company assesses whether primary beneficiary defined applicable accounting standard investments affiliates including vies company exercises significant influence control investee primary beneficiary investee’s activities carried cost plus equity undistributed earnings since acquisition adjusted appropriate basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain vies included using recent available financial statements case financial statements within 93 days company’s year end consistent period use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassifications effective january 1 2015 company formed fourth reportable business segment wild flavors specialty ingredients results wild flavors gmbh wild flavors specialty commodities inc sci acquired fourth quarter fiscal 2014 reported segment addition results certain product lines previously reported oilseeds processing corn processing agricultural services business segments throughout annual report form 10k prior period results product lines previously reported reportable business segments reclassified conform current period presentation effective april 1 2015 company early adopted amended guidance asc subtopic 83530 interest imputation interest addresses balance sheet presentation requirements debt issuance costs debt discounts premiums capitalized software costs 109 million 2014 previously included net property plant equipment reclassified goodwill intangible assets conform current period presentation cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements lending arrangements segregated balances represent deposits received customers company’s registered futures commission merchant securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance lending arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 70 million 81 million december 31 2015 2014 respectively reflect loss anticipated accounts receivable balances company estimates allowance based history writeoffs level pastdue accounts relationships economic status customers portions allowance uncollectible accounts recorded trade receivables current assets credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates december 31 2015 2014 35 million 15 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market following table sets forth company’s inventories december 31 2015 2014 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued fair value measurements company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date company uses market approach valuation technique measure majority assets liabilities carried fair value three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies contract level 3 many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period derivatives company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet unrealized gains reported current assets unrealized losses reported accrued expenses payables accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments changes fair value derivatives recognized earnings immediately derivative instruments designated qualify hedging instruments company designates hedging instrument based upon exposure hedged fair value hedge cash flow hedge derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk effective portion gain loss derivative instrument reported component accumulated comprehensive income aoci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings remaining gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value hedged item recognized consolidated statement earnings current period archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued marketable securities company classifies marketable securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component aoci company monitors investments impairment periodically recognizes impairment charge decline fair value investment judged otherthantemporary company uses specific identification method securities sold reclassified aoci earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 5 40 years machinery equipment 3 40 years company capitalized interest major construction projects progress 11 million 18 million 16 million years ended december 31 2015 2014 2013 respectively income taxes company accounts income tax positions accordance applicable accounting standards liability method used accounting income taxes deferred tax assets liabilities recorded temporary differences tax basis assets liabilities reported amounts consolidated financial statements using statutory rates effect year differences expected reverse effect deferred tax assets liabilities change tax rates recorded results operations period includes enactment date law applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests definitelived intangible assets amortized estimated useful lives 2 47 years reviewed impairment whenever indicators carrying value assets may fully recoverable company’s accounting policy evaluate goodwill intangible assets indefinite lives impairment october 1 fiscal year whenever indicators carrying value assets may fully recoverable company recorded impairment charges goodwill intangibles totaling 21 million related computer software certain company’s international oilseeds processing facilities facility corn processing segment year ended december 31 2015 9 million related company’s brazilian sugar milling business year ended december 31 2013 impairment charges recorded goodwill intangible assets year ended december 31 2014 asset abandonments writedowns company evaluates longlived assets impairment whenever indicators impairment exist assets written fair value consideration company’s ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value fair value generally based discounted cash flow analysis relies management’s estimate market participant assumptions level 3 measurement applicable accounting standards years ended december 31 2015 2014 2013 impairment charges 108 million 35 million 84 million respectively see note 19 additional information archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued payables brokerage customers payables brokerage customers represent total customer accounts company’s futures commission merchant credit positive balances customer accounts used primarily connection commodity transactions include gains losses open commodity trades well securities deposits made margins purpose required company exchangeclearing organizations counterparties payables brokerage customers corresponding balance segregated cash investments customer omnibus receivable current assets revenues company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured company sales contracts allow pricing occur title goods passed customer cases company continues report goods inventory recognizes sales revenue price determined freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates years ended december 31 2015 2014 2013 50 billion 58 billion 69 billion respectively stock compensation company recognizes expense stock compensation based fair value awards granted company’s stock compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related stock compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 122 million 79 million 59 million years ended december 31 2015 2014 2013 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method business combinations company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended assets acquired liabilities assumed based preliminary purchase price allocations adjusted fair values acquisition date remainder purchase price recorded goodwill measurement period may take one year acquisition date adjustments assets acquired liabilities assumed may recorded upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first subsequent adjustments charged consolidated statements earnings archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued adoption new accounting standards effective april 1 2015 company early adopted amended guidance accounting standards codification asc subtopic 83530 interest imputation interest addresses balance sheet presentation requirements debt issuance costs debt discounts premiums amended guidance aligns closely international financial reporting standards require transaction costs deducted carrying value financial liability recorded separate assets company reclassified 30 million debt issuance costs assets longterm debt december 31 2014 consolidated balance sheet conform current presentation december 31 2015 longterm debt balance net 22 million debt issuance costs effective october 1 2015 company early adopted amended guidance asc topic 810 consolidation seeks improve targeted areas consolidation guidance legal entities limited partnerships limited liability corporations securitization structures amended guidance changes analysis reporting entity must perform determine whether consolidate certain types legal entities changes include among others modification evaluation whether limited partnerships similar legal entities variable interest entities voting interest entities elimination presumption general partner consolidate limited partnership adoption amended guidance impact company’s financial results effective october 1 2015 company early adopted amended guidance asc subtopic 22520 income statement extraordinary unusual items eliminates concept extraordinary items generally accepted accounting principles us amended guidance aligns closely international accounting standards 1 presentation financial statements ias 1 prohibits presentation disclosure extraordinary items adoption amended guidance impact company’s financial results effective october 1 2015 company early adopted amended guidance asc topic 718 compensation stock compensation seeks resolve diversity practice exists accounting sharebased payments amended guidance requires performance target affects vesting could achieved requisite service period treated performance condition adoption amended guidance impact company’s financial results effective october 1 2015 company early adopted amended guidance asc topic 740 income taxes simplifies balance sheet presentation deferred income taxes amended guidance aligns closely international accounting standards 1 requires deferred tax assets liabilities classified noncurrent assets liabilities classified statement financial position company adopted amended guidance prospectively reclassified 185 million current deferred tax assets current assets 17 million current deferred tax liabilities accrued expenses payables assets deferred income taxes respectively december 31 2015 consolidated balance sheet pending accounting standards effective january 1 2016 company required adopt amended guidance asc topic 805 business combinations simplifies accounting adjustments made provisional amounts recognized business combination amended guidance requires acquirer recognize adjustments provisional amounts identified measurement period reporting period adjustment amounts determined effect earnings changes depreciation amortization income effects result change provisional amounts calculated accounting completed acquisition date shall recorded period’s financial statements amended guidance also requires entity present separately face income statement disclose notes portion amount recorded currentperiod earnings line item would recorded previous reporting periods adjustment provisional amounts recognized acquisition date company required adopt amended guidance prospectively adjustments provisional amounts occur effective date earlier application permitted financial statements issued company expect adoption amended guidance significant impact company’s financial results archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective january 1 2017 company required adopt amended guidance asc topic 330 inventory simplifies measurement inventory amended guidance requires entity measure costbased inventory lower cost net realizable value net realizable value estimated selling price ordinary course business less reasonably predictable costs completion disposal transportation subsequent measurement unchanged inventory measured using lastin firstout method retail inventory method company expect adoption amended guidance significant impact company’s financial results effective january 1 2018 company required adopt new guidance asc topic 606 revenue contracts customers topic 606 supersede revenue recognition requirements asc topic 605 revenue recognition topic 606 requires company recognize revenue depict transfer promised goods services customers amount reflects consideration entity expects entitled exchange goods services new guidance requires company apply following steps 1 identify contract customer 2 identify performance obligations contract 3 determine transaction price 4 allocate transaction price performance obligations contract 5 recognize revenue company satisfies performance obligation company required adopt topic 606 either full retrospective basis prior reporting period presented modified retrospective basis cumulative effect initially applying new guidance recognized date initial application company elects modified retrospective approach required provide additional disclosures amount financial statement line item affected current reporting period compared guidance effect change explanation reasons significant changes company expects complete assessment impact new guidance consolidated financial statements 2016 note 2 acquisitions operating results acquisitions included company’s financial statements date acquisition fiscal year 2015 acquisitions november 2 2015 company completed acquisition remaining 50 percent interest eaststarch cv acquisition includes corn wet mills bulgaria turkey 50 percent stake wet mill hungary enhancing company’s capabilities serve customers around world 2015 post acquisition financial results eaststarch cv reported corn processing segment year ended december 31 2015 company acquired four businesses including remaining interest eaststarch cv described total cost 508 million purchase price net cash acquired 29 million plus acquisitiondate fair values company’s previously held equity interests 385 million eaststarch cv 64 million north star shipping minmetal included others preliminarily allocated follows archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued year ended december 31 2015 company recognized pretax gains 185 million eaststarch cv transaction 27 million north star shipping minmetal transaction included others representing difference carrying values acquisitiondate fair values company’s previously held equity interests acquisition date fair value determined based discounted cash flow analysis using market participant assumptions level 3 measurement applicable accounting standards goodwill recorded connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses following table sets forth preliminary fair values weighted average useful lives intangible assets acquired company’s consolidated statement earnings year ended december 31 2015 includes post acquisition results acquired businesses immaterial archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued fiscal year 2014 acquisitions october 1 2014 november 18 2014 company completed acquisitions wild flavors businesses wild flavors specialty commodities inc sci respectively acquisitions line company’s strategy increase returns reduce earnings volatility growth specialty ingredient offerings 2014 post acquisition financial results wild flavors sci reported wild flavors specialty ingredients segment year ended december 31 2014 company acquired six businesses including wild flavors sci total cost 30 billion purchase price net cash acquired 280 million preliminarily allocated follows goodwill recorded connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses 18 billion preliminarily allocated goodwill 15 million expected deductible tax purposes following table sets forth preliminary fair values weighted average useful lives intangible assets acquired company’s consolidated statement earnings year ended december 31 2014 includes post acquisition results wild flavors immaterial archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued 2015 finalization purchase price allocation related acquisition wild flavors resulted increase goodwill 123 million corresponding decreases intangibles longterm liabilities finalization purchase price allocations related acquisitions result material adjustments 2015 fiscal year 2013 acquisitions year ended december 31 2013 company acquired four businesses total cost 44 million recorded preliminary allocation purchase price related acquisitions net cash purchase price acquisitions 44 million preliminarily allocated working capital property plant equipment goodwill longterm assets 6 million 29 million 2 million 7 million respectively finalization purchase price allocations related acquisitions result material adjustments note 3 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis december 31 2015 2014 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets market valuations company’s inventories adjusted location quality exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade unobservable inputs significant impact measurement fair value inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold derivative contracts include exchangetraded commodity futures option contracts forward commodity purchase sale contracts otc instruments related primarily agricultural commodities energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact measurement fair value contract classified level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component revenues cost products sold income expensenet effective portions changes fair value derivatives designated cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss hedged items recorded earnings probable hedged transaction longer occur archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued company’s cash equivalents comprised money market funds valued using quoted market prices classified level 1 company’s marketable securities comprised equity investments us treasury securities obligations us government agencies debt securities publicly traded equity investments us treasury securities valued using quoted market prices classified level 1 us government agency obligations corporate municipal debt securities valued using thirdparty pricing services substantially classified level 2 unrealized changes fair value availableforsale marketable securities recognized consolidated balance sheets component accumulated comprehensive income loss unless decline value deemed otherthantemporary point decline recorded earnings company’s segregated investments comprised us treasury securities us treasury securities valued using quoted market prices classified level 1 company deferred consideration accounts receivable securitization programs “programs” represents note receivable purchasers programs amount reflected current assets consolidated balance sheet see notes 6 20 company carries deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 years ended december 31 2015 2014 includes gains 297 million attributable change unrealized gains relating level 3 assets still held december 31 2015 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued includes losses 328 million attributable change unrealized losses relating level 3 liabilities still held december 31 2015 includes gains 602 million attributable change unrealized gains relating level 3 assets still held december 31 2014 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued includes losses 558 million attributable change unrealized losses relating level 3 liabilities still held december 31 2014 periods presented company transfers levels 1 2 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 cases price components inventories commodity purchase sale contracts observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components determined specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations december 31 2015 2014 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component weighted average 100 total price assets 535 liabilities archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations absent corroborating evidence company considers price quotes 100 percent unobservable therefore fair value items reported level 3 note 4 derivative instruments hedging activities derivatives designated hedging instruments majority company’s derivative instruments designated hedging instruments company uses exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets derivatives including exchange traded contracts physical purchase sale contracts inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore fair values changes fair values inventories included tables following table sets forth fair value derivatives designated hedging instruments december 31 2015 2014 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended december 31 2015 2014 2013 archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued 2014 company recognized 102 million pretax foreign exchange hedging losses euro foreign currency derivative contracts entered economically hedge wild flavors acquisition inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately component cost products sold derivatives designated cash flow fair value hedging strategies december 31 2015 2014 company certain derivatives designated cash flow hedges fair value hedges company uses interest rate swaps designated fair value hedges protect fair value fixedrate debt due changes interest rates changes fair value interest rate swaps underlying fixedrate debt recorded income expense net terms interest rate swaps match terms underlying debt resulting ineffectiveness december 31 2015 company 19 million current assets representing fair value interest rate swaps corresponding increase underlying debt amount impact earnings commodity hedge programs described derivatives designated cash flow hedges assuming normal market conditions changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either revenues cost products sold interest expense income expense net applicable december 31 2015 company 21 million aftertax losses aoci related gains losses commodity cash flow hedge transactions company expects recognize 20 million losses consolidated statement earnings next 12 months company uses futures options contracts fix purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 76 million bushels corn per month past 12 months company hedged 16 69 monthly anticipated grind december 31 2015 company designated hedges representing 13 25 anticipated monthly grind corn next 12 months company time also uses futures options swaps fix sales price certain ethanol sales contracts company established hedging programs ethanol sales contracts indexed unleaded gasoline prices various exchangetraded ethanol contracts objective hedging programs reduce variability cash flows associated company’s sales ethanol past 12 months company hedged 6 million 105 million gallons ethanol sales per month programs december 31 2015 company designated hedges representing 0 13 million gallons ethanol sales per month next 12 months following tables set forth fair value derivatives designated hedging instruments december 31 2015 2014 archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended december 31 2015 2014 2013 respectively hedge ineffectiveness commodity contracts results change price underlying commodity specific cash market differs change price derivative financial instrument used establish hedging relationship example change price corn futures contract strongly correlated change cash price paid corn gain loss derivative instrument deferred recognized time corn grind occurs change price derivative strongly correlate change cash price corn example portion derivative gains losses may required recognized earnings prior corn grind occurring net investment hedging strategies june 24 2015 company issued €500 million aggregate principal amount floating rate notes €600 million aggregate principal amount 175 notes collectively “notes” see note 10 information notes company designated €11 billion notes hedge net investment foreign subsidiary december 31 2015 company 19 million gains aoci related gains losses net investment hedge transaction amount deferred aoci underlying investment divested archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities following table sets forth items shortterm longterm investments 6 million unrealized losses december 31 2015 1 million arose within last 12 months related company’s investment one availableforsale equity security fair value 4 million market value company’s investment unrealized loss position 12 months longer 2 million related company’s investment one available sale equity security company evaluated nearterm prospects issuer relation severity duration impairment based evaluation company’s ability intent hold investments reasonable period time sufficient forecasted recovery fair value company consider investments otherthantemporarily impaired december 31 2015 archerdanielsmidland company notes consolidated financial statements continued note 6 current assets following table sets forth items current assets 1 company provides financing suppliers primarily brazilian farmers finance portion suppliers’ production costs amounts reported net allowances 8 million 11 million december 31 2015 2014 respectively interest earned financing receivables 23 million 23 million 26 million years ended december 31 2015 2014 2013 respectively included interest income consolidated statements earnings note 7 accrued expenses payables following table sets forth items accrued expenses payables archerdanielsmidland company notes consolidated financial statements continued note 8 investments advances affiliates company applies equity method accounting investments investees company ability exercise significant influence including company’s 190 173 share ownership wilmar december 31 2015 2014 respectively company 58 60 unconsolidated domestic foreign affiliates december 31 2015 2014 respectively following table summarizes combined balance sheets december 31 2015 2014 combined statements earnings company’s unconsolidated affiliates years ended december 31 2015 2014 2013 company’s share undistributed earnings unconsolidated affiliates december 31 2015 19 billion company direct investment foreign equity method investee carrying value 26 billion december 31 2015 market value 25 billion based active market quoted prices converted us dollars applicable exchange rates december 31 2015 investment unrealized loss position less 12 months company evaluated nearterm prospects investee relation severity duration impairment based evaluation company consider investment otherthantemporarily impaired december 31 2015 company provides credit facilities totaling 90 million four unconsolidated affiliates three facilities due demand bear interest 267 317 total outstanding balance 27 million one facility outstanding balance december 31 2015 outstanding balance included current assets accompanying consolidated balance sheet archerdanielsmidland company notes consolidated financial statements continued note 9 goodwill intangible assets goodwill balances attributable consolidated businesses segment set forth following table changes goodwill year ended december 31 2015 related primarily acquisitions purchase price allocation adjustments see note 2 divestitures see note 18 impairments see note 19 following table sets forth intangible assets change gross carrying amount intangible assets year ended december 31 2015 primarily related acquisitions discussed note 2 reclassifications categories partially offset purchase price allocation adjustments foreign currency translation adjustments aggregate amortization expense 75 million 27 million 22 million years ended december 31 2015 2014 2013 respectively estimated future aggregate amortization expense next five years 106 million 99 million 95 million 93 million 89 million archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements 1 700 million face amount december 31 2014 2 750 million face amount december 31 2014 3 600 million face amount december 31 2014 4 596 million face amount december 31 2014 5 420 million face amount december 31 2014 6 295 million face amount december 31 2014 7 185 million face amount december 31 2014 8 182 million face amount december 31 2014 9 172 million face amount december 31 2014 10 187 million face amount december 31 2014 11 154 million face amount december 31 2014 12 124 million face amount december 31 2014 archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued june 24 2015 company issued €500 million 563 million aggregate principal amount floating rate notes due 2019 €600 million 675 million aggregate principal amount 175 notes due 2023 proceeds expenses €499 million 562 million €594 million 669 million floating rate notes 175 notes respectively december 31 2015 company designated €11 billion notes hedge net investment foreign subsidiary july 1 2015 company accepted repurchase 794 million aggregate principal amount certain outstanding debentures “debentures” validly tendered withdrawn pursuant terms previously announced cash tender offers company paid aggregate total consideration 961 million debentures accepted repurchase september 2015 company redeemed 141 million 545 outstanding debentures 156 million cash tender offers debt redemption financed eurodenominated debt issued june 24 2015 company recognized debt extinguishment charge 189 million including transaction expenses 7 million quarter ended september 30 2015 pertaining transactions debt issuance debt repurchase transactions discussed resulted net increase longterm debt 03 billion discount amortization expense net premium amortization 8 million 11 million 54 million years ended december 31 2015 2014 2013 respectively included interest expense related company’s longterm debt december 31 2015 fair value company’s longterm debt exceeded carrying value 09 billion estimated using quoted market prices level 2 measurement applicable accounting standards aggregate maturities longterm debt five years december 31 2015 12 million 273 million 571 million 552 million 8 million respectively december 31 2015 company lines credit totaling 57 billion 56 billion unused weighted average interest rates shortterm borrowings outstanding december 31 2015 2014 550 376 respectively company’s total lines credit 40 billion support commercial paper borrowing facility commercial paper outstanding december 31 2015 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2015 company outstanding standby letters credit surety bonds december 31 2015 2014 totaling 08 billion 10 billion respectively company accounts receivable securitization programs “programs” programs provide company 16 billion funding resulting sale accounts receivable december 31 2015 company utilized 12 billion facility programs see note 20 information programs note 11 stock compensation company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2002 2009 incentive compensation plans options issued market value date grant vest incrementally one five years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary option activity 2015 presented weightedaverage remaining contractual term options outstanding exercisable december 31 2015 6 years 4 years respectively aggregate intrinsic value options outstanding exercisable december 31 2015 38 million 47 million respectively weightedaverage grantdate fair values options granted years ended december 31 2015 2014 2013 1029 1280 1002 respectively total intrinsic values options exercised years ended december 31 2015 2014 2013 20 million 66 million 29 million respectively cash proceeds received options exercised years ended december 31 2015 2014 2013 28 million 93 million 73 million respectively december 31 2015 19 million total unrecognized compensation expense related option grants amounts recognized compensation expense next four years 10 million 4 million 3 million 2 million respectively company’s 2002 2009 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2002 2009 incentive compensation plans also provide granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock units vest end threeyear vesting period subject attainment certain future performance criteria based company’s adjusted return invested capital compared weighted average cost capital years ended december 31 2015 2014 2013 18 million 14 million 09 million common stock units respectively granted restricted stock awards psus december 31 2015 138 million shares available future grants pursuant 2009 plan fair value restricted stock awards psus determined based market value company’s shares grant date weightedaverage grantdate fair values awards granted years ended december 31 2015 2014 2013 4673 4078 3296 respectively archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary restricted stock awards psus activity 2015 presented december 31 2015 59 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three years 36 million 19 million 4 million respectively total grantdate fair value restricted stock awards vested year ended december 31 2015 28 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant compensation expense psus based probability meeting performance criteria total compensation expense option grants restricted stock awards psus recognized years ended december 31 2015 2014 2013 70 million 55 million 43 million respectively note 12 income expense net following table sets forth items income expense individually significant items included table gain sale revaluation assets year ended december 31 2015 includes gain 256 million related primarily sale cocoa chocolate lactic businesses gain 212 million revaluation company’s previously held equity investments north star shipping minmetal eaststarch cv conjunction acquisition remaining interests gain 62 million sale 50 interest barcarena export terminal facility brazil glencore plc gain sale revaluation assets year ended december 31 2014 includes gain 156 million upon company’s effective dilution pacificor formerly kalama export company resulting contribution additional assets another member exchange new equity units gain 126 million sale fertilizer business archerdanielsmidland company notes consolidated financial statements continued note 12 income expense net continued loss debt extinguishment including transaction expenses 7 million year ended december 31 2015 related cash tender offers redemption certain company’s outstanding debentures loss derivatives year ended december 31 2014 due losses euro foreign currency derivative contracts entered economically hedge wild flavors acquisition loss derivatives year ended december 31 2013 due losses australian dollar foreign currency derivative contracts entered economically hedge proposed graincorp limited graincorp acquisition realized gains sales availableforsale marketable securities totaled 8 million year ended december 31 2013 realized gains sales availableforsale marketable securities immaterial years ended december 31 2015 2014 realized losses sales availableforsale marketable securities immaterial periods presented impairment losses securities 6 million 166 million years ended december 31 2014 2013 respectively classified asset impairment exit restructuring charges consolidated statements earnings see note 19 information impairment losses securities year ended december 31 2015 net year ended december 31 2015 includes 45 million loss provisions related company’s brazilian sugar ethanol facilities note 13 income taxes following table sets forth geographic split earnings income taxes significant components income tax follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued significant components deferred tax liabilities assets follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued reconciliation statutory federal income tax rate company’s effective income tax rate earnings follows reduction federal statutory rate related foreign earnings taxed lower rates resulted mostly company’s foreign operations switzerland asia caribbean including significant onetime gains portfolio actions 2015 company’s foreign earnings taxed rates lower us rate generated jurisdictions 51 47 65 foreign earnings taxes fiscal years 2015 2014 2013 respectively company historically included amounts received us government form biodiesel credit taxable income federal state income tax returns fourth quarter 2013 internal revenue service released chief counsel advice stipulating biodiesel credits included taxable income based upon chief counsel advice company changed position related credits excluded income years 2011 current year total tax benefit recorded 2013 107 million 55 million relates years prior 2013 company 301 million 305 million tax assets related net operating loss carryforwards certain international subsidiaries december 31 2015 2014 respectively december 31 2015 approximately 222 million assets expiration date remaining 79 million expire various times fiscal 2033 annual usage certain assets limited percentage taxable income respective foreign subsidiary year company recorded valuation allowance 127 million 218 million tax assets december 31 2015 2014 respectively due uncertainty realization fourth quarter 2013 company recorded full valuation allowance net deferred tax assets german subsidiary amount 103 million 82 million equal 012 per share adjusted income attributable minority interest holders management’s establishment valuation allowance resulted combination matters including absence financial performance subsidiary ability generate sufficient taxable income future 2015 company reversed 85 million valuation allowance net deferred tax assets subsidiary following 2014 wild flavors acquisition subsequent restructuring consolidated tax group subsidiary belongs fourth quarter 2013 company placed full valuation allowance deferred tax asset related impairment investment graincorp amount 41 million company also placed full valuation allowance impairment assets related sugar business brazil amount 17 million 2015 company recorded additional impairment assets provisions related sugar business increasing valuation allowance 58 million archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company 22 million 21 million tax assets related foreign domestic capital loss carryforwards december 31 2015 2014 respectively company recorded valuation allowance 22 million 21 million tax assets december 31 2015 2014 respectively company 90 million 76 million tax assets related excess foreign tax credits december 31 2015 2014 respectively begin expire 2016 due uncertainty realization company recorded valuation allowance 8 million assets december 31 2015 company 62 million 70 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit december 31 2015 2014 respectively expire various times fiscal 2035 due uncertainty realization company recorded valuation allowance 47 million 51 million related state income tax assets net federal tax benefit december 31 2015 2014 respectively company remains subject federal examination us calendar tax years 2014 2015 undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method aggregating approximately 96 billion december 31 2015 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings following table sets forth rollforward activity unrecognized tax benefits year ended december 31 2015 2014 follows additions reductions unrecognized tax benefits shown table include effects related net income shareholders’ equity changes unrecognized tax benefits material effect company’s net income cash flow december 31 2015 2014 company accrued interest penalties unrecognized tax benefits 20 million 21 million respectively company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 36 million tax expense period archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company subject routine examination domestic foreign tax authorities frequently faces challenges regarding amount taxes due challenges include positions taken company related timing nature amount deductions allocation income among various tax jurisdictions resolution related tax positions negotiation relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions routine evaluations exposure associated various tax filing positions company recognizes liability necessary estimated potential additional tax owed company accordance applicable accounting standard however company cannot predict provide assurance ultimate outcome ongoing future examinations company’s whollyowned subsidiary adm brasil ltda adm brasil received three separate tax assessments brazilian federal revenue service bfrs challenging tax deductibility commodity hedging losses related expenses tax years 2004 2006 2007 december 31 2015 assessments updated estimated penalties interest variation currency exchange rates totaled approximately 361 million adm brasil’s tax return 2005 also audited assessment received statute limitations 2005 2008 2010 expired company expect receive additional tax assessments adm brasil enters commodity hedging transactions result gains included adm brasil’s calculation taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs adm brasil filed administrative appeal assessments appeal panel found favor bfrs assessments adm brasil filed second level administrative appeal second administrative appeal panel continues conduct customary procedural activities including ongoing dialogue bfrs auditor adm brasil continues unsuccessful administrative appellate process company intends file appeals brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company intends vigorously defend position current assessments similar assessments may issued years subsequent 2010 company’s subsidiaries argentina received tax assessments challenging transfer prices used price grain exports totaling 123 million inclusive interest adjusted variation currency exchange rates tax years 2004 2008 argentine tax authorities conducting review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion company believes complied argentine tax laws cannot rule receiving additional assessments challenging transfer prices used price grain exports years subsequent 2008 estimates potential assessments would approximately 165 million december 31 2015 subject variation currency exchange rates company believes appropriately evaluated transactions underlying assessments concluded based argentine tax law tax position would sustained accordingly recorded tax liability assessments company intends vigorously defend position current assessments similar assessments may issued years subsequent 2008 accordance accounting requirements uncertain tax positions company recorded uncertain tax liability assessments concluded likely prevail brazil argentina matters based upon technical merits taxing jurisdictions’ processes provide mechanism settling less full amount assessment company’s consideration tax assessments requires judgments application income tax regulations specific facts circumstances final outcome matters cannot reliably predicted may take many years resolve could result financial impacts entire amount assessments archerdanielsmidland company notes consolidated financial statements continued note 14 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2024 rent expense years ended december 31 2015 2014 2013 241 million 224 million 199 million respectively additional amounts incurred charges pertaining time charters ocean going vessels accounted leases years ended december 31 2015 2014 2013 110 million 136 million 147 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans company provides substantially us employees certain foreign subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage others provided health care reimbursement accounts described company maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest adm stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 12 million shares company common stock december 31 2015 market value 426 million cash dividends received shares company common stock plans year ended december 31 2015 13 million archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth changes defined benefit obligation fair value defined benefit plan assets years ended december 31 2015 2014 included accumulated comprehensive income pension benefits december 31 2015 following amounts yet recognized net periodic pension cost unrecognized prior service cost 4 million unrecognized actuarial loss 851 million prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost 2016 2 million 56 million respectively archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued included accumulated comprehensive income postretirement benefits december 31 2015 following amounts yet recognized net periodic postretirement benefit cost unrecognized prior service credit 68 million unrecognized actuarial loss 41 million prior service credit 17 million actuarial loss 3 million included accumulated comprehensive income expected recognized net periodic benefit cost 2016 following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 25 billion 22 billion 15 billion respectively december 31 2015 29 billion 26 billion 17 billion respectively december 31 2014 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 25 billion 22 billion 15 billion respectively december 31 2015 28 billion 25 billion 17 billion respectively december 31 2014 accumulated benefit obligation pension plans december 31 2015 2014 26 billion 30 billion respectively postretirement benefit measurement purposes 725 annual rate increase per capita cost covered health care benefits assumed year ended december 31 2015 rate assumed decrease gradually 45 2025 remain level thereafter credits used fund certain retirees health reimbursement accounts indexed maximum 2 per year 1 change assumed health care cost trend rates would following effects 1 increase 1 decrease millions effect combined service interest cost components 1 effect accumulated postretirement benefit obligations 5 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts based cumulative net asset value nav underlying investments ccts comprised international equity funds small cap us equity fund large cap us equity funds fixed income funds fund units valued nav based closing market value units bought sold valuation date classified level 2 fair value hierarchy ccts seek primarily provide investment results approximating aggregate price dividend performance total return income stream underlying investments funds issuances redemptions certain cct investments may restricted date andor amount corporate debt instruments corporate debt instruments valued using thirdparty pricing services classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth level within fair value hierarchy fair value plan assets december 31 2015 2014 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 77 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt securities target asset allocation company’s us pension plans approximately actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 52 equity securities 42 debt securities 6 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans hold shares company common stock december 31 2015 2014 measurement dates investment objectives company’s plan assets • optimize longterm return plan assets acceptable level risk • maintain broad diversification across asset classes among investment managers • maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments based actuarial calculations company expects contribute 31 million pension plans 13 million postretirement benefit plan 2016 company may elect make additional discretionary contributions period archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following benefit payments reflect expected future service expected paid benefit plans note 16 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued december 31 2015 2014 company approximately 1208 million shares 794 million shares respectively common shares treasury stock 47 billion 27 billion december 31 2015 2014 respectively recorded cost reduction common stock included foreign currency translation adjustment component aoci 19 million net tax income pertaining foreign currencydenominated debt designated net investment hedge see note 4 information following tables set forth changes aoci component reclassifications aoci years ended december 31 2015 2014 archerdanielsmidland company notes consolidated financial statements continued note 16 shareholders’ equity continued change foreign currency translation adjustment primarily due us dollar appreciation mainly impacting eurodenominated equity company’s foreign subsidiaries foreign currency translation adjustment reclassified earnings 2015 due foreign currency translation loss recognized upon acquisition remaining interest eaststarch cv partially offset foreign currency translation gain recognized upon sale global cocoa chocolate businesses archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations organized managed classified four reportable business segments agricultural services corn processing oilseeds processing wild flavors specialty ingredients segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified effective january 1 2015 company formed fourth reportable business segment wild flavors specialty ingredients results wild flavors sci acquired fourth quarter fiscal 2014 reported segment addition results certain product lines previously reported agricultural services corn processing oilseeds processing business segments prior period results product lines previously reported reportable business segments reclassified conform current period presentation agricultural services segment utilizes extensive global grain elevator transportation networks port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services segment includes international agricultural commodities merchandising handling activities managed global trade desk based rolle switzerland agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail freight services agricultural services segment also includes activities related structured trade finance processing wheat flour may 2015 company acquired remaining interests north star shipping minmetal operate export facilities romanian port constanta black sea agricultural services segment also includes company’s 322 share results pacificor formerly kalama export company llc joint venture returns associated company’s 198 investment graincorp company’s corn processing segment engaged corn wet milling dry milling activities utilizing asset base primarily located central part united states additional facilities china bulgaria turkey corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include essential amino acids lysine threonine used swine poultry diets optimize performance corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing segment also includes activities related processing distribution formula feeds animal health nutrition products corn processing products include citric acids glycols used various food industrial products corn processing segment also includes activities company’s brazilian sugarcane ethanol plant related operations segment also includes company’s share results equity investments almidones mexicanos sa red star yeast company llc may 2015 company sold lactic acid business november 2015 company completed purchase remaining interest eaststarch cv archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment major supplier peanuts tree nuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets oilseeds processing segment also included activities related global chocolate cocoa businesses sale businesses july 2015 october 2015 respectively oilseeds processing segment also includes company’s share results equity investment wilmar international limited wilmar share results stratas foods llc edible oils limited joint ventures 2015 company acquired additional shares wilmar increasing ownership interest 173 190 september 2015 company completed purchase belgian oil bottler aor nv wild flavors specialty ingredients segment engages manufacturing sales distribution specialty products including natural flavor ingredients flavor systems natural colors proteins emulsifiers soluble fiber polyols hydrocolloids natural health nutrition products specialty food feed ingredients wild flavors specialty ingredients segment also includes activities related procurement processing distribution edible beans company’s wild flavors specialty ingredients segment includes activities wild flavors sci acquired fourth quarter fiscal 2014 eatem foods leading developer producer premium traditional natural organic savory flavor systems acquired fourth quarter 2015 includes company’s remaining operations primarily financial business units related futures commission insurance activities intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included segment operating profit equity earnings affiliates based equity method accounting certain corporate items allocated company’s reportable business segments corporate results principally include impact liforelated adjustments unallocated corporate expenses interest cost net investment income company’s share results equity investment archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued segment information archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued geographic information following geographic data include revenues attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment archerdanielsmidland company notes consolidated financial statements continued note 18 assets liabilities held sale july 31 2015 company completed sale global chocolate business cargill inc 431 million recorded gain sale 38 million net transaction expenses oilseeds processing segment year ended december 31 2015 prior july 31 2015 assets liabilities global chocolate business subject purchase sale agreement classified held sale company’s consolidated balance sheet october 16 2015 company completed sale global cocoa business olam international limited 12 billion recorded gain sale 206 million net transaction expenses oilseeds processing segment quarter ended december 31 2015 prior october 16 2015 assets liabilities global cocoa business subject purchase sale agreement classified held sale company’s consolidated balance sheet global chocolate cocoa businesses comprise major component company’s operations therefore meet criteria classified discontinued operations december 31 2015 2014 amended guidance asc topics 205 360 company early adopted october 1 2014 assets liabilities classified held sale required recorded lower carrying value fair value less costs sell december 31 2014 carrying value cocoa chocolate assets less fair value less costs sell accordingly adjustment asset value necessary assets liabilities held sale december 31 2015 major classes assets liabilities held sale december 31 2014 follows archerdanielsmidland company notes consolidated financial statements continued note 19 asset impairment exit restructuring costs following table sets forth charges included asset impairment exit restructuring costs 1 restructuring exit costs recognized year ended december 31 2015 consisted primarily restructuring charges 29 million related principally international pension plan settlement exit costs 22 million related brazilian sugar ethanol facilities corn processing segment restructuring exit costs totaling 20 million restructuring exit costs recognized year ended december 31 2014 consisted costs associated relocation company’s global headquarters chicago illinois 16 million restructuring charges related wild flavors acquisition toepfer integration following acquisition minority interest restructuring charges 48 million 2 asset impairment charge equity securities fiscal year ended december 31 2014 consisted otherthantemporary investment writedowns available sale securities corporate asset impairment charge equity securities fiscal year ended december 31 2013 consisted otherthantemporary impairment charges 155 million company’s graincorp investment agricultural services segment 11 million one available sale security corporate 3 company recognized intangible asset impairment charge 8 million related capitalized software costs corporate year ended december 31 2015 company recognized goodwill impairment charges 13 million related corn processing facility certain international oilseeds processing facilities 9 million related brazilian sugar ethanol business corn processing segment years ended december 31 2015 2013 respectively 4 asset impairment fiscal year ended december 31 2015 consisted property plant equipment asset impairments 66 million related principally brazilian sugar ethanol business corn processing segment based uncertain outlook business yearend 40 million oilseeds processing segment 1 million wild flavors specialty ingredients segment 1 million corporate asset impairments fiscal year ended december 31 2014 consisted property plant equipment asset impairments 17 million agricultural services segment 15 million corn processing segment 3 million oilseeds processing segment asset impairments fiscal year ended december 31 2013 consisted property plant equipment asset impairments 3 million agricultural services segment 62 million corn processing segment 4 million oilseeds processing segment 15 million corporate note 20 sale accounts receivable since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 13 billion amended additional amount upon collection accounts receivable deferred consideration program terminates june 24 2016 unless extended archerdanielsmidland company notes consolidated financial statements continued note 20 sale accounts receivable continued march 2014 company entered second accounts receivable securitization program “second program” certain commercial paper conduit purchasers committed purchasers collectively “second purchasers” second program certain nonusoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm ireland receivables company “adm ireland receivables” adm ireland receivables turn transfers purchased accounts receivable entirety second purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm ireland receivables receives cash payment 03 billion additional amount upon collection accounts receivable deferred consideration second program terminates march 18 2016 unless extended program second program collectively “programs” adm receivables adm ireland receivables use cash proceeds transfer receivables purchasers second purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2015 2014 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold december 31 2015 2014 fair value trade receivables transferred purchasers programs derecognized company’s consolidated balance sheet 17 billion 21 billion respectively exchange transfer december 31 2015 2014 company received cash 12 billion 16 billion recorded receivable deferred consideration included current assets 513 million 511 million respectively cash collections customers receivables sold 407 billion 364 billion 398 billion years ended december 31 2015 2014 2013 respectively amount 403 billion 351 billion 398 billion pertain cash collections deferred consideration years ended december 31 2015 2014 2013 respectively deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases program company’s risk loss following transfer accounts receivable program limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant transfers receivables program years ended december 31 2015 2014 2013 resulted expense loss sale 5 million 5 million 4 million respectively classified selling general administrative expenses consolidated statements earnings company reflects cash flows related program operating activities consolidated statements cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables archerdanielsmidland company notes consolidated financial statements continued note 21 legal proceedings guarantees commitments company routinely involved number actual threatened legal actions including involving alleged personal injuries employment law product liability intellectual property environmental issues alleged tax liability see note 13 information income tax matters class actions company also routinely receives inquiries regulators government authorities relating various aspects business given time company matters various stages resolution applicable government authorities outcomes matters within complete control may known prolonged periods time actions claimants seek damages well relief including injunctive relief could require significant expenditures result lost revenues accordance applicable accounting standards company records liability consolidated financial statements material loss contingencies loss known considered probable amount reasonably estimated reasonable estimate known probable loss range amount within range better estimate minimum amount range accrued material loss contingency reasonably possible known probable reasonably estimated loss range loss disclosed notes consolidated financial statements determining estimated loss range loss significant judgment required estimate amount timing loss recorded estimates probable losses resulting litigation governmental proceedings involving company inherently difficult predict particularly matters early procedural stages incomplete facts legal discovery involve unsubstantiated indeterminate claims damages potentially involve penalties fines disgorgement punitive damages could result change business practice april 22 2011 certain manufacturers distributors sugar cane beet sugar products filed suit us district court central district california company manufacturers marketers highfructose corn syrup hfcs corn refiners association alleging defendants falsely claimed hfcs “natural” nutritionally equivalent sugar defendants vigorously denied plaintiffs’ allegations filed counterclaim trial began november 3 2015 november 20 2015 parties announced reached confidential settlement parties dropped claims company party numerous lawsuits pending various us state federal courts arising syngenta corporation’s syngenta marketing distribution genetically modified corn products agrisure viptera agrisure duracade us first company brought state court action louisiana syngenta 2014 alleging syngenta negligent commercializing products approved certain nonus markets second company putative class member number purported class actions filed beginning 2013 farmers parties syngenta federal courts consolidated pretrial proceedings multidistrict litigation proceeding federal court kansas city missouri alleging syngenta negligent commercializing products fourth quarter 2015 syngenta turn filed thirdparty claims company grain companies seeking contribution event syngenta held liable lawsuits third company named defendant approximately 130 suits filed farmers parties beginning fourth quarter 2015 alleging company grain companies negligent failing screen genetically modified corn company denies liability actions named thirdparty defendant actions pretrial proceedings premature time estimate range potential liability company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 4 million december 31 2015 archerdanielsmidland company notes consolidated financial statements continued note 22 quarterly financial data unaudited net earnings attributable controlling interests second quarter fiscal year ended december 31 2015 include aftertax gains totaling 71 million equal 011 per share related revaluation company’s previously held investments north star shipping minmetal conjunction acquisition remaining interests sale 50 interest barcarena export terminal facility brazil glencore plc sale lactic business discussed note 12 longlived asset goodwill impairments restructuring charges related primarily certain international oilseeds processing facilities 28 million tax equal 004 per share discussed note 19 net earnings attributable controlling interests third quarter fiscal year ended december 31 2015 includes gain sale global chocolate business 23 million tax equal 004 per share discussed note 12 fixed asset impairment charges related primarily sugar ethanol facilities brazil corn processing segment 35 million tax equal 006 per share discussed note 19 restructuring charges related international pension plan settlement 26 million tax equal 004 per share discussed note 19 aftertax loss debt extinguishment 118 million equal 019 per share related cash tender offers redemption certain company’s outstanding debentures discussed note 12 net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2015 include aftertax gains totaling 421 million equal 070 per share related primarily sale chocolate cocoa businesses revaluation company’s previously held investment eaststarch cv conjunction acquisition remaining interest discussed note 12 aftertax restructuring exit costs totaling 33 million equal 006 per share related sugar ethanol facilities brazil restructuring charges discussed note 19 aftertax loss provisions settlement charges inventory writedown totaling 58 million equal 010 per share aftertax goodwill intangible property plant equipment asset impairments totaling 50 million equal 008 per share discussed note 19 release valuation allowance certain deferred tax assets 66 million equal 011 per share aftertax biodiesel credits 34 million equal 005 per share recognized fourth quarter related prior quarters 2015 archerdanielsmidland company notes consolidated financial statements continued note 22 quarterly financial data unaudited continued net earnings attributable controlling interests second quarter fiscal year ended december 31 2014 include relocation restructuring costs associated relocation company’s global headquarters chicago illinois costs related integration toepfer following acquisition noncontrolling interest restructuring charges totaling 20 million aftertax equal 003 per share discussed note 19 net earnings attributable controlling interests third quarter fiscal year ended december 31 2014 include aftertax gain sale 97 million equal 015 per share upon company’s effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units discussed note 12 aftertax loss euro foreign exchange hedges 63 million equal 010 per share discussed note 12 net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2014 include restructuring costs related wild flavors acquisition 21 million aftertax equal 003 per share discussed note 19 aftertax gain sale assets related sale fertilizer business asset 89 million equal 014 per share discussed note 12 aftertax asset impairment charges related certain fixed assets 26 million equal 004 per share discussed note 19 aftertax charge 61 million equal 009 per share related pension settlements aftertax biodiesel blending credits 61 million equal 009 per share recognized upon approval relevant legislation fourth quarter related prior quarters 2014 note 23 subsequent events february 2 2016 company announced reached agreement purchase controlling stake harvest innovations industry leader minimally processed expellerpressed soy proteins oils glutenfree ingredients acquisition complements company’s existing ingredient businesses offers customers fullservice onestop shop ingredient needs february 8 2016 company announced agreed acquire tate lyle casablanca moroccobased corn wet mill produces glucose native starch acquisition expands company’s global sweeteners starches footprint transactions expected close 2016 subject regulatory approvals report independent registered public accounting firm board directors shareholders archerdanielsmidland company chicago illinois audited accompanying consolidated balance sheets archerdanielsmidland company december 31 2015 2014 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2015 audits also included financial statement schedule listed index item 15a2 financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archerdanielsmidland company december 31 2015 2014 consolidated results operations cash flows three years period ended december 31 2015 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein also audited accordance standards public company accounting oversight board united states archerdanielsmidland company’s internal control financial reporting december 31 2015 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework report dated february 19 2016 expressed unqualified opinion thereon ernst young llp st louis missouri february 19 2016 report independent registered public accounting firm board directors shareholders archerdanielsmidland company chicago illinois audited archerdanielsmidland company’s company internal control financial reporting december 31 2015 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework coso criteria archerdanielsmidland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion archerdanielsmidland company maintained material respects effective internal control financial reporting december 31 2015 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archerdanielsmidland company december 31 2015 2014 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2015 archerdanielsmidland company report dated february 19 2016 expressed unqualified opinion thereon ernst young llp st louis missouri february 19 2016 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated statements comprehensive income loss consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated statements comprehensive income loss see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements include accounts company subsidiaries significant intercompany accounts transactions eliminated company consolidates entities including variable interest entities vies controlling financial interest vies company assesses whether primary beneficiary defined applicable accounting standard investments affiliates including vies company exercises significant influence control investee primary beneficiary investee’s activities carried cost plus equity undistributed earnings since acquisition adjusted appropriate basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain vies included using recent available financial statements case financial statements within 93 days company’s year end consistent period use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassifications company classified 64 million us futures commission brokerage fees cost products sold year ended december 31 2017 prior period amounts 65 million 54 million years ended december 31 2016 2015 respectively reclassified selling general administrative expenses consolidated statement earnings conform current presentation company began presenting certain specified items separately individual business segments described note 17 prior period amounts reclassified separately identify specified items conform current presentation line futures brokerage industry practice company classified 10 billion segregated cash equivalents restricted cash equivalents statement cash flows year ended december 31 2017 prior period amounts restated conform current presentation resulted increase 80 million decrease 765 million total cash provided operating activities years ended december 31 2016 2015 respectively increase 873 million 793 million ending balance cash equivalents restricted cash restricted cash equivalents december 31 2016 2015 respectively cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued segregated cash investments company segregates certain cash equivalents investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements balances represent deposits received customers company’s registered futures commission merchant commodity brokerage services cash margins securities pledged commodity exchange clearinghouses cash pledged security certain insurance arrangements segregated cash investments also include restricted cash collateral various insurance programs company’s captive insurance business degree segregated balances comprised cash equivalents considered restricted cash equivalents statement cash flows receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 73 million 72 million december 31 2017 2016 respectively reflect loss anticipated accounts receivable balances company estimates allowance based history writeoffs level pastdue accounts relationships economic status customers portions allowance uncollectible accounts recorded trade receivables current assets credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates december 31 2017 2016 343 million 232 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods net realizable value following table sets forth company’s inventories december 31 2017 2016 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued fair value measurements company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date company uses market approach valuation technique measure majority assets liabilities carried fair value three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies contract level 3 many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period derivatives company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet unrealized gains reported current assets unrealized losses reported accrued expenses payables accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments changes fair value derivatives recognized earnings immediately derivative instruments designated qualify hedging instruments company designates hedging instrument based upon exposure hedged fair value hedge cash flow hedge beginning 2017 derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk gain loss derivative instrument reported component accumulated comprehensive income aoci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period prior 2017 gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion recognized consolidated statement earnings current period derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value hedged item recognized consolidated statement earnings current period archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued marketable securities company classifies marketable securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component aoci company monitors investments impairment periodically recognizes impairment charge decline fair value investment judged otherthantemporary company uses specific identification method securities sold reclassified aoci earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 15 40 years machinery equipment 3 40 years company capitalized interest major construction projects progress 17 million 20 million 11 million years ended december 31 2017 2016 2015 respectively income taxes company accounts income tax positions accordance applicable accounting standards liability method used accounting income taxes deferred tax assets liabilities recorded temporary differences tax basis assets liabilities reported amounts consolidated financial statements using statutory rates effect year differences expected reverse effect deferred tax assets liabilities change tax rates recorded results operations period includes enactment date law applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests definitelived intangible assets amortized estimated useful lives 2 50 years reviewed impairment whenever indicators carrying value assets may fully recoverable company’s accounting policy evaluate goodwill intangible assets indefinite lives impairment october 1 fiscal year whenever indicators carrying value assets may fully recoverable impairment charges recorded goodwill intangible assets year ended december 31 2017 company recorded impairment charges goodwill intangibles totaling 11 million related computer software 21 million related computer software certain company’s international oilseeds processing facilities facility corn processing segment years ended december 31 2016 2015 respectively asset abandonments writedowns company evaluates longlived assets impairment whenever indicators impairment exist assets written fair value consideration company’s ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value fair value generally based discounted cash flow analysis relies management’s estimate market participant assumptions level 3 measurement applicable accounting standards years ended december 31 2017 2016 2015 impairment charges 101 million 17 million 108 million respectively see note 18 additional information archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued payables brokerage customers payables brokerage customers represent total customer accounts company’s futures commission merchant credit positive balances customer accounts used primarily connection commodity transactions include gains losses open commodity trades well securities deposits made margins purposes required company exchangeclearing organizations counterparties payables brokerage customers corresponding balance segregated cash investments customer omnibus receivable current assets revenues company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured company sales contracts allow pricing occur title goods passed customer cases company continues report goods inventory recognizes sales revenue price determined freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates years ended december 31 2017 2016 2015 60 billion 42 billion 50 billion respectively stock compensation company recognizes expense stock compensation based fair value awards granted company’s stock compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related stock compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 129 million 123 million 122 million years ended december 31 2017 2016 2015 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method business combinations company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended assets acquired liabilities assumed based preliminary purchase price allocations recorded fair values acquisition date remainder consideration recorded goodwill measurement period may take one year acquisition date adjustments due changes estimated fair value assets acquired liabilities assumed may recorded adjustments purchase price allocations upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first adjustments charged consolidated statements earnings archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued adoption new accounting standards effective january 1 2017 company adopted amended guidance asc topic 330 inventory simplifies measurement inventory amended guidance requires entity measure costbased inventory lower cost net realizable value net realizable value estimated selling price ordinary course business less reasonably predictable costs completion disposal transportation effective january 1 2017 company adopted amended guidance asc topic 323 investments equity method joint ventures simplifies transition equity method accounting amended guidance eliminates requirement investor adjust investment results operations retained earnings retroactively investment qualifies equity method accounting result increase level ownership interest degree influence amendments require investor add cost acquiring additional interest investee current basis investor’s previously held interest adopt equity method accounting date investment becomes qualified equity method accounting adoption amended guidance significant impact company’s financial results effective january 1 2017 company adopted amended guidance asc topic 810 consolidation affects reporting entities required evaluate whether consolidate variable interest entity certain situations involving entities common control amended guidance changes evaluation whether reporting entity primary beneficiary variable interest entity changing reporting entity single decision maker variable interest entity treats indirect interests entity held related parties common control reporting entity company required adopt amended guidance using retrospective transition approach periods presented adoption amended guidance result deconsolidation variable interest entities effective january 1 2017 company adopted amended guidance asc topic 740 income taxes asu 201616 requires entities recognize income tax consequences intraentity transfer inventory transfer occurs previous accounting rules entities prohibited recognizing current deferred income taxes intraentity asset transfer asset sold outside party amended guidance change accounting pretax effects intraentity asset transfer intraentity transfer inventory company adopted amended guidance modified retrospective approach basis 7 million cumulative effect adjustment reinvested earnings january 1 2017 effective october 1 2017 company adopted amended guidance asc topic 805 business combinations clarifies definition business amended guidance intended help companies organizations evaluate whether transactions accounted acquisitions disposals assets businesses provides robust framework use determining set assets activities business adoption amended guidance impact company’s financial results effective october 1 2017 company adopted amended guidance asc topic 718 compensation stock compensation topic 718 provides clarity reduces diversity practice well cost complexity applying guidance topic 718 modification terms conditions sharebased payment amendments include guidance determining changes terms conditions sharebased payment awards require entity apply modification accounting adoption amended guidance significant impact company’s financial results effective october 1 2017 company adopted amended guidance asc topic 350 goodwill simplifies subsequent measurement goodwill amended guidance removes second step goodwill impairment test requires application onestep quantitative test amount goodwill impairment excess reporting units carrying amount fair value exceed total amount goodwill allocated reporting unit new guidance amend optional qualitative assessment goodwill impairment adoption amended guidance impact company’s financial results archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective october 1 2017 company adopted amended guidance asc topic 815 derivatives hedging topic 815 expands refines hedge accounting nonfinancial financial risk components aligns recognition presentation effects hedging instrument hedged item financial statements amended guidance also simplifies application hedge accounting guidance eases administrative burden hedge documentation requirements assessing hedge effectiveness amended guidance amounts considered ineffective related effective hedging relationships deferred accumulated comprehensive income hedged item impacts earnings company adopted amended guidance adjustment reinvested earnings january 1 2017 immaterial adoption also material impact reported earnings earlier quarters 2017 pending accounting standards effective january 1 2018 company required adopt amended guidance asc subtopic 82510 financial instruments overall intended improve recognition measurement financial instruments amended guidance requires entity measure equity investments except accounted equity method accounting result consolidation investee fair value changes fair value recognized net income simplify impairment assessment equity investments without readily determinable fair values using qualitative assessment identify impairment company expect adoption amended guidance significant impact company’s financial results effective january 1 2018 company required adopt new guidance asc topic 606 revenue contracts customers topic 606 supersede revenue recognition requirements asc topic 605 revenue recognition topic 606 requires company recognize revenue depict transfer promised goods services customers amount reflects consideration entity expects entitled exchange goods services new guidance requires company apply following steps 1 identify contract customer 2 identify performance obligations contract 3 determine transaction price 4 allocate transaction price performance obligations contract 5 recognize revenue company satisfies performance obligation company adopt topic 606 modified retrospective basis required provide additional disclosures amount financial statement line item affected current reporting period compared guidance effect change explanation reasons significant changes adoption new guidance require expanded disclosures company’s consolidated financial statements including separate quantitative disclosure revenues within scope topic 606 revenues excluded scope topic 606 many company’s sales contracts considered derivatives asc topic 815 derivatives hedging therefore excluded scope topic 606 company established crossfunctional implementation team consisting representatives business segments company utilized surveys validate current revenue recognition streams identify areas business potential differences could result applying requirements new standard company also conducted workshops performed contract reviews gather information nature magnitude frequency underlying transactions drove survey responses fourth quarter 2017 company completed final phase revenue recognition implementation plan included quantification areas accounting change assessment financial impact new guidance consolidated financial statements finalization revenue recognition accounting policy position papers based results companys quantification efforts adoption new guidance result immaterial cumulative effect adjustment reinvested earnings january 1 2018 company expect adoption new guidance significant ongoing impact company’s financial results effective january 1 2018 company required adopt amended guidance asc topic 715 compensation retirement benefits requires employer reports service cost component line items compensation costs arising services rendered pertinent employees period components net benefit cost required presented income statement separately service cost component outside subtotal income operations one presented adoption amended guidance require expanded disclosures reclassification components net benefit cost products sold selling general administrative expenses income expense net company’s consolidated statements earnings impact financial results archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective january 1 2019 company required adopt new guidance asc topic 842 leases topic 842 supersede asc topic 840 leases topic 842 requires lessees recognize assets liabilities leases company expects adopt topic 842 using modified retrospective transition approach leases existing entered beginning earliest comparative period presented financial statements adoption new guidance require expanded disclosures company’s consolidated financial statements company established crossfunctional implementation team consisting representatives accounting legal procurement operations company utilized surveys centrally gather information existing leases lease processes gather lease contracts ensure completeness population lease contracts results survey crossreferenced available lease information ie yearend disclosures general ledger company also working vendor implement lease management system assist delivering required accounting changes disclosures next phase implementation plan abstraction relevant lease contract data points expected completed second half 2018 impact new standard significant increase right use assets lease liabilities company’s consolidated balance sheet primarily result operating leases currently recognized balance sheet company yet completed assessment impact new guidance consolidated statement earnings effective january 1 2020 company required adopt amended guidance asc topic 326 financial instruments credit losses intended improve financial reporting requiring timely recording credit losses loans financial instruments held financial institutions organizations amended guidance requires measurement expected credit losses financial assets held reporting date based historical experience current conditions reasonable supportable forecasts early adoption permitted fiscal years interim periods within fiscal years beginning december 15 2018 company expect adoption amended guidance significant impact company’s financial results note 2 acquisitions operating results acquisitions included company’s financial statements date acquisition fiscal year 2017 acquisitions year ended december 31 2017 company acquired crosswind industries inc chamtor sa 51 controlling interest industries centers 89 controlling interest biopolis sl aggregate consideration 194 million cash aggregate purchase price acquisitions net cash acquired 7 million preliminarily allocated follows company records remaining 49 industries centers 11 biopolis sl temporary equity redeemable noncontrolling interest noncontrolling interest respectively archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued fiscal year 2016 acquisitions year ended december 31 2016 company acquired 90 interest harvest innovations industry leader minimally processed expellerpressed soy proteins oils glutenfree ingredients 50 interest cairobased medsofts group joint venture owns manages merchandising supply chain operations caterina foods leading toll manufacturer specialty glutenfree highprotein pastas casablanca moroccobased corn wet mill produces glucose native starch aggregate cost 141 million cash aggregate purchase price acquisitions net cash acquired 11 million preliminarily allocated follows remaining 10 interest harvest innovations recorded longterm liabilities accounted mandatorily redeemable interest company agreed acquire following two years operations company option three years date acquisition acquire remaining 50 interest medsofts group based fixed multiple earnings taxes interest depreciation amortization last twelve months threeyear period company elect exercise option noncontrolling interest holder option put 50 interest company similar though discounted terms company records 50 remaining interest temporary equity redeemable noncontrolling interest finalization purchase price allocations related acquisitions result material adjustments 2017 fiscal year 2015 acquisitions november 2 2015 company completed acquisition remaining 50 percent interest eaststarch cv acquisition includes corn wet mills bulgaria turkey 50 percent stake wet mill hungary enhancing company’s capabilities serve customers around world 2015 post acquisition financial results eaststarch cv reported corn processing segment year ended december 31 2015 company acquired four businesses including remaining interest eaststarch cv described total cost 508 million purchase price net cash acquired 29 million plus acquisitiondate fair values company’s previously held equity interests 385 million eaststarch cv 64 million north star shipping minmetal included others preliminarily allocated follows archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued year ended december 31 2015 company recognized pretax gains 185 million eaststarch cv transaction 27 million north star shipping minmetal transaction included others representing difference carrying values acquisitiondate fair values company’s previously held equity interests acquisition date fair value determined based discounted cash flow analysis using market participant assumptions level 3 measurement applicable accounting standards goodwill recorded connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses following table sets forth preliminary fair values weighted average useful lives intangible assets acquired company’s consolidated statement earnings year ended december 31 2015 includes post acquisition results acquired businesses immaterial 2016 finalization purchase price allocation related acquisition eaststarch cv resulted increases goodwill intangibles 38 million 4 million respectively corresponding decrease longterm liabilities finalization purchase price allocations related acquisitions result material adjustments 2016 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis december 31 2017 2016 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets market valuations company’s inventories adjusted location quality exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade unobservable inputs significant impact measurement fair value inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold derivative contracts include exchangetraded commodity futures options contracts forward commodity purchase sale contracts otc instruments related primarily agricultural commodities energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact 10 measurement fair value contract classified level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component revenues cost products sold income expense net depending upon purpose contract changes fair value derivatives designated effective cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss aoci hedged items recorded earnings probable hedged transaction longer occur archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued company’s cash equivalents comprised money market funds valued using quoted market prices classified level 1 company’s marketable securities comprised us treasury securities corporate debt securities us treasury securities valued using quoted market prices classified level 1 corporate debt securities valued using thirdparty pricing services substantially classified level 2 unrealized changes fair value availableforsale marketable securities recognized consolidated balance sheets component aoci unless decline value deemed otherthantemporary point decline recorded earnings company’s segregated investments comprised us treasury securities us treasury securities valued using quoted market prices classified level 1 company deferred consideration accounts receivable securitization programs “programs” represents notes receivable purchasers programs see note 19 amount reflected current assets consolidated balance sheet see note 6 company carries deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred programs historically insignificant following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 years ended december 31 2017 2016 1 includes increase unrealized gains 106 million relating level 3 assets still held december 31 2017 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued 1 includes increase unrealized losses 260 million relating level 3 liabilities still held december 31 2017 1 includes increase unrealized gains 138 million relating level 3 assets still held december 31 2016 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued 1 includes increase unrealized losses 578 million relating level 3 liabilities still held december 31 2016 periods presented company transfers levels 1 2 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 cases price components result differences exchangetraded prices local prices inventories commodity purchase sale contracts observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components determined specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations december 31 2017 2016 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component december 31 2017 weighted average 128 total price assets 999 total price liabilities archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations absent corroborating evidence company considers price quotes 100 unobservable therefore fair value items reported level 3 note 4 derivative instruments hedging activities derivatives designated hedging instruments majority company’s derivative instruments designated hedging instruments company uses exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets derivatives including exchange traded contracts physical purchase sale contracts inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore fair values changes fair values inventories included tables following table sets forth fair value derivatives designated hedging instruments december 31 2017 2016 archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended december 31 2017 2016 2015 changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately component cost products sold derivatives designated cash flow fair value hedging strategies december 31 2017 2016 company certain derivatives designated cash flow fair value hedges company uses interest rate swaps designated fair value hedges protect fair value fixedrate debt due changes interest rates changes fair value interest rate swaps underlying fixedrate debt recorded income expense net terms interest rate swaps match terms underlying debt december 31 2017 company 1 million current liabilities representing fair value interest rate swaps corresponding decrease underlying debt amount impact earnings archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued commodity hedge programs described derivatives designated cash flow hedges assuming normal market conditions changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either revenues cost products sold applicable december 31 2017 company 8 million aftertax losses aoci related gains losses commodity cash flow hedge transactions company expects recognize 8 million aftertax losses consolidated statement earnings next 12 months company uses futures options contracts hedge purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 72 million bushels corn per month past 12 months company hedged 22 50 monthly anticipated grind december 31 2017 company designated hedges representing 8 86 anticipated monthly grind corn next 12 months company time also uses futures options swaps hedge sales price certain ethanol sales contracts company established hedging programs ethanol sales contracts indexed unleaded gasoline prices various exchangetraded ethanol contracts objective hedging programs reduce variability cash flows associated company’s sales ethanol past 12 months company hedged 1 million 28 million gallons ethanol sales per month programs december 31 2017 company designated hedges representing 0 135 million gallons ethanol sales per month next 6 months following table sets forth fair value derivatives designated hedging instruments december 31 2017 2016 archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended december 31 2017 2016 2015 archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued 2017 company adopted amended guidance topic 815 result hedge ineffectiveness related effective hedging relationships deferred aoci hedged item impacts earnings prior 2017 gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion recognized consolidated statement earnings current period net investment hedging strategies june 24 2015 company issued €500 million aggregate principal amount floating rate notes €600 million aggregate principal amount 175 notes collectively “notes” company designated €11 billion notes hedge net investment foreign subsidiary december 31 2017 company 59 million aftertax losses aoci related gains losses net investment hedge transaction amount deferred aoci underlying investment divested note 5 marketable securities following table sets forth items shortterm longterm investments archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities continued 1 million unrealized losses december 31 2017 arose within last 12 months related company’s investment one availableforsale debt security fair value 37 million contractual terms investment permit issuer settle securities price less amortized cost basis investment company intend sell investment likely required sell investment recovery amortized cost basis may maturity company consider investment otherthantemporarily impaired december 31 2017 information otherthan temporary impairment charges see note 18 note 6 current assets following table sets forth items current assets 1 company provides financing suppliers primarily brazilian farmers finance portion suppliers’ production costs amounts reported net allowances 6 million 7 million december 31 2017 2016 respectively interest earned financing receivables 25 million 22 million 23 million years ended december 31 2017 2016 2015 respectively included interest income consolidated statements earnings 2 nontrade receivables included 91 million 223 million reinsurance recoverables december 31 2017 2016 respectively note 7 accrued expenses payables following table sets forth items accrued expenses payables archerdanielsmidland company notes consolidated financial statements continued note 8 investments advances affiliates company applies equity method accounting investments investees company ability exercise significant influence including company’s 249 232 share ownership wilmar december 31 2017 2016 respectively company 56 59 unconsolidated domestic foreign affiliates december 31 2017 2016 respectively following table summarizes combined balance sheets december 31 2017 2016 combined statements earnings company’s unconsolidated affiliates years ended december 31 2017 2016 2015 company’s share undistributed earnings unconsolidated affiliates december 31 2017 21 billion companys investment wilmar carrying value 38 billion december 31 2017 market value 36 billion based market quoted price converted us dollars applicable exchange rate december 31 2017 investment unrealized loss position less 12 months company evaluated nearterm prospects investee relation severity duration impairment based evaluation company consider investment otherthantemporarily impaired december 31 2017 company provides credit facilities totaling 78 million four unconsolidated affiliates three facilities due demand bear interest 374 474 total outstanding balance 32 million facility outstanding balance december 31 2017 outstanding balance included current assets accompanying consolidated balance sheet december 31 2017 company received 79 million advance payment unconsolidated affiliate sales contracts expected executed may 2018 amount bears interest 326 included accrued expenses payables accompanying balance sheet archerdanielsmidland company notes consolidated financial statements continued note 9 goodwill intangible assets goodwill balances attributable consolidated businesses segment set forth following table changes goodwill year ended december 31 2017 primarily related foreign currency translation adjustments 98 million acquisitions 33 million see note 2 partially offset divestiture following table sets forth intangible assets changes gross carrying amounts intangible assets year ended december 31 2017 primarily related capitalized software 81 million foreign currency translation adjustments 79 million acquisitions see note 2 aggregate amortization expense 122 million 113 million 75 million years ended december 31 2017 2016 2015 respectively estimated future aggregate amortization expense next five years 109 million 107 million 105 million 100 million 95 million archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements september 29 2017 company redeemed 559 million aggregate principal amount 545 notes due march 15 2018 incurred early extinguishment charge 11 million year ended december 31 2017 september 14 2017 company issued 500 million aggregate principal amount 375 notes due 2047 proceeds expenses 493 million april 15 2017 company retired 261 million aggregate principal amount 8375 notes matured april 15 2017 august 11 2016 company issued 10 billion aggregate principal amount 25 notes due 2026 proceeds expenses 993 million discount amortization expense net premium amortization 11 million 9 million 8 million years ended december 31 2017 2016 2015 respectively included interest expense related company’s longterm debt archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued december 31 2017 fair value company’s longterm debt exceeded carrying value 12 billion estimated using quoted market prices level 2 measurement applicable accounting standards aggregate maturities longterm debt five years december 31 2017 13 million 618 million 14 million 670 million 8 million respectively december 31 2017 company lines credit including accounts receivable securitization programs described totaling 77 billion 55 billion unused weighted average interest rates shortterm borrowings outstanding december 31 2017 2016 235 566 respectively company’s total lines credit 50 billion support commercial paper borrowing facility 07 billion commercial paper outstanding december 31 2017 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2017 company outstanding standby letters credit surety bonds december 31 2017 2016 totaling 12 billion 11 billion respectively company accounts receivable securitization programs “programs” programs provide company 16 billion funding resulting sale accounts receivable december 31 2017 company utilized 14 billion facility programs see note 19 information programs note 11 stock compensation company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2009 incentive compensation plan options issued market value date grant vest incrementally one five years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary option activity 2017 presented 1 number shares granted 2017 immaterial weightedaverage remaining contractual term options outstanding exercisable december 31 2017 5 years 4 years respectively aggregate intrinsic value options outstanding exercisable december 31 2017 82 million 73 million respectively weightedaverage grantdate fair values options granted years ended december 31 2017 2016 2015 790 567 1029 respectively total intrinsic values options exercised years ended december 31 2017 2016 2015 11 million 28 million 20 million respectively cash proceeds received options exercised years ended december 31 2017 2016 2015 27 million 62 million 28 million respectively december 31 2017 13 million total unrecognized compensation expense related option grants amounts recognized compensation expense next three years 6 million 4 million 3 million respectively company’s 2009 incentive compensation plan provides granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2009 incentive compensation plan also provides granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock units vest end threeyear vesting period subject attainment certain future service performance criteria based company’s adjusted return invested capital roic adjusted earnings taxes interest depreciation amortization ebitda total shareholder return tsr years ended december 31 2017 2016 2015 22 million 18 million 18 million common stock units respectively granted restricted stock awards psus december 31 2017 79 million shares available future grants pursuant 2009 plan fair value restricted stock awards determined based market value company’s shares grant date fair value psus based weightedaverage values adjusted roic adjusted ebitda tsr adjusted roic adjusted ebitda fair value determined based market value companys shares grant date tsr fair value determined using monte carlo simulation weightedaverage grantdate fair values awards granted years ended december 31 2017 2016 2015 4438 3331 4673 respectively archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary restricted stock awards psus activity 2017 presented december 31 2017 82 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three years 35 million 19 million 2 million respectively total grantdate fair value restricted stock awards vested year ended december 31 2017 51 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant compensation expense psus based probability meeting performance criteria total compensation expense option grants restricted stock awards psus recognized years ended december 31 2017 2016 2015 66 million 72 million 70 million respectively note 12 income expense net following table sets forth items income expense individually significant items included table gains sales revaluation assets year ended december 31 2017 included gains related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business gains sales revaluation assets year ended december 31 2016 included realized additional consideration related sale company’s equity investment gruma sab de cv recovery loss provisions gain related sale company’s brazilian sugar ethanol facilities gain related revaluation remaining interest settlement value conjunction acquisition amazon flavors partially offset loss sale individually immaterial assets gains sales revaluation assets year ended december 31 2015 included gains related sale cocoa chocolate lactic businesses revaluation company’s previously held equity investments north star shipping minmetal eaststarch cv conjunction acquisition remaining interests sale 50 interest barcarena export terminal facility brazil glencore plc archerdanielsmidland company notes consolidated financial statements continued note 12 income expense net continued loss debt extinguishment year ended december 31 2017 related early redemption company’s 559 million notes due march 15 2018 loss debt extinguishment including transaction expenses 7 million year ended december 31 2015 related cash tender offers redemption certain companys outstanding debentures realized gains losses sales availableforsale marketable securities immaterial periods presented impairment losses securities years ended december 31 2017 2015 impairment losses securities 6 million year ended december 31 2016 classified asset impairment exit restructuring charges consolidated statement earnings see note 18 information net year ended december 31 2017 included provisions contingent losses related certain legal settlement items oilseeds processing wild flavors specialty ingredients segments foreign exchange losses partially offset income net year ended december 31 2015 included 45 million loss provisions related companys brazilian sugar ethanol facilities note 13 income taxes following table sets forth geographic split earnings income taxes significant components income taxes follows 1 includes impact tax cuts jobs act discussed page 84 2 includes impact tax cuts jobs act discussed page 83 archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued significant components deferred tax liabilities assets follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued reconciliation statutory federal income tax rate company’s effective income tax rate earnings follows reduction federal statutory rate related foreign earnings taxed lower rates resulted mostly company’s foreign operations switzerland asia caribbean company’s foreign earnings taxed rates lower us rate generated jurisdictions 59 47 51 foreign earnings taxes fiscal years 2017 2016 2015 respectively tax cuts jobs act “the act” enacted december 22 2017 income tax effects changes tax laws recognized period enacted act provides numerous significant tax law changes modifications varying effective dates include reducing us federal corporate income tax rate 35 21 creating territorial tax system onetime transition tax previously deferred foreign earnings broadening tax base allowing immediate capital expensing certain qualified property december 31 2017 company yet completed accounting tax effects act however described company made reasonable estimate effects existing deferred tax balances onetime transition tax recognized net provisional tax benefit 379 million included component income tax expense continuing operations company continue refine estimates calculations completes analysis tax effects act 2018 company remeasured certain us deferred tax assets liabilities based rates expected reverse future generally 21 however company still analyzing certain aspects act refining calculations could potentially affect measurement balances potentially give rise new deferred tax amounts provisional amount recorded related remeasurement deferred tax balance net tax benefit 528 million act also contains new provisions related global intangible low taxed income gilti company currently refining estimate gilti update estimate additional guidance accounting effects gilti provisions company made accounting policy election time archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method aggregated approximately 94 billion december 31 2017 company recorded provisional amount onetime transition tax liability 149 million net foreign tax credits prior year accruals deferred tax liabilities unremitted earnings deemed indefinitely reinvested onetime transition tax based companys total post1986 earnings profits ep previously deferred us income taxes company yet finalized calculation total post1986 ep foreign subsidiaries transition tax based part amount earnings held cash specified assets amount may change calculation post1986 foreign ep previously deferred us federal taxation amounts held cash specified assets finalized subject refinement guidance issued federal state taxing authorities company elected pay onetime transition tax eight years additional income taxes provided remaining undistributed foreign earnings subject transition tax additional outside basis difference inherent entities amounts continue indefinitely reinvested foreign operations practicable determine amount unrecognized deferred tax liability related remaining undistributed foreign earnings subject transition tax additional outside basis difference entities likely additional guidance issued providing clarification application act also reasonable expect global taxing authorities reviewing current legislation potential modifications reaction implementation act additional guidance along potential additional global tax legislation changes may affect significant deductions income inclusions could material adverse effect companys net income cash flow company 254 million 278 million tax assets related net operating loss carryforwards certain international subsidiaries december 31 2017 2016 respectively december 31 2017 approximately 151 million assets expiration date remaining 103 million expire various times fiscal 2025 annual usage certain assets limited percentage taxable income respective foreign subsidiary year company recorded valuation allowance 134 million 126 million tax assets december 31 2017 2016 respectively due uncertainty realization company 64 million 57 million tax assets related foreign domestic capital loss carryforwards december 31 2017 2016 respectively company recorded valuation allowance 64 million 41 million tax assets december 31 2017 2016 respectively company 0 95 million tax assets related excess foreign tax credits december 31 2017 2016 respectively valuation allowance recorded assets december 31 2016 company 78 million 62 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit december 31 2017 2016 respectively expire various times fiscal 2037 due uncertainty realization company recorded valuation allowance 65 million 49 million related state income tax assets net federal tax benefit december 31 2017 2016 respectively company remains subject federal examination us calendar tax years 2016 2017 archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued following table sets forth rollforward activity unrecognized tax benefits year ended december 31 2017 2016 follows additions reductions unrecognized tax benefits shown table included effects related net income shareholders’ equity changes unrecognized tax benefits material effect company’s net income cash flow december 31 2017 2016 company accrued interest penalties unrecognized tax benefits 23 million 26 million respectively company subject income taxation routine examinations many jurisdictions around world frequently faces challenges regarding amount taxes due challenges include positions taken company related timing nature amount deductions allocation income among various jurisdictions routine evaluations exposure associated various tax filing positions company recognizes liability necessary estimated potential tax owed company accordance applicable accounting standards resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions company cannot predict provide assurance ultimate outcome ongoing future examinations however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 56 million tax expense period company’s whollyowned subsidiary adm brasil ltda adm brasil received three separate tax assessments brazilian federal revenue service bfrs challenging tax deductibility commodity hedging losses related expenses tax years 2004 2006 2007 december 31 2017 assessments updated estimated penalties interest variation currency exchange rates totaled approximately 474 million statute limitations tax years 2005 2008 2011 expired company expect receive additional tax assessments adm brasil enters commodity hedging transactions result gains included adm brasil’s calculation taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued adm brasil filed administrative appeal assessments appeal panel found favor bfrs assessments adm brasil filed second level administrative appeal second administrative appeal panel continues conduct customary procedural activities including ongoing dialogue bfrs auditor adm brasil continues unsuccessful administrative appellate process company intends file appeals brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company intends vigorously defend position current assessments similar assessments may issued years subsequent 2011 company’s subsidiaries argentina received tax assessments challenging transfer prices used price grain exports totaling 113 million inclusive interest adjusted variation currency exchange rates tax years 2004 2010 argentine tax authorities conducting review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion company believes complied argentine tax laws cannot rule receiving additional assessments challenging transfer prices used price grain exports years subsequent 2010 estimates potential assessments would approximately 203 million december 31 2017 subject variation currency exchange rates company believes appropriately evaluated transactions underlying assessments concluded based argentine tax law tax position would sustained accordingly recorded tax liability assessments company intends vigorously defend position current assessments similar assessments may issued years subsequent 2010 accordance accounting requirements uncertain tax positions company recorded uncertain tax liability assessments concluded likely prevail brazil argentina matters based upon technical merits taxing jurisdictions’ processes provide mechanism settling less full amount assessment company’s consideration tax assessments requires judgments application income tax regulations specific facts circumstances final outcome matters cannot reliably predicted may take many years resolve could result financial impacts entire amount assessments company’s whollyowned subsidiary netherlands adm europe bv received tax assessment totaling 108 million netherlands tax authority challenging transfer pricing aspects 2009 business reorganization involved two subsidiary companies netherlands company appealed assessment carefully evaluated underlying transactions concluded amount gain recognized reorganization tax purposes appropriate company plans vigorously defend position assessment accrued amount believes would likely outcome litigation company’s defense judicial appeal may take extended period time could result additional financial impacts entire amount assessment archerdanielsmidland company notes consolidated financial statements continued note 14 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2027 rent expense years ended december 31 2017 2016 2015 249 million 253 million 241 million respectively additional amounts incurred charges pertaining time charters ocean going vessels accounted leases years ended december 31 2017 2016 2015 81 million 82 million 110 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows note 15 employee benefit plans company provides substantially us employees certain foreign subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides certain eligible us employees retire qualifying conditions subsidized postretirement health care coverage health care reimbursement accounts july 31 2017 company announced participants company’s us salaried pension plan supplemental executive retirement plan serp begin accruing benefits cash balance formula effective january 1 2022 benefits participants accruing final average pay formula frozen december 31 2021 including pay service date change along changes participation associated divestitures restructuring triggered remeasurement salaried pension plan serp resulting decreases fiscal 2017 pension expense accumulated comprehensive loss underfunded status 18 million 164 million 182 million respectively company also changed method used estimate service interest cost components net periodic pension postretirement benefit costs us canadian uk plans new method uses spot rate yield curve approach estimate service interest costs previously costs determined using single weightedaverage discount rate applied future cash outflows change affect measurement company’s benefit obligations accounted change accounting estimate accordance guidance asc topic 250 accounting estimates error corrections thereby impacting current future periods impact change aftertax earnings diluted earnings per share year ended december 31 2017 immaterial december 2016 company announced change us retiree medical program affected employees less 30 years service january 1 2017 change resulted curtailment gain 38 million year ended december 31 2016 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued company maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest companys stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 11 million shares company common stock december 31 2017 market value 422 million cash dividends received shares company common stock plans year ended december 31 2017 14 million archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth changes defined benefit obligation fair value defined benefit plan assets years ended december 31 2017 2016 included aoci pension benefits december 31 2017 following amounts yet recognized net periodic pension cost unrecognized prior service credit 171 million unrecognized actuarial loss 706 million prior service credit actuarial loss included aoci expected recognized net periodic pension cost 2018 19 million 60 million respectively included aoci postretirement benefits december 31 2017 following amounts yet recognized net periodic postretirement benefit cost unrecognized prior service credit 46 million unrecognized actuarial loss 35 million prior service credit 15 million actuarial loss 3 million included aoci expected recognized net periodic benefit cost 2018 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 27 billion 26 billion 20 billion respectively december 31 2017 27 billion 23 billion 18 billion respectively december 31 2016 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 27 billion 25 billion 19 billion respectively december 31 2017 26 billion 23 billion 17 billion respectively december 31 2016 accumulated benefit obligation pension plans december 31 2017 2016 30 billion 27 billion respectively postretirement benefit measurement purposes 770 annual rate increase per capita cost covered health care benefits assumed year ended december 31 2017 rate assumed decrease gradually 45 2026 remain level thereafter 1 change assumed health care cost trend rates would following effects 1 increase 1 decrease millions effect accumulated postretirement benefit obligations 5 effect combined service interest cost components immaterial archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts valued using net asset value nav investments ccts comprised international equity shortterm investments valued nav provided administrators funds corporate debt instruments corporate debt instruments valued using thirdparty pricing services classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth level within fair value hierarchy fair value plan assets december 31 2017 2016 level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 78 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt securities target asset allocation company’s us pension plans approximately actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 56 equity securities 43 debt securities 1 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans directly hold shares company common stock december 31 2017 2016 measurement dates investment objectives company’s plan assets • optimize longterm return plan assets acceptable level risk • maintain broad diversification across asset classes among investment managers • maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments based actuarial calculations company expects contribute 28 million pension plans 12 million postretirement benefit plan 2018 company may elect make additional discretionary contributions period archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following benefit payments reflect expected future service expected paid benefit plans note 16 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued december 31 2017 2016 company approximately 1587 million shares 1432 million shares respectively common shares treasury stock 55 billion december 31 2017 2016 recorded cost reduction common stock december 31 2017 2016 foreign currency translation adjustment component aoci included 59 million aftertax losses 40 million aftertax gains pertaining foreign currencydenominated debt designated net investment hedge respectively see note 4 information following tables set forth changes aoci component reclassifications aoci years ended december 31 2017 2016 archerdanielsmidland company notes consolidated financial statements continued note 16 shareholders’ equity continued change foreign currency translation adjustment 2017 primarily due us dollar depreciation impacting euro british pounddenominated equities company’s foreign subsidiaries change 2016 primarily due us dollar appreciation impacting euro british pound denominated equities company’s foreign subsidiaries archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products ingredients company’s operations organized managed classified four reportable business segments agricultural services corn processing oilseeds processing wild flavors specialty ingredients segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified agricultural services segment utilizes extensive global grain elevator transportation networks port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services segment includes international agricultural commodities merchandising handling activities managed global trade desk based rolle switzerland agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail container freight services agricultural services segment also includes activities related structured trade finance processing wheat flour company’s share results pacificor formerly kalama export company llc joint venture agricultural services segment also included returns associated company’s 198 investment graincorp sale december 2016 july 2017 company completed acquisition 51 controlling interest industries centers israeli company specializing import distribution agricultural feed products known adm israel company’s corn processing segment engaged corn wet dry milling activities utilizing asset base primarily located central part united states additional facilities china bulgaria france morocco spain turkey corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include essential amino acids lysine threonine used swine poultry diets optimize performance corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing segment also includes activities related processing distribution formula feeds animal health nutrition products corn processing products include citric acids glycols used various food industrial products corn processing segment also included activities company’s brazilian sugarcane ethanol plant related operations company completed sale operations may 2016 segment also includes company’s share results equity investments almidones mexicanos sa red star yeast company llc february 2017 company acquired crosswind industries inc industry leader manufacture contract private label pet treats foods 89 controlling interest biopolis sl leading provider microbial technology strong portfolio novel food ingredients june 2017 company completed acquisition chamtor sa french producer wheatbased sweeteners starches archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment major supplier peanuts tree nuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets oilseeds processing segment also included activities related global chocolate cocoa businesses sale businesses july 2015 october 2015 respectively oilseeds processing segment also includes company’s share results equity investment wilmar share results stratas foods llc edible oils limited olenex joint ventures year ended december 31 2017 company acquired additional shares wilmar increasing ownership interest 232 249 wild flavors specialty ingredients wfsi segment engages manufacturing sales distribution specialty products including natural flavor ingredients flavor systems natural colors proteins emulsifiers soluble fiber polyols hydrocolloids natural health nutrition products specialty food feed ingredients wfsi segment also includes activities related procurement processing distribution edible beans includes company’s remaining operations primarily financial business units related futures commission insurance activities may 1 2017 company completed sale crop risk services business validus holdings global group insurance reinsurance companies intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included segment operating profit equity earnings affiliates based equity method accounting specified items included total segment operating profit certain corporate items allocated company’s individual business segments operating performance business segment evaluated management exclusive items corporate results principally include impact liforelated adjustments unallocated corporate expenses interest cost net investment income company’s share results equity investment compagnie industrialle et financiere des produits amylaces sa luxembourg cip archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued segment information archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued 1 gains 2017 related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business gains 2016 primarily related recovery loss provisions gain related sale company’s brazilian sugar ethanol facilities realized contingent consideration december 2012 sale company’s equity investment gruma sa de cv revaluation remaining interest settlement value conjunction acquisition remaining interest amazon flavors partially offset loss sale asset gains 2015 related primarily sale cocoa chocolate lactic businesses revaluation company’s previously held investments north star shipping minmetal eaststarch cv conjunction acquisition remaining interests sale 50 interest barcarena export terminal facility brazil 2 charges 2017 consisted asset impairments related closure facility wfsi segment reconfiguration company’s peoria illinois ethanol complex corn processing segment settlement charges several individually insignificant asset impairments restructuring charges 2016 consisted several individually insignificant asset impairments restructuring charges 2015 consisted asset impairments related primarily certain international oilseeds processing facilities asset impairments loss provisions exit charges related sugar ethanol facilities brazil goodwill impairment charges inventory writedown several individually insignificant asset impairments restructuring charges 3 hedge timing effects relate hedge ineffectiveness associated documented hedge programs archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued geographic information following geographic data include revenues attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment archerdanielsmidland company notes consolidated financial statements continued note 18 asset impairment exit restructuring costs following table sets forth charges included asset impairment exit restructuring costs 1 restructuring exit costs recognized year ended december 31 2017 consisted 54 million restructuring charges corporate primarily related reduction certain positions within companys global workforce several individually insignificant restructuring charges totaling 18 million restructuring exit costs recognized year ended december 31 2016 consisted several individually insignificant charges restructuring exit costs recognized year ended december 31 2015 consisted primarily restructuring charges 29 million related principally international pension plan settlement exit costs 22 million related brazilian sugar ethanol facilities corn processing segment several individually insignificant restructuring exit costs totaling 20 million 2 impairment charge equity securities fiscal year ended december 31 2016 consisted otherthantemporary impairment charges company’s investment two available sale equity securities corporate 3 impairment charge goodwill intangible assets year ended december 31 2016 consisted software impairment corporate impairment charge goodwill intangible assets year ended december 31 2015 consisted software impairment 8 million corporate goodwill impairment charges 13 million related corn processing facility certain international oilseeds processing facilities 4 impairment charge fixed assets fiscal year ended december 31 2017 consisted 63 million asset impairments corn processing segment primarily related configuration companys peoria illinois ethanol complex 20 million asset impairments wild flavors specialty ingredients segment related closure facility several individually insignificant asset charges agricultural services 11 million 7 million oilseeds processing segment impairment charge fixed assets fiscal year ended december 31 2016 consisted several individually insignificant fixed asset impairments impairment charge fixed assets fiscal year ended december 31 2015 consisted asset impairments 66 million related principally brazilian sugar ethanol business corn processing segment based uncertain outlook business yearend 40 million several individually insignificant charges oilseeds processing segment 1 million wild flavors specialty ingredients segment 1 million corporate note 19 sale accounts receivable since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 1 billion amended additional amount upon collection accounts receivable deferred consideration program terminates june 22 2018 unless extended archerdanielsmidland company notes consolidated financial statements continued note 19 sale accounts receivable continued march 2014 company entered second accounts receivable securitization program “second program” certain commercial paper conduit purchasers committed purchasers collectively “second purchasers” second program certain nonusoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm ireland receivables company “adm ireland receivables” adm ireland receivables turn transfers purchased accounts receivable entirety second purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm ireland receivables receives cash payment 04 billion additional amount upon collection accounts receivable deferred consideration second program terminates march 16 2018 unless extended program second program collectively “programs” adm receivables adm ireland receivables use cash proceeds transfer receivables purchasers second purchasers collectively purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2017 2016 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold december 31 2017 2016 fair value trade receivables transferred purchasers programs derecognized company’s consolidated balance sheet 17 billion 16 billion respectively exchange transfer december 31 2017 2016 company received cash 14 billion 10 billion recorded receivable deferred consideration included current assets 307 million 540 million respectively cash collections customers receivables sold 335 billion 343 billion 407 billion years ended december 31 2017 2016 2015 respectively amount 335 billion 338 billion 403 billion pertain cash collections deferred consideration years ended december 31 2017 2016 2015 respectively deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases programs company’s risk loss following transfer accounts receivable programs limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred programs historically insignificant transfers receivables programs years ended december 31 2017 2016 2015 resulted expense loss sale 10 million 6 million 5 million respectively classified selling general administrative expenses consolidated statements earnings company reflects cash flows related programs operating activities consolidated statements cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables archerdanielsmidland company notes consolidated financial statements continued note 20 legal proceedings guarantees commitments company routinely involved number actual threatened legal actions including involving alleged personal injuries employment law product liability intellectual property environmental issues alleged tax liability see note 13 information income tax matters class actions company also routinely receives inquiries regulators government authorities relating various aspects business given time company matters various stages resolution applicable government authorities outcomes matters within complete control may known prolonged periods time actions claimants seek damages well relief including injunctive relief could require significant expenditures result lost revenues accordance applicable accounting standards company records liability consolidated financial statements material loss contingencies loss known considered probable amount reasonably estimated reasonable estimate known probable loss range amount within range better estimate minimum amount range accrued material loss contingency reasonably possible known probable reasonably estimated loss range loss disclosed notes consolidated financial statements determining estimated loss range loss significant judgment required estimate amount timing loss recorded estimates probable losses resulting litigation governmental proceedings involving company inherently difficult predict particularly matters early procedural stages incomplete facts legal discovery involve unsubstantiated indeterminate claims damages potentially involve penalties fines disgorgement punitive damages could result change business practice company party numerous lawsuits pending various us state federal courts arising syngenta corporation’s syngenta marketing distribution genetically modified corn products agrisure viptera agrisure duracade us first company brought state court action louisiana syngenta 2014 alleging syngenta negligent commercializing products approved china december 2017 company syngenta reached confidential settlement action second company party number purported class actions filed beginning 2013 farmers parties syngenta federal state courts alleging syngenta negligent commercializing products federal actions consolidated pretrial proceedings multidistrict litigation mdl proceeding federal court kansas city kansas state actions consolidated pretrial proceedings mdl minnesota state court fourth quarter 2015 syngenta filed thirdparty claims company grain companies mdls seeking contribution event syngenta held liable lawsuits september 2017 syngenta filed similar thirdparty claims company iowa state court september 2017 syngenta farmer plaintiffs reached tentative settlement subject court approval claims plaintiffs noted december 2017 company syngenta reached confidential settlement claims third company grain companies named defendants numerous individual purported class action suits filed farmers parties state federal courts beginning fourth quarter 2015 alleging company grain companies negligent failing screen genetically modified corn september 6 2016 court minnesota state mdl dismissed claims company january 4 2017 federal court southern district illinois similarly dismissed pending complaints company southern illinois parties expected appeal dismissals currently company remains defendant certain state court actions farmers parties pending illinois state court company moved dismiss well company denies liability actions named thirdparty defendant vigorously defending cases actions pretrial proceedings time company unable predict final outcome matter reasonable degree certainty believes outcome material adverse effect financial condition results operations cash flows archerdanielsmidland company notes consolidated financial statements continued note 21 quarterly financial data unaudited net earnings attributable controlling interests first quarter fiscal year ended december 31 2017 include aftertax charges 8 million equal 001 per share related several individually insignificant asset impairments restructuring charges certain discrete tax adjustments 4 million equal 001 per share related valuation allowances net earnings attributable controlling interests second quarter fiscal year ended december 31 2017 include aftertax charges 21 million equal 004 per share related impairment certain longlived assets restructuring settlement aftertax losses 22 million equal 004 per share related adjustment proceeds 2015 sale cocoa business partially offset gain sale crop risk business net earnings attributable controlling interests third quarter fiscal year ended december 31 2017 include aftertax charges 69 million equal 012 per share asset impairments related reconfiguration company’s peoria illinois ethanol complex restructuring related reduction certain positions within company’s global workforce aftertax gains 10 million equal 002 per share related adjustment proceeds 2015 sale cocoa business gain sale asset aftertax debt extinguishment charge 7 million equal 001 per share related early redemption 559 million notes due march 15 2018 net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2017 include aftertax charges 46 million equal 008 per share related legal settlement asset impairments primarily related closure facility several individually insignificant asset impairments restructuring charges net tax adjustment 370 million equal 065 per share related estimated impact tax cuts jobs act us tax reform certain discrete items archerdanielsmidland company notes consolidated financial statements continued note 21 quarterly financial data unaudited continued net earnings attributable controlling interests first quarter fiscal year ended december 31 2016 include aftertax charges 8 million equal 001 per share primarily related software impairment restructuring charges net earnings attributable controlling interests second quarter fiscal year ended december 31 2016 include aftertax gains 101 million equal 017 per share primarily related gain including recovery loss provisions sale company’s brazilian sugar ethanol facilities realized contingent consideration sale company’s equity investment gruma sa de cv december 2012 revaluation remaining interest settlement value conjunction acquisition amazon flavors partially offset loss sale asset aftertax charges 8 million equal 001 per share primarily related impairment certain longlived assets restructuring charges certain discrete tax adjustments 6 million equal 001 per share related valuation allowances net earnings attributable controlling interests third quarter fiscal year ended december 31 2016 include aftertax losses totaling 9 million equal 002 per share primarily related loss sale equity investment aftertax charges 48 million equal 008 per share primarily related legal fees settlement impairment certain longlived assets investments restructuring charges net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2016 include aftertax charges 13 million equal 003 per share related impairment certain longlived assets restructuring charges aftertax gain 24 million equal 004 per share related us retiree medical benefit plan curtailment certain discrete tax adjustments totaling 21 million equal 003 per share related valuation allowances deferred tax rerates changes assertion note 22 subsequent event bipartisan budget act 2018 passed congress signed law february 9 2018 retroactively extending biodiesel blenders tax credit 2017 result company expects record estimated net amount 100 million 130 million pretax earnings first quarter 2018 report independent registered public accounting firm board directors shareholders archerdanielsmidland company chicago illinois opinion financial statements audited accompanying consolidated balance sheets archerdanielsmidland company december 31 2017 2016 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2017 related notes financial statement schedule listed index item 15a2 collectively referred “financial statements” opinion financial statements present fairly material respects consolidated financial position company december 31 2017 2016 consolidated results operations cash flows three years period ended december 31 2017 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states pcaob companys internal control financial reporting december 31 2017 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework report dated february 16 2018 expressed unqualified opinion thereon basis opinion financial statements responsibility company’s management responsibility express opinion company’s financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement financial statements whether due error fraud performing procedures respond risks procedures include examining test basis evidence regarding amounts disclosures financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation financial statements believe audits provide reasonable basis opinion ernst young llp served companys auditor since 1930 st louis missouri february 16 2018 report independent registered public accounting firm board directors shareholders archerdanielsmidland company chicago illinois opinion internal control financial reporting audited archerdanielsmidland company’s internal control financial reporting december 31 2017 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework coso criteria opinion archerdanielsmidland company maintained material respects effective internal control financial reporting december 31 2017 based coso criteria also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets archerdanielsmidland company december 31 2017 2016 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2017 related notes financial statement schedule listed index item 15a2 report dated february 16 2018 expressed unqualified opinion thereon basis opinion companys management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate ernst young llp st louis missouri february 16 2018 item 9item 8financial statements supplementary data financial statementspage consolidated statements earnings58 consolidated statements comprehensive income loss59 consolidated balance sheets60 consolidated statements cash flows61 consolidated statements shareholders’ equity62 notes consolidated financial statements63 reports independent registered public accounting firm119 archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated statements comprehensive income loss see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business adm unlocks power nature provide access nutrition worldwide company global leader human animal nutrition world’s premier agricultural origination processing company adm’s breadth depth insights facilities logistical expertise give company unparalleled capabilities meet needs food beverages health wellness seed idea outcome solution adm enriches quality life world company transforms natural products staple foods sustainable renewable industrial products expansive pantry food beverage ingredients solutions foods beverages supplements nutrition pets livestock array unparalleled capabilities across every part global food chain adm gives customers edge solving global challenges today tomorrow adm sustainable practices focus environmental responsibility separate primary business integral work company every day serve customers create value shareholders company one world’s leading producers ingredients human animal nutrition products made nature principles consolidation consolidated financial statements include accounts company subsidiaries significant intercompany accounts transactions eliminated company consolidates entities including variable interest entities vies controlling financial interest vies company assesses whether primary beneficiary defined applicable accounting standard investments affiliates including vies company exercises significant influence control investee primary beneficiary investee’s activities carried cost plus equity undistributed earnings since acquisition adjusted appropriate basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain vies included using recent available financial statements case financial statements within 93 days company’s yearend consistent period use estimates preparation consolidated financial statements conformity generally accepted accounting principles gaap requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassifications effective january 1 2020 company started reporting newly created dry mill ethanol subsidiary vantage corn processors vcp subsegment within carbohydrate solutions segment vcp replaces bioproducts subsegment included combined results company’s corn dry wet mill ethanol operations wet mill ethanol operations previously reported bioproducts included starches sweeteners subsegment addition dry mill ethanol production vcp sellsbrokers adm’s wet mill ethanol production sole marketer ethanol produced company’s facilities change impact total results carbohydrate solutions segment prior period information notes 2 17 reclassified conform current period segment presentation archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash equivalents investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements balances represent deposits received customers company’s registered futures commission merchant commodity brokerage services cash margins securities pledged commodity exchange clearinghouses cash pledged security certain insurance arrangements segregated cash investments also include restricted cash collateral various insurance programs company’s captive insurance business degree segregated balances comprised cash equivalents considered restricted cash equivalents statement cash flows receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 100 million 110 million december 31 2020 2019 respectively reflect loss anticipated accounts receivable balances including accrued interest receivables thereon longterm receivables recorded assets material company’s overall receivables portfolio effective january 1 2020 company adopted accounting standards codification asc topic 326 financial instruments credit losses topic 326 developed new methodology estimating uncollectible accounts methodology receivables pooled according type region credit risk rating age pool assigned expected loss coefficient arrive general reserve based historical writeoffs adjusted needed regional economic forwardlooking factors company minimizes credit risk due large diversified nature worldwide customer base adm manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures company recorded bad debt expense selling general administrative expenses 47 million 23 million 26 million years ended december 31 2020 2019 2018 respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using firstin firstout fifo method lower cost net realizable value prior january 1 2020 company also valued certain agricultural commodity inventories using lastin firstout lifo method lower cost net realizable value effective january 1 2020 company changed method accounting certain agricultural commodity inventories lifo method market value ag services oilseeds segment december 31 2019 inventories accounted using lifo lower cost net realizable value represented approximately 10 consolidated inventories company believes market value preferable conforms inventory valuation methodology used majority adm’s agricultural commodity inventories ii enhances matching inventory costs revenues better reflects current cost inventory company’s balance sheet iii provides better comparability company’s peers company concluded accounting change material effect prior periods’ financial statements elected apply change retrospective basis result company recorded reduction cost products sold 91 million 69 million tax equal 012 per diluted share cumulative effect change three months ended march 31 2020 impact statement cash flows change material impact company’s results year ended december 31 2020 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued company made accounting change effect lifo valuation adm’s operating results would increase cost goods sold 147 million 113 million tax equal 020 per diluted share year ended december 31 2020 impact consolidated statement cash flows following table sets forth company’s inventories december 31 2020 2019 fair value measurements company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date company uses market approach valuation technique measure majority assets liabilities carried fair value three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies measurement level 3 many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued derivatives company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet unrealized gains reported current assets unrealized losses reported accrued expenses payables accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments changes fair value derivatives recognized earnings immediately derivative instruments designated qualify hedging instruments company designates hedging instrument based upon exposure hedged fair value hedge cash flow hedge net investment hedge derivative instruments designated qualify highlyeffective cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk gain loss derivative instrument reported component accumulated comprehensive income loss aoci operating activity statement cash flows reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value hedged item recognized consolidated statement earnings current period derivative instruments designated qualify net investment hedges foreign exchange gains losses related changes foreign currency exchange rates deferred aoci underlying investment divested property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 15 40 years machinery equipment 3 40 years company capitalized interest major construction projects progress 14 million 15 million 21 million years ended december 31 2020 2019 2018 respectively income taxes company accounts income taxes accordance liability method deferred tax assets liabilities recorded temporary differences tax basis assets liabilities reported amounts consolidated financial statements using statutory rates effect year differences expected reverse effect deferred tax assets liabilities change tax rates recorded results operations period includes enactment date law applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests definitelived intangible assets including capitalized expenses related company’s 1adm program amortized estimated useful lives 1 50 years reviewed impairment whenever indicators carrying value assets may fully recoverable company’s accounting policy evaluate goodwill intangible assets indefinite lives impairment october 1 fiscal year whenever indicators carrying value assets may fully recoverable company recorded impairment charges totaling 26 million related customer lists 11 million related goodwill intangibles 9 million related customer lists years ended december 31 2020 2019 2018 respectively see note 9 additional information asset abandonments writedowns company evaluates longlived assets impairment whenever indicators impairment exist addition assets written fair value consideration company’s ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value fair value generally based discounted cash flow analysis relies management’s estimate market participant assumptions estimated selling price assets considered held sale level 3 measurement applicable accounting standards 2020 company temporarily idled certain corn processing assets ethanol produced performed quantitative impairment assessment assets resulting impairment charges total carrying value temporarily idled assets december 31 2020 immaterial years ended december 31 2020 2019 2018 asset abandonment impairment charges 28 million 131 million 100 million respectively payables brokerage customers payables brokerage customers represent total customer accounts company’s futures commission merchant credit positive balances customer accounts used primarily connection commodity transactions include gains losses open commodity trades well securities deposits made margins purposes required company exchangeclearing organizations counterparties payables brokerage customers corresponding balance segregated cash investments customer omnibus receivable current assets revenues company follows policy recognizing revenue single point time satisfies performance obligation transferring control product service customer transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance asc topic 606 revenue contracts customers “topic 606” physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required asc 61020 gains losses derecognition nonfinancial assets “topic 61020” stock compensation company recognizes expense stock compensation based fair value awards granted company’s stock compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input subjective assumptions measured compensation cost net forfeitures recognized ratably vesting period related stock compensation award archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 160 million 154 million 141 million years ended december 31 2020 2019 2018 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method business combinations company’s acquisitions accounted accordance asc topic 805 business combinations amended consideration transferred allocated various assets acquired liabilities assumed estimated fair values acquisition date residual allocated goodwill fair values allocated assets acquired liabilities assumed business combinations require management make significant judgments estimates assumptions especially respect intangible assets management makes estimates fair values based upon assumptions believes reasonable estimates based upon historical experience information obtained management acquired companies inherently uncertain estimated fair values related intangible assets primarily consist customer relationships trademarks developed technology determined primarily using discounted cash flow models estimates discounted cash flow models include limited certain assumptions form basis forecasted results eg revenue growth rates customer attrition rates royalty rates significant assumptions forward looking could affected future economic market conditions measurement period may take one year acquisition date adjustments due changes estimated fair value assets acquired liabilities assumed may recorded adjustments consideration transferred related allocations upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first adjustments charged consolidated statements earnings adoption new accounting standards effective january 1 2020 company adopted amended guidance topic 326 intended improve financial reporting requiring timely recording credit losses loans financial instruments held financial institutions organizations amended guidance replaces prior “incurred loss” approach “expected loss” model requires measurement expected credit losses financial assets held reporting date based historical experience current conditions reasonable supportable forecasts company required adopt amended guidance modified retrospective basis cumulative effect adjustment retained earnings beginning period adoption company evaluated current methodology estimating allowance doubtful accounts risk profile receivable portfolio developed model includes qualitative forecasting aspects “expected loss” model amended guidance company finalized assessment impact amended guidance recorded 8 million cumulative effect adjustment retained earnings january 1 2020 effective january 1 2020 company adopted amended guidance asc topic 820 fair value measurement modifies disclosure requirements fair value measurements adoption amended guidance impact company’s financial results effective december 31 2020 company adopted amended guidance asc subtopic 71520 compensation retirement benefits defined benefit plans general modifies disclosure requirements employers sponsor defined benefit pension postretirement plans adoption amended guidance impact company’s financial results archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued pending accounting standards effective january 1 2021 company required adopt amended guidance asc topic 740 income taxes topic 740 simplifies accounting income taxes removing certain exceptions general principles topic 740 amendments also improve consistent application simplify areas topic 740 early adoption permitted company expect adoption amendments significant impact financial results december 31 2022 company option adopt amended guidance asc topic 848 reference rate reform provides optional expedients exceptions applying gaap contracts hedging relationships transactions affected reference rate reform certain criteria met amendments apply contracts hedging relationships transactions reference libor another reference rate expected discontinued reference rate reform expedients exceptions provided amended guidance apply contract modifications made hedging relationships entered evaluated december 31 2022 except hedging relationships existing december 31 2022 entity elected certain optional expedients retained end hedging relationship company plans adopt expedients exceptions provided amended guidance december 31 2022 expiry date yet completed assessment impact consolidated financial statements note 2 revenues revenue recognition company principally generates revenue merchandising transporting agricultural commodities manufactured products used ingredients food feed energy industrial products revenue measured based consideration specified contract customer excludes sales incentives amounts collected behalf third parties company follows policy recognizing revenue single point time satisfies performance obligation transferring control product service customer majority company’s contracts customers one performance obligation contract duration one year less company applies practical expedient paragraph 105014 topic 606 disclose information remaining performance obligations original expected durations one year less transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance topic 606 company recognized revenue transportation service contracts 423 million 515 million 481 million years ended december 31 2020 2019 2018 respectively physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required asc 61020 shipping handling costs shipping handling costs related contracts customers sale goods accounted fulfillment activity included cost products sold accordingly amounts billed customers costs included component revenues taxes collected customers remitted governmental authorities company include taxes assessed governmental authorities imposed concurrent specific revenueproducing transaction ii collected customers measurement transactions prices component revenues cost products sold contract liabilities contract liabilities relate advance payments customers goods services company yet provide contract liabilities 626 million 604 million december 31 2020 2019 respectively recorded accrued expenses payables consolidated balance sheet contract liabilities recognized revenues years ended december 31 2020 2019 604 million 575 million respectively archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued disaggregation revenues following tables present revenue disaggregated timing recognition major product lines years ended december 31 2020 2019 2018 archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued 1 topic 815 revenue relates physical delivery settlement company’s sales contracts accounted derivatives outside scope topic 606 archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued ag services oilseeds ag services oilseeds segment generates revenue sale commodities service fees transportation goods sale products manufactured global processing facilities structured trade finance activities revenue measured based consideration specified contract excludes sales incentives amounts collected behalf third parties revenue recognized performance obligation satisfied transferring control product providing service customer transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance topic 606 amount revenue recognized follows contractually specified price may include freight contractually specified cost components physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required topic 61020 carbohydrate solutions carbohydrate solutions segment generates revenue sale products manufactured company’s global corn wheat milling facilities around world revenue recognized control products transferred customer products shipped customers company’s various facilities network storage terminals amount revenue recognized based consideration specified contract could include freight costs depending specific shipping terms contract physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required topic 61020 nutrition segment sells specialty products including natural flavor ingredients flavor systems natural colors animal nutrition products specialty food feed ingredients revenue recognized control products transferred customer amount revenue recognized follows contracted price mutually agreed price product freight shipping recognized component revenue time control transfers customer business includes company’s futures commission business whose primary sources revenue commissions brokerage income generated executing orders clearing futures contracts options futures contracts behalf customers commissions brokerage revenue recognized date transaction executed also includes company’s captive insurance business generates third party revenue proportionate share premiums thirdparty reinsurance pools reinsurance premiums recognized straightline basis period underlying policy note 3 acquisitions operating results acquisitions included company’s financial statements date acquisition significant year ended december 31 2020 goodwill allocated connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses archerdanielsmidland company notes consolidated financial statements continued note 3 acquisitions continued fiscal year 2020 acquisitions year ended december 31 2020 company acquired yerbalatina remaining 70 interest anco animal nutrition competence gmbh “anco” aggregate cash consideration 15 million aggregate cash consideration acquisitions plus 3 million acquisitiondate value company’s previously held equity interest anco allocated follows millions working capital16 property plant equipment1 goodwill2 longterm liabilities1 aggregate cash consideration plus acquisitiondate fair value previously held equity interest18 company recognized pretax gain 2 million anco transaction representing difference carrying value acquisitiondate fair value company’s previously held equity interest acquisitiondate fair value determined based discounted cash flow analysis using market participant assumptions level 3 measurement applicable accounting standards fiscal year 2019 acquisitions year ended december 31 2019 company acquired neovia sas “neovia” florida chemical company “fcc” ziegler group “ziegler” remaining 50 interest gleadell agriculture ltd “gleadell” aggregate cash consideration 20 billion aggregate cash consideration acquisitions net 95 million cash acquired plus 15 million acquisitiondate value company’s previously held equity interest gleadell allocated follows 900 million allocated goodwill 94 million expected deductible tax purposes company recognized pretax gain 4 million gleadell transaction representing difference carrying value acquisitiondate fair value company’s previously held equity interest acquisitiondate fair value determined based discounted cash flow analysis using market participant assumptions level 3 measurement applicable accounting standards archerdanielsmidland company notes consolidated financial statements continued note 3 acquisitions continued following table sets forth fair values useful lives intangible assets acquired neovia fcc ziegler acquisitions line company’s strategy become one world’s leading nutrition companies postacquisition financial results acquisitions reported nutrition segment fiscal year 2018 acquisitions year ended december 31 2018 company acquired probiotics international limited also known protexin britishbased provider probiotic supplements human pet productionanimal uses rodelle inc premium originator processor supplier vanilla products certain soybean origination crushing refining bottling assets brazilbased algar agro aggregate cash consideration 506 million aggregate cash consideration acquisitions net 42 million cash acquired allocated follows acquisitions protexin rodelle inc expand company’s wide portfolio health wellness offerings human animal nutrition consumers archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis december 31 2020 2019 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets quality referred basis market valuations company’s inventories adjusted location quality basis exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade basis adjustments generally determined using inputs broker dealer quotations market transactions either listed counter otc markets considered observable cases basis adjustments unobservable supported little market activity unobservable inputs significant impact measurement fair value inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued derivative contracts include exchangetraded commodity futures options contracts forward commodity purchase sale contracts otc instruments related primarily agricultural commodities energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets market valuations company’s forward commodity purchase sale contracts adjusted location basis exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade basis adjustments generally determined using inputs broker dealer quotations market transactions either listed otc markets considered observable cases basis adjustments unobservable supported little market activity observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact 10 measurement fair value contract classified level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component revenues cost products sold income expense net depending upon purpose contract changes fair value derivatives designated effective cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss aoci hedged items recorded earnings probable hedged transaction longer occur company’s cash equivalents comprised money market funds valued using quoted market prices classified level 1 company’s marketable securities comprised us treasury securities corporate debt securities us treasury securities valued using quoted market prices classified level 1 corporate debt securities valued using thirdparty pricing services substantially classified level 2 unrealized changes fair value availableforsale marketable debt securities recognized consolidated balance sheets component aoci unless decline value deemed otherthantemporary point decline recorded earnings company’s segregated investments comprised us treasury securities us treasury securities valued using quoted market prices classified level 1 company deferred consideration accounts receivable securitization programs “programs” represented notes receivable purchasers programs see note 19 amount reflected current assets consolidated balance sheet see note 6 company carried deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate receipt deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred programs historically insignificant debt conversion option equity linked embedded derivative related exchangeable bonds described note 10 fair value embedded derivative included longterm debt changes fair value recognized interest valued assistance thirdparty pricing service level 3 measurement applicable accounting standards archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 years ended december 31 2020 2019 1 includes increase unrealized gains 17 billion relating level 3 assets still held december 31 2020 1 includes increase unrealized losses 18 billion relating level 3 liabilities still held december 31 2020 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued 1 includes increase unrealized gains 900 million relating level 3 assets still held december 31 2019 1 includes increase unrealized losses 7 million relating level 3 liabilities still held december 31 2019 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued cases price components result differences exchangetraded prices local prices inventories commodity purchase sale contracts observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components impacted specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations december 31 2020 2019 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component december 31 2020 weighted average 43 total price assets 137 total price liabilities certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations absent corroborating evidence company considers price quotes 100 unobservable therefore fair value items reported level 3 note 5 derivative instruments hedging activities derivatives designated hedging instruments majority company’s derivative instruments designated hedging instruments company uses exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural product inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets derivatives including exchange traded contracts physical purchase sale contracts inventories certain merchandisable agricultural products include amounts acquired deferred pricing contracts stated market value inventory derivative therefore fair values changes fair values inventories included tables archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments december 31 2020 2019 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended december 31 2020 2019 2018 archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately component cost products sold derivatives designated cash flow fair value net investment hedging strategies company certain derivatives designated cash flow net investment hedges december 31 2020 certain derivatives designated cash flow fair value net investment hedges december 31 2019 derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value hedged item recognized consolidated statement earnings period company used interest rate swaps designated fair value hedges protect fair value 496 million fixedrate debt due changes interest rates terms interest rate swaps matched terms underlying debt december 31 2019 company 3 million current assets representing fair value interest rate swaps corresponding increase underlying debt amount net impact earnings june 2020 company redeemed debt recorded gain 8 million termination swaps derivative instruments designated qualify net investment hedges foreign exchange gains losses related changes foreign currency exchange rates deferred aoci underlying investment divested company uses crosscurrency swaps foreign exchange forwards designated net investment hedges protect company’s investment foreign subsidiary changes foreign currency exchange rates company executed usdfixed eurofixed crosscurrency swaps aggregate notional amount 13 billion 12 billion december 31 2020 2019 respectively foreign exchange forwards aggregate notional amount 18 billion december 31 2020 december 31 2020 2019 company aftertax losses 202 million aftertax gains 6 million aoci respectively related foreign exchange gains losses net investment hedge transactions amount deferred aoci underlying investment divested derivative instruments designated qualify highlyeffective cash flow hedges ie hedging exposure variability expected future cash flow attributable particular risk gain loss derivative instrument reported component aoci operating activity statement cash flows reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period company’s structured trade finance programs use interest rate swaps designated cash flow hedges hedge forecasted interest payments certain letters credit banks terms interest rate swaps match terms forecasted interest payments deferred gains losses recognized revenues period related interest payments paid banks amounts recorded revenues related results also recorded revenues december 31 2020 2019 company interest rate swaps maturing various dates aggregate notional amounts 33 billion 47 billion respectively company also uses swap locks designated cash flow hedges hedge changes forecasted interest payments due changes benchmark rate leading future bond issuance dates terms swap locks match terms forecasted interest payments deferred gains losses recognized interest expense period related interest payments paid year ended december 31 2020 company executed swap locks maturing various dates aggregate notional amount 550 million archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued december 31 2020 2019 company aftertax gains 31 million aftertax losses 43 million aoci respectively related interest rate swaps swap locks company expects recognize amounts deferred aoci consolidated statement earnings life instruments hedge programs described derivatives designated cash flow hedges changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gains losses arising hedge reclassified aoci either revenues cost products sold applicable december 31 2020 2019 company 119 million aftertax gains 5 million aftertax losses aoci respectively related gains losses programs company expects recognize 119 million 2020 aftertax gains consolidated statement earnings next 12 months company uses futures options contracts hedge purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants normally grind approximately 72 million bushels corn per month due temporarily idled dry mill assets company currently grinding approximately 56 million bushels corn per month past 12 months company hedged 20 38 monthly grind december 31 2020 company designated hedges representing 20 33 anticipated monthly grind corn next 12 months company time also uses futures options swaps hedge sales price certain ethanol sales contracts company established hedging programs ethanol sales contracts indexed unleaded gasoline prices various exchangetraded ethanol contracts objective hedging programs reduce variability cash flows associated company’s sales ethanol past 12 months company hedged 0 28 million gallons ethanol sales per month programs december 31 2020 company hedges related ethanol sales company uses futures options contracts hedge purchase price anticipated volumes soybeans purchased processed future month certain us soybean crush facilities company also uses futures options contracts hedge sales prices anticipated soybean meal soybean oil sales proportionate soybean crushing process facilities past 12 months company hedged 27 100 anticipated monthly soybean crush soybean purchases soybean meal oil sales designated facilities company designated hedges representing 0 100 anticipated monthly soybean crush soybean purchases soybean meal oil sales designated facilities next 12 months following table sets forth fair value derivatives designated hedging instruments december 31 2020 2019 archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended december 31 2020 2019 2018 net investment hedging strategies company designated €15 billion €17 billion outstanding longterm debt commercial paper borrowings december 31 2020 2019 respectively hedges net investment foreign subsidiary december 31 2020 2019 company aftertax losses 87 million aftertax gains 7 million aoci respectively related foreign exchange gains losses net investment hedge transactions amount deferred aoci underlying investment divested archerdanielsmidland company notes consolidated financial statements continued note 6 current assets following table sets forth items current assets 1 company provides financing suppliers primarily brazilian farmers finance portion suppliers’ production costs amounts reported net allowances 4 million 3 million december 31 2020 2019 respectively interest earned financing receivables 20 million 27 million 26 million years ended december 31 2020 2019 2018 respectively included interest income consolidated statements earnings 2 nontrade receivables included 40 million 81 million reinsurance recoverables december 31 2020 2019 respectively note 7 accrued expenses payables following table sets forth items accrued expenses payables archerdanielsmidland company notes consolidated financial statements continued note 8 investments advances affiliates company applies equity method accounting investments investees adm ability exercise significant influence including company’s 222 248 share ownership wilmar december 31 2020 2019 respectively company 60 63 unconsolidated domestic foreign affiliates december 31 2020 2019 respectively following table summarizes combined balance sheets december 31 2020 2019 combined statements earnings company’s unconsolidated affiliates years ended december 31 2020 2019 2018 company’s share undistributed earnings unconsolidated affiliates december 31 2020 26 billion company’s investment wilmar carrying value 36 billion december 31 2020 market value 50 billion based quoted market price converted us dollars applicable exchange rate december 31 2020 company provides credit facilities totaling 106 million five unconsolidated affiliates two facilities bear interest 000 246 total outstanding balance 36 million three facilities outstanding balance december 31 2020 outstanding balance included current assets accompanying consolidated balance sheet net sales unconsolidated affiliates years ended december 31 2020 2019 2018 47 billion 49 billion 56 billion respectively accounts receivable due unconsolidated affiliates december 31 2020 2019 197 million 156 million respectively archerdanielsmidland company notes consolidated financial statements continued note 9 goodwill intangible assets goodwill balances attributable consolidated businesses segment set forth following table changes goodwill year ended december 31 2020 related foreign currency translation following table sets forth intangible assets aggregate amortization expense 173 million 165 million 129 million years ended december 31 2020 2019 2018 respectively estimated future aggregate amortization expense next five years 188 million 178 million 164 million 153 million 132 million respectively archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements company’s longterm debt consisted following 1 500 million face amount 2019 10 159 million face amount 2019 2 570 million face amount 2019 11 164 million face amount 2019 3 528 million face amount 2019 12 150 million face amount 2019 4 470 million face amount 2019 5 378 million face amount 2019 6 383 million face amount 2019 7 127 million face amount 2019 8 160 million face amount 2019 9 118 million face amount 2019 archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued march 27 2020 company issued 05 billion 10 billion aggregate principal amounts 275 notes due 2025 325 notes due 2030 respectively net proceeds expenses 275 325 notes 492 million 988 million respectively second half 2020 global credit market stabilized corporate credit spreads prepandemic levels continued actions central banks provided additional support shortterm longterm funding markets stabilizing corporate credit markets low benchmark yields favorable credit spreads coupled continued strong cash flow generation second half year presented opportunities adm rebalance company’s liability portfolio prepandemic levels starting june 2020 adm began series liability management transactions including multiple early debt redemptions 665 million debt tender september 2020 capitalize alltime low interest rates june 2020 company redeemed 495 million aggregate principal amount 4479 debentures due 2021 recognized debt extinguishment charge 14 million year ended december 31 2020 september 2020 company redeemed 400 million aggregate principal amount 3375 notes due 2022 recognized debt extinguishment charge 19 million year ended december 31 2020 september 2020 company repurchased 665 million aggregate principal amount certain outstanding notes debentures “debentures” validly tendered withdrawn pursuant terms cash tender offers company paid aggregate total consideration 933 million debentures accepted repurchase cash tender offers partially financed proceeds exchangeable bonds issued companys whollyowned subsidiary adm ag holding limited “adm ag” august 26 2020 discussed company recognized debt extinguishment charge 370 million year ended december 31 2020 consisted makewhole premiums writeoff debt issuance costs september 2020 november 2020 company’s whollyowned subsidiary adm germany gmbh redeemed private placement notes due 2021 2024 totaling 200 million aggregate principal amount recognized debt extinguishment charge 6 million year ended december 31 2020 august 26 2020 adm ag issued 300 million aggregate principal amount zero coupon exchangeable bonds “bonds” due 2023 nonus persons outside us subject upon compliance terms conditions bonds conditions procedures certifications prescribed thereunder bonds exchangeable ordinary shares wilmar international limited “wilmar” currently held company’s consolidated subsidiaries effective october 6 2020 holders bonds entitled receive 505970453 wilmar shares “exchange property per bond” 200000 principal amount bonds exercise exchange rights subject dividend adjustments effective february 26 2022 adm ag option call outstanding bonds principal amount value exchange property per bond exceeds 120 principal amount 20 consecutive trading days company accounts bond’s exchange feature equitylinked embedded derivative clearly closely related host debt instrument since indexed wilmar’s stock company unconditionally irrevocably guarantees payment sums payable performance adm ag’s obligations bonds contemplation issuance bonds archer daniels midland asiapacific limited company’s whollyowned subsidiary holds shares wilmar entered stock borrowing lending agreement financial institution discount amortization expense net premium amortization 13 million 12 million 10 million years ended december 31 2020 2019 2018 respectively included interest expense related company’s longterm debt december 31 2020 fair value company’s longterm debt exceeded carrying value 16 billion estimated using quoted market prices level 2 measurement applicable accounting standards aggregate maturities longterm debt five years december 31 2020 2 million 0 million 11 billion 1 million 13 billion respectively archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued december 31 2020 company lines credit including accounts receivable securitization programs described totaling 102 billion 66 billion unused weighted average interest rates shortterm borrowings outstanding december 31 2020 2019 045 123 respectively company’s total lines credit 50 billion supported commercial paper borrowing programs 17 billion commercial paper outstanding december 31 2020 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2020 company outstanding standby letters credit surety bonds december 31 2020 2019 totaling 12 billion 14 billion respectively company accounts receivable securitization programs “programs” programs provide company 18 billion funding resulting sale accounts receivable december 31 2020 company utilized 16 billion facility programs see note 19 information programs note 11 stock compensation company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2020 incentive compensation plan options issued market value date grant vest incrementally one year five years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model 2019 2018 follows options granted 2020 archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary option activity 2020 presented weightedaverage remaining contractual term options outstanding exercisable december 31 2020 4 years 4 years respectively aggregate intrinsic value options outstanding exercisable december 31 2020 77 million 69 million respectively weightedaverage grantdate fair values options granted years ended december 31 2019 2018 788 695 respectively total intrinsic values options exercised years ended december 31 2020 2019 2018 32 million 15 million 36 million respectively cash proceeds received options exercised years ended december 31 2020 2019 2018 49 million 27 million 55 million respectively december 31 2020 unrecognized compensation expense related option grants recognized compensation expense next year immaterial company’s 2020 incentive compensation plan provides granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2020 incentive compensation plan also provides granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end restriction period three years awards psus made common stock units vest end vesting period three years subject attainment certain future service performance criteria based company’s adjusted return invested capital roic adjusted earnings taxes interest depreciation amortization ebitda total shareholder return tsr years ended december 31 2020 2019 2018 27 million 26 million 25 million common stock units respectively granted restricted stock awards psus december 31 2020 194 million shares available future grants pursuant 2020 plan fair value restricted stock awards determined based market value company’s shares grant date fair value psus based weightedaverage values adjusted roic adjusted ebitda tsr adjusted roic adjusted ebitda fair value determined based market value company’s shares grant date tsr fair value determined using monte carlo simulation weightedaverage grantdate fair values awards granted years ended december 31 2020 2019 2018 4559 4211 4272 respectively archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary restricted stock awards psus activity 2020 presented december 31 2020 107 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three years 67 million 34 million 6 million respectively total grantdate fair value restricted stock awards vested year ended december 31 2020 63 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant compensation expense psus based probability meeting performance criteria company recognizes forfeitures occur total compensation expense option grants restricted stock awards psus recognized years ended december 31 2020 2019 2018 151 million 89 million 109 million respectively changes incentive compensation expense primarily caused level attainment psu performance criteria described note 12 income expense net following table sets forth items income expense individually significant items included table gain sales assets year ended december 31 2020 included gain sale portion company’s shares wilmar investment revaluation gain net gains sale certain assets disposals individually insignificant assets ordinary course business gain loss sales assets year ended december 31 2019 included loss sale company’s equity investment cip partially offset gains sale certain assets stepup gains equity investments gain sales assets businesses year ended december 31 2018 included gains sale company’s oilseeds operations bolivia equity investment archerdanielsmidland company notes consolidated financial statements continued note 12 income expense net continued pension settlement year ended december 31 2018 related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain retirees company’s adm retirement plan realized gains losses sales availableforsale marketable securities immaterial periods presented net year ended december 31 2020 included nonservice components net pension benefit income 33 million foreign exchange gains income net year ended december 31 2019 included income nonservice components net pension benefit income 15 million partially offset foreign exchange losses net year ended december 31 2018 included foreign exchange losses partially offset income nonservice components net benefit income 10 million note 13 income taxes following table sets forth geographic split earnings income taxes significant components income taxes follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued significant components deferred tax liabilities assets follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued reconciliation statutory federal income tax rate company’s effective income tax rate earnings follows effective tax rate 2020 impacted changes geographic mix earnings us tax credits mainly railroad maintenance tax credit gilti effective tax rate 2019 impacted us tax credits including 2018 2019 biodiesel tax credit railroad maintenance tax credit signed law december 2019 effective tax rate 2018 included 2017 biodiesel tax credit recorded first quarter 2018 additional trueup adjustments related 2017 us tax reform along certain favorable discrete tax items foreign rate differential primarily due lower tax rates company’s operations switzerland asia caribbean company’s foreign earnings taxed rates lower us rate generated jurisdictions 59 61 56 foreign earnings taxes fiscal years 2020 2019 2018 respectively undistributed earnings company’s foreign subsidiaries corporate joint ventures approximately 125 billion december 31 2020 undistributed earnings continue indefinitely reinvested foreign operations income taxes transition tax us tax undistributed subpart f minimum tax gilti provided tax cuts jobs act “act” enacted december 22 2017 practicable determine amount unrecognized deferred tax liability related remaining undistributed earnings foreign subsidiaries corporate joint ventures subject transition tax company elected pay onetime transition tax accumulated foreign earnings eight years december 31 2020 company’s remaining transition tax liability 164 million paid installments 2025 company incurred us taxable income 259 million 105 million 101 million related gilti deducted 12 million 1 million 101 million related fdii fiscal years 2020 2019 2018 respectively company made accounting policy election treat gilti period cost company recorded continue record impact tax reform items us tax authorities issue treasury regulations guidance addressing tax reformrelated changes also reasonable expect global taxing authorities reviewing current legislation potential modifications reaction implementation act additional guidance along potential additional global tax legislation changes may affect significant deductions income inclusions could material adverse effect company’s net income cash flow archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company 470 million 411 million tax assets related net operating loss carryforwards certain international subsidiaries december 31 2020 2019 respectively december 31 2020 approximately 357 million assets expiration date remaining 113 million expire various times fiscal 2029 annual usage certain assets limited percentage taxable income respective foreign subsidiary year company recorded valuation allowance 197 million 193 million tax assets december 31 2020 2019 respectively due uncertainty realization company 70 million 62 million tax assets related foreign capital loss carryforwards december 31 2020 2019 respectively company recorded valuation allowance 70 million 62 million tax assets december 31 2020 2019 respectively company 79 million 74 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit december 31 2020 2019 majority expire 2021 2025 due uncertainty realization company recorded valuation allowance 72 million 70 million related state income tax assets net federal tax benefit december 31 2020 2019 respectively company remains subject federal examination us calendar tax years 2016 2017 2018 2019 2020 following table sets forth rollforward activity unrecognized tax benefits year ended december 31 2020 2019 follows additions reductions unrecognized tax benefits shown table included effects related net income shareholders’ equity changes unrecognized tax benefits material effect company’s net income cash flow december 31 2020 2019 company accrued interest penalties unrecognized tax benefits 33 million 26 million respectively archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company subject income taxation routine examinations many jurisdictions around world frequently faces challenges regarding amount taxes due challenges include positions taken company related timing nature amount deductions allocation income among various jurisdictions routine evaluations exposure associated various tax filing positions company recognizes liability necessary estimated potential tax owed company accordance applicable accounting standards resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions company cannot predict provide assurance ultimate outcome ongoing future examinations however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 151 million tax expense period 2011 2019 company’s subsidiary argentina adm agro srl formerly adm argentina sa alfred c toepfer argentina srl received tax assessments challenging transfer prices used price grain exports tax years 1999 2011 december 31 2020 assessments totaled 10 million tax 42 million interest adjusted variation currency exchange rates argentine tax authorities conducted review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion company strongly believes complied argentine tax laws date company received assessments closed years subsequent 2011 statute limitations expired tax years 2012 2013 company cannot rule receiving additional assessments challenging transfer prices used price grain exports years subsequent 2013 estimates potential assessments could approximately 31 million tax 27 million interest adjusted variation currency exchange rates december 31 2020 company believes appropriately evaluated transactions underlying assessments concluded based argentine tax law tax position would sustained accordingly recorded tax liability assessments accordance accounting requirements uncertain tax positions company recorded uncertain tax liability assessment concluded likely prevail matter based upon technical merits taxing jurisdiction’s process provide mechanism settling less full amount assessment company intends vigorously defend position current assessments similar assessments may issued years subsequent 2013 2014 company’s whollyowned subsidiary netherlands adm europe bv received tax assessment netherlands tax authority challenging transfer pricing aspects 2009 business reorganization involved two subsidiary companies netherlands december 31 2020 assessment 99 million tax 38 million interest adjusted variation currency exchange rates september 2019 company received interim decision appeal directed parties work toward settlement april 2020 court issued ruling unfavorable company october 2020 assigned third party expert establish valuation early 2021 subsequent appeals may take extended period time could result additional financial impacts entire amount assessment company carefully evaluated underlying transactions concluded amount gain recognized reorganization tax purposes appropriate december 31 2020 company accrued best estimate believes likely outcome litigation vigorously defend position assessment quarter ended june 30 2020 ongoing litigation company’s whollyowned subsidiary adm brasil ltda brazilian federal revenue service favorably resolved without tax due litigation related assessments received respect tax deductibility commodity hedging losses related expenses company expect receive additional tax assessments respect issue archerdanielsmidland company notes consolidated financial statements continued note 14 leases lessee accounting company leases certain transportation equipment plant equipment office equipment land buildings storage facilities leases include options renew renewal terms extend lease term 10 months 49 years renewal options included measurement right use assets lease liabilities unless company reasonably certain exercise optional renewal periods certain leases also include index nonindex escalation clauses options purchase leased property leases accounted finance leases immaterial december 31 2020 accounting policy election company apply recognition requirements topic 842 shortterm leases underlying asset categories company recognizes shortterm lease payments earnings straightline basis lease term variable lease payments period obligation payments incurred company also combines lease nonlease contract components underlying asset categories accounting policy election following table sets forth amounts relating company’s total lease cost information archerdanielsmidland company notes consolidated financial statements continued note 14 leases continued tabular disclosure future annual undiscounted cash flows operating lease liabilities december 31 2020 1 calculated using implicit rate lease available incremental borrowing rate appropriate tenor geography lease note 15 employee benefit plans company provides substantially us employees certain foreign subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides certain eligible us employees retire qualifying conditions subsidized postretirement health care coverage health care reimbursement accounts april 2019 company announced enhanced early retirement program eligible employees us canada result company recognized pension remeasurement charge 48 million second quarter 2019 employees electing retire early also given option receive benefit form lump sum payment resulted pension settlement charge 51 million second half 2019 october 2018 company amended adm retirement plan “plan” entered binding agreement purchase group annuity contract prudential insurance company america “prudential” irrevocably transferring future benefit obligations annuity administration approximately 3800 retirees plan prudential purchase group annuity contract funded directed plan’s assets completed november 2 2018 reduced company’s pension obligations approximately 528 million result transaction company recognized noncash pension settlement charge approximately 117 million fourth quarter 2018 july 31 2017 company announced participants company’s us salaried pension plan supplemental executive retirement plan serp begin accruing benefits cash balance formula effective january 1 2022 benefits participants accruing final average pay formula frozen december 31 2021 including pay service date company maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest company’s stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 7 million shares company common stock december 31 2020 market value 371 million cash dividends received shares company common stock plans year ended december 31 2020 11 million archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth components retirement plan expense years ended december 31 2020 2019 2018 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth changes defined benefit obligation fair value defined benefit plan assets years ended december 31 2020 2019 actuarial loss pension plans 2020 2019 primarily due declines global bond yield included aoci pension benefits december 31 2020 following amounts yet recognized net periodic pension cost unrecognized prior service credit 113 million unrecognized actuarial loss 639 million included aoci postretirement benefits december 31 2020 following amounts yet recognized net periodic postretirement benefit cost unrecognized prior service credit 2 million unrecognized actuarial loss 57 million archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth principal assumptions used developing net periodic benefit cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 26 billion 25 billion 19 billion respectively december 31 2020 23 billion 22 billion 16 billion respectively december 31 2019 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 26 billion 25 billion 19 billion respectively december 31 2020 22 billion 21 billion 15 billion respectively december 31 2019 accumulated benefit obligation pension plans december 31 2020 2019 29 billion 26 billion respectively postretirement benefit measurement purposes 61 annual rate increase per capita cost covered health care benefits assumed year ended december 31 2020 rate assumed decrease gradually 45 2029 remain level thereafter plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts valued using net asset value nav investments ccts comprised international equity shortterm investments valued nav provided administrators funds corporate debt instruments corporate debt instruments valued using thirdparty pricing services classified within level 2 valuation hierarchy archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date following tables set forth level within fair value hierarchy fair value plan assets december 31 2020 2019 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets following table sets forth actual asset allocation company’s global pension plan assets measurement date 1the company’s us pension plans contain approximately 75 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt target asset allocation company’s us pension plans approximately actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 36 equity securities 20 debt securities 44 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2the company’s pension plans directly hold shares company common stock december 31 2020 2019 measurement dates archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued investment objectives company’s plan assets •optimize longterm return plan assets acceptable level risk •maintain broad diversification across asset classes among investment managers •maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments based actuarial calculations company expects contribute 29 million pension plans 16 million postretirement benefit plan 2021 company may elect make additional discretionary contributions period following benefit payments reflect expected future service expected paid benefit plans note 16 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued december 31 2020 2019 company approximately 1600 million shares 1588 million shares respectively common shares treasury stock 52 billion 53 billion december 31 2020 2019 respectively recorded cost reduction common stock treasury stock 03 billion 01 billion december 31 2020 2019 respectively recorded cost reduction retained earnings archerdanielsmidland company notes consolidated financial statements continued note 16 shareholders’ equity continued following tables set forth changes aoci component reclassifications aoci years ended december 31 2020 2019 change foreign currency translation adjustment 2020 primarily due net investment hedges discussed note 5 change foreign currency translation adjustment 2019 primarily due us dollar appreciation impacting eurodenominated equities company’s foreign subsidiaries archerdanielsmidland company notes consolidated financial statements continued note 16 shareholders’ equity continued company’s accounting policy release income tax effects aoci individual units account sold terminated extinguished note 17 segment geographic information discussed note 1 prior period results reclassified conform current period segment presentation company’s operations organized managed classified three reportable business segments ag services oilseeds carbohydrate solutions nutrition segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified business archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued ag services oilseeds segment includes global activities related origination merchandising transportation storage agricultural raw materials crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed segment include ingredients food feed energy industrial customers crude vegetable oils produced segment’s crushing activities sold “as is” manufacturers renewable green diesel customers processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel glycols sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds ag services oilseeds segment also major supplier peanuts peanutderived ingredients us export markets north america cotton cellulose pulp manufactured sold chemical paper industrial markets ag services oilseeds segment’s grain sourcing handling transportation network including barge oceangoing vessel truck rail container freight services provides reliable efficient services company’s customers agricultural processing operations ag services oilseeds segment also includes agricultural commodity feed product import export global distribution structured trade finance activities structured trade finance’s activities include programs adm prepays financial institutions discounted basis us dollardenominated letters credit based underlying commodity trade flows segment also includes company’s share results equity investment wilmar share results pacificor stratas foods llc edible oils limited olenex sarl soyven joint ventures august 2020 company sold portion shares wilmar decreasing ownership interest 248 december 31 2019 222 december 31 2020 carbohydrate solutions segment engaged corn wheat wet dry milling activities carbohydrate solutions segment converts corn wheat products ingredients used food beverage industry including sweeteners corn wheat starches syrup glucose wheat flour dextrose starch used carbohydrate solutions segment feedstocks downstream processes fermentation dextrose carbohydrate solutions segment produces alcohol food animal feed ingredients ethyl alcohol produced company industrial use products hand sanitizers ethanol beverage grade ethanol gasoline increases octane used extender oxygenate corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal carbohydrate solutions products include citric acids used various food industrial products segment also includes company’s share results equity investments hungrana ltd almidones mexicanos sa red star yeast company llc aston foods food ingredients nutrition segment serves various end markets including food beverages nutritional supplements feed premix livestock aquaculture pet food segment engages manufacturing sale distribution wide array ingredients solutions including plantbased proteins natural flavors flavor systems natural colors emulsifiers soluble fiber polyols hydrocolloids probiotics prebiotics enzymes botanical extracts specialty food feed ingredients nutrition segment includes activities related procurement processing distribution edible beans segment also includes activities related processing distribution formula feeds animal health nutrition products manufacture contract private label pet treats foods january 2020 adm acquired yerbalatina natural plantbased extracts ingredients manufacturer october 2020 company formally launched plantplus foods 30 joint venture marfrig one world’s leading beef producers world’s largest beef patty producer offer wide range finished plantbased food products across north south america entered agreement spiber inc spiber expand production spiber’s innovative brewed protein™ polymers use apparel consumer products business includes company’s financial business units related futures commission insurance activities archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included operating profit segment equity earnings affiliates based equity method accounting specified items included total segment operating profit certain corporate items allocated company’s individual business segments operating performance business segment evaluated management exclusive items corporate results principally include impact liforelated adjustments unallocated corporate expenses interest cost net investment income results earlystage startup companies adm ventures investments company’s share results equity investment cip sold december 2019 segment information archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued 1 gain 2020 consisted gain sale portion company’s shares wilmar certain assets gain 2019 consisted gain sale certain assets stepup gain equity investment gain 2018 related sale company’s oilseeds operations bolivia certain assets 2 charges 2020 related impairment certain assets restructuring settlement charges 2019 primarily related impairment certain assets charges 2018 related impairment certain assets restructuring settlement archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued geographic information following geographic data include revenues attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment note 18 asset impairment exit restructuring costs following table sets forth charges included asset impairment exit restructuring costs archerdanielsmidland company notes consolidated financial statements continued note 18 asset impairment exit restructuring costs continued 1restructuring exit costs year ended december 31 2020 consisted several individually insignificant restructuring charges totaling 17 million presented specified items within segment operating profit 9 million corporate restructuring exit costs year ended december 31 2019 consisted restructuring pension settlement remeasurement charges 159 million corporate primarily related early retirement reorganization initiatives several individually insignificant restructuring charges presented specified items within segment operating profit restructuring exit costs year ended december 31 2018 consisted restructuring charges 24 million corporate primarily related reorganization services corporate several individually insignificant restructuring charges presented specified items within segment operating profit 2impairment charge equity method investment consisted impairment charge equity investment presented specified item within segment operating profit 3impairment charge goodwill intangible assets year ended december 31 2020 consisted 26 million intangible asset impairment ag services oilseeds presented specified items within segment operating profit impairment charge goodwill intangible assets year ended december 31 2019 consisted goodwill intangible asset impairments ag services oilseeds presented specified items within segment operating profit impairment charge goodwill intangible assets year ended december 31 2018 consisted intangible asset impairment ag services oilseeds presented specified items within segment operating profit 4impairment charge longlived assets year ended december 31 2020 consisted impairments related certain longlived assets ag services oilseeds nutrition 8 million 13 million respectively presented specified items within segment operating profit 7 million impairments related certain assets corporate impairment charge longlived assets year ended december 31 2019 consisted 130 million asset impairments related certain facilities vessels longlived assets ag services oilseeds 1 million asset impairments related certain longlived assets carbohydrate solutions presented specified items within segment operating profit impairment charge longlived assets year ended december 31 2018 consisted 61 million asset impairments related longterm receivable certain longlived assets ag services oilseeds 11 million asset impairments related certain longlived assets nutrition presented specified items within segment operating profit 49 million charge related discontinued software project corporate note 19 sale accounts receivable company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “first purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” prior october 1 2020 adm receivables transferred purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables received cash payment certain amount additional amount upon collection accounts receivable deferred consideration october 1 2020 company restructured program deferred purchase price pledge structure new structure adm receivables transfers certain purchased accounts receivable first purchasers together security interest right title interest remaining purchased accounts receivable exchange adm receivables receives cash payment 12 billion accounts receivables transferred program terminates may 18 2021 unless extended archerdanielsmidland company notes consolidated financial statements continued note 19 sale accounts receivable continued company also accounts receivable securitization program “second program” certain commercial paper conduit purchasers committed purchasers collectively “second purchasers” second program certain nonusoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm ireland receivables company adm ireland receivables prior april 1 2020 adm ireland receivables transferred purchased accounts receivable entirety second purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm ireland receivables received cash payment certain amount additional amount upon collection accounts receivable deferred consideration april 1 2020 company restructured second program deferred purchase price pledge structure new structure adm ireland receivables transfers certain purchased accounts receivable second purchasers together security interest right title interest remaining purchased accounts receivable exchange adm ireland receivables receives cash payment 06 billion €05 billion accounts receivables transferred second program terminates march 12 2021 unless extended first second programs collectively “programs” adm receivables adm ireland receivables use cash proceeds transfer receivables first purchasers second purchasers collectively “purchasers” consideration applicable finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company acts servicer transferred receivables december 31 2020 2019 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold december 31 2020 2019 fair value trade receivables transferred purchasers programs derecognized company’s consolidated balance sheet 16 billion 19 billion respectively exchange transfer december 31 2020 2019 company received cash 16 billion 14 billion respectively company recorded receivable deferred consideration included current assets 446 million december 31 2019 total receivables sold 350 billion 345 billion 357 billion years ended december 31 2020 2019 2018 respectively cash collections customers receivables sold 342 billion 338 billion 348 billion years ended december 31 2020 2019 2018 respectively amount 67 billion 131 billion 148 billion cash collections deferred consideration reflected cash inflows investing activities years ended december 31 2020 2019 2018 respectively december 31 2020 04 billion receivables pledged collateral purchasers programs’ previous structure company’s risk loss following transfer accounts receivable limited deferred receivables consideration outstanding company carried deferred receivables consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred receivables consideration subject significant risks delinquencies credit losses accounts receivable transferred programs historically insignificant transfers receivables programs years ended december 31 2020 2019 2018 resulted expense loss sale 9 million 18 million 18 million respectively classified selling general administrative expenses consolidated statements earnings accordance amended guidance topic 230 company reflects cash flows related deferred receivables consideration investing activities consolidated statements cash flows cash flows classified operating activities cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables archerdanielsmidland company notes consolidated financial statements continued note 20 legal proceedings company routinely involved number actual threatened legal actions including involving alleged personal injuries employment law product liability intellectual property environmental issues alleged tax liability see note 13 information income tax matters class actions company also routinely receives inquiries regulators government authorities relating various aspects business given time company matters various stages resolution outcomes matters within complete control may known prolonged periods time actions claimants seek damages well relief including injunctive relief could require significant expenditures result lost revenues accordance applicable accounting standards company records liability consolidated financial statements material loss contingencies loss known considered probable amount reasonably estimated reasonable estimate known probable loss range amount within range better estimate minimum amount range accrued material loss contingency reasonably possible known probable reasonably estimated loss range loss disclosed notes consolidated financial statements determining estimated loss range loss significant judgment required estimate amount timing loss recorded estimates probable losses resulting litigation governmental proceedings involving company inherently difficult predict particularly matters early procedural stages incomplete facts legal discovery involve unsubstantiated indeterminate claims damages potentially involve penalties fines disgorgement punitive damages could result change business practice september 4 2019 aot holding ag aot filed putative class action us commodities exchange act federal district court urbana illinois alleging company sought manipulate benchmark price used price settle ethanol derivatives traded futures exchanges aot alleges members putative class suffered “hundreds millions dollars damages” result company’s alleged actions july 14 2020 green plains inc related entities filed putative class action lawsuit alleging substantially operative facts federal court nebraska seeking represent sellers ethanol july 23 2020 midwest renewable energy llc filed putative class action federal court illinois alleging substantially operative facts asserting claims sherman act november 11 2020 six ethanol producers filed lawsuit federal court illinois alleging substantially facts asserting claims sherman act illinois wisconsin law company denies liability vigorously defending actions pretrial proceedings company unable time predict final outcome reasonable degree certainty believes outcome material adverse effect financial condition results operations cash flows september 5 2019 dm farms mark hasty dustin land filed putative class action behalf purported class peanut farmers us federal antitrust laws federal court norfolk virginia alleging company’s subsidiary golden peanut another peanut shelling company conspired fix price paid farmers raw peanuts plaintiffs subsequently added third peanut shelling company case two defendants reached preliminary settlements plaintiffs december 2 2020 district court certified class company denies liability vigorously defending action pretrial proceedings company unable time predict final outcome reasonable degree certainty believes outcome material adverse effect financial condition results operations cash flows archerdanielsmidland company notes consolidated financial statements continued note 21 quarterly financial data unaudited net earnings attributable controlling interest first quarter year ended december 31 2020 included aftertax charges 32 million equal 006 per share related impairment certain assets tax expense adjustment 7 million equal 001 per share related us tax reform certain discrete items net earnings attributable controlling interest second quarter year ended december 31 2020 included aftertax gains 18 million equal 003 per share related sale certain assets aftertax charges 12 million equal 002 per share related impairment certain assets restructuring aftertax charges 11 million equal 002 per share related early repayment debt tax expense adjustment 1 million equal 000 per share related us tax reform certain discrete items net earnings attributable controlling interest third quarter year ended december 31 2020 included aftertax gains 54 million equal 010 per share sale portion company’s shares wilmar shares certain assets aftertax charges 5 million equal 001 per share related impairment certain assets restructuring settlement aftertax charges 300 million equal 053 per share related early repurchase certain company’s notes debentures aftertax charges 15 million equal 003 per share related marktomarket adjustment conversion option exchangeable bonds issued august 2020 tax expense adjustment 8 million equal 002 per share related certain discrete items net earnings attributable controlling interest fourth quarter year ended december 31 2020 included aftertax charges 20 million equal 003 per share related impairment certain assets restructuring settlement aftertax charges 3 million equal 001 per share related target acquisition aftertax charges 2 million equal 000 per share related marktomarket adjustment conversion option exchangeable bonds issued august 2020 aftertax gains 8 million equal 001 per share related sale certain assets aftertax gain 1 million equal 000 per share related early repayment certain debt tax benefit adjustment 19 million equal 004 per share related certain discrete items archerdanielsmidland company notes consolidated financial statements continued note 21 quarterly financial data unaudited continued net earnings attributable controlling interests first quarter year ended december 31 2019 included aftertax gains 9 million equal 002 per share related sale certain assets stepup gain equity investment aftertax charges 10 million equal 002 per share related impairment certain assets restructuring aftertax charges 9 million equal 002 per share related neovia acquisition tax expense adjustment 17 million equal 003 per share related us tax reform certain discrete items net earnings attributable controlling interests second quarter year ended december 31 2019 included aftertax charges 105 million equal 018 per share related impairment certain assets restructuring pension remeasurement tax benefit adjustment 19 million equal 003 per share related us tax reform certain discrete items net earnings attributable controlling interest third quarter year ended december 31 2019 included aftertax charges 41 million equal 008 per share related impairment certain assets restructuring pension settlement tax benefit adjustment 5 million equal 001 per share related us tax reform certain discrete items net earnings attributable controlling interest fourth quarter year ended december 31 2019 included aftertax loss 133 million equal 024 per share related sale equity investment aftertax charges 93 million equal 016 per share related impairment certain assets restructuring pension settlement aftertax charges 2 million equal 000 per share related certain acquisitions tax expense adjustment 46 million equal 008 per share related us tax reform certain discrete items report independent registered public accounting firm board directors shareholders archerdanielsmidland company opinion financial statements audited accompanying consolidated balance sheets archerdanielsmidland company december 31 2020 2019 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2020 related notes financial statement schedule listed index item 15a2 collectively referred “financial statements” opinion financial statements present fairly material respects financial position company december 31 2020 2019 results operations cash flows three years period ended december 31 2020 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states pcaob company’s internal control financial reporting december 31 2020 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission 2013 framework report dated february 18 2021 expressed unqualified opinion thereon basis opinion financial statements responsibility company’s management responsibility express opinion company’s financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation financial statements believe audits provide reasonable basis opinion critical audit matter critical audit matter communicated matter arising current period audit financial statements communicated required communicated audit committee 1 relates accounts disclosures material financial statements 2 involved especially challenging subjective complex judgments communication critical audit matter alter way opinion financial statements taken whole communicating critical audit matter providing separate opinion critical audit matter accounts disclosures relates fair value measurements inventory commodity derivatives description matteras explained notes 1 4 financial statements estimated fair values inventories carried market forward commodity purchase sale contracts based exchangequoted prices adjusted differences local markets andor quality referred basis market valuations inventories fair values forward commodity purchase sale contracts adjusted location quality differences basis exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade stated fair values december 31 2020 inventories commodity contracts asset position commodity contracts liability position 7941 million 2764 million 2034 million respectively auditing estimated fair values inventories carried market forward commodity purchase sale contracts complex due judgment involved determining market prices specifically related determining estimated basis adjustment basis adjustment impacted specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact basis adjustment addressed matter audit obtained understanding evaluated design tested operating effectiveness controls company’s determination estimated fair values inventories carried market forward commodity purchase sale contracts tests included controls estimation process supporting basis adjustments test estimated fair values inventories carried market forward commodity purchase sale contracts audit procedures included among others evaluating company’s selection principal market ii inputs basis adjustments iii completeness accuracy underlying data supporting basis adjustments example evaluated management’s methodology determining basis adjustment assessing principal market identified sources utilized management support basis adjustment specifically compared basis adjustments used management broker quotes trade publications andor recent trade prices including recently executed transactions investigated extent necessary basis adjustments inconsistent third party available information finally evaluated adequacy company’s financial statement disclosures related estimated fair value inventories carried market forward commodity purchase sale contracts ernst young llp served company’s auditor since 1930 saint louis missouri february 18 2021 report independent registered public accounting firm board directors shareholders archerdanielsmidland company opinion internal control financial reporting audited archerdanielsmidland company’s internal control financial reporting december 31 2020 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework coso criteria opinion archerdanielsmidland company maintained material respects effective internal control financial reporting december 31 2020 based coso criteria also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets archerdanielsmidland company december 31 2020 2019 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2020 related notes financial statement schedule listed index item 15a2 report dated february 18 2021 expressed unqualified opinion thereon basis opinion company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate ernst young llp saint louis missouri february 18 2021 item 9item 8 financial statements supplementary data following financial statements supplementary data included annual shareholders report year ended june 30 2002 incorporated herein reference consolidated balance sheetsjune 30 2002 2001 consolidated statements earningsyears ended june 30 2002 2001 2000 consolidated statements shareholders equityyears ended june 30 2002 2001 2000 consolidated statements cash flowsyears ended june 30 2002 2001 2000 notes consolidated financial statementsjune 30 2002 summary significant accounting policies report independent auditors quarterly financial data unaudited item 9item 8 financial statements supplementary data financial statements consolidated statements earnings consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archer daniels midland company consolidated statements earnings see notes consolidated financial statements archer daniels midland company consolidated balance sheets see notes consolidated financial statements archer daniels midland company consolidated statements cash flows see notes consolidated financial statements archer daniels midland company consolidated statements shareholders equity archer daniels midland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements june 30 2007 three years ended include accounts company majorityowned subsidiaries significant intercompany accounts transactions eliminated investments affiliates carried cost plus equity undistributed earnings since acquisition company evaluates less majorityowned investments consolidation pursuant financial accounting standards board fasb interpretation number 46 consolidation variable interest entities interpretation accounting research bulletin 51 fin 46 variable interest entity vie corporation partnership trust legal structure used business purposes equity investors voting rights equity investors provide sufficient financial resources entity support activities fin 46 requires vie consolidated company primary beneficiary vie primary beneficiary vie entity subject majority risk loss vie’s activities entitled receive majority entity’s residual returns june 30 2007 company 165 million investments private equity funds included investments affiliates considered vies pursuant fin 46 company’s residual risk rewards vies proportional company’s ownership interest company primary beneficiary vies therefore company consolidate vies use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance certain regulatory requirements commodity exchange requirements insurance arrangements segregated balances represent deposits received customers trading exchangetraded commodity instruments securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds receivables company records trade accounts receivable net realizable value includes appropriate allowance estimated uncollectible accounts 69 million 54 million june 30 2007 2006 respectively reflect loss anticipated trade accounts receivable balances company calculates allowance based history writeoffs level pastdue accounts relationships economic status customers archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued credit risk trade receivables minimized result large diversified nature company’s worldwide customer base company controls exposure credit risk credit approvals credit limits monitoring procedures collateral generally required company’s trade receivables trade accounts receivable due unconsolidated affiliates june 30 2007 2006 260 million 58 million respectively inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market marketable securities company classifies marketable securities availableforsale except certain designated securities classified trading securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component comprehensive income unrealized gains losses related trading securities included income current basis company uses specific identification method securities sold reclassified accumulated comprehensive income earnings property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 50 years machinery equipment 3 30 years asset abandonments writedowns company recorded 21 million 71 million 42 million charge cost products sold 2007 2006 2005 respectively principally related abandonment writedown certain longlived assets majority assets idle related underperforming product lines decision abandon finalized consideration ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value writedowns carrying value assets immaterial net sales company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates 2007 2006 2005 37 billion 31 billion 29 billion respectively archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued stock compensation effective july 1 2004 company adopted fair value recognition provisions sfas number 123 accounting stockbased compensation stockbased employee compensation modified prospective method adoption selected company provisions sfas number 148 accounting stockbased compensation transition disclosure stockbased employee compensation expense recognized 2005 expense would recognized fair value recognition provisions sfas number 123 applied options granted july 1 1995 effective july 1 2005 company adopted fair value recognition provisions sfas number 123r sharebased payment using modified prospective transition method modified prospective transition method compensation expense includes compensation expense sharebased payments granted prior yet vested july 1 2005 based grant date fair value estimated accordance original provisions sfas number 123 b compensation expense sharebased payments granted subsequent july 1 2005 based grant date fair value estimated accordance provisions sfas number 123r results prior periods restated per share data basic earnings per common share determined dividing net earnings weighted average number common shares outstanding computing diluted earnings per share weighted average number common shares outstanding increased common stock options outstanding exercise prices lower average market prices common shares 2007 2006 2005 diluted average shares outstanding included incremental shares related outstanding common stock options 5 million 2 million 2 million respectively new accounting standards july 2006 fasb issued interpretation number 48 accounting uncertainty income taxes fin 48 fin 48 clarifies accounting income taxes prescribing minimum requirements tax position must meet recognized financial statements addition fin 48 prohibits use sfas number 5 accounting contingencies evaluating recognition measurement uncertain tax positions company required adopt fin 48 july 1 2007 adoption expected material effect company’s financial statements september 2006 fasb issued sfas number 157 fair value measurements sfas number 157 establishes framework measuring fair value within generally accepted accounting principles clarifies definition fair value within framework expands disclosures use fair value measurements sfas number 157 require new fair value measurements generally accepted accounting principles however definition fair value sfas number 157 may affect assumptions used companies determining fair value company required adopt sfas number 157 july 1 2008 company completed evaluation currently believes impact require material modification company’s fair value measurements substantially limited expanded disclosures notes company’s consolidated financial statements september 2006 fasb issued sfas number 158 employers’ accounting defined benefit pension postretirement plans sfas number 158 requires employer recognize overfunded underfunded status defined benefit postretirement plan multiemployer plan asset liability balance sheet recognize changes funded status defined benefit postretirement plan comprehensive income year changes occur sfas number 158 also requires companies measure funded status defined benefit postretirement plans end fiscal year instead date three months prior end fiscal year june 30 2007 company recorded funded status defined benefit postretirement plans accompanying consolidated balance sheet impact company’s consolidated balance sheet resulting recording funded status defined benefit postretirement plans disclosed note 13 company required adopt measurement date provisions sfas number 158 june 30 2009 believe adoption significant impact company’s financial statements archer daniels midland company notes consolidated financial statements continued note 1 summary significant accounting policies continued february 2007 fasb issued sfas number 159 fair value option financial assets financial liabilities sfas number 159 allows entities voluntarily choose specified election dates measure many financial assets financial liabilities fair value election made instrumentbyinstrument basis irrevocable fair value option elected instrument sfas number 159 specifies subsequent changes fair value instrument shall reported earnings company required adopt sfas 159 july 1 2008 yet assessed impact adoption standard company’s financial statements note 2 acquisitions 2007 2006 2005 acquisitions accounted purchases accordance sfas number 141 business combinations accordingly tangible assets liabilities adjusted fair values remainder purchase price recorded goodwill identifiable intangible assets acquired part acquisitions material acquisitions 2007 company acquired seven businesses total cost 103 million one acquisitions company acquired remaining outstanding shares unconsolidated affiliate prior obtaining remaining outstanding shares company held 50 interest unconsolidated affiliate accounted investment equity method accounting carrying value company’s investment unconsolidated affiliate immediately prior acquisition 100 million company recorded preliminary allocation purchase price related 2007 acquisitions purchase price allocation resulted goodwill 6 million assigned oilseeds processing segment cash purchase price 103 million plus 100 million carrying value previously unconsolidated affiliate allocated current assets property plant equipment current liabilities debt 82 million 206 million 33 million 52 million respectively acquisitions 2006 company acquired twelve businesses total cost 182 million company recorded goodwill related acquisitions portion purchase price allocated current assets property plant equipment longterm assets current liabilities 64 million 79 million 59 million 25 million respectively acquisitions 2005 company acquired five businesses total cost 24 million company recorded goodwill related acquisitions archer daniels midland company notes consolidated financial statements continued note 3 marketable securities cash equivalents archer daniels midland company notes consolidated financial statements continued note 3 marketable securities cash equivalents continued 27 million unrealized losses june 30 2007 2 million unrealized losses arose within last 12 months 1 million unrealized losses arose within last 24 months 21 million unrealized losses arose within last months remaining 3 million unrealized losses arose within last 48 months market value united states government obligations governmentsponsored enterprise obligations corporate debt securities debt securities unrealized losses june 30 2007 434 million 10 million unrealized losses associated united states government obligations governmentsponsored enterprise obligations corporate debt securities debt securities considered otherthantemporary unrealized losses related changes interest rates affect expected cash flows received upon maturity investments credit quality issuer market value two availableforsale equity securities unrealized losses june 30 2007 45 million 17 million unrealized losses associated availableforsale equity securities arose within last 36 months principally related longterm strategic investments company intent ability hold debt equity securities period time sufficient recover unrealized losses company recognized otherthantemporary impairments debt equity securities archer daniels midland company notes consolidated financial statements continued note 4 inventories derivatives reduce price risk caused market fluctuations company generally follows policy using exchangetraded futures options contracts minimize net position merchandisable agricultural commodity inventories forward cash purchase sales contracts company also use exchangetraded futures options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors volatility relationship value exchangetraded commodities futures contracts cash prices underlying commodities counterparty contracts defaults volatility freight markets inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value exchangetraded futures options contracts forward cash purchase contracts forward cash sales contracts merchandisable agricultural commodities none designated fair value hedges valued market price changes market value inventories merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures contracts recognized earnings immediately resulting cost goods sold approximating firstin firstout fifo cost unrealized gains forward cash purchase contracts forward cash sales contracts exchangetraded futures contracts represent fair value instruments classified company’s balance sheet receivables unrealized losses forward cash purchase contracts forward cash sales contracts exchangetraded futures contracts represent fair value instruments classified company’s balance sheet accounts payable company also values certain inventories using lower cost determined either lifo fifo method market archer daniels midland company notes consolidated financial statements continued note 4 inventories derivatives continued company time uses futures contracts fix purchase price anticipated volumes commodities purchased processed future month company also uses futures options swaps fix purchase price company’s anticipated natural gas requirements certain production facilities addition certain company’s ethanol sales contracts indexed unleaded gasoline prices company uses futures options fix sales price anticipated volumes ethanol sales future months derivatives designated cash flow hedges changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item amounts representing ineffectiveness cash flow hedges immaterial gains losses arising open closed hedging transactions deferred comprehensive income net applicable income taxes recognized component cost products sold statement earnings hedged item recognized june 30 2007 company recorded 16 million aftertax losses accumulated comprehensive income related gains losses cash flow hedge transactions company expects recognize aftertax losses statement earnings fiscal 2008 june 30 2007 accumulated comprehensive income included 7 million aftertax gain related treasurylock agreement entered settled 2006 treasurylock agreement designated cash flow hedge anticipated proceeds company’s issuance 600 million debentures september 2005 company recognize 7 million aftertax gain statement earnings term debentures june 30 2007 accumulated comprehensive income also included 3 million aftertax gains representing company’s share derivative gains reported unconsolidated affiliates company note 5 investments advances affiliates company ownership interests nonmajorityowned affiliates accounted equity method company 79 89 unconsolidated affiliates june 30 2007 2006 respectively located north south america africa europe asia decrease number affiliates 2007 principally due exchange company’s ownership interest 11 affiliates shares stock new affiliate following table summarizes combined balance sheets combined statements earnings company’s unconsolidated affiliates three years ended june 30 2007 2006 2005 archer daniels midland company notes consolidated financial statements continued note 5 investments advances affiliates continued undistributed earnings company’s unconsolidated affiliates june 30 2007 656 million company limited partner various private equity funds carrying value june 30 2007 165 million company future capital commitments related partnerships 138 million june 30 2007 two foreign affiliates company carrying value 11 billion market value 13 billion based quoted market prices exchange rates june 30 2007 company provides 200 million credit facility one unconsolidated affiliate facility due demand bears interest equal monthly average commercial paper rate applicable company’s commercial paper borrowing facility outstanding advances credit facility 180 million june 30 2007 included receivables accompanying consolidated balance sheet 2007 company sold 28 ownership interest agricore united cash 321 million recognized gain 153 million june 2007 company exchanged ownership interests eleven asian joint venture companies shares wilmar international limited wil singapore publicly listed company exchange ownership interests joint ventures company received 366 million wil shares fair value 756 million immediately prior exchange carrying value company’s interests joint ventures exchanged wil shares 231 million company accounted exchange transaction accordance sfas number 153 exchanges nonmonetary assets amendment apb 29 pursuant sfas number 153 accounting nonmonetary transactions based upon fair value assets received gain loss recognized difference fair value asset received cost asset surrendered accordingly company recognized 440 million gain accompanying consolidated statement earnings related exchange transaction gain represents difference fair value wil shares received carrying value company’s interests joint ventures exchanged wil shares less elimination portion gain representing company’s retained direct indirect ownership interests wil company accounting direct indirect interests wil equity method accounting company believes ability exercise significant influence operating financial policies wil june 30 2007 one joint venture company subject exchange transaction regulatory approval pending company recognized gain related exchange joint venture wil june 30 2007 exchange transaction related gain joint venture recognized final regulatory approval obtained archer daniels midland company notes consolidated financial statements continued note 6 goodwill company accounts goodwill intangible assets accordance sfas number 142 goodwill intangible assets standard goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests company recorded goodwill impairment charge 2007 recorded 10 million goodwill impairment charge 2006 based annual impairment tests carrying value company’s intangible assets material goodwill balances attributable consolidated businesses investments affiliates segment set forth following table changes goodwill 2007 related acquisitions disposal affiliate foreign currency translation adjustments archer daniels midland company notes consolidated financial statements continued note 7 debt financing arrangements archer daniels midland company notes consolidated financial statements continued note 7 debt financing arrangements continued february 2007 company issued 12 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually notes convertible based initial conversion rate 228343 shares per 1000 principal amount notes equal initial conversion price approximately 4379 per share notes may converted subject adjustment following circumstances 1 calendar quarter beginning march 31 2007 closing price company’s common stock least 20 trading days 30 consecutive trading days ending last trading day immediately preceding quarter 140 applicable conversion price per share 1000 divided applicable conversion rate 2 five consecutive business day period immediately five consecutive trading day period note measurement period average trading price per 1000 principal amount notes equal less 98 average product closing price company’s common stock conversion rate date note measurement period 3 company makes specified distributions common stockholders specified corporate transactions occur 4 time january 15 2014 business day preceding maturity date upon conversion holder would receive amount cash equal lesser 1 1000 2 conversion value defined conversion value exceeds 1000 company deliver company’s election cash common stock combination cash common stock conversion value excess 1000 notes converted connection change control defined company may required provide makewhole premium form increase conversion rate subject stated maximum amount addition event change control holders may require company purchase portion notes purchase price equal 100 principal amount notes plus accrued unpaid interest concurrent issuance notes company purchased call options private transactions cost 299 million purchased call options allow company receive shares common stock andor cash counterparties equal amounts common stock andor cash related excess current market price company’s common stock exercise price purchased call options addition company sold warrants private transactions acquire subject customary antidilution adjustments 263 million shares common stock exercise price 6256 per share received proceeds 170 million average price company’s common stock defined period ending respective settlement dates exceeds exercise price warrants settled company’s option cash shares common stock purchased call options warrants intended reduce potential dilution upon future conversions notes effectively increasing initial conversion price 6256 per share net cost purchased call options warrant transactions 130 million recorded reduction stockholder’s equity company also recorded 114 million increase stockholder’s equity deferred tax assets recognized related purchased call options upon closing sale notes 370 million net proceeds note issuance proceeds warrant transactions used repurchase 103 million shares company’s common stock company’s stock repurchase program june 30 2007 none conditions permitting conversion notes satisfied addition june 30 2007 market price company’s common stock greater exercise price purchased call options warrants june 30 2007 share amounts related conversion notes exercise warrants included diluted average shares outstanding june 30 2007 fair value company’s longterm debt exceeded carrying value 110 million estimated using quoted market prices discounted future cash flows based company’s current incremental borrowing rates similar types borrowing arrangements archer daniels midland company notes consolidated financial statements continued note 7 debt financing arrangements continued aggregate maturities longterm debt five years june 30 2007 65 million 49 million 43 million 311 million 114 million respectively june 30 2007 company pledged certain property plant equipment carrying value 398 million security certain longterm debt obligations june 30 2007 company lines credit totaling 39 billion 34 billion unused weighted average interest rates shortterm borrowings outstanding june 30 2007 2006 618 525 respectively company’s total lines credit 25 billion support commercial paper borrowing facility borrowings june 30 2007 company outstanding standby letters credit surety bonds june 30 2007 2006 totaling 339 million 334 million respectively note 8 shareholder’s equity company authorized one billion shares common stock 500000 shares preferred stock without par value preferred stock issued june 30 2007 2006 company approximately 286 million 163 million shares respectively treasury stock 723 million june 30 2007 238 million june 30 2006 recorded cost reduction common stock company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 1996 stock option plan 1999 incentive compensation plan 2002 incentive compensation plan options issued market value date grant vest one nine years expire five ten years date grant company’s 1999 2002 incentive compensation plans provide granting restricted stock awards cost certain officers key employees awarded shares made common stock vest end threeyear restriction period 2007 2006 2005 11 million 24 million 25 million common shares respectively granted restricted stock awards june 30 2007 12 million 106 million shares available future grants pursuant 1999 2002 plans respectively compensation expense option grants restricted stock awards granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirement eligible employees recognized earnings date grant total compensation expense option grants restricted stock awards recognized 2007 2006 2005 70 million 67 million 29 million respectively archer daniels midland company notes consolidated financial statements continued note 8 shareholder’s equity continued fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock eight year period immediately prior date grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows summary option activity 2007 presented weightedaverage remaining contractual term options outstanding exercisable june 30 2007 7 years 5 years respectively aggregate intrinsic value options outstanding exercisable june 30 2007 125 million 42 million respectively weightedaverage grantdate fair values options granted 2007 2006 2005 1642 752 541 respectively total intrinsic values options exercised 2007 2006 2005 41 million 60 million 33 million respectively cash proceeds received options exercised 2007 2006 2005 20 million 30 million 31 million respectively june 30 2007 34 million total unrecognized compensation expense related option grants amounts recognized compensation expense next five fiscal years 12 million 10 million 7 million 4 million 1 million respectively archer daniels midland company notes consolidated financial statements continued note 8 shareholder’s equity continued fair value restricted shares determined based market value company’s shares grant date weightedaverage grantdate fair values shares granted 2007 2006 4175 2204 respectively summary restricted shares activity 2007 presented june 30 2007 23 million total unrecognized compensation expense related restricted shares amounts recognized compensation expense next three fiscal years 16 million 6 million 1 million respectively total fair value restricted shares vested 2007 12 million archer daniels midland company notes consolidated financial statements continued note 9 accumulated comprehensive income following table sets forth information respect accumulated comprehensive income archer daniels midland company notes consolidated financial statements continued note 10 income net interest expense net interest capitalized 24 million 11 million 11 million 2007 2006 2005 respectively company made interest payments 425 million 365 million 326 million 2007 2006 2005 respectively realized gains sales availableforsale marketable securities totaled 394 million 41 million 114 million 2007 2006 2005 respectively realized losses totaled 1 million year 2007 2006 2005 note 11 income taxes financial reporting purposes earnings income taxes include following components archer daniels midland company notes consolidated financial statements continued note 11 income taxes continued reconciliation statutory federal income tax rate company’s effective tax rate earnings follows company made income tax payments 794 million 508 million 238 million 2007 2006 2005 respectively archer daniels midland company notes consolidated financial statements continued note 11 income taxes continued company 82 million 85 million tax assets net operating loss carryforwards related certain international subsidiaries june 30 2007 2006 respectively june 30 2007 approximately 70 million assets expiration date remaining 12 million expire various times fiscal 2016 annual usage certain assets limited percentage taxable income respective international subsidiary year company recorded valuation allowance 52 million 59 million tax assets june 30 2007 2006 respectively due uncertainty realization company also 44 million tax assets related excess foreign tax credits begin expire fiscal 2013 17 million tax assets related state income tax incentive credits net federal benefit expire various times fiscal 2011 company recorded valuation allowance 15 million excess foreign tax credits 1 million state income tax incentive credits june 30 2007 due uncertainty realization june 30 2006 company valuation allowance recorded related excess foreign tax credits 14 million valuation allowance related state income tax incentive credits undistributed earnings company’s foreign subsidiaries affiliated corporate joint venture companies accounted equity method amounting approximately 36 billion june 30 2007 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings note 12 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases expire various dates year 2076 rent expense 2007 2006 2005 166 million 129 million 116 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans company provides substantially domestic employees certain international subsidiaries pension benefits company also provides substantially domestic salaried employees postretirement health care life insurance benefits company savings investment plans available employees company also maintains stock ownership plans qualifying employees company contributes shares stock plans match qualifying employee contributions employees choice retaining company stock accounts diversifying shares investment options expense measured recorded based upon fair market value stock contributed plans month number shares designated use plans significant compared shares outstanding periods presented assets company’s defined contribution savings plans consist primarily listed common stocks pooled funds company’s defined contribution savings plans held 191 million shares company common stock june 30 2007 market value 631 million cash dividends received shares company common stock held plans year ended june 30 2007 8 million june 30 2007 company adopted recognition disclosure provisions sfas number 158 sfas number 158 required company recognize funded status pension plans june 30 2007 consolidated balance sheet corresponding adjustment accumulated comprehensive income adjustment accumulated comprehensive income adoption represents net unrecognized actuarial losses unrecognized prior service costs unrecognized transition obligation remaining initial adoption sfas number 87 employers’ accounting pensions previously netted plans’ funded status company’s consolidated balance sheet pursuant provisions sfas number 87 amounts subsequently recognized net periodic pension cost pursuant company’s historical accounting policy amortizing amounts actuarial gains losses arise subsequent periods recognized net periodic pension cost periods recognized component comprehensive income amounts subsequently recognized component net periodic pension cost basis amounts recognized accumulated comprehensive income upon adoption sfas number 158 archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued incremental effects adopting provisions sfas number 158 company’s consolidated balance sheet june 30 2007 presented following table adoption sfas number 158 effect company’s consolidated statement earnings year ended june 30 2007 prior period presented effect company’s operating results future periods company required adopt sfas number 158 june 30 2007 would recognized additional minimum liability pursuant provisions sfas number 87 effects recognizing additional minimum liability included table column labeled “prior adopting sfas number 158” archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued company uses march 31 measurement date substantially defined benefit plans following tables set forth changes defined benefit obligation fair value defined benefit plan assets archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued included accumulated comprehensive income pension benefits june 30 2007 following amounts yet recognized net periodic pension cost unrecognized transition obligation 3 million unrecognized prior service costs 41 million unrecognized actuarial losses 336 million transition obligation prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost fiscal year ended june 30 2008 1 million 6 million 17 million respectively included accumulated comprehensive income postretirement benefits june 30 2007 following amounts yet recognized net periodic pension cost unrecognized prior service credits 9 million unrecognized actuarial losses 47 million prior service credit actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost fiscal year ended june 30 2008 1 million 2 million respectively following table sets forth principal assumptions used developing benefit obligation net periodic pension expense projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 17 billion 15 billion 14 billion respectively june 30 2007 13 billion 11 billion 11 billion respectively june 30 2006 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 491 million 481 million 284 million respectively june 30 2007 213 million 198 million 25 million respectively june 30 2006 accumulated benefit obligation pension plans june 30 2007 2006 17 billion 15 billion respectively postretirement benefit measurement purposes 91 annual rate increase per capita cost covered health care benefits assumed 2007 rate assumed decrease gradually 50 2016 remain level thereafter assumed health care cost trend rates significant impact amounts reported health care plans 1 change assumed health care cost trend rates would following effect archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued plan assets following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 63 company’s global pension plan assets target asset allocation company’s us pension plans consists 60 equity securities 30 debt securities 10 real estate actual asset allocation us pension plans measurement date consists 62 equity securities 28 debt securities 10 real estate actual asset allocation company’s foreign pension plans measurement date consists 40 equity securities 59 debt securities 1 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans held 32 million shares company common stock measurement date march 31 2007 market value 119 million cash dividends received shares company common stock plans twelvemonth period ended march 31 2007 1 million investment objectives company’s plan assets · optimize longterm return plan assets acceptable level risk · maintain broad diversification across asset classes among investment managers · maintain careful control risk level within asset class · focus longterm return objective asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study concluded january 2005 investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments archer daniels midland company notes consolidated financial statements continued note 13 employee benefit plans continued external consultants monitor investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets expected longterm rate return assumption used computing 2007 net periodic pension cost pension plans 72 contributions expected future benefit payments company expects contribute 32 million pension plans 7 million postretirement benefit plan 2008 following benefit payments reflect expected future service expected paid archer daniels midland company notes consolidated financial statements continued note 14 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations aggregated classified oilseeds processing segment includes activities related processing oilseeds soybeans cottonseed sunflower seeds canola peanuts flaxseed vegetable oils meals principally food feed industries addition oilseeds may resold marketplace raw material processors crude vegetable oil sold “as is” processed refining bleaching deodorizing salad oils salad oils processed hydrogenating andor interesterifying margarine shortening food products partially refined oil sold use chemicals paints industrial products refined oil processed use production biodiesel oilseed meals primary ingredients used manufacture commercial livestock poultry feeds oilseeds processing also includes activities related company’s interest wilmar international limited largest agricultural processing business asia corn processing segment includes activities related production sweeteners starches dextrose syrups food beverage industry well activities related production fermentation bioproducts alcohol amino acids specialty food feed ingredients agricultural services segment utilizes company’s extensive grain elevator transportation network buy store clean transport agricultural commodities oilseeds corn wheat milo oats barley resells commodities primarily feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing transportation network provides reliable efficient services company’s agricultural processing operations also included agricultural services activities ac toepfer international global merchandiser agricultural commodities processed products includes company’s remaining operations consisting principally food feed industrial businesses financial activities food feed industrial includes wheat processing activities related production wheat flour cocoa processing activities related production chocolate cocoa products production natural health nutrition products production food feed industrial products financial activities include banking captive insurance private equity fund investments futures commission merchant activities intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses including interest charge related working capital usage also included operating profit related equity earnings affiliates based equity method accounting general corporate expenses investment income unallocated interest expense marketable securities transactions fifo lifo inventory adjustments excluded segment operations classified corporate gross additions property plant equipment represent purchases property plant equipment plus amounts allocated property plant equipment related acquired businesses archer daniels midland company notes consolidated financial statements continued note 14 segment geographic information continued segment information archer daniels midland company notes consolidated financial statements continued note 14 segment geographic information continued archer daniels midland company notes consolidated financial statements continued note 14 segment geographic information continued geographic information following geographic area data include net sales operating income attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent sum net book value property plant equipment plus goodwill related consolidated businesses note 15 guarantees commitments company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligation company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 98 million june 30 2007 amounts outstanding primary entity contingent obligations 51 million june 30 2007 june 30 2007 company construction new ethanol biodiesel pha cocoa production facilities date company entered purchase commitments totaling 660 million third parties related construction facilities archer daniels midland company notes consolidated financial statements continued note 16 quarterly financial data unaudited net earnings three months year ended june 30 2007 include credits income gains 440 million 286 million tax equal 044 per share related exchanging shares certain unconsolidated affiliates shares wil 357 million 225 million tax equal 034 per share related company’s sale equity securities tyson foods inc overseas shipholding group inc 157 million 99 million tax equal 015 per share related sale businesses net earnings three months year ended june 30 2007 also includes charge income 46 million 29 million tax equal 004 per share related repurchase 400 million company’s outstanding debentures charge cost products sold 19 million 12 million tax equal 002 per share related abandonment writedown longlived assets year ended june 30 2007 net earnings include credit income 209 million 132 million tax equal 020 per share related sale businesses net earnings three months year ended june 30 2006 include charges cost products sold 34 million 22 million tax equal 03 per share 61 million 38 million tax equal 06 per share respectively related abandonment writedown certain longlived assets charge cost products sold 15 million 9 million tax equal 01 per share related adoption fin 47 credit income 17 million 11 million tax equal 02 per share related sale longlived assets net earnings three months year ended june 30 2006 also include credit cost products sold 27 million 18 million tax equal 03 per share related brazilian transactional tax credits year ended june 30 2006 net earnings include credit income taxes 36 million 05 per share related adjustment state federal income taxes previously filed returns year ended june 30 2006 also includes credit income 19 million 12 million tax equal 02 per share related brazilian transactional tax credits report independent registered public accounting firm board directors shareholders archer daniels midland company decatur illinois audited accompanying consolidated balance sheets archer daniels midland company june 30 2007 2006 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2007 audits also included financial statement schedule listed index item 15a financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archer daniels midland company june 30 2007 2006 consolidated results operations cash flows three years period ended june 30 2007 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein discussed note 13 consolidated financial statements 2007 archer daniels midland company adopted statement financial accounting standards number 158 related defined benefit pension postretirement plans also audited accordance standards public company accounting oversight board united states effectiveness archer daniels midland company’s internal control financial reporting june 30 2007 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission report dated august 24 2007 expressed unqualified opinion thereon ernst young llp st louis missouri august 24 report independent registered public accounting firm board directors shareholders archer daniels midland company decatur illinois audited management’s assessment included accompanying management’s report internal control financial reporting archer daniels midland company maintained effective internal control financial reporting june 30 2007 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission coso criteria archer daniels midland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting responsibility express opinion management’s assessment opinion effectiveness company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting evaluating management’s assessment testing evaluating design operating effectiveness internal control performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion management’s assessment archer daniels midland company maintained effective internal control financial reporting june 30 2007 fairly stated material respects based coso criteria also opinion archer daniels midland company maintained material respects effective internal control financial reporting june 30 2007 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archer daniels midland company june 30 2007 2006 related consolidated statements earnings shareholders’ equity cash flows three years period ended june 30 2007 archer daniels midland company report dated august 24 2007 expressed unqualified opinion thereon ernst young llp st louis missouri august 24 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated statements comprehensive income loss consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated statements comprehensive income loss see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products change fiscal year may 3 2012 board directors company determined accordance bylaws upon recommendation audit committee company’s fiscal year shall begin january 1 end december 31 year starting january 1 2013 required transition period july 1 2012 december 31 2012 included form 10k report amounts included report six months ended december 31 2011 unaudited principles consolidation consolidated financial statements include accounts company subsidiaries significant intercompany accounts transactions eliminated company consolidates entities including variable interest entities vies controlling financial interest vies company assesses whether primary beneficiary defined applicable accounting standard investments affiliates including vies company exercises significant influence control investee primary beneficiary investees activities carried cost plus equity undistributed earnings since acquisition adjusted appropriate basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain vies included using recent available financial statements case financial statements within 93 days company’s year end consistent period company consolidates alfred c toepfer international toepfer wholly owned subsidiary prior june 6 2014 company 80 interest minority interest subject mandatorily redeemable put option result put option associated minority interest reported longterm liabilities december 31 2011 put option expired company reclassified 174 million minority interest longterm liabilities noncontrolling interests shareholders’ equity date 2013 toepfer became subject new mandatorily redeemable put option result company reclassified 180 million noncontrolling interest shareholders equity longterm liabilities june 6 2014 company completed acquisition remaining 20 interest toepfer 157 million excess purchase price carrying value associated noncontrolling interest 12 million recorded reduction additional paid capital use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassifications affiliates goodwill 198 million 2013 previously included goodwill intangible assets reclassified investments advances affiliates change total investments assets result reclassification cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued segregated cash investments company segregates certain cash investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements lending arrangements segregated balances represent deposits received customers company’s registered futures commission merchant securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance lending arrangements segregated cash investments primarily consist cash united states government securities moneymarket funds receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 81 million december 31 2014 2013 reflect loss anticipated accounts receivable balances company estimates allowance based history writeoffs level pastdue accounts relationships economic status customers portions allowance uncollectible accounts recorded trade receivables current assets credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates december 31 2014 2013 15 million 73 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market following table sets forth companys inventories december 31 2014 2013 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued fair value measurements company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date company uses market approach valuation technique measure majority assets liabilities carried fair value three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies contract level 3 many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period derivatives company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet unrealized gains reported current assets unrealized losses reported accrued expenses payables accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments changes fair value derivatives recognized earnings immediately derivative instruments designated qualify hedging instruments company designates hedging instrument based upon exposure hedged fair value hedge cash flow hedge derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk effective portion gain loss derivative instrument reported component accumulated comprehensive income aoci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings remaining gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value underlying recognized consolidated statement earnings current period archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued marketable securities company classifies marketable securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component comprehensive income company monitors investments impairment periodically recognizes impairment charge decline fair value investment judged otherthantemporary company uses specific identification method securities sold reclassified accumulated comprehensive income earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 10 40 years machinery equipment 3 30 years company capitalized interest major construction projects progress 18 million 16 million 12 million 9 million 21 million years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 respectively income taxes company accounts income tax positions accordance applicable accounting standards liability method used accounting income taxes deferred tax assets liabilities recorded temporary differences tax basis assets liabilities reported amounts consolidated financial statements using statutory rates effect year differences expected reverse effect deferred tax assets liabilities change tax rates recorded results operations period includes enactment date law applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests definitelived intangible assets amortized estimated useful lives 2 25 years reviewed impairment whenever indicators carrying value assets may fully recoverable prior fiscal year end change transition period company’s accounting policy evaluate goodwill intangible assets indefinite lives impairment april 1 fiscal year whenever indicators carrying value assets may fully recoverable effective transition period ended december 31 2012 company voluntarily changed accounting policy begin conducting annual goodwill indefinite life intangible assets impairment tests october 1 change annual goodwill indefinite life intangible assets impairment testing date preferable circumstances new impairment testing date better aligned timing company’s annual strategic planning budgeting process timing closely aligned company’s annual financial reporting process result change year end resulting change accounting principle related annual testing date delay accelerate avoid impairment charge company’s goodwill impracticable objectively determine estimates assumptions necessary perform annual goodwill impairment test october 1 periods prior october 1 2012 company prospectively applied annual goodwill impairment testing date effective october 1 2012 year ended december 31 2013 company recorded impairment charge goodwill 9 million related companys brazilian sugar milling business impairment charges recorded goodwill indefinitelived intangible assets year ended december 31 2014 six months ended december 31 2012 year ended june 30 2012 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued asset abandonments writedowns company evaluates longlived assets impairment whenever indicators impairment exist assets written fair value consideration companys ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 impairment charges 35 million 84 million 0 million 337 million 367 million respectively see note 19 additional information payables brokerage customers payables brokerage customers represent total customer accounts companys futures commission merchant credit positive balances customer accounts used primarily connection commodity transactions include gains losses open commodity trades well securities deposits made margins purpose required company exchangeclearing organizations counterparties payables brokerage customers corresponding balance segregated cash investments customer omnibus receivable current assets revenues company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured company sales contracts allow pricing occur title goods passed customer cases company continues report goods inventory recognizes sales revenue price determined freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 58 billion 69 billion 40 billion 45 billion 77 billion respectively stock compensation company recognizes expense stock compensation based fair value awards granted company’s stock compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related stock compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 79 million 59 million 28 million 29 million 56 million years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued business combinations company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended assets acquired liabilities assumed based preliminary purchase price allocations adjusted fair values acquisition date remainder purchase price recorded goodwill measurement period may take one year acquisition date adjustments assets acquired liabilities assumed may recorded corresponding offset goodwill upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first subsequent adjustments charged consolidated statements earnings adoption new accounting standards effective january 1 2014 company adopted amended guidance accounting standards codification asc topic 740 income taxes requires company present unrecognized tax benefit financial statements reduction deferred tax asset net operating loss carryforward similar tax loss tax credit carryforward situations net operating loss carryforward similar tax loss tax credit carryforward available reporting date tax law applicable jurisdiction company intend use deferred tax asset purpose unrecognized tax benefit presented liability financial statements combined deferred tax assets adoption amended guidance impact company’s financial results effective january 1 2014 company adopted amended guidance asc topic 830 foreign currency matters topic 830 requires company transfer currency translation adjustments comprehensive income net income certain circumstances amended guidance aims resolve diversity practice whether asc topic 810 consolidation topic 830 applies release cumulative translation adjustment net income parent either sells part investment foreign entity longer holds controlling financial interest subsidiary group assets nonprofit activity business adoption amended guidance impact company’s current period results company disposes part qualifying foreign entity required release portion cumulative translation adjustment applicable disposed entity effective january 1 2014 company adopted amended guidance asc topic 405 liabilities addresses recognition measurement disclosure obligations resulting joint several liability arrangements total amount arrangement fixed reporting date amended guidance aims resolve diversity practice among companies subject joint several liabilities retrospective adoption amended guidance impact current prior period results expected material impact company’s financial results effective october 1 2014 company early adopted amended guidance asc topic 205 presentation financial statements topic 205 asc topic 360 property plant equipment limit definition discontinued operations disposals components entity represent strategic shift major effect entity’s operations financial results amended guidance also expands definition discontinued operations include business nonprofit activity acquisition meets criteria classified held sale disposal equity method investment meets definition discontinued operations amended guidance requires company report discontinued operations 1 component entity group components entity meets criteria topic 205 classified held sale 2 component entity group components entity disposed sale 3 component entity group components entity disposed sale result prospective adoption amended guidance global chocolate cocoa businesses classified held sale december 31 2014 see note 18 information reported discontinued operations company believe sale businesses major effect entitys operations financial results archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued pending accounting standards effective january 1 2016 company required adopt amended guidance asc topic 718 compensation stock compensation topic 718 seeks resolve diversity practice exists accounting sharebased payments amended guidance requires performance target affects vesting could achieved requisite service period treated performance condition company required adopt amended guidance either prospectively awards granted modified effective date retrospectively awards performance targets outstanding beginning earliest annual period presented financial statements new modified awards thereafter company expect adoption amended guidance impact financial results effective january 1 2017 company required adopt new guidance asc topic 606 revenue contracts customers topic 606 supersede revenue recognition requirements asc topic 605 revenue recognition topic 606 requires company recognize revenue depict transfer promised goods services customers amount reflects consideration entity expects entitled exchange goods services new guidance requires company apply following steps 1 identify contract customer 2 identify performance obligations contract 3 determine transaction price 4 allocate transaction price performance obligations contract 5 recognize revenue company satisfies performance obligation company required adopt topic 606 either full retrospective basis prior reporting period presented modified retrospective basis cumulative effect initially applying new guidance recognized date initial application company elects modified retrospective approach required provide additional disclosures amount financial statement line item affected current reporting period compared guidance effect change explanation reasons significant changes company yet completed assessment impact new guidance consolidated financial statements note 2 acquisitions operating results acquisitions included company’s financial statements date acquisition significant company’s consolidated operating results fiscal year 2014 acquisitions october 1 2014 november 18 2014 company completed acquisitions wild flavors businesses wild flavors specialty commodities inc sci respectively acquisitions line companys strategy increase returns reduce earnings volatility growth specialty ingredient offerings 2014 post acquisition financial results wild flavors sci reported segment archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued year ended december 31 2014 company acquired six businesses including wild flavors sci total cost 30 billion purchase price net cash acquired 280 million preliminarily allocated follows goodwill recorded connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses 18 billion preliminarily allocated goodwill 15 million expected deductible tax purposes following table sets forth preliminary fair values weighted average useful lives intangible assets acquired companys consolidated statement earnings year ended december 31 2014 includes post acquisition results wild flavors immaterial archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued fiscal year 2013 acquisitions year ended december 31 2013 company acquired four businesses total cost 44 million recorded preliminary allocation purchase price related acquisitions net cash purchase price acquisitions 44 million preliminarily allocated working capital property plant equipment goodwill longterm assets 6 million 29 million 2 million 7 million respectively finalization purchase price allocations related acquisitions result material adjustments transition period 2012 acquisitions six months ended december 31 2012 company made eight acquisitions total cost 26 million cash recorded preliminary allocation purchase price related acquisitions net cash purchase price eight acquisitions 26 million preliminarily allocated working capital property plant equipment goodwill longterm assets 4 million 24 million 2 million 4 million respectively finalization purchase price allocations related acquisitions result material adjustments fiscal year 2012 acquisitions fiscal year 2012 company made nine acquisitions total cost 241 million cash recorded preliminary allocation purchase price related acquisitions net cash purchase price nine acquisitions 241 million allocated working capital property plant equipment goodwill longterm assets longterm liabilities 12 million 199 million 51 million 6 million 3 million respectively finalization purchase price allocations related acquisitions result material adjustments single material acquisition year archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis december 31 2014 2013 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets market valuations company’s inventories adjusted location quality exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade unobservable inputs significant impact measurement fair value inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued derivative contracts include exchangetraded commodity futures option contracts forward commodity purchase sale contracts otc instruments related primarily agricultural commodities energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact measurement fair value contract classified level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component revenues cost products sold income expensenet effective portions changes fair value derivatives designated cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss hedged items recorded earnings probable hedged transaction longer occur companys cash equivalents comprised money market funds valued using quoted market prices classified level 1 company’s marketable securities comprised equity investments us treasury securities obligations us government agencies debt securities publicly traded equity investments us treasury securities valued using quoted market prices classified level 1 us government agency obligations corporate municipal debt securities valued using thirdparty pricing services substantially classified level 2 unrealized changes fair value availableforsale marketable securities recognized consolidated balance sheets component accumulated comprehensive income loss unless decline value deemed otherthantemporary point decline recorded earnings companys segregated investments comprised us treasury securities us treasury securities valued using quoted market prices classified level 1 company deferred consideration accounts receivable securitization programs “programs” represents note receivable purchasers programs amount reflected current assets consolidated balance sheet see notes 6 20 company carries deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 years ended december 31 2014 2013 includes gains 602 million attributable change unrealized gains relating level 3 assets still held december 31 2014 includes losses 558 million attributable change unrealized losses relating level 3 liabilities still held december 31 2014 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued includes gains 700 million attributable change unrealized gains relating level 3 assets still held december 31 2013 includes losses 380 million attributable change unrealized losses relating level 3 liabilities still held december 31 2013 periods presented company transfers levels 1 2 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued cases price components inventories commodity purchase sale contracts observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components determined specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations december 31 2014 2013 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component weighted average 234 total price assets 434 liabilities certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations absent corroborating evidence company considers price quotes 100 percent unobservable therefore fair value items reported level 3 note 4 derivative instruments hedging activities derivatives designated hedging instruments majority companys derivative instruments designated hedging instruments company uses exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets derivatives including exchange traded contracts physical purchase sale contracts inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore fair values changes fair values inventories included tables archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments december 31 2014 2013 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 quarter ended september 30 2014 company recognized 102 million pretax foreign exchange hedging losses euro foreign currency derivative contracts entered economically hedge wild flavors acquisition december 2012 company entered two transactions investment bank counterparties resulting economic interest graincorp shares purpose transactions facilitate company’s planned acquisition graincorp rejected australian federal treasurer november 2013 one transactions accounted unfunded derivative instrument transaction hybrid financial instrument defined applicable accounting standards whereby accounting rules required company account funded host instrument separate embedded derivative instrument december 2012 company settled derivative instruments known “total return swaps” recognized pretax gains reported “other contracts” table settlement transactions interest graincorp recorded longterm marketable security archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately derivatives designated cash flow fair value hedging strategies december 31 2014 2013 company certain derivatives designated cash flow hedges fair value hedges company uses interest rate swaps designated fair value hedges protect fair value fixedrate debt due changes interest rates changes fair value interest rate swaps underlying fixedrate debt recorded income expense net terms interest rate swaps match terms underlying debt resulting ineffectiveness december 31 2014 company 21 million current assets representing fair value interest rate swaps corresponding increase underlying debt amount impact earnings commodity hedge programs described derivatives designated cash flow hedges assuming normal market conditions changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either revenues cost products sold interest expense income expense net applicable december 31 2014 company 30 million aftertax gains aoci related gains losses commodity cash flow hedge transactions company expects recognize 30 million gains consolidated statement earnings next 12 months company uses futures options contracts fix purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 76 million bushels corn per month past 12 months company hedged 24 71 monthly anticipated grind december 31 2014 company designated hedges representing 03 23 anticipated monthly grind corn next 12 months company time also uses futures options swaps fix sales price certain ethanol sales contracts company established hedging programs ethanol sales contracts indexed unleaded gasoline prices various exchangetraded ethanol contracts objective hedging programs reduce variability cash flows associated company’s sales ethanol past 12 months company hedged 9 million 121 million gallons ethanol sales per month programs december 31 2014 company designated hedges representing 1 million 30 million gallons ethanol sales per month next 6 months following tables set forth fair value derivatives designated hedging instruments december 31 2014 2013 archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 hedge ineffectiveness commodity contracts results change price underlying commodity specific cash market differs change price derivative financial instrument used establish hedging relationship example change price corn futures contract strongly correlated change cash price paid corn gain loss derivative instrument deferred recognized time corn grind occurs change price derivative strongly correlate change cash price corn example portion derivative gains losses may required recognized earnings prior corn grind occurring archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities following table sets forth items shortterm longterm investments 12 million unrealized losses december 31 2014 arose within last 12 months related company’s investment two available sale equity securities fair value 310 million company evaluated nearterm prospects issuer relation severity duration impairment based evaluation company’s ability intent hold investments reasonable period time sufficient forecasted recovery fair value company consider investments otherthantemporarily impaired december 31 2014 information otherthantemporary impairment charges see note 19 archerdanielsmidland company notes consolidated financial statements continued note 6 current assets following table sets forth items current assets 1 company provides financing suppliers primarily brazilian farmers finance portion suppliers’ production costs amounts reported net allowances 11 million 15 million december 31 2014 2013 respectively changes allowance 2014 included increase 4 million additional bad debt provisions reduction allowance adjustments 8 million respectively interest earned financing receivables 23 million 26 million 15 million 12 million 26 million years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 respectively included interest income consolidated statements earnings note 7 accrued expenses payables following table sets forth items accrued expenses payables archerdanielsmidland company notes consolidated financial statements continued note 8 investments advances affiliates company applies equity method investments investees company ability exercise significant influence including company’s 173 164 share ownership wilmar december 31 2014 2013 respectively company 60 unconsolidated domestic foreign affiliates december 31 2014 2013 respectively following table summarizes combined balance sheets december 31 2014 2013 combined statements earnings company’s unconsolidated affiliates years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 company’s share undistributed earnings unconsolidated affiliates december 31 2014 21 billion company direct investment foreign equity method investee carrying value 24 billion december 31 2014 market value 27 billion based active market quoted prices converted us dollars applicable exchange rates december 31 2014 company provides credit facilities totaling 168 million five unconsolidated affiliates one facility due demand bears interest one month british pound libor rate plus 15 outstanding balance 17 million four facilities outstanding balances december 31 2014 outstanding balance included current assets accompanying consolidated balance sheet information company’s former equity method interest gruma see note 19 archerdanielsmidland company notes consolidated financial statements continued note 9 goodwill intangible assets goodwill balances attributable consolidated businesses segment set forth following table changes goodwill year ended december 31 2014 related primarily acquisitions see note 2 assets classified held sale see note 18 following table sets forth intangible assets change gross carrying amount intangible assets year ended december 31 2014 primarily related acquisitions discussed note 2 partially offset reclassification held sale presentation foreign currency translation adjustments aggregate amortization expense 27 million 22 million 10 million 14 million 28 million years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 respectively estimated future aggregate amortization expense next five years 81 million 78 million 74 million 72 million 72 million archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued february 2007 company issued 115 billion principal amount convertible senior notes due 2014 notes private placement notes issued par bear interest rate 0875 per year payable semiannually accordance applicable accounting standards company recognized notes proceeds received 2007 longterm debt 853 million equity 297 million discount longterm debt amortized life notes using effective interest method discount amortization expense 6 million 49 million 24 million 22 million 45 million years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 respectively included interest expense related notes february 18 2014 notes repaid available funds discount amortization expense net premium 11 million 54 million 23 million 26 million 49 million years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 respectively included interest expense related companys longterm debt december 31 2014 fair value company’s longterm debt exceeded carrying value 13 billion estimated using quoted market prices level 2 measurement applicable accounting standards aggregate maturities longterm debt five years december 31 2014 24 million 14 million 307 million 711 million 10 million respectively december 31 2014 company lines credit totaling 66 billion unused weighted average interest rates shortterm borrowings outstanding december 31 2014 2013 376 424 respectively company’s total lines credit 40 billion support commercial paper borrowing facility commercial paper outstanding december 31 2014 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2014 company outstanding standby letters credit surety bonds december 31 2014 2013 totaling 980 million 795 million respectively company accounts receivable securitization programs “programs” programs provide company 16 billion funding resulting sale accounts receivable december 31 2014 company utilized 16 billion facility programs see note 20 information programs note 11 stock compensation company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2002 2009 incentive compensation plans options issued market value date grant vest incrementally one five years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary option activity 2014 presented weightedaverage remaining contractual term options outstanding exercisable december 31 2014 6 years 5 years respectively aggregate intrinsic value options outstanding exercisable december 31 2014 248 million 158 million respectively weightedaverage grantdate fair values options granted years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 1280 1002 589 698 respectively total intrinsic values options exercised years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 66 million 29 million 1 million 5 million respectively cash proceeds received options exercised years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 93 million 73 million 2 million 7 million respectively december 31 2014 21 million total unrecognized compensation expense related option grants amounts recognized compensation expense next four years 10 million 6 million 3 million 2 million respectively company’s 2002 2009 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2002 2009 incentive compensation plans also provide granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock units vest end threeyear vesting period subject attainment certain future performance criteria based companys adjusted return invested capital compared weighted average cost capital years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 14 million 09 million 13 million 12 million common stock units respectively granted restricted stock awards psus december 31 2014 173 million shares available future grants pursuant 2009 plan fair value restricted stock awards psus determined based market value company’s shares grant date weightedaverage grantdate fair values awards granted years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 4078 3296 2634 2675 respectively archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary restricted stock awards psus activity 2014 presented december 31 2014 44 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three years 27 million 15 million 2 million respectively vesting date total fair value restricted stock awards vested year ended december 31 2014 35 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant compensation expense psus based probability meeting performance criteria total compensation expense option grants restricted stock awards psus recognized years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 55 million 43 million 31 million 34 million 48 million respectively note 12 income expense net following table sets forth items income expense archerdanielsmidland company notes consolidated financial statements continued note 12 income expense net continued individually significant items included table loss derivatives year ended december 31 2014 due losses euro foreign currency derivative contracts entered economically hedge wild flavors acquisition loss derivatives year ended december 31 2013 due losses australian dollar foreign currency derivative contracts entered economically hedge proposed graincorp limited graincorp acquisition gain derivatives six months year ended december 31 2012 relates settlement total return swap instruments related companys investment graincorp see note 4 information gain sale assets year ended december 31 2014 includes gain 156 million upon companys effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units gain 126 million sale fertilizer business gain sale assets six months ended december 31 2012 includes 39 million gain related sale certain company’s exchange membership interests realized gains sales availableforsale marketable securities totaled 8 million 8 million 17 million 38 million year ended december 31 2013 six months ended december 31 2012 2011 year ended june 30 2012 respectively realized gains sales availableforsale marketable securities immaterial year ended december 31 2014 realized losses sales availableforsale marketable securities immaterial periods presented impairment losses securities 6 million 166 million 13 million 25 million years ended december 31 2014 2013 six months ended december 31 2011 year ended june 30 2012 respectively classified asset impairment exit restructuring charges consolidated statements earnings see note 19 information archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes following table sets forth geographic split earnings income taxes significant components income tax follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued significant components deferred tax liabilities assets follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued reconciliation statutory federal income tax rate company’s effective income tax rate earnings follows company historically included amounts received us government form biodiesel credit taxable income federal state income tax returns fourth quarter 2013 internal revenue service released chief counsel advice stipulating biodiesel credits included taxable income based upon chief counsel advice company changed position related credits excluded income years 2011 current year total tax benefit recorded 2013 107 million 55 million relates years prior 2013 company 305 million 329 million tax assets related net operating loss carryforwards certain international subsidiaries december 31 2014 2013 respectively december 31 2014 approximately 274 million assets expiration date remaining 31 million expire various times fiscal 2032 annual usage certain assets limited percentage taxable income respective foreign subsidiary year company recorded valuation allowance 218 million 196 million tax assets december 31 2014 2013 respectively due uncertainty realization fourth quarter 2013 company recorded full valuation allowance net deferred tax assets german subsidiary amount 103 million 82 million equal 012 per share adjusted income attributable minority interest holders management’s establishment valuation allowance resulted combination matters including absence financial performance subsidiary ability generate sufficient taxable income future management continues maintain view subsidiary need valuation allowance fourth quarter 2013 company placed full valuation allowance deferred tax asset related impairment investment graincorp amount 41 million company also placed full valuation allowance impairment assets related sugar business brazil amount 17 million company 21 million tax assets related foreign domestic capital loss carryforwards december 31 2014 company recorded valuation allowance 21 million tax assets december 31 2014 archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company 76 million 26 million tax assets related excess foreign tax credits december 31 2014 2013 respectively begin expire 2015 company 70 million 74 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit december 31 2014 2013 respectively expire various times fiscal 2034 company recorded valuation allowance excess foreign tax credits december 31 2014 due uncertainty realization company recorded valuation allowance 51 million 53 million related state income tax assets net federal tax benefit december 31 2014 2013 respectively company remains subject federal examination us calendar tax years 2013 2014 undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method amounting approximately 86 billion december 31 2014 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings following table sets forth rollforward activity unrecognized tax benefits year ended december 31 2014 2013 follows additions reductions unrecognized tax benefits shown table include effects related net income shareholders’ equity changes unrecognized tax benefits material effect company’s net income cash flow december 31 2014 2013 company accrued interest penalties unrecognized tax benefits 21 million 18 million respectively company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 62 million tax expense period archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company subject routine examination domestic foreign tax authorities frequently faces challenges regarding amount taxes due challenges include positions taken company related timing nature amount deductions allocation income among various tax jurisdictions resolution related tax positions negotiation relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions routine evaluations exposure associated various tax filing positions company recognizes liability necessary estimated potential additional tax owed company accordance applicable accounting standard however company cannot predict provide assurance ultimate outcome ongoing future examinations company’s whollyowned subsidiary adm brasil ltda adm brasil received three separate tax assessments brazilian federal revenue service bfrs challenging tax deductibility commodity hedging losses related expenses tax years 2004 2006 2007 december 31 2014 assessments updated estimated penalties interest variation currency exchange rates totaled approximately 493 million adm brasil’s tax return 2005 also audited assessment received statute limitations 2005 2008 expired bfrs challenge commodity hedging deductions tax years 2008 company estimates could receive additional tax assessments approximately 57 million based currency exchange rates december 31 2014 adm brasil enters commodity hedging transactions result gains included adm brasil’s calculations taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs adm brasil filed administrative appeal assessments second quarter fiscal 2011 appeal panel found favor bfrs 2004 assessment adm brasil filed second level administrative appeal still ongoing january 2012 appeal panel found favor bfrs 2006 2007 assessments adm brasil filed second level administrative appeal still ongoing adm brasil continues unsuccessful administrative appellate process intends file appeals brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company intends vigorously defend position current assessments similar assessments may issued years subsequent 2008 company’s subsidiaries argentina received tax assessments challenging transfer prices used price grain exports totaling 93 million inclusive interest adjusted variation currency exchange rates tax years 2004 2007 argentine tax authorities conducting review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion company believes complied argentine tax laws cannot rule receiving additional assessments challenging transfer prices used price grain exports years subsequent 2007 estimates potential assessments would approximately 325 million december 31 2014 subject variation currency exchange rates company intends vigorously defend position current assessments similar assessments may issued years subsequent 2007 company believes appropriately evaluated transactions underlying assessments concluded based argentine tax law tax position would sustained accordingly company recorded tax liability assessments accordance accounting requirements uncertain tax positions company concluded likely prevail brazil argentina matters based upon technical merits company recorded uncertain tax liability assessments partly taxing jurisdictions processes provide mechanism settling less full amount assessment companys consideration tax assessments requires judgments application income tax regulations specific facts circumstances final outcome matters cannot reliably predicted may take many years resolve could result financial impacts entire amount assessments archerdanielsmidland company notes consolidated financial statements continued note 14 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2044 rent expense years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 224 million 199 million 106 million 103 million 209 million respectively additional amounts incurred charges pertaining time charters ocean going vessels accounted leases years ended december 31 2014 2013 six months ended december 31 2012 2011 year ended june 30 2012 136 million 147 million 62 million 76 million 164 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows note 15 employee benefit plans company provides substantially us employees certain foreign subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage others provided health care reimbursement accounts described august 5 2014 company amended us qualified pension plans began notifying certain eligible individuals offer pay individuals’ pension benefit lump sum individuals eligible voluntary lump sum payment option generally retirees surviving joint annuitants beneficiaries alternate payees us qualified pension plans currently receiving payment commenced benefit prior june 30 2014 voluntary lump sum amounted 296 million reduced companys global pension benefit obligation 336 million resulting net improvement pension underfunding 40 million company incurred noncash pretax income statement charge 98 million quarter ended december 31 2014 result requirement expense unrealized actuarial losses recognized accumulated comprehensive income loss pertaining liabilities settled december 31 2014 company maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest adm stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 11 million shares company common stock december 31 2014 market value 596 million cash dividends received shares company common stock plans year ended december 31 2014 12 million archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued 1 see note 19 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued prior december 31 2012 company used june 30 measurement date defined benefit plans result change fiscal year end see note 1 company changed measurement date defined benefit plans december 31 effective transition period ended december 31 2012 following tables set forth changes defined benefit obligation fair value defined benefit plan assets years ended december 31 2014 2013 included accumulated comprehensive income pension benefits december 31 2014 unrecognized actuarial loss 983 million yet recognized net periodic pension cost prior service cost actuarial loss included accumulated comprehensive income expected recognized net periodic pension cost 2015 2 million 68 million respectively archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued included accumulated comprehensive income postretirement benefits december 31 2014 following amounts yet recognized net periodic pension cost unrecognized prior service credit 85 million unrecognized actuarial loss 80 million prior service credit 18 million actuarial loss 7 million included accumulated comprehensive income expected recognized net periodic benefit cost 2015 following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations december 31 2014 new mortality table used estimate anticipated mortality rates contributed increase projected benefit obligations approximately 02 billion projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 29 billion 26 billion 17 billion respectively december 31 2014 22 billion 20 billion 16 billion respectively december 31 2013 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 28 billion 25 billion 17 billion respectively december 31 2014 21 billion 19 billion 16 billion respectively december 31 2013 accumulated benefit obligation pension plans december 31 2014 2013 30 billion 26 billion respectively postretirement benefit measurement purposes 725 annual rate increase per capita cost covered health care benefits assumed year ended december 31 2014 rate assumed decrease gradually 5 2024 remain level thereafter credits used fund certain retirees health reimbursement accounts indexed maximum 3 per year 1 change assumed health care cost trend rates would following effects 1 increase 1 decrease millions effect combined service interest cost components 1 effect accumulated postretirement benefit obligations 7 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts based cumulative net asset value nav underlying investments ccts comprised international equity funds small cap us equity fund large cap us equity funds fixed income funds fund units valued nav based closing market value units bought sold valuation date classified level 2 fair value hierarchy ccts seek primarily provide investment results approximating aggregate price dividend performance total return income stream underlying investments funds issuances redemptions certain cct investments may restricted date andor amount corporate debt instruments corporate debt instruments valued closing price reported active market traded classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth level within fair value hierarchy fair value plan assets december 31 2014 2013 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 62 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt securities target asset allocation company’s us pension plans approximately actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 38 equity securities 60 debt securities 2 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans hold shares company common stock december 31 2014 2013 measurement dates investment objectives company’s plan assets • optimize longterm return plan assets acceptable level risk • maintain broad diversification across asset classes among investment managers • maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments based actuarial calculations company expects contribute 38 million pension plans 12 million postretirement benefit plan 2015 company may elect make additional discretionary contributions period archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following benefit payments reflect expected future service expected paid benefit plans note 16 shareholders equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued december 31 2014 2013 company approximately 794 million shares 575 million shares respectively common shares treasury stock 27 billion 16 billion december 31 2014 2013 respectively recorded cost reduction common stock included foreign currency translation adjustment component aoci 43 million net tax loss pertaining foreign currencydenominated debt designated net investment hedge october 27 2014 following tables set forth changes aoci component reclassifications aoci years ended december 31 2014 2013 archerdanielsmidland company notes consolidated financial statements continued note 16 shareholders equity continued note 17 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations organized managed classified three reportable business segments oilseeds processing corn processing agricultural services segments organized based upon nature products services offered company’s remaining operations reportable segments defined asc topic 280 segment reporting classified fourth quarter 2014 company completed acquisition wild flavors sci making company one world’s leading flavors specialty ingredients companies effective january 1 2015 company formed fourth reportable business segment wild flavors specialty ingredients results wild flavors sci reported 2014 results material company archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds oilseeds processing segment also includes activities related procurement transportation processing cocoa beans cocoa liquor cocoa butter cocoa powder chocolate various compounds north america south america europe asia africa food processing industry europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment produces natural health nutrition products specialty food feed ingredients oilseeds processing segment major supplier peanuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets south america oilseeds processing segment operates fertilizer blending facilities oilseeds processing segment also includes company’s share results equity investment wilmar share results stratas foods llc edible oils limited joint ventures company’s corn processing segment engaged corn wet milling dry milling activities asset base primarily located central part united states corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids specialty food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include amino acids lysine threonine vital compounds used swine feeds produce leaner animals poultry feeds enhance speed efficiency poultry production corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing products include citric lactic acids lactates sorbitol xanthan gum glycols used various food industrial products corn processing segment includes activities propylene ethylene glycol facility company’s brazilian sugarcane ethanol plant related operations segment also includes company’s share results equity investments almidones mexicanos sa eaststarch cv red star yeast company llc agricultural services segment utilizes extensive us grain elevator global transportation network port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail freight services agricultural services segment also includes activities related processing wheat flour processing distribution formula feeds animal health nutrition products procurement processing distribution edible beans agricultural services segment includes activities alfred c toepfer international toepfer global merchant agricultural commodities processed products june 6 2014 company announced completed acquisition remaining 20 interest toepfer agricultural services segment also includes company’s 322 share results pacificor formerly kalama export company llc joint venture returns associated companys 198 investment graincorp prior december 2012 company 232 interest gruma sab de cv gruma world’s largest producer marketer corn flour tortillas additionally company joint ventures corn flour wheat flour mills gruma december 2012 company sold 232 interest gruma grumarelated joint ventures includes activities wild flavors sci company’s remaining operations primarily financial business units related principally futures commission merchant insurance activities archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included segment operating profit equity earnings affiliates based equity method accounting certain corporate items allocated company’s reportable business segments corporate results principally include impact liforelated adjustments unallocated corporate expenses interest cost net investment income company’s share results equity investment corporate results also include aftertax elimination income attributable mandatorily redeemable interests consolidated subsidiaries except calendar year 2012 put options related interests expired results included noncontrolling interest company acquired remaining 20 interest toepfer second quarter 2014 thus longer requiring elimination income attributable minority shareholder june 30 2014 archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued segment information archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued geographic information following geographic data include revenues attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment note 18 assets liabilities held sale september 2 2014 company announced sale global chocolate business cargill inc 440 million subject regulatory approval customary conditions december 15 2014 company also announced reached agreement sell global cocoa business olam international limited 13 billion subject customary conditions transactions expected close 2015 assets liabilities subject purchase sale agreements classified held sale companys consolidated balance sheet december 31 2014 global chocolate cocoa businesses meet criteria classified discontinued operations december 31 2014 amended guidance asc topics 205 360 company early adopted october 1 2014 businesses comprise major component companys operations assets liabilities classified held sale required recorded lower carrying value fair value less costs sell december 31 2014 carrying value cocoa chocolate assets less fair value less costs sell accordingly adjustment asset value necessary gain loss disposal along continuing operations disposal group reported oilseeds processing segment archerdanielsmidland company notes consolidated financial statements continued note 18 assets liabilities held sale continued major classes assets liabilities held sale follows note 19 asset impairment exit restructuring costs following table sets forth charges included asset impairment exit restructuring costs 1 relocation restructuring costs recognized year ended december 31 2014 consisted costs associated relocation company’s global headquarters chicago illinois 16 million restructuring charges related wild flavors acquisition toepfer integration following acquisition minority interest restructuring charges 48 million year ended june 30 2012 costs primarily consisted 37 million onetime termination benefits provided employees involuntarily terminated 34 million pension postretirement remeasurement charges triggered amendment companys us plans due voluntary early retirement program 2 part company’s ongoing portfolio management company decided divest interests gruma sab de cv related joint ventures “gruma” result company’s equity method investments gruma evaluated impairment quarter ended september 30 2012 company recorded 146 million pretax asset impairment charge 016 per share tax investments gruma comparing carrying value including 123 million cumulative unrealized foreign currency translation losses estimated fair value fair value estimated based negotiations resulted company entering nonbinding letter intent sell interests gruma third party october 16 2012 company sold interest gruma december 2012 archerdanielsmidland company notes consolidated financial statements continued note 19 asset impairment exit restructuring costs continued 3 asset impairment charge equity securities fiscal year ended december 31 2014 six months ended december 31 2011 year ended june 30 2012 consisted otherthantemporary investment writedowns available sale securities corporate asset impairment charge equity securities fiscal year ended december 31 2013 consisted otherthantemporary impairment charges 155 million companys graincorp investment agricultural services segment 11 million one available sale security corporate 4 company recognized goodwill impairment charge related brazilian sugar milling business corn processing segment fiscal year ended december 31 2013 5 asset impairments fiscal year ended december 31 2014 consisted property plant equipment asset impairments 3 million oilseeds processing segment 15 million corn processing segment 17 million agricultural services segment asset impairments fiscal year ended december 31 2013 consisted property plant equipment asset impairments 4 million oilseeds processing segment 62 million corn processing segment 3 million agricultural services segment 15 million corporate asset impairments six months ended december 31 2011 consisted asset impairment charges costs related exit clinton ia bioplastics facility corn processing segment asset impairment charges fiscal year ended june 30 2012 consisted asset impairment charges costs 349 million related exit clinton ia bioplastics walhalla nd ethanol facilities corn processing segment facility exitrelated costs 4 million corporate note 20 sale accounts receivable since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 12 billion amended additional amount upon collection accounts receivable deferred consideration program terminates june 26 2015 unless extended march 2014 company entered second accounts receivable securitization program “second program” certain commercial paper conduit purchasers committed purchasers collectively “second purchasers” second program certain nonusoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm ireland receivables company “adm ireland receivables” adm ireland receivables turn transfers purchased accounts receivable entirety second purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm ireland receivables receives cash payment 04 billion additional amount upon collection accounts receivable deferred consideration second program terminates march 20 2015 unless extended program second program collectively “programs” adm receivables adm ireland receivables use cash proceeds transfer receivables purchasers second purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2014 2013 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold archerdanielsmidland company notes consolidated financial statements continued note 20 sale accounts receivable continued december 31 2014 2013 fair value trade receivables transferred purchasers programs derecognized company’s consolidated balance sheet 21 billion 19 billion respectively exchange transfer december 31 2014 2013 company received cash 16 billion 11 billion recorded receivable deferred consideration included current assets 05 billion 08 billion respectively cash collections customers receivables sold 364 billion 398 billion 219 billion 89 billion years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 respectively amount 351 billion 398 billion 219 billion 89 billion pertain cash collections deferred consideration years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 respectively deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases program company’s risk loss following transfer accounts receivable program limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant transfers receivables program years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 resulted expense loss sale 5 million 4 million 4 million 4 million respectively classified selling general administrative expenses consolidated statements earnings company reflects cash flows related program operating activities consolidated statements cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables note 21 legal proceedings guarantees commitments company routinely involved number actual threatened legal actions including involving alleged personal injuries employment law product liability intellectual property environmental issues alleged tax liability see note 13 information tax matters class actions company also routinely receives inquiries regulators government authorities relating various aspects business including respect compliance laws regulations relating environment given time company matters various stages resolution applicable government authorities outcomes matters within complete control may known prolonged periods time actions claimants seek damages well relief including injunctive relief could require significant expenditures result lost revenues accordance applicable accounting standards company records liability consolidated financial statements material loss contingencies loss known considered probable amount reasonably estimated reasonable estimate known probable loss range amount within range better estimate minimum amount range accrued material loss contingency reasonably possible known probable reasonably estimated loss range loss disclosed notes consolidated financial statements determining estimated loss range loss significant judgment required estimate amount timing loss recorded estimates probable losses resulting litigation governmental proceedings involving company inherently difficult predict particularly matters early procedural stages incomplete facts legal discovery involve unsubstantiated indeterminate claims damages potentially involve penalties fines disgorgement punitive damages could result change business practice april 22 2011 certain manufacturers distributors sugar cane beet sugar products filed suit us district court central district california company manufacturers marketers highfructose corn syrup hfcs corn refiners association alleging defendants falsely claimed hfcs “natural” nutritionally equivalent sugar defendants filed counterclaims plaintiffs parties currently engaged pretrial proceedings archerdanielsmidland company notes consolidated financial statements continued note 21 legal proceedings guarantees commitments continued company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations contingent obligations totaled 27 million december 31 2014 note 22 quarterly financial data unaudited net earnings attributable controlling interests second quarter fiscal year ended december 31 2014 include relocation restructuring costs associated relocation company’s global headquarters chicago illinois costs related integration toepfer following acquisition noncontrolling interest restructuring charges totaling 20 million aftertax equal 003 per share discussed note 19 net earnings attributable controlling interests third quarter fiscal year ended december 31 2014 include aftertax gain sale 97 million equal 015 per share upon companys effective dilution pacificor formerly kalama export company joint venture resulting contribution additional assets another member exchange new equity units discussed note 12 aftertax loss euro foreign exchange hedges 63 million equal 010 per share discussed note 12 net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2014 include restructuring costs related wild flavors acquisition 21 million aftertax equal 003 per share discussed note 19 aftertax gain sale assets related sale fertilizer business asset 89 million equal 014 per share discussed note 12 aftertax asset impairment charges related certain fixed assets 26 million equal 004 per share discussed note 19 aftertax charge 61 million equal 009 per share related pension settlements aftertax biodiesel blending credits 61 million equal 009 per share recognized upon approval relevant legislation fourth quarter related prior quarters 2014 archerdanielsmidland company notes consolidated financial statements continued note 22 quarterly financial data unaudited continued net earnings attributable controlling interests first quarter fiscal year ended december 31 2013 include aftertax fcpa charge 17 million equal 003 per share net earnings attributable controlling interests second quarter fiscal year ended december 31 2013 include aftertax fcpa charge 20 million equal 003 per share aftertax loss australian dollar foreign exchange hedges 32 million equal 005 per share discussed note 12 net earnings attributable controlling interests third quarter fiscal year ended december 31 2013 include aftertax gain australian dollar foreign exchange hedges 16 million equal 002 per share discussed note 12 aftertax asset impairment charges related certain fixed assets 8 million equal 001 per share discussed note 19 aftertax otherthantemporary writedown investment 7 million equal 001 per share discussed note 19 net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2013 include aftertax loss australian dollar foreign exchange hedges 9 million equal 001 per share discussed note 12 aftertax asset impairment charges related certain fixed assets 61 million equal 009 per share discussed note 19 aftertax goodwill impairment charge 9 million equal 002 per share discussed note 19 aftertax otherthantemporary writedown graincorp 155 million equal 023 per share discussed note 19 aftertax graincorprelated charges 3 million equal 001 per share valuation allowance certain deferred tax assets 82 million equal 012 per share income tax benefit recognized current period 84 million equal 013 per share related biodiesel blending credits prior periods effective tax rate adjustment due change annual effective tax rate prior yeartodate earnings 21 million equal 003 per shareand aftertax charges 3 million equal 001 per share note 23 subsequent event february 3 2015 company announced reached agreement sell 50 percent stake export terminal barcarena northern brazilian state pará glencore plc report independent registered public accounting firm board directors shareholders archerdanielsmidland company decatur illinois audited accompanying consolidated balance sheets archerdanielsmidland company december 31 2014 2013 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows years ended december 31 2014 2013 sixmonth period ended december 31 2012 year ended june 30 2012 audits also included financial statement schedule listed index item 15a2 financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archerdanielsmidland company december 31 2014 2013 consolidated results operations cash flows years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein also audited accordance standards public company accounting oversight board united states archerdanielsmidland company’s internal control financial reporting december 31 2014 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework report dated february 20 2015 expressed unqualified opinion thereon ernst young llp st louis missouri february 20 2015 report independent registered public accounting firm board directors shareholders archerdanielsmidland company decatur illinois audited archerdanielsmidland company’s company internal control financial reporting december 31 2014 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework coso criteria archerdanielsmidland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate indicated accompanying managements report internal control financial reporting managements assessment conclusion effectiveness internal control financial reporting include internal controls wild flavors gmbh specialty commodities inc included 2014 consolidated financial statements archerdanielsmidland company constituted 64 91 total net assets respectively december 31 2014 04 28 revenues net income respectively year ended audit internal control financial reporting archerdanielsmidland company also include evaluation internal control financial reporting wild flavors gmbh specialty commodities inc opinion archerdanielsmidland company maintained material respects effective internal control financial reporting december 31 2014 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archerdanielsmidland company december 31 2014 2013 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows years ended december 31 2014 2013 six months ended december 31 2012 year ended june 30 2012 archerdanielsmidland company report dated february 20 2015 expressed unqualified opinion thereon ernst young llp st louis missouri february 20 2015 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated statements comprehensive income loss consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated statements comprehensive income loss see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products principles consolidation consolidated financial statements include accounts company subsidiaries significant intercompany accounts transactions eliminated company consolidates entities including variable interest entities vies controlling financial interest vies company assesses whether primary beneficiary defined applicable accounting standard investments affiliates including vies company exercises significant influence control investee primary beneficiary investee’s activities carried cost plus equity undistributed earnings since acquisition adjusted appropriate basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain vies included using recent available financial statements case financial statements within 93 days company’s year end consistent period use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassification company classified 71 million intangible amortization selling general administrative expenses year ended december 31 2016 prior period amounts 29 million 26 million years ended december 31 2015 2014 respectively reclassified income expense net consolidated statements earnings note 12 conform current presentation cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements lending arrangements segregated balances represent deposits received customers company’s registered futures commission merchant securities pledged commodity exchange clearinghouses cash securities pledged security certain insurance lending arrangements segregated cash also includes restricted cash held collateral various insurance programs companys captive insurance business segregated cash investments primarily consist cash united states government securities moneymarket funds receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 72 million 70 million december 31 2016 2015 respectively reflect loss anticipated accounts receivable balances company estimates allowance based history writeoffs level pastdue accounts relationships economic status customers portions allowance uncollectible accounts recorded trade receivables current assets archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates december 31 2016 2015 232 million 35 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods market following table sets forth company’s inventories december 31 2016 2015 fair value measurements company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date company uses market approach valuation technique measure majority assets liabilities carried fair value three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies contract level 3 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period derivatives company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet unrealized gains reported current assets unrealized losses reported accrued expenses payables accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments changes fair value derivatives recognized earnings immediately derivative instruments designated qualify hedging instruments company designates hedging instrument based upon exposure hedged fair value hedge cash flow hedge derivative instruments designated qualify cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk effective portion gain loss derivative instrument reported component accumulated comprehensive income aoci reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings remaining gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value hedged item recognized consolidated statement earnings current period marketable securities company classifies marketable securities availableforsale securities carried fair value unrealized gains losses net income taxes reported component aoci company monitors investments impairment periodically recognizes impairment charge decline fair value investment judged otherthantemporary company uses specific identification method securities sold reclassified aoci earnings company considers marketable securities maturing less one year shortterm marketable securities classified longterm property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 15 40 years machinery equipment 3 40 years company capitalized interest major construction projects progress 20 million 11 million 18 million years ended december 31 2016 2015 2014 respectively archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued income taxes company accounts income tax positions accordance applicable accounting standards liability method used accounting income taxes deferred tax assets liabilities recorded temporary differences tax basis assets liabilities reported amounts consolidated financial statements using statutory rates effect year differences expected reverse effect deferred tax assets liabilities change tax rates recorded results operations period includes enactment date law applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests definitelived intangible assets amortized estimated useful lives 2 50 years reviewed impairment whenever indicators carrying value assets may fully recoverable company’s accounting policy evaluate goodwill intangible assets indefinite lives impairment october 1 fiscal year whenever indicators carrying value assets may fully recoverable company recorded impairment charges goodwill intangibles totaling 11 million related computer software 21 million related computer software certain company’s international oilseeds processing facilities facility corn processing segment years ended december 31 2016 2015 respectively impairment charges recorded goodwill intangible assets year ended december 31 2014 asset abandonments writedowns company evaluates longlived assets impairment whenever indicators impairment exist assets written fair value consideration company’s ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value fair value generally based discounted cash flow analysis relies management’s estimate market participant assumptions level 3 measurement applicable accounting standards years ended december 31 2016 2015 2014 impairment charges 17 million 108 million 35 million respectively see note 18 additional information payables brokerage customers payables brokerage customers represent total customer accounts company’s futures commission merchant credit positive balances customer accounts used primarily connection commodity transactions include gains losses open commodity trades well securities deposits made margins purpose required company exchangeclearing organizations counterparties payables brokerage customers corresponding balance segregated cash investments customer omnibus receivable current assets revenues company follows policy recognizing sales revenue time delivery product following occurred sales agreement place pricing fixed determinable collection reasonably assured company sales contracts allow pricing occur title goods passed customer cases company continues report goods inventory recognizes sales revenue price determined freight costs handling charges related sales recorded component cost products sold net sales unconsolidated affiliates years ended december 31 2016 2015 2014 42 billion 50 billion 58 billion respectively archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued stock compensation company recognizes expense stock compensation based fair value awards granted company’s stock compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related stock compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 123 million 122 million 79 million years ended december 31 2016 2015 2014 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method business combinations company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended assets acquired liabilities assumed based preliminary purchase price allocations adjusted fair values acquisition date remainder purchase price recorded goodwill measurement period may take one year acquisition date adjustments assets acquired liabilities assumed may recorded upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first subsequent adjustments charged consolidated statements earnings adoption new accounting standards effective january 1 2016 company adopted amended guidance accounting standards codification asc topic 805 business combinations simplifies accounting adjustments made provisional amounts recognized business combination amended guidance requires acquirer recognize adjustments provisional amounts identified measurement period reporting period adjustment amounts determined effect earnings changes depreciation amortization income effects result change provisional amounts calculated accounting completed acquisition date shall recorded period’s financial statements amended guidance also requires entity present separately face income statement disclose notes portion amount recorded currentperiod earnings line item would recorded previous reporting periods adjustment provisional amounts recognized acquisition date adoption amended guidance significant impact company’s financial results effective january 1 2016 company adopted accounting standards update 201609 amended guidance asc topic 718 compensation stock compensation simplify accounting sharebased payment award transactions areas simplification include income tax consequences classification awards either equity liabilities classification statement cash flows adoption amended guidance significant impact company’s financial results archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective october 1 2016 company adopted amended guidance asc 230 statement cash flows topic 230 intended clarify entities present restricted cash restricted cash equivalents statement cash flows address diversity certain cash receipts cash payments presented classified statement cash flows amended guidance requires entities show changes total cash equivalents restricted cash restricted cash equivalents statement cash flows reconciliation totals statement cash flows related captions balance sheet either face statement cash flows notes financial statements amendments also provide guidance application predominance principle presentation classification debt prepayments debt extinguishment costs settlement zerocoupon debt instruments debt instruments coupon interest rates insignificant relation effective interest rate borrowing contingent consideration payments made business combination proceeds settlement insurance claims proceeds settlement corporateowned life insurance policies distributions received equity method investees beneficial interests securitization transactions separately identifiable cash flows adoption amended guidance pertaining restricted cash restricted cash equivalents resulted expanded disclosures decrease 11 million 19 million total cash provided operating activities years ended december 31 2015 2014 respectively increase 93 million 104 million ending balances cash equivalents restricted cash restricted cash equivalents december 31 2015 2014 respectively change cash flow presentation adoption amendments significant impact companys consolidated statement cash flows pending accounting standards effective january 1 2017 company required adopt amended guidance asc topic 330 inventory simplifies measurement inventory amended guidance requires entity measure costbased inventory lower cost net realizable value net realizable value estimated selling price ordinary course business less reasonably predictable costs completion disposal transportation company expect adoption amended guidance significant impact company’s financial results effective january 1 2017 company required adopt amended guidance asc topic 323 investments equity method joint ventures simplifies transition equity method accounting amended guidance eliminates requirement investor adjust investment results operations retained earnings retroactively investment qualifies equity method accounting result increase level ownership interest degree influence amendments require investor add cost acquiring additional interest investee current basis investors’ previously held interest adopt equity method accounting date investment becomes qualified equity method accounting company expect adoption amended guidance significant impact company’s financial results effective january 1 2017 company required adopt amended guidance asc topic 810 consolidation affects reporting entities required evaluate whether consolidate variable interest entity certain situations involving entities common control amended guidance changes evaluation whether reporting entity primary beneficiary variable interest entity changing reporting entity single decision maker variable interest entity treats indirect interests entity held related parties common control reporting entity company required adopt amended guidance using retrospective transition approach periods presented company expect adoption amended guidance result deconsolidation variable interest entities effective january 1 2018 company required adopt amended guidance asc subtopic 82510 financial instruments overall intended improve recognition measurement financial instruments amended guidance requires entity measure equity investments except accounted equity method accounting result consolidation investee fair value changes fair value recognized net income simplify impairment assessment equity investments without readily determinable fair values using qualitative assessment identify impairment company expect adoption amended guidance significant impact company’s financial results archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective january 1 2018 company required adopt new guidance asc topic 606 revenue contracts customers topic 606 supersede revenue recognition requirements asc topic 605 revenue recognition topic 606 requires company recognize revenue depict transfer promised goods services customers amount reflects consideration entity expects entitled exchange goods services new guidance requires company apply following steps 1 identify contract customer 2 identify performance obligations contract 3 determine transaction price 4 allocate transaction price performance obligations contract 5 recognize revenue company satisfies performance obligation company required adopt topic 606 either full retrospective basis prior reporting period presented modified retrospective basis cumulative effect initially applying new guidance recognized date initial application company adopt topic 606 modified retrospective basis required provide additional disclosures amount financial statement line item affected current reporting period compared guidance effect change explanation reasons significant changes adoption new guidance require expanded disclosures company’s consolidated financial statements company established crossfunctional implementation team consisting representatives business segments company utilized surveys gather information identify areas business potential differences could result applying requirements new standard revenue contracts results surveys indicate potential differences area control transfer initial impact assessment also indicates majority companys contracts continue recognized point time number performance obligations accounting variable consideration expected significantly different current practice many companys sales contracts considered derivatives asc topic 815 derivatives hedging therefore excluded scope topic 606 company scheduled conduct workshops gather information nature magnitude frequency underlying transactions drove survey responses resulting identification potential issues workshops expected completed end first quarter 2017 company expects assessment financial impact new guidance consolidated financial statements mid 2017 effective january 1 2018 company required adopt amended guidance asc topic 740 income taxes requires entities recognize income tax consequences intraentity transfer inventory transfer occurs current accounting rules entities prohibited recognizing current deferred income taxes intraentity asset transfer asset sold outside party amended guidance change accounting pretax effects intraentity asset transfer intraentity transfer inventory company required adopt amended guidance modified retrospective approach basis cumulative effect adjustment retained earnings beginning period adoption early adoption permitted beginning annual period company expect adoption amended guidance significant impact companys financial results effective january 1 2019 company required adopt new guidance asc topic 842 leases topic 842 supersede asc topic 840 leases topic 842 requires lessees recognize assets liabilities leases lease terms 12 months company expects adopt topic 842 using modified retrospective transition approach leases existing entered beginning earliest comparative period presented financial statements company yet completed assessment impact new guidance consolidated financial statements effective january 1 2020 company required adopt amended guidance asc topic 326 financial instruments credit losses intended improve financial reporting requiring timely recording credit losses loans financial instruments held financial institutions organizations amended guidance requires measurement expected credit losses financial assets held reporting date based historical experience current conditions reasonable supportable forecasts early adoption permitted fiscal years interim periods within fiscal years beginning december 15 2018 company expect adoption amended guidance significant impact company’s financial results archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions operating results acquisitions included company’s financial statements date acquisition fiscal year 2016 acquisitions year ended december 31 2016 company acquired 90 interest harvest innovations industry leader minimally processed expellerpressed soy proteins oils glutenfree ingredients 50 interest cairobased medsofts group joint venture owns manages merchandising supply chain operations caterina foods leading toll manufacturer specialty glutenfree highprotein pastas casablanca moroccobased corn wet mill produces glucose native starch aggregate cost 141 million cash aggregate purchase price acquisitions net cash acquired 11 million preliminarily allocated working capital property plant equipment goodwill intangible assets longterm assets longterm liabilities redeemable noncontrolling interest 15 million 23 million 72 million 41 million 34 million 17 million 38 million respectively remaining 10 interest harvest innovations recorded longterm liabilities accounted mandatorily redeemable interest company agreed acquire following two years operations company option three years date acquisition acquire remaining 50 interest medsofts group based fixed multiple earnings taxes interest depreciation amortization last twelve months threeyear period company elect exercise option noncontrolling interest holder option put 50 interest company similar though discounted terms company records 50 remaining interest temporary equity redeemable noncontrolling interest fiscal year 2015 acquisitions november 2 2015 company completed acquisition remaining 50 percent interest eaststarch cv acquisition includes corn wet mills bulgaria turkey 50 percent stake wet mill hungary enhancing company’s capabilities serve customers around world 2015 post acquisition financial results eaststarch cv reported corn processing segment year ended december 31 2015 company acquired four businesses including remaining interest eaststarch cv described total cost 508 million purchase price net cash acquired 29 million plus acquisitiondate fair values company’s previously held equity interests 385 million eaststarch cv 64 million north star shipping minmetal included others preliminarily allocated follows archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued year ended december 31 2015 company recognized pretax gains 185 million eaststarch cv transaction 27 million north star shipping minmetal transaction included others representing difference carrying values acquisitiondate fair values company’s previously held equity interests acquisition date fair value determined based discounted cash flow analysis using market participant assumptions level 3 measurement applicable accounting standards goodwill recorded connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses following table sets forth preliminary fair values weighted average useful lives intangible assets acquired company’s consolidated statement earnings year ended december 31 2015 includes post acquisition results acquired businesses immaterial 2016 finalization purchase price allocation related acquisition eaststarch cv resulted increases goodwill intangibles 38 million 4 million respectively corresponding decrease longterm liabilities finalization purchase price allocations related acquisitions result material adjustments 2016 archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued fiscal year 2014 acquisitions october 1 2014 november 18 2014 company completed acquisitions wild flavors businesses wild flavors specialty commodities inc sci respectively acquisitions line company’s strategy increase returns reduce earnings volatility growth specialty ingredient offerings 2014 post acquisition financial results wild flavors sci reported wild flavors specialty ingredients segment year ended december 31 2014 company acquired six businesses including wild flavors sci total cost 30 billion purchase price net cash acquired 280 million preliminarily allocated follows goodwill recorded connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses 18 billion preliminarily allocated goodwill 15 million expected deductible tax purposes following table sets forth preliminary fair values weighted average useful lives intangible assets acquired company’s consolidated statement earnings year ended december 31 2014 includes post acquisition results wild flavors immaterial archerdanielsmidland company notes consolidated financial statements continued note 2 acquisitions continued 2015 finalization purchase price allocation related acquisition wild flavors resulted increase goodwill 123 million corresponding decreases intangibles longterm liabilities finalization purchase price allocations related acquisitions result material adjustments 2015 note 3 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis december 31 2016 2015 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets market valuations company’s inventories adjusted location quality exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade unobservable inputs significant impact measurement fair value inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold derivative contracts include exchangetraded commodity futures option contracts forward commodity purchase sale contracts otc instruments related primarily agricultural commodities energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact 10 measurement fair value contract classified level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component revenues cost products sold income expensenet effective portions changes fair value derivatives designated cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss hedged items recorded earnings probable hedged transaction longer occur archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued company’s cash equivalents comprised money market funds valued using quoted market prices classified level 1 company’s marketable securities comprised equity investments us treasury securities obligations us government agencies debt securities publicly traded equity investments us treasury securities valued using quoted market prices classified level 1 us government agency obligations corporate municipal debt securities valued using thirdparty pricing services substantially classified level 2 unrealized changes fair value availableforsale marketable securities recognized consolidated balance sheets component accumulated comprehensive income loss unless decline value deemed otherthantemporary point decline recorded earnings company’s segregated investments comprised us treasury securities us treasury securities valued using quoted market prices classified level 1 company deferred consideration accounts receivable securitization programs “programs” represents note receivable purchasers programs amount reflected current assets consolidated balance sheet see notes 6 19 company carries deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 years ended december 31 2016 2015 1 includes gains 138 million attributable change unrealized gains relating level 3 assets still held december 31 2016 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued 1 includes losses 578 million attributable change unrealized losses relating level 3 liabilities still held december 31 2016 1 includes gains 297 million attributable change unrealized gains relating level 3 assets still held december 31 2015 archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued 1 includes losses 328 million attributable change unrealized losses relating level 3 liabilities still held december 31 2015 periods presented company transfers levels 1 2 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 cases price components inventories commodity purchase sale contracts observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components determined specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations december 31 2016 2015 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component weighted average 165 total price assets 671 liabilities archerdanielsmidland company notes consolidated financial statements continued note 3 fair value measurements continued certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations absent corroborating evidence company considers price quotes 100 percent unobservable therefore fair value items reported level 3 note 4 derivative instruments hedging activities derivatives designated hedging instruments majority company’s derivative instruments designated hedging instruments company uses exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets derivatives including exchange traded contracts physical purchase sale contracts inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore fair values changes fair values inventories included tables following table sets forth fair value derivatives designated hedging instruments december 31 2016 2015 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended december 31 2016 2015 2014 company recognized 102 million pretax foreign exchange hedging losses euro foreign currency derivative contracts entered economically hedge wild flavors acquisition archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately component cost products sold derivatives designated cash flow fair value hedging strategies december 31 2016 2015 company certain derivatives designated cash flow hedges fair value hedges company uses interest rate swaps designated fair value hedges protect fair value fixedrate debt due changes interest rates changes fair value interest rate swaps underlying fixedrate debt recorded income expense net terms interest rate swaps match terms underlying debt resulting ineffectiveness december 31 2016 company 11 million current assets representing fair value interest rate swaps corresponding increase underlying debt amount impact earnings commodity hedge programs described derivatives designated cash flow hedges assuming normal market conditions changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either revenues cost products sold interest expense income expense net applicable december 31 2016 company 10 million aftertax losses aoci related gains losses commodity cash flow hedge transactions company expects recognize 10 million losses consolidated statement earnings next 12 months company uses futures options contracts fix purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 76 million bushels corn per month past 12 months company hedged 17 62 monthly anticipated grind december 31 2016 company designated hedges representing 15 39 anticipated monthly grind corn next 12 months company time also uses futures options swaps fix sales price certain ethanol sales contracts company established hedging programs ethanol sales contracts indexed unleaded gasoline prices various exchangetraded ethanol contracts objective hedging programs reduce variability cash flows associated company’s sales ethanol past 12 months company hedged 0 66 million gallons ethanol sales per month programs december 31 2016 company designated hedges representing 0 21 million gallons ethanol sales per month next 12 months following tables set forth fair value derivatives designated hedging instruments december 31 2016 2015 archerdanielsmidland company notes consolidated financial statements continued note 4 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended december 31 2016 2015 2014 respectively hedge ineffectiveness commodity contracts results change price underlying commodity specific cash market differs change price derivative financial instrument used establish hedging relationship example change price corn futures contract strongly correlated change cash price paid corn gain loss derivative instrument deferred recognized time corn grind occurs change price derivative strongly correlate change cash price corn example portion derivative gains losses may required recognized earnings prior corn grind occurring net investment hedging strategies june 24 2015 company issued €500 million aggregate principal amount floating rate notes €600 million aggregate principal amount 175 notes collectively “notes” see note 10 information notes company designated €11 billion notes hedge net investment foreign subsidiary december 31 2016 company 40 million aftertax gains aoci related gains losses net investment hedge transaction amount deferred aoci underlying investment divested archerdanielsmidland company notes consolidated financial statements continued note 5 marketable securities following table sets forth items shortterm longterm investments 1 million unrealized losses december 31 2016 arose within last 12 months related company’s investment one availableforsale debt security fair value 42 million contractual terms investment permit issuer settle securities price less amortized cost basis investment company intend sell investment likely required sell investment recovery amortized cost basis may maturity company consider investment otherthantemporarily impaired december 31 2016 information otherthan temporary impairment charges see note 18 december 2016 company sold 198 ownership interest graincorp a387 million us288 million investment classified availableforsale equity security december 31 2015 table archerdanielsmidland company notes consolidated financial statements continued note 6 current assets following table sets forth items current assets 1 company provides financing suppliers primarily brazilian farmers finance portion suppliers’ production costs amounts reported net allowances 7 million 8 million december 31 2016 2015 respectively interest earned financing receivables 22 million 23 million 23 million years ended december 31 2016 2015 2014 respectively included interest income consolidated statements earnings 2 nontrade receivables include 223 million 272 million reinsurance recoverables december 31 2016 2015 respectively note 7 accrued expenses payables following table sets forth items accrued expenses payables archerdanielsmidland company notes consolidated financial statements continued note 8 investments advances affiliates company applies equity method accounting investments investees company ability exercise significant influence including company’s 232 190 share ownership wilmar december 31 2016 2015 respectively company 59 58 unconsolidated domestic foreign affiliates december 31 2016 2015 respectively following table summarizes combined balance sheets december 31 2016 2015 combined statements earnings company’s unconsolidated affiliates years ended december 31 2016 2015 2014 company’s share undistributed earnings unconsolidated affiliates december 31 2016 19 billion company direct investment foreign equity method investee carrying value 32 billion december 31 2016 market value 36 billion based active market quoted prices converted us dollars applicable exchange rates december 31 2016 company provides credit facilities totaling 90 million four unconsolidated affiliates three facilities due demand bear interest 325 375 total outstanding balance 32 million one facility outstanding balance december 31 2016 outstanding balance included current assets accompanying consolidated balance sheet archerdanielsmidland company notes consolidated financial statements continued note 9 goodwill intangible assets goodwill balances attributable consolidated businesses segment set forth following table changes goodwill year ended december 31 2016 primarily related acquisitions purchase price allocation adjustments discussed note 2 partially offset foreign currency translation adjustments 41 million following table sets forth intangible assets changes gross carrying amounts intangible assets year ended december 31 2016 primarily related acquisitions purchase price allocation adjustments discussed note 2 reclassifications partially offset impairment discussed note 18 foreign currency translation adjustments 40 million aggregate amortization expense 113 million 75 million 27 million years ended december 31 2016 2015 2014 respectively estimated future aggregate amortization expense next five years 106 million 99 million 96 million 93 million 85 million archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements august 11 2016 company issued 10 billion aggregate principal amount 25 notes due 2026 proceeds expenses 993 million june 24 2015 company issued €500 million 563 million aggregate principal amount floating rate notes due 2019 €600 million 675 million aggregate principal amount 175 notes due 2023 proceeds expenses €499 million 562 million €594 million 669 million floating rate notes 175 notes respectively december 31 2016 company designated €11 billion notes hedge net investment foreign subsidiary july 1 2015 company accepted repurchase 794 million aggregate principal amount certain outstanding debentures “debentures” validly tendered withdrawn pursuant terms previously announced cash tender offers company paid aggregate total consideration 961 million debentures accepted repurchase september 2015 company redeemed 141 million 545 outstanding debentures 156 million cash tender offers debt redemption financed eurodenominated debt issued june 24 2015 company recognized debt extinguishment charge 189 million including transaction expenses 7 million quarter ended september 30 2015 pertaining transactions archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued debt issuance debt repurchase transactions 2015 discussed resulted net increase longterm debt 03 billion discount amortization expense net premium amortization 9 million 8 million 11 million years ended december 31 2016 2015 2014 respectively included interest expense related company’s longterm debt december 31 2016 fair value company’s longterm debt exceeded carrying value 10 billion estimated using quoted market prices level 2 measurement applicable accounting standards aggregate maturities longterm debt five years december 31 2016 273 million 574 million 542 million 12 million 677 million respectively december 31 2016 company lines credit including accounts receivable securitization programs described totaling 69 billion 58 billion unused weighted average interest rates shortterm borrowings outstanding december 31 2016 2015 566 550 respectively company’s total lines credit 40 billion support commercial paper borrowing facility commercial paper outstanding december 31 2016 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2016 company outstanding standby letters credit surety bonds december 31 2016 2015 totaling 11 billion 08 billion respectively company accounts receivable securitization programs “programs” programs provide company 15 billion funding resulting sale accounts receivable december 31 2016 company utilized 10 billion facility programs see note 19 information programs note 11 stock compensation company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2002 2009 incentive compensation plans options issued market value date grant vest incrementally one five years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary option activity 2016 presented weightedaverage remaining contractual term options outstanding exercisable december 31 2016 6 years 4 years respectively aggregate intrinsic value options outstanding exercisable december 31 2016 149 million 106 million respectively weightedaverage grantdate fair values options granted years ended december 31 2016 2015 2014 567 1029 1280 respectively total intrinsic values options exercised years ended december 31 2016 2015 2014 28 million 20 million 66 million respectively cash proceeds received options exercised years ended december 31 2016 2015 2014 62 million 28 million 93 million respectively december 31 2016 19 million total unrecognized compensation expense related option grants amounts recognized compensation expense next four years 7 million 6 million 4 million 2 million respectively company’s 2002 2009 incentive compensation plans provide granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2002 2009 incentive compensation plans also provide granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock units vest end threeyear vesting period subject attainment certain future performance criteria based company’s adjusted return invested capital compared weighted average cost capital years ended december 31 2016 2015 2014 18 million 18 million 14 million common stock units respectively granted restricted stock awards psus december 31 2016 99 million shares available future grants pursuant 2009 plan fair value restricted stock awards psus determined based market value company’s shares grant date weightedaverage grantdate fair values awards granted years ended december 31 2016 2015 2014 3331 4673 4078 respectively summary restricted stock awards psus activity 2016 presented archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued december 31 2016 53 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three years 33 million 18 million 2 million respectively total grantdate fair value restricted stock awards vested year ended december 31 2016 32 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant compensation expense psus based probability meeting performance criteria total compensation expense option grants restricted stock awards psus recognized years ended december 31 2016 2015 2014 72 million 70 million 55 million respectively note 12 income expense net following table sets forth items income expense individually significant items included table gains sales assets revaluation assets year ended december 31 2016 include realized additional consideration 48 million related sale company’s equity investment gruma sab de cv 59 million gain including recovery loss provisions related sale company’s brazilian sugar ethanol facilities gain related revaluation remaining interest settlement value conjunction acquisition amazon flavors 12 million partially offset 10 million loss sale individually immaterial assets gains sales revaluation assets year ended december 31 2015 includes gain 256 million related primarily sale cocoa chocolate lactic businesses gain 212 million revaluation company’s previously held equity investments north star shipping minmetal eaststarch cv conjunction acquisition remaining interests gain 62 million sale 50 interest barcarena export terminal facility brazil glencore plc gains sales revaluation assets year ended december 31 2014 includes gain 156 million upon company’s effective dilution pacificor formerly kalama export company resulting contribution additional assets another member exchange new equity units gain 126 million sale fertilizer business loss debt extinguishment including transaction expenses 7 million year ended december 31 2015 related cash tender offers redemption certain company’s outstanding debentures loss derivatives year ended december 31 2014 due losses euro foreign currency derivative contracts entered economically hedge wild flavors acquisition archerdanielsmidland company notes consolidated financial statements continued note 12 income expense net continued realized gains losses sales availableforsale marketable securities immaterial periods presented impairment losses securities 6 million years ended december 31 2016 2014 classified asset impairment exit restructuring charges consolidated statements earnings see note 18 information impairment losses securities year ended december 31 2015 net year ended december 31 2015 includes 45 million loss provisions related company’s brazilian sugar ethanol facilities note 13 income taxes following table sets forth geographic split earnings income taxes significant components income taxes follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued significant components deferred tax liabilities assets follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued reconciliation statutory federal income tax rate company’s effective income tax rate earnings follows reduction federal statutory rate related foreign earnings taxed lower rates resulted mostly company’s foreign operations switzerland asia caribbean company’s foreign earnings taxed rates lower us rate generated jurisdictions 47 51 47 foreign earnings taxes fiscal years 2016 2015 2014 respectively company 278 million 301 million tax assets related net operating loss carryforwards certain international subsidiaries december 31 2016 2015 respectively december 31 2016 approximately 200 million assets expiration date remaining 78 million expire various times fiscal 2035 annual usage certain assets limited percentage taxable income respective foreign subsidiary year company recorded valuation allowance 126 million 127 million tax assets december 31 2016 2015 respectively due uncertainty realization company 57 million 22 million tax assets related foreign domestic capital loss carryforwards december 31 2016 2015 respectively company recorded valuation allowance 41 million 22 million tax assets december 31 2016 2015 respectively company 95 million 90 million tax assets related excess foreign tax credits december 31 2016 2015 respectively begin expire 2017 due uncertainty realization company recorded valuation allowance 8 million assets december 31 2015 valuation allowance recorded assets december 31 2016 company 62 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit december 31 2016 2015 expire various times fiscal 2036 due uncertainty realization company recorded valuation allowance 49 million 47 million related state income tax assets net federal tax benefit december 31 2016 2015 respectively company remains subject federal examination us calendar tax years 2014 2015 2016 undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method aggregating approximately 93 billion december 31 2016 considered permanently reinvested accordingly provision us income taxes provided thereon practicable determine deferred tax liability temporary differences related undistributed earnings archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued following table sets forth rollforward activity unrecognized tax benefits year ended december 31 2016 2015 follows additions reductions unrecognized tax benefits shown table include effects related net income shareholders’ equity changes unrecognized tax benefits material effect company’s net income cash flow december 31 2016 2015 company accrued interest penalties unrecognized tax benefits 26 million 20 million respectively company subject income taxation many jurisdictions around world resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 51 million tax expense period company subject routine examination domestic foreign tax authorities frequently faces challenges regarding amount taxes due challenges include positions taken company related timing nature amount deductions allocation income among various tax jurisdictions resolution related tax positions negotiation relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions routine evaluations exposure associated various tax filing positions company recognizes liability necessary estimated potential additional tax owed company accordance applicable accounting standard however company cannot predict provide assurance ultimate outcome ongoing future examinations company’s whollyowned subsidiary adm brasil ltda adm brasil received three separate tax assessments brazilian federal revenue service bfrs challenging tax deductibility commodity hedging losses related expenses tax years 2004 2006 2007 december 31 2016 assessments updated estimated penalties interest variation currency exchange rates totaled approximately 463 million statute limitations 2005 2008 2011 expired company expect receive additional tax assessments archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued adm brasil enters commodity hedging transactions result gains included adm brasil’s calculation taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs adm brasil filed administrative appeal assessments appeal panel found favor bfrs assessments adm brasil filed second level administrative appeal second administrative appeal panel continues conduct customary procedural activities including ongoing dialogue bfrs auditor adm brasil continues unsuccessful administrative appellate process company intends file appeals brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company intends vigorously defend position current assessments similar assessments may issued years subsequent 2011 company’s subsidiaries argentina received tax assessments challenging transfer prices used price grain exports totaling 126 million inclusive interest adjusted variation currency exchange rates tax years 2004 2010 argentine tax authorities conducting review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion company believes complied argentine tax laws cannot rule receiving additional assessments challenging transfer prices used price grain exports years subsequent 2010 estimates potential assessments would approximately 204 million december 31 2016 subject variation currency exchange rates company believes appropriately evaluated transactions underlying assessments concluded based argentine tax law tax position would sustained accordingly recorded tax liability assessments company intends vigorously defend position current assessments similar assessments may issued years subsequent 2010 accordance accounting requirements uncertain tax positions company recorded uncertain tax liability assessments concluded likely prevail brazil argentina matters based upon technical merits taxing jurisdictions’ processes provide mechanism settling less full amount assessment company’s consideration tax assessments requires judgments application income tax regulations specific facts circumstances final outcome matters cannot reliably predicted may take many years resolve could result financial impacts entire amount assessments company’s whollyowned subsidiary netherlands adm europe bv received tax assessment totaling 95 million netherlands tax authority challenging transfer pricing aspects 2009 business reorganization involved two subsidiary companies netherlands company appealed assessment carefully evaluated underlying transactions concluded amount gain recognized reorganization tax purposes appropriate company plans vigorously defend position assessment accrued amount believes would likely outcome litigation company’s defense judicial appeal may take extended period time could result additional financial impacts entire amount assessment archerdanielsmidland company notes consolidated financial statements continued note 14 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2025 rent expense years ended december 31 2016 2015 2014 253 million 241 million 224 million respectively additional amounts incurred charges pertaining time charters ocean going vessels accounted leases years ended december 31 2016 2015 2014 82 million 110 million 136 million respectively future minimum rental payments noncancelable operating leases initial remaining terms excess one year follows archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans company provides substantially us employees certain foreign subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides eligible us employees retire qualifying conditions access postretirement health care full cost retiree certain employees “grandfathered” subsidized coverage others provided health care reimbursement accounts december 2016 company announced change us retiree medical program affected employees less 30 years service january 1 2017 change resulted curtailment gain 38 million year ended december 31 2016 company maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest companys stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 11 million shares company common stock december 31 2016 market value 503 million cash dividends received shares company common stock plans year ended december 31 2016 14 million archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth changes defined benefit obligation fair value defined benefit plan assets years ended december 31 2016 2015 included aoci pension benefits december 31 2016 following amounts yet recognized net periodic pension cost unrecognized prior service cost 2 million unrecognized actuarial loss 824 million prior service cost actuarial loss included aoci expected recognized net periodic pension cost 2017 1 million 62 million respectively included aoci postretirement benefits december 31 2016 following amounts yet recognized net periodic postretirement benefit cost unrecognized prior service credit 48 million unrecognized actuarial loss 42 million prior service credit 13 million actuarial loss 4 million included aoci expected recognized net periodic benefit cost 2017 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 27 billion 23 billion 18 billion respectively december 31 2016 25 billion 22 billion 15 billion respectively december 31 2015 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 26 billion 23 billion 17 billion respectively december 31 2016 25 billion 22 billion 15 billion respectively december 31 2015 accumulated benefit obligation pension plans december 31 2016 2015 27 billion 26 billion respectively postretirement benefit measurement purposes 705 annual rate increase per capita cost covered health care benefits assumed year ended december 31 2016 rate assumed decrease gradually 46 2025 remain level thereafter credits used fund certain retirees health reimbursement accounts indexed maximum 2 per year 1 change assumed health care cost trend rates would following effects 1 increase 1 decrease millions effect accumulated postretirement benefit obligations 4 effect combined service interest cost components immaterial archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts based cumulative net asset value nav underlying investments ccts comprised international equity funds small cap us equity fund large cap us equity funds fixed income funds fund units valued nav based closing market value units bought sold valuation date classified level 2 fair value hierarchy ccts seek primarily provide investment results approximating aggregate price dividend performance total return income stream underlying investments funds issuances redemptions certain cct investments may restricted date andor amount corporate debt instruments corporate debt instruments valued using thirdparty pricing services classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth level within fair value hierarchy fair value plan assets december 31 2016 2015 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 79 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt securities target asset allocation company’s us pension plans approximately actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 54 equity securities 41 debt securities 5 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans directly hold shares company common stock december 31 2016 2015 measurement dates investment objectives company’s plan assets • optimize longterm return plan assets acceptable level risk • maintain broad diversification across asset classes among investment managers • maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments based actuarial calculations company expects contribute 30 million pension plans 13 million postretirement benefit plan 2017 company may elect make additional discretionary contributions period archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following benefit payments reflect expected future service expected paid benefit plans note 16 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued december 31 2016 2015 company approximately 1432 million shares 1208 million shares respectively common shares treasury stock 55 billion 47 billion december 31 2016 2015 respectively recorded cost reduction common stock december 31 2016 2015 foreign currency translation adjustment component aoci included income net tax 40 million 19 million pertaining foreign currencydenominated debt designated net investment hedge respectively see note 4 information following tables set forth changes aoci component reclassifications aoci years ended december 31 2016 2015 archerdanielsmidland company notes consolidated financial statements continued note 16 shareholders’ equity continued change foreign currency translation adjustment 2016 primarily due us dollar appreciation impacting euro british pounddenominated equities company’s foreign subsidiaries change 2015 primarily due us dollar appreciation mainly impacting eurodenominated equity company’s foreign subsidiaries archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products company’s operations organized managed classified four reportable business segments agricultural services corn processing oilseeds processing wild flavors specialty ingredients segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified agricultural services segment utilizes extensive global grain elevator transportation networks port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry agricultural services segment includes international agricultural commodities merchandising handling activities managed global trade desk based rolle switzerland agricultural services’ grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations agricultural services’ transportation network capabilities include barge oceangoing vessel truck rail container freight services agricultural services segment also includes activities related structured trade finance processing wheat flour company’s 322 share results pacificor formerly kalama export company llc joint venture agricultural services segment also included returns associated company’s 198 investment graincorp sale december 2016 april 2016 company acquired 50 interest cairo egyptbased medsofts group consolidated joint venture owns manages merchandising supply chain operations company’s corn processing segment engaged corn wet milling dry milling activities utilizing asset base primarily located central part united states additional facilities china bulgaria morocco turkey corn processing segment converts corn sweeteners starches bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose dextrose starch used corn processing segment feedstocks bioproducts operations fermentation dextrose corn processing segment produces alcohol amino acids food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate bioproducts also include essential amino acids lysine threonine used swine poultry diets optimize performance corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal corn processing segment also includes activities related processing distribution formula feeds animal health nutrition products corn processing products include citric acids glycols used various food industrial products corn processing segment also included activities company’s brazilian sugarcane ethanol plant related operations company completed sale operations may 2016 segment also includes company’s share results equity investments almidones mexicanos sa red star yeast company llc june 2016 company acquired tate lyle casablanca moroccobased corn wet mill produces glucose native starch archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued oilseeds processing segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds europe south america oilseeds processing segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds processing segment major supplier peanuts tree nuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper filter markets oilseeds processing segment also included activities related global chocolate cocoa businesses sale businesses july 2015 october 2015 respectively oilseeds processing segment also includes company’s share results equity investment wilmar international limited wilmar share results stratas foods llc edible oils limited joint ventures company acquired additional shares wilmar increasing ownership interest 19 20 march 2016 22 june 2016 232 september 2016 november 2016 company completed expansion olenex 375 joint venture wilmar olenex owns operates specialty oils fats palm refining tropical oils processing plants europe wild flavors specialty ingredients wfsi segment engages manufacturing sales distribution specialty products including natural flavor ingredients flavor systems natural colors proteins emulsifiers soluble fiber polyols hydrocolloids natural health nutrition products specialty food feed ingredients wfsi segment also includes activities related procurement processing distribution edible beans company acquired 90 controlling stake harvest innovations industry leader minimally processed expellerpressed soy proteins oils glutenfree ingredients february 2016 remaining 60 interest amazon flavors leading brazilian manufacturer natural extracts emulsions compounds may 2016 caterina foods leading toll manufacturer specialty glutenfree highprotein pastas september 2016 includes company’s remaining operations primarily financial business units related futures commission insurance activities intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included segment operating profit equity earnings affiliates based equity method accounting certain corporate items allocated company’s reportable business segments corporate results principally include impact liforelated adjustments unallocated corporate expenses charges including legal settlements costs legal fees interest cost net investment income company’s share results equity investment following sale cocoa business october 2015 remaining results cocoa combined results refining packaging biodiesel within oilseeds processing segment effective january 1 2016 prior period results reclassified conform current presentation archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued segment information archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued geographic information following geographic data include revenues attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment archerdanielsmidland company notes consolidated financial statements continued note 18 asset impairment exit restructuring costs following table sets forth charges included asset impairment exit restructuring costs 1 restructuring exit costs recognized year ended december 31 2016 consisted several individually insignificant charges restructuring exit costs recognized year ended december 31 2015 consisted primarily restructuring charges 29 million related principally international pension plan settlement exit costs 22 million related brazilian sugar ethanol facilities corn processing segment several individually insignificant restructuring exit costs totaling 20 million restructuring exit costs recognized year ended december 31 2014 consisted costs associated relocation company’s global headquarters chicago illinois 16 million restructuring charges related wild flavors acquisition toepfer integration following acquisition minority interest restructuring charges 48 million 2 impairment charge equity securities fiscal year ended december 31 2016 consisted otherthantemporary impairment charges company’s investment two available sale equity securities corporate impairment charge equity securities fiscal year ended december 31 2014 consisted otherthantemporary investment writedowns available sale securities corporate 3 impairment charge goodwill intangible assets year ended december 31 2016 consisted software impairment corporate impairment charge goodwill intangible assets year ended december 31 2015 consisted software impairment 8 million corporate goodwill impairment charges 13 million related corn processing facility certain international oilseeds processing facilities 4 impairment charge fixed assets fiscal year ended december 31 2016 consisted several individually insignificant fixed asset impairments impairment charge fixed assets fiscal year ended december 31 2015 consisted property plant equipment asset impairments 66 million related principally brazilian sugar ethanol business corn processing segment based uncertain outlook business yearend 40 million several individually insignificant charges oilseeds processing segment 1 million wild flavors specialty ingredients segment 1 million corporate impairment charge fixed assets fiscal year ended december 31 2014 consisted property plant equipment asset impairments 17 million agricultural services segment 15 million corn processing segment 3 million oilseeds processing segment note 19 sale accounts receivable since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 12 billion amended additional amount upon collection accounts receivable deferred consideration program terminates june 23 2017 unless extended archerdanielsmidland company notes consolidated financial statements continued note 19 sale accounts receivable continued march 2014 company entered second accounts receivable securitization program “second program” certain commercial paper conduit purchasers committed purchasers collectively “second purchasers” second program certain nonusoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm ireland receivables company “adm ireland receivables” adm ireland receivables turn transfers purchased accounts receivable entirety second purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm ireland receivables receives cash payment 03 billion additional amount upon collection accounts receivable deferred consideration second program terminates march 17 2017 unless extended program second program collectively “programs” adm receivables adm ireland receivables use cash proceeds transfer receivables purchasers second purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2016 2015 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold december 31 2016 2015 fair value trade receivables transferred purchasers programs derecognized company’s consolidated balance sheet 16 billion 17 billion respectively exchange transfer december 31 2016 2015 company received cash 10 billion 12 billion recorded receivable deferred consideration included current assets 540 million 513 million respectively cash collections customers receivables sold 343 billion 407 billion 364 billion years ended december 31 2016 2015 2014 respectively amount 338 billion 403 billion 351 billion pertain cash collections deferred consideration years ended december 31 2016 2015 2014 respectively deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases program company’s risk loss following transfer accounts receivable program limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred program historically insignificant transfers receivables program years ended december 31 2016 2015 2014 resulted expense loss sale 6 million 5 million 5 million respectively classified selling general administrative expenses consolidated statements earnings company reflects cash flows related program operating activities consolidated statements cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables archerdanielsmidland company notes consolidated financial statements continued note 20 legal proceedings guarantees commitments company routinely involved number actual threatened legal actions including involving alleged personal injuries employment law product liability intellectual property environmental issues alleged tax liability see note 13 information income tax matters class actions company also routinely receives inquiries regulators government authorities relating various aspects business given time company matters various stages resolution applicable government authorities outcomes matters within complete control may known prolonged periods time actions claimants seek damages well relief including injunctive relief could require significant expenditures result lost revenues accordance applicable accounting standards company records liability consolidated financial statements material loss contingencies loss known considered probable amount reasonably estimated reasonable estimate known probable loss range amount within range better estimate minimum amount range accrued material loss contingency reasonably possible known probable reasonably estimated loss range loss disclosed notes consolidated financial statements determining estimated loss range loss significant judgment required estimate amount timing loss recorded estimates probable losses resulting litigation governmental proceedings involving company inherently difficult predict particularly matters early procedural stages incomplete facts legal discovery involve unsubstantiated indeterminate claims damages potentially involve penalties fines disgorgement punitive damages could result change business practice beginning 2011 approximately 45 farmers us brought suit missouri state court company one employees recover alleged losses ponzi scheme orchestrated thirdparty grain handler cathy gieseker convicted 2010 felony fraud charges currently serving time federal prison farmers alleged company knew known ms gieseker’s ponzi scheme stop ms gieseker effectively acting company’s agent company defrauded otherwise wronged attorneys farmers claimed represent 100 additional farmers similar claims collectively farmers sought 250 million alleged economic losses unspecified amount alleged mental pain suffering unspecified amount punitive damages august 24 2016 company farmers entered comprehensive confidential settlement matter company admit wrongdoing matter end company recorded settlement related costs fees pertaining matter 2016 company party numerous lawsuits pending various us state federal courts arising syngenta corporation’s syngenta marketing distribution genetically modified corn products agrisure viptera agrisure duracade us first company brought state court action louisiana syngenta 2014 alleging syngenta negligent commercializing products approved china second company putative class member number purported class actions filed beginning 2013 farmers parties syngenta federal courts consolidated pretrial proceedings multidistrict litigation mdl proceeding federal court kansas city kansas alleging syngenta negligent commercializing products fourth quarter 2015 syngenta filed thirdparty claims company grain companies seeking contribution event syngenta held liable lawsuits courts dismissed thirdparty claims april 4 2016 company therefore longer thirdparty defendant mdl third company grain companies named defendant numerous individual purported class action suits filed farmers parties state federal courts beginning fourth quarter 2015 alleging company grain companies negligent failing screen genetically modified corn september 6 2016 court minnesota state mdl proceedings granted company’s motion dismiss complaints company actions january 4 2017 federal court southern district illinois similarly dismissed pending complaints company denies liability actions named thirdparty defendant vigorously defending cases actions pretrial proceedings time company unable predict final outcome matter reasonable degree certainty believes material adverse effect financial condition results operations cash flows archerdanielsmidland company notes consolidated financial statements continued note 20 legal proceedings guarantees commitments continued company entered agreements primarily debt guarantee agreements related equitymethod investees could obligate company make future payments primary entity fails perform contractual obligations company recorded liability payment contingent obligations company believes fair value contingent obligations immaterial company collateral portion contingent obligations note 21 quarterly financial data unaudited net earnings attributable controlling interests first quarter fiscal year ended december 31 2016 include aftertax charges 8 million equal 001 per share primarily related software impairment restructuring charges net earnings attributable controlling interests second quarter fiscal year ended december 31 2016 include aftertax gains 101 million equal 017 per share primarily related gain including recovery loss provisions sale company’s brazilian sugar ethanol facilities realized contingent consideration sale company’s equity investment gruma sa de cv december 2012 revaluation remaining interest settlement value conjunction acquisition amazon flavors partially offset loss sale asset aftertax charges 8 million equal 001 per share primarily related impairment certain longlived assets restructuring charges certain discrete tax adjustments 6 million equal 001 per share related valuation allowances net earnings attributable controlling interests third quarter fiscal year ended december 31 2016 include aftertax losses totalling 9 million equal 002 per share primarily related loss sale equity investment aftertax charges 48 million equal 008 per share primarily related legal fees settlement impairment certain longlived assets investments restructuring charges archerdanielsmidland company notes consolidated financial statements continued note 21 quarterly financial data unaudited continued net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2016 include aftertax charges 13 million equal 003 per share related impairment certain longlived assets restructuring charges aftertax gain 24 million equal 004 per share related us retiree medical benefit plan curtailment certain discrete tax adjustments totaling 21 million equal 003 per share related valuation allowances deferred tax rerates changes assertion net earnings attributable controlling interests second quarter fiscal year ended december 31 2015 include aftertax gains totaling 71 million equal 011 per share related revaluation company’s previously held investments north star shipping minmetal conjunction acquisition remaining interests sale 50 interest barcarena export terminal facility brazil glencore plc sale lactic business discussed note 12 aftertax charges 28 million equal 004 per share primarily related impairment certain longlived assets discussed note 18 certain discrete tax adjustments 13 million equal 002 per share related valuation allowances net earnings attributable controlling interests third quarter fiscal year ended december 31 2015 include gain sale global chocolate business 23 million tax equal 004 per share discussed note 12 fixed asset impairment charges related primarily sugar ethanol facilities brazil corn processing segment 35 million tax equal 006 per share discussed note 18 restructuring charges related international pension plan settlement 26 million tax equal 004 per share discussed note 18 aftertax loss debt extinguishment 118 million equal 019 per share related cash tender offers redemption certain company’s outstanding debentures discussed note 12 net earnings attributable controlling interests fourth quarter fiscal year ended december 31 2015 include aftertax gains totaling 421 million equal 070 per share related primarily sale chocolate cocoa businesses revaluation company’s previously held investment eaststarch cv conjunction acquisition remaining interest discussed note 12 aftertax restructuring exit costs totaling 33 million equal 006 per share related sugar ethanol facilities brazil restructuring charges discussed note 18 aftertax loss provisions settlement charges inventory writedown totaling 58 million equal 010 per share aftertax goodwill intangible property plant equipment asset impairments totaling 50 million equal 008 per share discussed note 18 certain discrete tax adjustments totaling 73 million equal 012 per share related valuation allowances deferred tax rerates note 22 subsequent events january 16 2017 company acquired additional shares wilmar increasing ownership interest 232 239 january 30 2017 company announced sale crop risk services businesses validus holdings global group insurance reinsurance companies sale subject regulatory approval expected close first half 2017 february 1 2017 company completed acquisition crosswind industries inc industry leader manufacture contract private label pet treats foods well specialty ingredients 81 million subject working capital adjustments report independent registered public accounting firm board directors shareholders archerdanielsmidland company chicago illinois audited accompanying consolidated balance sheets archerdanielsmidland company december 31 2016 2015 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2016 audits also included financial statement schedule listed index item 15a2 financial statements schedule responsibility company’s management responsibility express opinion financial statements schedule based audits conducted audits accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion financial statements referred present fairly material respects consolidated financial position archerdanielsmidland company december 31 2016 2015 consolidated results operations cash flows three years period ended december 31 2016 conformity us generally accepted accounting principles also opinion related financial statement schedule considered relation basic financial statements taken whole presents fairly material respects information set forth therein also audited accordance standards public company accounting oversight board united states archerdanielsmidland company’s internal control financial reporting december 31 2016 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework report dated february 17 2017 expressed unqualified opinion thereon ernst young llp st louis missouri february 17 2017 report independent registered public accounting firm board directors shareholders archerdanielsmidland company chicago illinois audited archerdanielsmidland company’s company internal control financial reporting december 31 2016 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework coso criteria archerdanielsmidland company’s management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit conducted audit accordance standards public company accounting oversight board united states standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate opinion archerdanielsmidland company maintained material respects effective internal control financial reporting december 31 2016 based coso criteria also audited accordance standards public company accounting oversight board united states consolidated balance sheets archerdanielsmidland company december 31 2016 2015 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2016 archerdanielsmidland company report dated february 17 2017 expressed unqualified opinion thereon ernst young llp st louis missouri february 17 2017 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated statements comprehensive income loss consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated statements comprehensive income loss see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business company principally engaged procuring transporting storing processing merchandising agricultural commodities products ingredients principles consolidation consolidated financial statements include accounts company subsidiaries significant intercompany accounts transactions eliminated company consolidates entities including variable interest entities vies controlling financial interest vies company assesses whether primary beneficiary defined applicable accounting standard investments affiliates including vies company exercises significant influence control investee primary beneficiary investee’s activities carried cost plus equity undistributed earnings since acquisition adjusted appropriate basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain vies included using recent available financial statements case financial statements within 93 days company’s yearend consistent period use estimates preparation consolidated financial statements conformity generally accepted accounting principles requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassifications company classified 78 billion cash inflows net consideration received beneficial interest obtained selling trade receivables investing instead operating activities year ended december 31 2018 accordance adoption accounting standards codification asc topic 230 statement cash flows prior period amounts conformed current presentation resulted decrease 82 billion 81 billion total cash provided operating activities corresponding increase cash provided investing activities years ended december 31 2017 2016 respectively company classified 10 million nonservice components net benefit cost income expense net consolidated statement earnings year ended december 31 2018 result adoption amended guidance asc topic 715 compensation retirement benefits amounts previously reported cost goods sold 12 million 1 million years ended december 31 2017 2016 respectively selling general administrative expenses 15 million 1 million years ended december 31 2017 2016 respectively reclassified income expense net conform current presentation see note 12 effective january 1 2018 company changed segment reporting reflect changes operating structure companys new segments origination formerly agricultural services oilseeds formerly oilseeds processing carbohydrate solutions formerly corn processing nutrition formerly wild flavors specialty ingredients european origination business previously reported oilseeds managed leaders origination better coordinate continental trading activities carbohydrate solutions includes results adm milling previously reported origination addition company also moved segment reporting renewable chemicals business carbohydrate solutions oilseeds effective july 1 2018 nutrition includes results animal nutrition certain product lines previously reported carbohydrate solutions well certain product lines previously reported oilseeds throughout annual report form 10k prior period results reclassified conform current period presentation archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash equivalents investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements balances represent deposits received customers company’s registered futures commission merchant commodity brokerage services cash margins securities pledged commodity exchange clearinghouses cash pledged security certain insurance arrangements segregated cash investments also include restricted cash collateral various insurance programs company’s captive insurance business degree segregated balances comprised cash equivalents considered restricted cash equivalents statement cash flows receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 84 million 73 million december 31 2018 2017 respectively reflect loss anticipated accounts receivable balances company estimates allowance based history writeoffs level pastdue accounts relationships economic status customers portions allowance uncollectible accounts recorded trade receivables current assets credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates december 31 2018 2017 161 million 343 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods net realizable value following table sets forth company’s inventories december 31 2018 2017 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued fair value measurements company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date company uses market approach valuation technique measure majority assets liabilities carried fair value three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies measurement level 3 many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period derivatives company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet unrealized gains reported current assets unrealized losses reported accrued expenses payables accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments changes fair value derivatives recognized earnings immediately derivative instruments designated qualify hedging instruments company designates hedging instrument based upon exposure hedged fair value hedge cash flow hedge beginning 2017 derivative instruments designated qualify highlyeffective cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk gain loss derivative instrument reported component accumulated comprehensive income loss aoci operating activity statement cash flows reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period prior 2017 gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion recognized consolidated statement earnings current period derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value hedged item recognized consolidated statement earnings current period archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 15 40 years machinery equipment 3 40 years company capitalized interest major construction projects progress 21 million 17 million 20 million years ended december 31 2018 2017 2016 respectively income taxes company accounts income taxes accordance liability method deferred tax assets liabilities recorded temporary differences tax basis assets liabilities reported amounts consolidated financial statements using statutory rates effect year differences expected reverse effect deferred tax assets liabilities change tax rates recorded results operations period includes enactment date law applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests definitelived intangible assets amortized estimated useful lives 2 50 years reviewed impairment whenever indicators carrying value assets may fully recoverable company’s accounting policy evaluate goodwill intangible assets indefinite lives impairment october 1 fiscal year whenever indicators carrying value assets may fully recoverable company recorded impairment charges goodwill intangibles totaling 9 million related customer lists 11 million related computer software years ended december 31 2018 2016 respectively impairment charges recorded goodwill intangible assets year ended december 31 2017 see note 9 additional information asset abandonments writedowns company evaluates longlived assets impairment whenever indicators impairment exist assets written fair value consideration company’s ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value fair value generally based discounted cash flow analysis relies management’s estimate market participant assumptions level 3 measurement applicable accounting standards years ended december 31 2018 2017 2016 impairment charges 100 million 101 million 17 million respectively asset abandonment impairment charges 2018 included 49 million discontinued software project see note 18 additional information payables brokerage customers payables brokerage customers represent total customer accounts company’s futures commission merchant credit positive balances customer accounts used primarily connection commodity transactions include gains losses open commodity trades well securities deposits made margins purposes required company exchangeclearing organizations counterparties payables brokerage customers corresponding balance segregated cash investments customer omnibus receivable current assets archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued revenues company follows policy recognizing revenue single point time satisfies performance obligation transferring control product service customer transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance asc topic 606 revenue contracts customers topic 606 physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required asc 61020 gains losses derecognition nonfinancial assets topic 61020 net sales unconsolidated affiliates years ended december 31 2018 2017 2016 68 billion 60 billion 42 billion respectively stock compensation company recognizes expense stock compensation based fair value awards granted company’s stock compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input highly subjective assumptions measured compensation cost net estimated forfeitures recognized ratably vesting period related stock compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 141 million 129 million 123 million years ended december 31 2018 2017 2016 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method business combinations company’s acquisitions accounted purchases accordance asc topic 805 business combinations amended assets acquired liabilities assumed recorded fair values acquisition date remainder consideration recorded goodwill measurement period may take one year acquisition date adjustments due changes estimated fair value assets acquired liabilities assumed may recorded adjustments purchase price allocations upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first adjustments charged consolidated statements earnings adoption new accounting standards effective january 1 2018 company adopted amended guidance asc subtopic 82510 financial instruments overall intended improve recognition measurement financial instruments amended guidance requires entity measure equity investments except accounted equity method accounting result consolidation investee fair value changes fair value recognized net income amended guidance also simplifies impairment assessment equity investments without readily determinable fair values using qualitative assessment identify impairment adoption amended guidance significant impact company’s financial results archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective january 1 2018 company adopted new guidance asc topic 606 revenue contracts customers contracts completed adoption date modified retrospective approach topic 606 requires company recognize revenue depict transfer promised goods services customers amount reflects consideration entity expects entitled exchange goods services new guidance requires company apply following steps 1 identify contract customer 2 identify performance obligations contract 3 determine transaction price 4 allocate transaction price performance obligations contract 5 recognize revenue company satisfies performance obligation many company’s forward commodity sales contracts considered physically settled derivatives asc topic 815 derivatives hedging topic 815 therefore excluded scope topic 606 comparative balance sheet statement earnings information restated continues reported guidance asc 605 revenue recognition topic 605 effect december 31 2017 years ended december 31 2017 2016 cumulative effect initially applying guidance adjustment opening reinvested earnings balance january 1 2018 less 1 million information adoption topic 606 see note 2 effective january 1 2018 company adopted amended guidance asc 230 statement cash flows topic 230 provides guidance application predominance principle presentation classification specific cash flow issues including requirement classify consideration received beneficial interest obtained selling trade receivables investing instead operating activities adoption amended guidance company’s accounts receivable securitization programs resulted expanded disclosures reclassification cash inflows operating activities investing activities see note 1 reclassification amounts effective january 1 2018 company adopted amended guidance asc topic 715 compensation retirement benefits requires employer report service cost component line items compensation costs arising services rendered pertinent employees period components net benefit cost required presented income statement separately service cost component outside subtotal income operations one presented adoption amended guidance required expanded disclosures reclassification nonservice components net benefit cost products sold selling general administrative expenses income expense net company’s consolidated statements earnings impact financial results see note 1 reclassification amounts pending accounting standards effective january 1 2019 company required adopt new guidance asc topic 842 leases topic 842 supersede asc topic 840 leases topic 842 requires lessees recognize assets liabilities leases company adopt topic 842 using modified retrospective transition approach leases existing entered beginning earliest comparative period presented financial statements adoption new guidance require expanded disclosures company’s consolidated financial statements company established crossfunctional implementation team consisting representatives accounting legal procurement operations company utilized surveys centrally gather information existing leases lease processes gather lease contracts ensure completeness population lease contracts results survey crossreferenced available lease information ie yearend disclosures authorization expenditure listings company implemented lease accounting system assist delivering required accounting changes disclosures adoption new standard result significant increase right use assets lease liabilities company’s consolidated balance sheet primarily result operating leases currently recognized balance sheet company estimates record right use assets corresponding lease liabilities approximately07 billion 08 billion january 1 2019 transition date archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued effective january 1 2019 company required adopt amended guidance asc topic 220 income statement reporting comprehensive income topic 220 allows reclassification accumulated comprehensive income aoci retained earnings stranded tax effects resulting tax cuts jobs act “act” eliminating stranded tax effects resulting act improving usefulness information reported financial statement users addition company required disclose 1 description accounting policy releasing income tax effects accumulated comprehensive income 2 whether elects reclassify stranded income tax effects act 3 information income tax effects related application act reclassified aoci retained earnings early adoption permitted interim period financial statements issued company elected reclassify stranded tax effects resulting act effective january 1 2020 company required adopt amended guidance asc topic 326 financial instruments credit losses intended improve financial reporting requiring timely recording credit losses loans financial instruments held financial institutions organizations amended guidance requires measurement expected credit losses financial assets held reporting date based historical experience current conditions reasonable supportable forecasts early adoption permitted fiscal years interim periods within fiscal years beginning december 15 2018 company expect adoption amended guidance significant impact company’s financial results effective january 1 2020 company required adopt amended guidance asc topic 820 fair value measurement modifies disclosure requirements fair value measurements early adoption permitted adoption amended guidance impact company’s financial results effective december 31 2020 company required adopt amended guidance asc subtopic 71520 compensation retirement benefits defined benefit plans general modifies disclosure requirements employers sponsor defined benefit pension postretirement plans early adoption permitted adoption amended guidance impact company’s financial results note 2 revenues revenue recognition company principally generates revenue merchandising transporting agricultural commodities manufactured products used ingredients food beverages feed energy industrial products revenue measured based consideration specified contract customer excludes sales incentives amounts collected behalf third parties company follows policy recognizing revenue single point time satisfies performance obligation transferring control product service customer transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance topic 606 physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required topic 61020 shipping handling costs shipping handling costs related contracts customers sale goods accounted fulfillment activity included cost products sold accordingly amounts billed customers costs included component revenues taxes collected customers remitted governmental authorities company include taxes assessed governmental authorities imposed concurrent specific revenueproducing transaction ii collected customers measurement transactions prices component revenues cost products sold archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued transaction price allocated remaining performance obligations company generally recognizes revenue point time exception revenue transportation services recognized time majority company’s contracts customers one performance obligation contract duration one year less company applies practical expedient paragraph 105014 topic 606 disclose information remaining performance obligations original expected durations one year less contract liabilities contract liabilities relate advance payments customers goods services company yet provide contract liabilities 501 million 519 million december 31 2018 january 1 2018 respectively recorded accrued expenses payables consolidated balance sheet contract liabilities recognized revenues year ended december 31 2018 647 million disaggregation revenues following table presents revenue disaggregated timing recognition major product lines year ended december 31 2018 1 topic 815 revenue relates physical delivery settlement company’s sales contracts accounted derivatives outside scope topic 606 archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued origination segment generates revenue sale commodities service fees transportation goods revenue measured based consideration specified contract excludes sales incentives amounts collected behalf third parties revenue recognized performance obligation satisfied transferring control product providing service customer transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance topic 606 physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required topic 61020 oilseeds segment generates revenue primarily sale products manufactured global processing facilities segment also generates revenue sale raw commodities south american grain origination business sale peanuts tree nuts peanutderived ingredients revenue recognized performance obligation satisfied transferring control product amount revenue recognized follows contractually specified price may include freight contractually specified cost components physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required topic 61020 carbohydrate solutions carbohydrate solutions segment generates revenue sale products manufactured company’s global corn milling facilities around world revenue recognized control products transferred customer products shipped customers company’s various facilities network storage terminals amount revenue recognized based consideration specified contract could include freight costs depending specific shipping terms contract physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required topic 61020 nutrition segment sells specialty products including natural flavor ingredients flavor systems natural colors animal nutrition products specialty food feed ingredients revenue recognized control products transferred customer amount revenue recognized follows contracted price mutually agreed price product freight shipping recognized component revenue time control transfers customer includes company’s futures commission business whose primary sources revenue commissions brokerage income generated executing orders clearing futures contracts options futures contracts behalf customers commissions brokerage revenue recognized date transaction executed also includes company’s captive insurance business generates thirdparty revenue proportionate share premiums thirdparty reinsurance pools reinsurance premiums recognized straightline basis period underlying policy archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued impacts financial statements following tables summarize impacts topic 606 adoption various lines company’s consolidated financial statements consolidated balance sheets excerpt consolidated statements earnings excerpt archerdanielsmidland company notes consolidated financial statements continued note 3 acquisitions operating results acquisitions included company’s financial statements date acquisition immaterial periods goodwill allocated connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses fiscal year 2018 acquisitions year ended december 31 2018 company acquired probiotics international limited also known protexin britishbased provider probiotic supplements human pet productionanimal uses rodelle inc premium originator processor supplier vanilla products certain soybean origination crushing refining bottling assets brazilbased algar agro aggregate consideration 506 million cash aggregate consideration acquisitions net 42 million cash acquired preliminarily allocated follows acquisitions protexin rodelle inc expand companys wide portfolio health wellness offerings human animal nutrition consumers fiscal year 2017 acquisitions year ended december 31 2017 company acquired crosswind industries inc industry leader manufacture contract private label treats foods well specialty ingredients chamtor sa french producer wheatbased sweeteners starches 51 controlling interest industries centers israeli company specializing import distribution agricultural feed products 89 controlling interest biopolis sl leading provider microbial technology strong portfolio novel food ingredients aggregate consideration 194 million cash aggregate consideration acquisitions net 7 million cash acquired allocated follows archerdanielsmidland company notes consolidated financial statements continued note 3 acquisitions continued company records remaining 49 industries centers 11 biopolis sl temporary equity redeemable noncontrolling interest noncontrolling interest respectively fiscal year 2016 acquisitions year ended december 31 2016 company acquired 90 interest harvest innovations industry leader minimally processed expellerpressed soy proteins oils glutenfree ingredients 50 interest cairobased medsofts group joint venture owns manages merchandising supply chain operations caterina foods leading toll manufacturer specialty glutenfree highprotein pastas casablanca moroccobased corn wet mill produces glucose native starch aggregate consideration 141 million cash aggregate consideration acquisitions net 11 million cash acquired allocated follows remaining 10 interest harvest innovations recorded longterm liabilities accounted mandatorily redeemable interest company agreed acquire following two years operations 2018 company purchased mandatorily redeemable interest 8 million company option three years date acquisition acquire remaining 50 interest medsofts group based fixed multiple earnings taxes interest depreciation amortization last twelve months threeyear period company elect exercise option noncontrolling interest holder option put 50 interest company similar though discounted terms company records 50 remaining interest temporary equity redeemable noncontrolling interest archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis december 31 2018 2017 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets broker dealer quotations market transactions either listed overthecounter otc markets market valuations company’s inventories adjusted location quality exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade unobservable inputs significant impact measurement fair value inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold derivative contracts include exchangetraded commodity futures options contracts forward commodity purchase sale contracts otc instruments related primarily agricultural commodities energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets differences generally determined using inputs broker dealer quotations market transactions either listed otc markets observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact 10 measurement fair value contract classified level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component revenues cost products sold income expense net depending upon purpose contract changes fair value derivatives designated effective cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss aoci hedged items recorded earnings probable hedged transaction longer occur archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued company’s cash equivalents comprised money market funds valued using quoted market prices classified level 1 company’s marketable securities comprised us treasury securities corporate debt securities us treasury securities valued using quoted market prices classified level 1 corporate debt securities valued using thirdparty pricing services substantially classified level 2 unrealized changes fair value availableforsale marketable debt securities recognized consolidated balance sheets component aoci unless decline value deemed otherthantemporary point decline recorded earnings company’s segregated investments comprised us treasury securities us treasury securities valued using quoted market prices classified level 1 company deferred consideration accounts receivable securitization programs “programs” represents notes receivable purchasers programs see note 19 amount reflected current assets consolidated balance sheet see note 6 company carries deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred programs historically insignificant following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 years ended december 31 2018 2017 1 includes increase unrealized gains 669 million relating level 3 assets still held december 31 2018 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued 1 includes increase unrealized losses 532 million relating level 3 liabilities still held december 31 2018 1 includes increase unrealized gains 106 million relating level 3 assets still held december 31 2017 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued 1 includes increase unrealized losses 260 million relating level 3 liabilities still held december 31 2017 periods presented company transfers levels 1 2 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 cases price components result differences exchangetraded prices local prices inventories commodity purchase sale contracts observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components determined specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations december 31 2018 2017 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component december 31 2018 weighted average 185 total price assets 1250 total price liabilities archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations absent corroborating evidence company considers price quotes 100 unobservable therefore fair value items reported level 3 note 5 derivative instruments hedging activities derivatives designated hedging instruments majority company’s derivative instruments designated hedging instruments company uses exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural commodity inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets derivatives including exchange traded contracts physical purchase sale contracts inventories certain merchandisable agricultural commodities include amounts acquired deferred pricing contracts stated market value inventory derivative therefore fair values changes fair values inventories included tables following table sets forth fair value derivatives designated hedging instruments december 31 2018 2017 archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended december 31 2018 2017 2016 changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately component cost products sold derivatives designated cash flow fair value hedging strategies december 31 2018 2017 company certain derivatives designated cash flow fair value hedges company uses interest rate swaps designated fair value hedges protect fair value 496 million fixedrate debt due changes interest rates changes fair value interest rate swaps underlying fixedrate debt recorded income expense net terms interest rate swaps match terms underlying debt december 31 2018 company 4 million current liabilities representing fair value interest rate swaps corresponding decrease underlying debt amount net impact earnings archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued commodity hedge programs described derivatives designated cash flow hedges assuming normal market conditions changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either revenues cost products sold applicable december 31 2018 company 31 million aftertax gains aoci related gains losses commodity cash flow hedge transactions company expects recognize 31 million aftertax gains consolidated statement earnings next 12 months company uses futures options contracts hedge purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 72 million bushels corn per month past 12 months company hedged 23 95 monthly anticipated grind december 31 2018 company designated hedges representing 7 60 anticipated monthly grind corn next 12 months company time also uses futures options swaps hedge sales price certain ethanol sales contracts company established hedging programs ethanol sales contracts indexed unleaded gasoline prices various exchangetraded ethanol contracts objective hedging programs reduce variability cash flows associated company’s sales ethanol past 12 months company hedged 2 million 135 million gallons ethanol sales per month programs december 31 2018 company designated hedges representing 0 52 million gallons ethanol sales per month next 12 months first quarter 2018 company started using futures options contracts hedge purchase price anticipated volumes soybeans purchased processed future month certain us soybean crush facilities company also uses futures options contracts hedge sales prices anticipated soybean meal soybean oil sales proportionate soybean crushing process facilities past 12 months company hedged 0 100 anticipated monthly soybean crush soybean purchases soybean meal oil sales designated facilities company designated hedges representing 0 100 anticipated monthly soybean crush soybean purchases soybean meal oil sales designated facilities next 12 months following table sets forth fair value derivatives designated hedging instruments december 31 2018 2017 archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended december 31 2018 2017 2016 2017 company adopted amended guidance asc 815 derivatives hedging result gains losses related highlyeffective hedging relationships deferred aoci hedged item impacts earnings prior 2017 gain loss derivative instrument excess cumulative change cash flows hedged item ie ineffective portion recognized consolidated statement earnings current period archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued net investment hedging strategies june 2015 company issued €500 million aggregate principal amount floating rate notes €600 million aggregate principal amount 175 notes company designated €11 billion hedge net investment foreign subsidiary december 31 2018 company 26 million aftertax losses aoci related gains losses net investment hedge transaction amount deferred aoci underlying investment divested july 2018 company entered forward foreign exchange contracts designated €500 million hedge net investment foreign subsidiary december 31 2018 company 14 million aftertax losses aoci related gains losses net investment hedge transaction amount deferred aoci underlying investment divested note 6 current assets following table sets forth items current assets 1 company provides financing suppliers primarily brazilian farmers finance portion suppliers’ production costs amounts reported net allowances 3 million 6 million december 31 2018 2017 respectively interest earned financing receivables 26 million 25 million 22 million years ended december 31 2018 2017 2016 respectively included interest income consolidated statements earnings 2 nontrade receivables included 84 million 91 million reinsurance recoverables december 31 2018 2017 respectively archerdanielsmidland company notes consolidated financial statements continued note 7 accrued expenses payables following table sets forth items accrued expenses payables note 8 investments advances affiliates company applies equity method accounting investments investees company ability exercise significant influence including company’s 249 share ownership wilmar december 31 2018 2017 company 56 unconsolidated domestic foreign affiliates december 31 2018 2017 following table summarizes combined balance sheets december 31 2018 2017 combined statements earnings company’s unconsolidated affiliates years ended december 31 2018 2017 2016 archerdanielsmidland company notes consolidated financial statements continued note 8 investments advances affiliates continued company’s share undistributed earnings unconsolidated affiliates december 31 2018 24 billion companys investment wilmar carrying value 39 billion december 31 2018 market value 36 billion based quoted market price converted us dollars applicable exchange rate december 31 2018 investment unrealized loss position less 12 months company evaluated nearterm prospects investee relation severity duration impairment based evaluation company consider equity method investment otherthantemporarily impaired december 31 2018 company provides credit facilities totaling 105 million four unconsolidated affiliates two facilities due demand bear interest 000 574 total outstanding balance 34 million two facilities outstanding balance december 31 2018 outstanding balance included current assets accompanying consolidated balance sheet note 9 goodwill intangible assets goodwill balances attributable consolidated businesses segment set forth following table changes goodwill year ended december 31 2018 primarily related acquisitions 187 million see note 3 partially offset foreign currency translation adjustments 77 million archerdanielsmidland company notes consolidated financial statements continued note 9 goodwill intangible assets continued following table sets forth intangible assets changes gross carrying amounts intangible assets year ended december 31 2018 primarily related acquisitions 132 million see note 3 capitalized software 26 million reclassifications partially offset foreign currency translation adjustments 63 million impairment 9 million aggregate amortization expense 129 million 122 million 113 million years ended december 31 2018 2017 2016 respectively estimated future aggregate amortization expense next five years 146 million 143 million 136 million 131 million 124 million archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements december 3 2018 company issued 600 million 400 million aggregate principal amounts 45 notes due 2049 3375 notes due 2022 respectively net proceeds expenses 45 3375 notes 588 million 399 million respectively september 12 2018 company issued €650 million 744 million december 31 2018 aggregate principal amount 10 notes due 2025 net proceeds expenses 747 million september 29 2017 company redeemed 559 million aggregate principal amount 545 notes due march 15 2018 incurred early extinguishment charge 11 million year ended december 31 2017 september 14 2017 company issued 500 million aggregate principal amount 375 notes due 2047 proceeds expenses 493 million april 15 2017 company retired 261 million aggregate principal amount 8375 notes matured april 15 2017 archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued discount amortization expense net premium amortization 10 million 11 million 9 million years ended december 31 2018 2017 2016 respectively included interest expense related company’s longterm debt december 31 2018 fair value company’s longterm debt exceeded carrying value 07 billion estimated using quoted market prices level 2 measurement applicable accounting standards aggregate maturities longterm debt five years december 31 2018 582 million 16 million 666 million 409 million 11 million respectively december 31 2018 company lines credit including accounts receivable securitization programs described totaling 104 billion 89 billion unused weighted average interest rates shortterm borrowings outstanding december 31 2018 2017 795 235 respectively company’s total lines credit 50 billion supported combined us european commercial paper borrowing programs commercial paper outstanding december 31 2018 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2018 company outstanding standby letters credit surety bonds december 31 2018 2017 totaling 17 billion 12 billion respectively company accounts receivable securitization programs “programs” programs provide company 18 billion funding resulting sale accounts receivable december 31 2018 company utilized 15 billion facility programs see note 19 information programs note 11 stock compensation company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2009 incentive compensation plan options issued market value date grant vest incrementally one five years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary option activity 2018 presented 1 number shares granted 2018 immaterial weightedaverage remaining contractual term options outstanding exercisable december 31 2018 5 years 4 years respectively aggregate intrinsic value options outstanding exercisable december 31 2018 81 million 69 million respectively weightedaverage grantdate fair values options granted years ended december 31 2018 2017 2016 695 790 567 respectively total intrinsic values options exercised years ended december 31 2018 2017 2016 36 million 11 million 28 million respectively cash proceeds received options exercised years ended december 31 2018 2017 2016 55 million 27 million 62 million respectively december 31 2018 7 million total unrecognized compensation expense related option grants amounts recognized compensation expense next two years 4 million 3 million respectively company’s 2009 incentive compensation plan provides granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2009 incentive compensation plan also provides granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end threeyear restriction period awards psus made common stock units vest end threeyear vesting period subject attainment certain future service performance criteria based company’s adjusted return invested capital roic adjusted earnings taxes interest depreciation amortization ebitda total shareholder return tsr years ended december 31 2018 2017 2016 25 million 22 million 18 million common stock units respectively granted restricted stock awards psus december 31 2018 63 million shares available future grants pursuant 2009 plan fair value restricted stock awards determined based market value company’s shares grant date fair value psus based weightedaverage values adjusted roic adjusted ebitda tsr adjusted roic adjusted ebitda fair value determined based market value companys shares grant date tsr fair value determined using monte carlo simulation weightedaverage grantdate fair values awards granted years ended december 31 2018 2017 2016 4272 4438 3331 respectively archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary restricted stock awards psus activity 2018 presented december 31 2018 99 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three years 60 million 36 million 3 million respectively total grantdate fair value restricted stock awards vested year ended december 31 2018 74 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant compensation expense psus based probability meeting performance criteria total compensation expense option grants restricted stock awards psus recognized years ended december 31 2018 2017 2016 109 million 66 million 72 million respectively note 12 income expense net following table sets forth items income expense individually significant items included table gains sales assets businesses year ended december 31 2018 included gains sale companys oilseeds operations bolivia equity investment individually insignificant assets ordinary course business gains sales assets businesses year ended december 31 2017 included gains related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business gains sales revaluation assets year ended december 31 2016 included realized additional consideration related sale company’s equity investment gruma sab de cv recovery loss provisions gain related sale company’s brazilian sugar ethanol facilities gain related revaluation remaining interest settlement value conjunction acquisition amazon flavors partially offset loss sale individually immaterial assets archerdanielsmidland company notes consolidated financial statements continued note 12 income expense net continued pension settlement year ended december 31 2018 related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain retirees companys adm retirement plan loss debt extinguishment year ended december 31 2017 related early redemption company’s 559 million notes due march 15 2018 realized gains losses sales availableforsale marketable securities immaterial periods presented impairment losses securities years ended december 31 2018 2017 impairment losses securities 6 million year ended december 31 2016 classified asset impairment exit restructuring charges consolidated statement earnings see note 18 information net year ended december 31 2018 included foreign exchange losses partially offset income nonservice components net benefit income net year ended december 31 2017 included provisions contingent losses related certain legal settlement items oilseeds nutrition segments foreign exchange losses nonservice components net benefit cost partially offset income note 13 income taxes following table sets forth geographic split earnings income taxes significant components income taxes follows 1 includes impact tax cuts jobs act discussed page 88 archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued significant components deferred tax liabilities assets follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued reconciliation statutory federal income tax rate company’s effective income tax rate earnings follows foreign rate differential primarily due lower tax rates companys operations switzerland asia caribbean company’s foreign earnings taxed rates lower us rate generated jurisdictions 56 59 47 foreign earnings taxes fiscal years 2018 2017 2016 respectively undistributed earnings company’s foreign subsidiaries company’s share undistributed earnings affiliated corporate joint venture companies accounted equity method aggregated approximately 105 billion december 31 2018 company’s undistributed foreign earnings outside basis differences inherent foreign entities continue indefinitely reinvested foreign operations income taxes transition tax minimum tax global intangible low taxed income gilti provided practicable determine amount unrecognized deferred tax liability related remaining undistributed foreign earnings subject transition tax additional outside basis differences entities tax cuts jobs act “act” enacted december 22 2017 income tax effects changes tax laws recognized period enacted act provides numerous significant tax law changes modifications varying effective dates include reducing us federal corporate income tax rate 35 21 creating territorial tax system onetime transition tax previously deferred foreign earnings broadening tax base allowing immediate capital expensing certain qualified property result company made reasonable estimate effects existing deferred tax balances onetime transition tax recognized net provisional benefit 379 million included component income tax expense year ended december 31 2017 net provisional benefit consisted net tax benefit 528 million related remeasurement deferred tax balance beneficial impact 220 million reserves previously established asc subtopic 74030 income taxes considerations special areas partially offset 369 million provisional impact transition tax company performed quarterly review provisional tax liability recorded 2017 new guidance act issued 2018 company finalized calculation transition tax recorded tax benefit 29 million fourth quarter 2018 company currently assessing impact pending treasury regulations company’s transition tax calculation record adjustment 2019 company elected pay onetime transition tax eight years archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued act also contains new provisions related gilti foreign derived intangible income fdii effective fiscal year 2018 company incurred additional us taxable income 101 million related gilti deducted 101 million related fdii company made accounting policy election treat gilti period cost 2018 us tax authorities issued proposed treasury regulations addressing tax reform items effective 2018 final treasury regulations issued company record impact changes 2019 also reasonable expect global taxing authorities reviewing current legislation potential modifications reaction implementation act additional guidance along potential additional global tax legislation changes may affect significant deductions income inclusions could material adverse effect companys net income cash flow company 313 million 254 million tax assets related net operating loss carryforwards certain international subsidiaries december 31 2018 2017 respectively december 31 2018 approximately 221 million assets expiration date remaining 92 million expire various times fiscal 2028 annual usage certain assets limited percentage taxable income respective foreign subsidiary year company recorded valuation allowance 166 million 134 million tax assets december 31 2018 2017 respectively due uncertainty realization company 55 million 64 million tax assets related foreign domestic capital loss carryforwards december 31 2018 2017 respectively company recorded valuation allowance 55 million 64 million tax assets december 31 2018 2017 respectively company 74 million 78 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit december 31 2018 2017 respectively expire various times fiscal 2038 due uncertainty realization company recorded valuation allowance 68 million 65 million related state income tax assets net federal tax benefit december 31 2018 2017 respectively company remains subject federal examination us calendar tax years 2016 2017 2018 following table sets forth rollforward activity unrecognized tax benefits year ended december 31 2018 2017 follows additions reductions unrecognized tax benefits shown table included effects related net income shareholders’ equity changes unrecognized tax benefits material effect company’s net income cash flow december 31 2018 2017 company accrued interest penalties unrecognized tax benefits 24 million 23 million respectively archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company subject income taxation routine examinations many jurisdictions around world frequently faces challenges regarding amount taxes due challenges include positions taken company related timing nature amount deductions allocation income among various jurisdictions routine evaluations exposure associated various tax filing positions company recognizes liability necessary estimated potential tax owed company accordance applicable accounting standards resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions company cannot predict provide assurance ultimate outcome ongoing future examinations however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 107 million tax expense period company’s whollyowned subsidiary adm brasil ltda adm brasil received three separate tax assessments brazilian federal revenue service bfrs challenging tax deductibility commodity hedging losses related expenses tax years 2004 2006 2007 assessments totaled approximately 109 million tax 308 million interest penalties december 31 2018 adjusted variation currency exchange rates statute limitations tax years 2005 2008 2011 expired company expect receive additional tax assessments respect issue adm brasil enters commodity hedging transactions result gains included adm brasil’s calculation taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs adm brasil filed administrative appeal assessments appeal panel found favor bfrs assessments adm brasil filed second level administrative appeal second administrative appeal panel continues conduct customary procedural activities including ongoing dialogue bfrs auditor adm brasil continues unsuccessful administrative appellate process company intends file appeals brazilian federal courts company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company intends vigorously defend position current assessment 2012 company’s subsidiaries argentina adm argentina alfred toepfer argentina received tax assessments challenging transfer prices used price grain exports tax years 2004 2010 december 31 2018 assessments totaled 17 million tax 58 million interest penalties adjusted variation currency exchange rates argentine tax authorities conducted review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion company strongly believes complied argentine tax laws date company received assessments tax years subsequent 2010 however cannot rule receiving additional assessments challenging transfer prices used price grain exports years estimates potential assessments could approximately 52 million tax 58 million interest adjusted variation currency exchange rates company believes appropriately evaluated transactions underlying assessments concluded based argentine tax law tax position would sustained accordingly recorded tax liability assessments company intends vigorously defend position current assessments similar assessments may issued years subsequent 2010 archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued accordance accounting requirements uncertain tax positions company recorded uncertain tax liability assessments concluded likely prevail brazil argentina matters based upon technical merits taxing jurisdictions’ processes provide mechanism settling less full amount assessment company’s consideration tax assessments requires judgments application income tax regulations specific facts circumstances final outcome matters cannot reliably predicted may take many years resolve could result financial impacts entire amount assessments 2014 company’s whollyowned subsidiary netherlands adm europe bv received tax assessment netherlands tax authority challenging transfer pricing aspects 2009 business reorganization involved two subsidiary companies netherlands december 31 2018 assessment 93 million tax 31 million interest adjusted variation currency exchange rates company appealed assessment carefully evaluated underlying transactions concluded amount gain recognized reorganization tax purposes appropriate company plans vigorously defend position assessment accrued amount believes would likely outcome litigation company’s defense judicial appeal may take extended period time could result additional financial impacts entire amount assessment note 14 leases company leases manufacturing warehouse facilities real estate transportation assets equipment noncancelable operating leases majority expire various dates year 2038 rent expense years ended december 31 2018 2017 2016 310 million 249 million 253 million respectively future minimum rental payments noncancellable operating leases including time charters ocean going vessels initial remaining terms excess one year follows note 15 employee benefit plans company provides substantially us employees certain foreign subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides certain eligible us employees retire qualifying conditions subsidized postretirement health care coverage health care reimbursement accounts october 2018 company amended adm retirement plan “plan” entered binding agreement purchase group annuity contract prudential insurance company america “prudential” irrevocably transferring future benefit obligations annuity administration approximately 3800 retirees plan prudential purchase group annuity contract funded directed plan’s assets completed november 2 2018 reduced companys pension obligations approximately 528 million result transaction company recognized noncash pension settlement charge approximately 117 million fourth quarter 2018 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued july 2017 company announced participants company’s us salaried pension plan supplemental executive retirement plan serp begin accruing benefits cash balance formula effective january 1 2022 benefits participants accruing final average pay formula frozen december 31 2021 including pay service date change along changes participation associated divestitures restructuring triggered remeasurement salaried pension plan serp resulting decreases fiscal 2017 pension expense accumulated comprehensive loss underfunded status 18 million 164 million 182 million respectively 2017 company also changed method used estimate service interest cost components net periodic pension postretirement benefit costs us canadian uk plans new method uses spot rate yield curve approach estimate service interest costs previously costs determined using single weightedaverage discount rate applied future cash outflows change affect measurement company’s benefit obligations accounted change accounting estimate accordance guidance asc topic 250 accounting estimates error corrections thereby impacting current future periods impact change aftertax earnings diluted earnings per share year ended december 31 2017 immaterial december 2016 company announced change us retiree medical program affected employees less 30 years service january 1 2017 change resulted curtailment gain 38 million year ended december 31 2016 company maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest companys stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 9 million shares company common stock december 31 2018 market value 388 million cash dividends received shares company common stock plans year ended december 31 2018 13 million following table sets forth components retirement plan expense years ended december 31 2018 2017 2016 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth changes defined benefit obligation fair value defined benefit plan assets years ended december 31 2018 2017 included aoci pension benefits december 31 2018 following amounts yet recognized net periodic pension cost unrecognized prior service credit 150 million unrecognized actuarial loss 517 million prior service credit actuarial loss included aoci expected recognized net periodic pension cost 2018 19 million 20 million respectively included aoci postretirement benefits december 31 2018 following amounts yet recognized net periodic postretirement benefit cost unrecognized prior service credit 31 million unrecognized actuarial loss 27 million prior service credit 15 million actuarial loss 2 million included aoci expected recognized net periodic benefit cost 2018 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth principal assumptions used developing net periodic pension cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 20 billion 19 billion 14 billion respectively december 31 2018 27 billion 26 billion 20 billion respectively december 31 2017 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 19 billion 18 billion 13 billion respectively december 31 2018 27 billion 25 billion 19 billion respectively december 31 2017 accumulated benefit obligation pension plans december 31 2018 2017 22 billion 30 billion respectively postretirement benefit measurement purposes 730 annual rate increase per capita cost covered health care benefits assumed year ended december 31 2018 rate assumed decrease gradually 45 2026 remain level thereafter 1 change assumed health care cost trend rates would following effects 1 increase 1 decrease millions effect accumulated postretirement benefit obligations 5 effect combined service interest cost components immaterial archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts valued using net asset value nav investments ccts comprised international equity shortterm investments valued nav provided administrators funds corporate debt instruments corporate debt instruments valued using thirdparty pricing services classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth level within fair value hierarchy fair value plan assets december 31 2018 2017 level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 73 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 55 equity securities 45 debt target asset allocation company’s us pension plans approximately actual asset allocation company’s us pensions plans’ assets asset allocation reflect impact 528 million purchase group annuity contract funded directed plan’s assets transferring future benefit obligations annuity administration approximately 3800 retirees plan prudential november 2 2018 actual asset allocation company’s foreign pension plans measurement date consists 32 equity securities 26 debt securities 42 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans directly hold shares company common stock december 31 2018 2017 measurement dates investment objectives company’s plan assets • optimize longterm return plan assets acceptable level risk • maintain broad diversification across asset classes among investment managers • maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments based actuarial calculations company expects contribute 27 million pension plans 13 million postretirement benefit plan 2019 company may elect make additional discretionary contributions period archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following benefit payments reflect expected future service expected paid benefit plans note 16 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued december 31 2018 2017 company approximately 1571 million shares 1587 million shares respectively common shares treasury stock 53 billion 55 billion december 31 2018 2017 respectively recorded cost reduction common stock december 31 2018 2017 foreign currency translation adjustment component aoci included 40 million 59 million aftertax losses respectively pertaining foreign currencydenominated debt designated net investment hedge see note 5 information following tables set forth changes aoci component reclassifications aoci years ended december 31 2018 2017 archerdanielsmidland company notes consolidated financial statements continued note 16 shareholders’ equity continued change foreign currency translation adjustment 2018 primarily due us dollar appreciation impacting euro british pounddenominated equities company’s foreign subsidiaries change 2017 primarily due us dollar depreciation impacting euro british pounddenominated equities company’s foreign subsidiaries archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information company principally engaged procuring transporting storing processing merchandising agricultural commodities products ingredients company’s operations organized managed classified four reportable business segments origination oilseeds carbohydrate solutions nutrition segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified effective january 1 2018 company changed segment reporting reflect changes operating structure company new segments origination formerly agricultural services oilseeds formerly oilseeds processing carbohydrate solutions formerly corn processing nutrition formerly wild flavors specialty ingredients european origination business previously reported oilseeds managed leaders origination better coordinate continental trading activities carbohydrate solutions includes results adm milling previously reported origination addition company also moved segment reporting renewable chemicals business carbohydrate solutions oilseeds effective july 1 2018 nutrition includes results animal nutrition certain product lines previously reported carbohydrate solutions well certain product lines previously reported oilseeds prior period results reclassified conform current period presentation origination segment utilizes extensive global grain elevator transportation networks port operations buy store clean transport agricultural commodities oilseeds corn wheat milo oats rice barley resells commodities primarily food feed ingredients raw materials agricultural processing industry origination segment also includes international agricultural commodities merchandising handling activities managed global trade desk based rolle switzerland origination segment’s grain sourcing handling transportation network provides reliable efficient services company’s customers agricultural processing operations origination segment’s transportation network capabilities include barge oceangoing vessel truck rail container freight services origination segment also includes activities related structured trade finance import distribution agricultural feed products company’s share results pacificor joint venture oilseeds segment includes global activities related origination merchandising crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed company include ingredients food feed energy industrial products industries crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel glycols sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds south america oilseeds segment includes origination merchandising activities adjuncts oilseeds processing assets activities include network grain elevators port facilities transportation assets used buy store clean transport grains oilseeds segment major supplier peanuts tree nuts peanutderived ingredients us export markets north america cottonseed flour produced sold primarily pharmaceutical industry cotton cellulose pulp manufactured sold chemical paper industrial markets oilseeds segment also includes company’s share results equity investment wilmar international limited wilmar share results stratas foods llc edible oils limited olenex sarl olenex joint ventures june 2018 company invested soyven 50 joint venture cargill provide soybean meal oil customers egypt july 2018 company completed sale oilseeds operations bolivia inversiones piuranas sa december 2018 company completed acquisition certain assets brazilbased algar agro archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued company’s carbohydrate solutions segment engaged corn wheat wet dry milling activities carbohydrate solutions segment converts corn wheat sweeteners corn wheat starches wheat flour bioproducts products include ingredients used food beverage industry including sweeteners starch syrup glucose flour dextrose starch used carbohydrate solutions segment feedstocks bioproducts operations fermentation dextrose carbohydrate solutions segment produces alcohol food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal carbohydrate solutions products include citric acids used various food industrial products segment also includes company’s share results equity investments hungrana ltd almidones mexicanos sa red star yeast company llc june 2018 company completed acquisition 50 equity stake starches sweeteners business russianbased aston foods food ingredients nutrition segment engages manufacturing sales distribution specialty products including natural flavor ingredients flavor systems natural colors proteins emulsifiers soluble fiber polyols hydrocolloids natural health nutrition products specialty food feed ingredients nutrition segment includes activities related procurement processing distribution edible beans nutrition segment also includes activities related processing distribution formula feeds animal health nutrition products manufacture contract private label pet treats foods august 2018 company completed acquisition probiotics international limited britishbased provider probiotic supplements human pet productionanimal uses rodelle inc premium originator processor supplier vanilla products includes company’s remaining operations primarily financial business units related futures commission insurance activities may 1 2017 company completed sale crop risk services business validus holdings global group insurance reinsurance companies intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included operating profit segment equity earnings affiliates based equity method accounting specified items included total segment operating profit certain corporate items allocated company’s individual business segments operating performance business segment evaluated management exclusive items corporate results principally include impact liforelated adjustments unallocated corporate expenses interest cost net investment income company’s share results equity investment compagnie industrialle et financiere des produits amylaces sa luxembourg cip archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued segment information archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued 1 gains 2018 related sale businesses assets gains 2017 related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business gains 2016 primarily related recovery loss provisions gain related sale company’s brazilian sugar ethanol facilities realized contingent consideration december 2012 sale company’s equity investment gruma sa de cv revaluation remaining interest settlement value conjunction acquisition remaining interest amazon flavors partially offset loss sale asset 2 charges 2018 consisted impairment certain assets restructuring settlement charges 2017 consisted asset impairments related closure facility reconfiguration company’s peoria illinois ethanol complex settlement charges several individually insignificant asset impairments restructuring charges 2016 consisted several individually insignificant asset impairments restructuring charges 3 hedge timing effects relate hedge ineffectiveness associated documented hedge programs archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued geographic information following geographic data include revenues attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment archerdanielsmidland company notes consolidated financial statements continued note 18 asset impairment exit restructuring costs following table sets forth charges included asset impairment exit restructuring costs 1 restructuring exit costs year ended december 31 2018 consisted restructuring charges 24 million corporate primarily related reorganization services corporate several individually insignificant restructuring charges presented specified items within segment operating profit restructuring exit costs year ended december 31 2017 consisted restructuring charges 54 million corporate primarily related reduction certain positions within companys global workforce several individually insignificant restructuring charges presented specified items within segment operating profit restructuring exit costs year ended december 31 2016 consisted restructuring charges 4 million corporate several individually insignificant charges presented specified items within segment operating profit 2 impairment charge equity method investment consisted impairment charge equity investment presented specified item within segment operating profit 3 impairment charge equity securities consisted otherthantemporary impairment charges company’s investment two available sale equity securities corporate 4 impairment charge goodwill intangible assets year ended december 31 2018 consisted intangible impairment presented specified item within segment operating profit impairment charge goodwill intangible assets year ended december 31 2016 consisted software impairment corporate 5 impairment charge longlived assets year ended december 31 2018 consisted 36 million asset impairments related longterm receivable certain longlived assets oilseeds 25 million asset impairments related certain longlived assets origination 11 million asset impairments related certain longlived assets nutrition presented specified items within segment operating profit 49 million charge related discontinued software project corporate impairment charge longlived assets year ended december 31 2017 consisted 63 million asset impairments primarily related configuration companys peoria illinois ethanol complex 20 million asset impairments related closure facility several individually insignificant asset charges presented specified items within segment operating profit impairment charge longlived assets year ended december 31 2016 consisted fixed asset impairment charges 2 million corporate several individually insignificant fixed asset impairments presented specified items within segment operating profit note 19 sale accounts receivable since march 2012 company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 12 billion additional amount upon collection accounts receivable deferred consideration program terminates june 20 2019 unless extended archerdanielsmidland company notes consolidated financial statements continued note 19 sale accounts receivable continued march 2014 company entered second accounts receivable securitization program “second program” certain commercial paper conduit purchasers committed purchasers collectively “second purchasers” second program certain nonusoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm ireland receivables company “adm ireland receivables” adm ireland receivables turn transfers purchased accounts receivable entirety second purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm ireland receivables receives cash payment 06 billion €05 billion additional amount upon collection accounts receivable deferred consideration second program terminates march 15 2019 unless extended program second program collectively “programs” adm receivables adm ireland receivables use cash proceeds transfer receivables purchasers second purchasers collectively purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2018 2017 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold december 31 2018 2017 fair value trade receivables transferred purchasers programs derecognized company’s consolidated balance sheet 19 billion 17 billion respectively exchange transfer december 31 2018 2017 company received cash 15 billion 14 billion recorded receivable deferred consideration included current assets 379 million 307 million respectively cash collections customers receivables sold 348 billion 335 billion 343 billion years ended december 31 2018 2017 2016 respectively amount 148 billion 125 billion 119 billion cash collections deferred consideration reflected cash inflows investing activities years ended december 31 2018 2017 2016 respectively deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases programs company’s risk loss following transfer accounts receivable programs limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate payment deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred programs historically insignificant transfers receivables programs years ended december 31 2018 2017 2016 resulted expense loss sale 18 million 10 million 6 million respectively classified selling general administrative expenses consolidated statements earnings company reflects cash flows related programs operating activities consolidated statements cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables archerdanielsmidland company notes consolidated financial statements continued note 20 legal proceedings company routinely involved number actual threatened legal actions including involving alleged personal injuries employment law product liability intellectual property environmental issues alleged tax liability see note 13 information income tax matters class actions company also routinely receives inquiries regulators government authorities relating various aspects business given time company matters various stages resolution applicable government authorities outcomes matters within complete control may known prolonged periods time actions claimants seek damages well relief including injunctive relief could require significant expenditures result lost revenues accordance applicable accounting standards company records liability consolidated financial statements material loss contingencies loss known considered probable amount reasonably estimated reasonable estimate known probable loss range amount within range better estimate minimum amount range accrued material loss contingency reasonably possible known probable reasonably estimated loss range loss disclosed notes consolidated financial statements determining estimated loss range loss significant judgment required estimate amount timing loss recorded estimates probable losses resulting litigation governmental proceedings involving company inherently difficult predict particularly matters early procedural stages incomplete facts legal discovery involve unsubstantiated indeterminate claims damages potentially involve penalties fines disgorgement punitive damages could result change business practice company party numerous lawsuits pending various us state federal courts arising syngenta corporation’s syngenta marketing distribution genetically modified corn products agrisure viptera agrisure duracade us first company brought state court action louisiana syngenta 2014 alleging syngenta negligent commercializing products approved china december 2017 company syngenta reached confidential settlement action second syngenta brought thirdparty claims company 2015 federal multidistrict litigation mdl kansas city kansas state court mdl minneapolis minnesota courts seeking contribution event syngenta held liable class actions farmers parties december 2017 settlement syngenta agreed dismiss thirdparty claims company third farmers parties sued company grain companies numerous individual purported class action suits illinois state federal courts beginning fourth quarter 2015 alleging company grain companies negligent failing screen genetically modified corn january 4 2017 federal court southern district illinois dismissed subject appeal pending federal complaints company thus company remains defendant certain illinois state court actions farmers parties actions company moved dismiss well company denies liability actions named thirdparty defendant vigorously defending cases actions pretrial proceedings time company unable predict final outcome matter reasonable degree certainty believes outcome material adverse effect financial condition results operations cash flows archerdanielsmidland company notes consolidated financial statements continued note 21 quarterly financial data unaudited net earnings attributable controlling interests first quarter year ended december 31 2018 included aftertax charges 12 million equal 002 per share primarily related impairment equity investment several individually insignificant asset impairments restructuring charges 14 million equal 003 per share provisional tax benefit adjustment related enactment tax cuts jobs act net earnings attributable controlling interests second quarter year ended december 31 2018 included aftertax charges 16 million equal 003 per share primarily related impairment longterm financing receivable several individually insignificant restructuring charges 7 million equal 001 per share provisional tax expense adjustment related enactment tax cuts jobs act certain discrete items net earnings attributable controlling interests third quarter year ended december 31 2018 included aftertax gains 20 million equal 004 per share related sale business equity investment 3 million equal 001 per share provisional tax expense adjustment related enactment tax cuts jobs acts net earnings attributable controlling interests fourth quarter year ended december 31 2018 included aftertax losses 7 million equal 002 per share primarily related sale asset business aftertax charges 196 million equal 035 per share consisting noncash pension settlement charge related transfer future benefit obligations annuity administration certain retirees companys adm retirement plan charge related discontinued software project corporate asset impairments related certain longlived assets restructuring charges primarily related reorganization services corporate settlement charges aftertax charges 9 million equal 001 per share related acquisition expenses net losses foreign currency derivative contracts economically hedge certain acquisitions 29 million equal 005 per share provisional tax benefit adjustment related enactment tax cuts jobs act certain discrete items archerdanielsmidland company notes consolidated financial statements continued note 21 quarterly financial data unaudited continued net earnings attributable controlling interests first quarter year ended december 31 2017 included aftertax charges 8 million equal 001 per share related several individually insignificant asset impairments restructuring charges certain discrete tax adjustments 4 million equal 001 per share related valuation allowances net earnings attributable controlling interests second quarter year ended december 31 2017 included aftertax charges 21 million equal 004 per share related impairment certain longlived assets restructuring settlement aftertax losses 22 million equal 004 per share related adjustment proceeds 2015 sale cocoa business partially offset gain sale crop risk business net earnings attributable controlling interests third quarter year ended december 31 2017 included aftertax charges 69 million equal 012 per share asset impairments related reconfiguration company’s peoria illinois ethanol complex restructuring related reduction certain positions within company’s global workforce aftertax gains 10 million equal 002 per share related adjustment proceeds 2015 sale cocoa business gain sale asset aftertax debt extinguishment charge 7 million equal 001 per share related early redemption 559 million notes due march 15 2018 net earnings attributable controlling interests fourth quarter year ended december 31 2017 included aftertax charges 46 million equal 008 per share related legal settlement asset impairments primarily related closure facility several individually insignificant asset impairments restructuring charges net tax adjustment 370 million equal 065 per share related estimated impact tax cuts jobs act us tax certain discrete items note 22 subsequent events company announced three significant portfolio actions company • signed agreement purchase florida chemical company fcc one worlds largest producers citrus oils ingredients 175 million subject regulatory approval • signed agreement purchase remaining 50 interest owned invivo gleadell agriculture ltd gleadell current joint venture invivo subject regulatory approval • completed acquisition neovia frenchbased global provider valueadded animal nutrition solutions 72 production facilities presence 25 countries 18 billion €15 billion fcc gleadell transactions expected close first quarter 2019 report independent registered public accounting firm board directors shareholders archerdanielsmidland company opinion financial statements audited accompanying consolidated balance sheets archerdanielsmidland company december 31 2018 2017 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2018 related notes financial statement schedule listed index item 15a2 collectively referred “financial statements” opinion financial statements present fairly material respects consolidated financial position company december 31 2018 2017 consolidated results operations cash flows three years period ended december 31 2018 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states pcaob companys internal control financial reporting december 31 2018 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework report dated february 19 2019 expressed unqualified opinion thereon basis opinion financial statements responsibility company’s management responsibility express opinion company’s financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement financial statements whether due error fraud performing procedures respond risks procedures include examining test basis evidence regarding amounts disclosures financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation financial statements believe audits provide reasonable basis opinion ernst young llp served companys auditor since 1930 saint louis missouri february 19 2019 report independent registered public accounting firm board directors shareholders archerdanielsmidland company opinion internal control financial reporting audited archerdanielsmidland company’s internal control financial reporting december 31 2018 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework coso criteria opinion archerdanielsmidland company maintained material respects effective internal control financial reporting december 31 2018 based coso criteria also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets archerdanielsmidland company december 31 2018 2017 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2018 related notes financial statement schedule listed index item 15a2 report dated february 19 2019 expressed unqualified opinion thereon basis opinion companys management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate ernst young llp saint louis missouri february 19 2019 item 9item 8 financial statements supplementary data financial statements page consolidated statements earnings consolidated statements comprehensive income loss consolidated balance sheets consolidated statements cash flows consolidated statements shareholders’ equity notes consolidated financial statements reports independent registered public accounting firm archerdanielsmidland company consolidated statements earnings see notes consolidated financial statements archerdanielsmidland company consolidated statements comprehensive income loss see notes consolidated financial statements archerdanielsmidland company consolidated balance sheets see notes consolidated financial statements archerdanielsmidland company consolidated statements cash flows see notes consolidated financial statements archerdanielsmidland company consolidated statements shareholders’ equity see notes consolidated financial statements archerdanielsmidland company notes consolidated financial statements note 1 summary significant accounting policies nature business adm global leader human animal nutrition one world’s premier agricultural origination processing company one world’s leading producers ingredients human animal nutrition products made nature principles consolidation consolidated financial statements include accounts company subsidiaries significant intercompany accounts transactions eliminated company consolidates entities including variable interest entities vies controlling financial interest vies company assesses whether primary beneficiary defined applicable accounting standard investments affiliates including vies company exercises significant influence control investee primary beneficiary investee’s activities carried cost plus equity undistributed earnings since acquisition adjusted appropriate basis differences investment balance underlying net assets investee company’s portion results certain affiliates results certain vies included using recent available financial statements case financial statements within 93 days company’s yearend consistent period use estimates preparation consolidated financial statements conformity generally accepted accounting principles gaap requires management make estimates assumptions affect amounts reported consolidated financial statements accompanying notes actual results could differ estimates reclassifications effective july 1 2019 company changed segment reporting reflect creation combined ag services oilseeds segment former origination oilseeds businesses merged combined ag services oilseeds segment enables company better respond market changes integrating supply value chains risk management delivering significant simplification efficiency daytoday business part company’s efforts streamlined management structure combined segment led former president oilseeds expanding role president ag services oilseeds prior period results reclassified conform current period segment presentation cash equivalents company considers nonsegregated highlyliquid investments maturity three months less time purchase cash equivalents segregated cash investments company segregates certain cash equivalents investment balances accordance regulatory requirements commodity exchange requirements insurance arrangements balances represent deposits received customers company’s registered futures commission merchant commodity brokerage services cash margins securities pledged commodity exchange clearinghouses cash pledged security certain insurance arrangements segregated cash investments also include restricted cash collateral various insurance programs company’s captive insurance business degree segregated balances comprised cash equivalents considered restricted cash equivalents statement cash flows archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued receivables company records accounts receivable net realizable value includes allowance estimated uncollectible accounts 110 million 84 million december 31 2019 2018 respectively reflect loss anticipated accounts receivable balances company estimates allowance based history writeoffs level pastdue accounts relationships economic status customers portions allowance uncollectible accounts recorded trade receivables current assets credit risk receivables minimized result large diversified nature company’s worldwide customer base company manages exposure counterparty credit risk credit analysis approvals credit limits monitoring procedures collateral generally required company’s receivables accounts receivable due unconsolidated affiliates december 31 2019 2018 156 million 146 million respectively inventories certain merchandisable agricultural commodities include inventories acquired deferred pricing contracts stated market value addition company values certain inventories using lower cost determined either firstin firstout fifo lastin firstout lifo methods net realizable value following table sets forth company’s inventories december 31 2019 2018 archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued fair value measurements company determines fair value based price would received sell asset paid transfer liability orderly transaction market participants measurement date company uses market approach valuation technique measure majority assets liabilities carried fair value three levels established within fair value hierarchy may used report fair value level 1 quoted prices unadjusted active markets identical assets liabilities level 2 observable inputs including level 1 prices adjusted quoted prices similar assets liabilities quoted prices markets less active traded exchanges inputs observable substantially corroborated observable market data level 3 unobservable inputs supported little market activity significant component fair value assets liabilities evaluating significance fair value inputs company generally classifies assets liabilities level 3 fair value determined using unobservable inputs individually aggregated unobservable inputs represent 10 fair value assets liabilities judgment required evaluating quantitative qualitative factors determination significance purposes fair value level classification level 3 amounts include assets liabilities whose value determined using pricing models discounted cash flow methodologies similar techniques well assets liabilities determination fair value requires significant management judgment estimation based historical experience company’s suppliers customers company’s credit risk knowledge current market conditions company view nonperformance risk significant input fair value majority forward commodity purchase sale contracts however certain cases company believes nonperformance risk significant input company records estimated fair value adjustments classifies measurement level 3 many cases valuation technique used measure fair value includes inputs multiple levels fair value hierarchy lowest level input significant component fair value measurement determines placement entire fair value measurement hierarchy company’s assessment significance particular input fair value measurement requires judgment may affect classification fair value assets liabilities within fair value hierarchy levels company’s policy regarding timing transfers levels including transfers level 3 measure record transfers end reporting period derivatives company recognizes derivative instruments either assets liabilities fair value consolidated balance sheet unrealized gains reported current assets unrealized losses reported accrued expenses payables accounting changes fair value ie gains losses derivative instrument depends whether designated qualifies part hedging relationship type hedging relationship majority company’s derivatives designated hedging instruments changes fair value derivatives recognized earnings immediately derivative instruments designated qualify hedging instruments company designates hedging instrument based upon exposure hedged fair value hedge cash flow hedge net investment hedge derivative instruments designated qualify highlyeffective cash flow hedges ie hedging exposure variability expected future cash flows attributable particular risk gain loss derivative instrument reported component accumulated comprehensive income loss aoci operating activity statement cash flows reclassified earnings line item affected hedged transaction period periods hedged transaction affects earnings hedge components excluded assessment effectiveness gains losses related discontinued hedges recognized consolidated statement earnings current period derivative instruments designated qualify fair value hedges changes fair value hedging instrument changes fair value hedged item recognized consolidated statement earnings current period archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued derivative instruments designated qualify net investment hedges foreign exchange gains losses related changes foreign currency exchange rates deferred aoci underlying investment divested property plant equipment property plant equipment recorded cost repair maintenance costs expensed incurred company generally uses straightline method computing depreciation financial reporting purposes generally uses accelerated methods income tax purposes annual provisions depreciation computed principally accordance following ranges asset lives buildings 15 40 years machinery equipment 3 40 years company capitalized interest major construction projects progress 15 million 21 million 17 million years ended december 31 2019 2018 2017 respectively income taxes company accounts income taxes accordance liability method deferred tax assets liabilities recorded temporary differences tax basis assets liabilities reported amounts consolidated financial statements using statutory rates effect year differences expected reverse effect deferred tax assets liabilities change tax rates recorded results operations period includes enactment date law applicable accounting standards prescribe minimum threshold tax position required meet recognized consolidated financial statements company recognizes consolidated financial statements tax positions determined likely sustained upon examination based technical merits position company classifies interest income taxrelated balances interest expense classifies taxrelated penalties selling general administrative expenses goodwill intangible assets goodwill intangible assets deemed indefinite lives amortized subject annual impairment tests definitelived intangible assets including capitalized expenses related companys 1adm program amortized estimated useful lives 2 50 years reviewed impairment whenever indicators carrying value assets may fully recoverable company’s accounting policy evaluate goodwill intangible assets indefinite lives impairment october 1 fiscal year whenever indicators carrying value assets may fully recoverable company recorded impairment charges 11 million related goodwill intangibles 9 million related customer lists years ended december 31 2019 2018 respectively impairment charges recorded goodwill intangible assets year ended december 31 2017 see note 9 additional information asset abandonments writedowns company evaluates longlived assets impairment whenever indicators impairment exist assets written fair value consideration company’s ability utilize assets intended purpose employ assets alternative uses sell assets recover carrying value fair value generally based discounted cash flow analysis relies management’s estimate market participant assumptions estimated selling price assets considered held sale level 3 measurement applicable accounting standards years ended december 31 2019 2018 2017 impairment charges 131 million 100 million 101 million respectively archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued payables brokerage customers payables brokerage customers represent total customer accounts company’s futures commission merchant credit positive balances customer accounts used primarily connection commodity transactions include gains losses open commodity trades well securities deposits made margins purposes required company exchangeclearing organizations counterparties payables brokerage customers corresponding balance segregated cash investments customer omnibus receivable current assets revenues company follows policy recognizing revenue single point time satisfies performance obligation transferring control product service customer transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance asc topic 606 revenue contracts customers topic 606 physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required asc 61020 gains losses derecognition nonfinancial assets topic 61020 net sales unconsolidated affiliates years ended december 31 2019 2018 2017 49 billion 56 billion 52 billion respectively stock compensation company recognizes expense stock compensation based fair value awards granted company’s stock compensation plans provide granting restricted stock restricted stock units performance stock units stock options fair values stock options performance stock units estimated date grant using blackscholes option valuation model lattice valuation model respectively valuation models require input subjective assumptions measured compensation cost net forfeitures recognized ratably vesting period related stock compensation award research development costs associated research development expensed incurred costs incurred net expenditures subsequently reimbursed government grants 154 million 141 million 129 million years ended december 31 2019 2018 2017 respectively per share data basic earnings per common share determined dividing net earnings attributable controlling interests weighted average number common shares outstanding computing diluted earnings per share average number common shares outstanding increased common stock options outstanding exercise prices lower average market price common shares using treasury share method archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued business combinations company’s acquisitions accounted accordance asc topic 805 business combinations amended consideration transferred allocated various assets acquired liabilities assumed estimated fair values acquisition date residual allocated goodwill fair values allocated assets acquired liabilities assumed business combinations require management make significant judgments estimates assumptions especially respect intangible assets management makes estimates fair values based upon assumptions believes reasonable estimates based upon historical experience information obtained management acquired companies inherently uncertain estimated fair values related intangible assets primarily consist customer relationships trademarks developed technology determined primarily using discounted cash flow models estimates discounted cash flow models include limited certain assumptions form basis forecasted results eg revenue growth rates customer attrition rates royalty rates significant assumptions forward looking could affected future economic market conditions measurement period may take one year acquisition date adjustments due changes estimated fair value assets acquired liabilities assumed may recorded adjustments consideration transferred related allocations upon conclusion measurement period final determination values assets acquired liabilities assumed whichever comes first adjustments charged consolidated statements earnings adoption new accounting standards effective january 1 2019 company adopted new guidance accounting standards codification asc topic 842 leases topic 842 superseded asc topic 840 leases topic 842 requires lessees recognize assets liabilities leases company adopted topic 842 using optional transition method allows entities forgo comparative reporting requirements modified retrospective transition method addition company elected apply package practical expedients allows entities forgo reassessing transition date 1 whether expired existing contracts contain leases 2 lease classification expired existing leases 3 whether unamortized initial direct costs existing leases meet definition initial direct costs new guidance company also elected use practical expedient allows combination lease nonlease contract components underlying asset categories well optional transition practical expedient permits entities continue applying current accounting policy land easements existed expired january 1 2019 adoption topic 842 resulted recording rightofuse assets lease liabilities 793 million 795 million respectively january 1 2019 new guidance material impact company’s consolidated statement earnings impact consolidated statement cash flows information adoption topic 842 see note 14 effective january 1 2019 company adopted amended guidance asc topic 220 income statement reporting comprehensive income topic 220 allows reclassification accumulated comprehensive income aoci retained earnings stranded tax effects resulting tax cuts jobs act eliminating stranded tax effects resulting act improving usefulness information reported financial statement users addition company required disclose 1 description accounting policy releasing income tax effects aoci 2 whether elects reclassify stranded income tax effects act 3 information income tax effects related application act reclassified aoci retained earnings company’s accounting policy release income tax effects aoci individual units account sold terminated extinguished however company elected release aoci stranded income tax effects resulting act archerdanielsmidland company notes consolidated financial statements continued note 1 summary significant accounting policies continued pending accounting standards effective january 1 2020 company required adopt amended guidance asc topic 326 financial instruments credit losses intended improve financial reporting requiring timely recording credit losses loans financial instruments held financial institutions organizations amended guidance replaces today’s “incurred loss” approach “expected loss” model requires measurement expected credit losses financial assets held reporting date based historical experience current conditions reasonable supportable forecasts company required adopt amended guidance modified retrospective basis cumulative effect adjustment retained earnings beginning period adoption company evaluated current methodology estimating allowance doubtful accounts risk profile receivable portfolio developed model includes qualitative forecasting aspects “expected loss” model amended guidance company finalized assessment impact amended guidance expects record immaterial cumulative effect adjustment retained earnings january 1 2020 effective january 1 2020 company required adopt amended guidance asc topic 820 fair value measurement modifies disclosure requirements fair value measurements early adoption permitted adoption amended guidance impact company’s financial results effective december 31 2020 company required adopt amended guidance asc subtopic 71520 compensation retirement benefits defined benefit plans general modifies disclosure requirements employers sponsor defined benefit pension postretirement plans early adoption permitted adoption amended guidance impact company’s financial results effective january 1 2021 company required adopt amended guidance asc topic 740 income taxes topic 740 simplifies accounting income taxes removing certain exceptions general principles topic 740 amendments also improve consistent application simplify gaap areas topic 740 clarifying amending existing guidance early adoption permitted company yet completed assessment impact amended guidance consolidated financial statements expect adoption amendments significant impact financial results note 2 revenues revenue recognition company principally generates revenue merchandising transporting agricultural commodities manufactured products used ingredients food feed energy industrial products revenue measured based consideration specified contract customer excludes sales incentives amounts collected behalf third parties company follows policy recognizing revenue single point time satisfies performance obligation transferring control product service customer majority company’s contracts customers one performance obligation contract duration one year less company applies practical expedient paragraph 105014 asc 606 revenue contracts customers “topic 606” disclose information remaining performance obligations original expected durations one year less transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance topic 606 company recognized revenue transportation service contracts 515 million 481 million years ended december 31 2019 2018 respectively physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required asc 61020 gains losses derecognition nonfinancial assets “topic 61020” shipping handling costs shipping handling costs related contracts customers sale goods accounted fulfillment activity included cost products sold accordingly amounts billed customers costs included component revenues archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued taxes collected customers remitted governmental authorities company include taxes assessed governmental authorities imposed concurrent specific revenueproducing transaction ii collected customers measurement transactions prices component revenues cost products sold contract liabilities contract liabilities relate advance payments customers goods services company yet provide contract liabilities 604 million 501 million december 31 2019 2018 respectively recorded accrued expenses payables consolidated balance sheet contract liabilities recognized revenues years ended december 31 2019 2018 575 million 647 million respectively disaggregation revenues following tables present revenue disaggregated timing recognition major product lines years ended december 31 2019 2018 archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued 1 topic 815 revenue relates physical delivery settlement company’s sales contracts accounted derivatives outside scope topic 606 ag services oilseeds ag services oilseeds segment generates revenue sale commodities service fees transportation goods sale products manufactured global processing facilities revenue measured based consideration specified contract excludes sales incentives amounts collected behalf third parties revenue recognized performance obligation satisfied transferring control product providing service customer transportation service contracts company recognizes revenue time barge oceangoing vessel truck rail container freight moves towards destination accordance transfer control guidance topic 606 amount revenue recognized follows contractually specified price may include freight contractually specified cost components physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required topic 61020 carbohydrate solutions carbohydrate solutions segment generates revenue sale products manufactured company’s global corn wheat milling facilities around world revenue recognized control products transferred customer products shipped customers company’s various facilities network storage terminals amount revenue recognized based consideration specified contract could include freight costs depending specific shipping terms contract physically settled derivative sales contracts outside scope topic 606 company recognizes revenue control inventory transferred within meaning topic 606 required topic 61020 archerdanielsmidland company notes consolidated financial statements continued note 2 revenues continued nutrition segment sells specialty products including natural flavor ingredients flavor systems natural colors animal nutrition products specialty food feed ingredients revenue recognized control products transferred customer amount revenue recognized follows contracted price mutually agreed price product freight shipping recognized component revenue time control transfers customer includes company’s futures commission business whose primary sources revenue commissions brokerage income generated executing orders clearing futures contracts options futures contracts behalf customers commissions brokerage revenue recognized date transaction executed also includes company’s captive insurance business generates third party revenue proportionate share premiums thirdparty reinsurance pools reinsurance premiums recognized straightline basis period underlying policy note 3 acquisitions operating results acquisitions included company’s financial statements date acquisition significant year ended december 31 2019 goodwill allocated connection acquisitions primarily attributable synergies expected arise company’s acquisition businesses fiscal year 2019 acquisitions year ended december 31 2019 company acquired neovia sas “neovia” florida chemical company “fcc” ziegler group “ziegler” remaining 50 interest gleadell agriculture ltd “gleadell” aggregate consideration 20 billion cash aggregate consideration acquisitions net 95 million cash acquired plus 15 million acquisitiondate value company’s previously held equity interest gleadell allocated follows subject final adjustments related neovia 900 million allocated goodwill 94 million expected deductible tax purposes company recognized pretax gains 4 million gleadell transaction representing difference carrying value acquisitiondate fair value company’s previously held equity interest acquisitiondate fair value determined based discounted cash flow analysis using market participant assumptions level 3 measurement applicable accounting standards archerdanielsmidland company notes consolidated financial statements continued note 3 acquisitions continued following table sets forth fair values useful lives intangible assets acquired neovia fcc ziegler acquisitions line company’s strategy become one world’s leading nutrition companies postacquisition financial results acquisitions reported nutrition segment fiscal year 2018 acquisitions year ended december 31 2018 company acquired probiotics international limited also known protexin britishbased provider probiotic supplements human pet productionanimal uses rodelle inc premium originator processor supplier vanilla products certain soybean origination crushing refining bottling assets brazilbased algar agro aggregate consideration 506 million cash aggregate consideration acquisitions net 42 million cash acquired allocated follows acquisitions protexin rodelle inc expand companys wide portfolio health wellness offerings human animal nutrition consumers fiscal year 2017 acquisitions year ended december 31 2017 company acquired crosswind industries inc industry leader manufacture contract private label treats foods well specialty ingredients chamtor sa french producer wheatbased sweeteners starches 51 controlling interest industries centers israeli company specializing import distribution agricultural feed products 89 controlling interest biopolis sl leading provider microbial technology strong portfolio novel food ingredients aggregate consideration 194 million cash archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements following tables set forth level company’s assets liabilities accounted fair value recurring basis december 31 2019 2018 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued estimated fair values inventories carried market based exchangequoted prices adjusted differences local markets quality referred basis market valuations company’s inventories adjusted location quality basis exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade basis adjustments generally determined using inputs broker dealer quotations market transactions either listed counter otc markets considered observable cases basis adjustments unobservable supported little market activity unobservable inputs significant impact measurement fair value inventory classified level 3 changes fair value inventories recognized consolidated statements earnings component cost products sold archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued derivative contracts include exchangetraded commodity futures options contracts forward commodity purchase sale contracts otc instruments related primarily agricultural commodities energy interest rates foreign currencies exchangetraded futures options contracts valued based unadjusted quoted prices active markets classified level 1 majority company’s exchangetraded futures options contracts cashsettled daily basis therefore included tables fair value forward commodity purchase sale contracts estimated based exchangequoted prices adjusted differences local markets market valuations companys forward commodity purchase sale contracts adjusted location basis exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade basis adjustments generally determined using inputs broker dealer quotations market transactions either listed otc markets considered observable cases basis adjustments unobservable supported little market activity observable inputs available substantially full term contract classified level 2 unobservable inputs significant impact 10 measurement fair value contract classified level 3 except certain derivatives designated cash flow hedges changes fair value commodityrelated derivatives recognized consolidated statements earnings component cost products sold changes fair value foreign currencyrelated derivatives recognized consolidated statements earnings component revenues cost products sold income expense net depending upon purpose contract changes fair value derivatives designated effective cash flow hedges recognized consolidated balance sheets component accumulated comprehensive income loss aoci hedged items recorded earnings probable hedged transaction longer occur company’s cash equivalents comprised money market funds valued using quoted market prices classified level 1 company’s marketable securities comprised us treasury securities corporate debt securities us treasury securities valued using quoted market prices classified level 1 corporate debt securities valued using thirdparty pricing services substantially classified level 2 unrealized changes fair value availableforsale marketable debt securities recognized consolidated balance sheets component aoci unless decline value deemed otherthantemporary point decline recorded earnings company’s segregated investments comprised us treasury securities us treasury securities valued using quoted market prices classified level 1 company deferred consideration accounts receivable securitization programs “programs” represents notes receivable purchasers programs see note 19 amount reflected current assets consolidated balance sheet see note 6 company carries deferred consideration fair value determined calculating expected amount cash received fair value principally based observable inputs level 2 measurement consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate receipt deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred programs historically insignificant archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued following tables present rollforward activity assets liabilities measured fair value recurring basis using significant unobservable inputs level 3 years ended december 31 2019 2018 1 includes increase unrealized gains 900 million relating level 3 assets still held december 31 2019 1 includes increase unrealized losses 7 million relating level 3 liabilities still held december 31 2019 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued 1 includes increase unrealized gains 669 million relating level 3 assets still held december 31 2018 1 includes increase unrealized losses 532 million relating level 3 liabilities still held december 31 2018 periods presented company transfers levels 1 2 transfers level 3 assets liabilities previously classified level 2 due relative value unobservable inputs total fair value measurement certain products derivative contracts rising 10 threshold transfers level 3 primarily due relative value unobservable inputs total fair value measurement certain products derivative contracts falling 10 threshold thus permitting reclassification level 2 archerdanielsmidland company notes consolidated financial statements continued note 4 fair value measurements continued cases price components result differences exchangetraded prices local prices inventories commodity purchase sale contracts observable based upon available quotations pricing components cases differences unobservable price components primarily include transportation costs adjustments required due location quality contract terms table adjustments referred basis changes unobservable price components impacted specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact movement unobservable price components following table sets forth weighted average percentage unobservable price components included company’s level 3 valuations december 31 2019 2018 company’s level 3 measurements may include basis transportation cost price components example level 3 inventories basis unobservable component december 31 2019 weighted average 282 total price assets 147 total price liabilities certain company’s principal markets company relies price quotes third parties value inventories physical commodity purchase sale contracts price quotes generally adjusted company determining applicable market price cases availability thirdparty quotes limited one two independent sources situations absent corroborating evidence company considers price quotes 100 unobservable therefore fair value items reported level 3 note 5 derivative instruments hedging activities derivatives designated hedging instruments majority company’s derivative instruments designated hedging instruments company uses exchangetraded futures exchangetraded otc options contracts manage net position merchandisable agricultural product inventories forward cash purchase sales contracts reduce price risk caused market fluctuations agricultural commodities foreign currencies company also uses exchangetraded futures exchangetraded otc options contracts components merchandising strategies designed enhance margins results strategies significantly impacted factors correlation value exchangetraded commodities futures contracts value underlying commodities counterparty contract defaults volatility freight markets derivatives including exchange traded contracts physical purchase sale contracts inventories certain merchandisable agricultural products include amounts acquired deferred pricing contracts stated market value inventory derivative therefore fair values changes fair values inventories included tables archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments december 31 2019 2018 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statements earnings years ended december 31 2019 2018 2017 changes market value inventories certain merchandisable agricultural commodities forward cash purchase sales contracts exchangetraded futures exchangetraded otc options contracts recognized earnings immediately component cost products sold archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued derivatives designated cash flow fair value net investment hedging strategies company certain derivatives designated cash flow fair value net investment hedges december 31 2019 certain derivatives designated cash flow fair value hedges december 31 2018 company uses interest rate swaps designated fair value hedges protect fair value 496 million fixedrate debt due changes interest rates terms interest rate swaps match terms underlying debt december 31 2019 2018 company 3 million current assets 4 million current liabilities respectively representing fair value interest rate swaps corresponding increase decrease underlying debt amount net impact earnings company uses crosscurrency swaps designated net investment hedges protect company’s investment foreign subsidiary changes foreign currency exchange rates year ended december 31 2019 company executed usdfixed eurofixed crosscurrency swaps maturing various dates aggregate notional amount 12 billion december 31 2019 company aftertax gains 6 million aoci related foreign exchange gains losses net investment hedge transactions amount deferred aoci underlying investment divested company uses interest rate swaps designated cash flow hedges hedge forecasted interest payments certain letters credit banks terms interest rate swaps match terms forecasted interest payments deferred gains losses recognized income expense net period related interest payments paid banks december 31 2019 company 43 million losses aoci related interest rate swaps company expects recognize amount consolidated statement earnings life instruments hedge programs described derivatives designated cash flow hedges assuming normal market conditions changes market value derivative contracts historically expected continue highly effective offsetting changes price movements hedged item hedged item recognized earnings gainslosses arising hedge reclassified aoci either revenues cost products sold applicable december 31 2019 2018 company 5 million aftertax losses 31 million aftertax gains aoci respectively related gains losses cash flow hedge transactions company expects recognize 5 million 2019 aftertax losses consolidated statement earnings next 12 months adm uses futures options contracts hedge purchase price anticipated volumes corn purchased processed future month objective hedging program reduce variability cash flows associated company’s forecasted purchases corn company’s corn processing plants currently grind approximately 72 million bushels corn per month past 12 months company hedged 19 60 monthly anticipated grind december 31 2019 company designated hedges representing 4 38 anticipated monthly grind corn next 12 months adm time also uses futures options swaps hedge sales price certain ethanol sales contracts company established hedging programs ethanol sales contracts indexed unleaded gasoline prices various exchangetraded ethanol contracts objective hedging programs reduce variability cash flows associated company’s sales ethanol past 12 months company hedged 0 million 108 million gallons ethanol sales per month programs december 31 2019 company designated hedges representing 1 million 28 million gallons ethanol sales per month next 12 months adm uses futures options contracts hedge purchase price anticipated volumes soybeans purchased processed future month certain us soybean crush facilities company also uses futures options contracts hedge sales prices anticipated soybean meal soybean oil sales proportionate soybean crushing process facilities past 12 months company hedged 79 100 anticipated monthly soybean crush soybean purchases soybean meal oil sales designated facilities company designated hedges representing 0 100 anticipated monthly soybean crush soybean purchases soybean meal oil sales designated facilities next 12 months archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued following table sets forth fair value derivatives designated hedging instruments december 31 2019 2018 following table sets forth pretax gains losses derivatives designated hedging instruments included consolidated statement earnings years ended december 31 2019 2018 2017 archerdanielsmidland company notes consolidated financial statements continued note 5 derivative instruments hedging activities continued net investment hedging strategies company designated €17 billion outstanding longterm debt commercial paper borrowings €11 billion outstanding longterm debt december 31 2019 2018 respectively hedges net investment foreign subsidiary december 31 2019 2018 company aftertax gains 7 million losses 26 million respectively aoci related foreign exchange gains losses net investment hedge transactions amount deferred aoci underlying investment divested note 6 current assets following table sets forth items current assets 1 company provides financing suppliers primarily brazilian farmers finance portion suppliers’ production costs amounts reported net allowances 3 million december 31 2019 2018 interest earned financing receivables 27 million 26 million 25 million years ended december 31 2019 2018 2017 respectively included interest income consolidated statements earnings 2 nontrade receivables included 81 million 84 million reinsurance recoverables december 31 2019 2018 respectively archerdanielsmidland company notes consolidated financial statements continued note 7 accrued expenses payables following table sets forth items accrued expenses payables note 8 investments advances affiliates company applies equity method accounting investments investees adm ability exercise significant influence including company’s 248 249 share ownership wilmar december 31 2019 2018 respectively company 63 56 unconsolidated domestic foreign affiliates december 31 2019 2018 respectively following table summarizes combined balance sheets december 31 2019 2018 combined statements earnings company’s unconsolidated affiliates years ended december 31 2019 2018 2017 company’s share undistributed earnings unconsolidated affiliates december 31 2019 23 billion companys investment wilmar carrying value 39 billion december 31 2019 market value 48 billion based quoted market price converted us dollars applicable exchange rate december 31 2019 company provides credit facilities totaling 106 million five unconsolidated affiliates two facilities bear interest 000 441 total outstanding balance 31 million three facilities outstanding balance december 31 2019 outstanding balance included current assets accompanying consolidated balance sheet archerdanielsmidland company notes consolidated financial statements continued note 9 goodwill intangible assets goodwill balances attributable consolidated businesses segment set forth following table changes goodwill year ended december 31 2019 primarily related acquisitions 900 million see note 3 following table sets forth intangible assets changes gross carrying amounts intangible assets year ended december 31 2019 primarily related acquisitions 733 million see note 3 aggregate amortization expense 165 million 129 million 122 million years ended december 31 2019 2018 2017 respectively estimated future aggregate amortization expense next five years 180 million 180 million 178 million 168 million 161 million respectively archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements company’s longterm debt consisted following june 2019 company retired €500 million aggregate principal amount floating rate notes matured june 24 2019 december 3 2018 company issued 600 million 400 million aggregate principal amounts 45 notes due 2049 3375 notes due 2022 respectively net proceeds expenses 45 3375 notes 588 million 399 million respectively september 12 2018 company issued €650 million 744 million december 31 2018 aggregate principal amount 1000 notes due 2025 net proceeds expenses 747 million discount amortization expense net premium amortization 12 million 10 million 11 million years ended december 31 2019 2018 2017 respectively included interest expense related company’s longterm debt archerdanielsmidland company notes consolidated financial statements continued note 10 debt financing arrangements continued december 31 2019 fair value company’s longterm debt exceeded carrying value 15 billion estimated using quoted market prices level 2 measurement applicable accounting standards aggregate maturities longterm debt five years december 31 2019 7 million 672 million 409 million 678 million 48 million respectively december 31 2019 company lines credit including accounts receivable securitization programs described totaling 90 billion 64 billion unused weighted average interest rates shortterm borrowings outstanding december 31 2019 2018 123 795 respectively company’s total lines credit 50 billion supported combined us european commercial paper borrowing programs 10 billion commercial paper outstanding december 31 2019 company’s credit facilities certain debentures require company comply specified financial nonfinancial covenants including maintenance minimum tangible net worth well limitations related incurring liens secured debt certain financing arrangements company compliance covenants december 31 2019 company outstanding standby letters credit surety bonds december 31 2019 2018 totaling 14 billion 17 billion respectively company accounts receivable securitization programs “programs” programs provide company 19 billion funding resulting sale accounts receivable december 31 2019 company utilized 14 billion facility programs see note 19 information programs note 11 stock compensation company’s employee stock compensation plans provide granting options employees purchase common stock company pursuant company’s 2009 incentive compensation plan options issued market value date grant vest incrementally one year five years expire ten years date grant fair value option grant estimated date grant using blackscholes single option pricing model volatility assumption used blackscholes single option pricing model based historical volatility company’s stock volatility company’s stock calculated based upon monthly closing price company’s stock period immediately prior date grant corresponding average expected life grant average expected life represents period time option grants expected outstanding riskfree rate based rate us treasury zerocoupon issues remaining term equal expected life option grants assumptions used blackscholes single option pricing model follows archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary option activity 2019 presented weightedaverage remaining contractual term options outstanding exercisable december 31 2019 4 years 4 years respectively aggregate intrinsic value options outstanding exercisable december 31 2019 78 million 68 million respectively weightedaverage grantdate fair values options granted years ended december 31 2019 2018 2017 788 695 790 respectively total intrinsic values options exercised years ended december 31 2019 2018 2017 15 million 36 million 11 million respectively cash proceeds received options exercised years ended december 31 2019 2018 2017 27 million 55 million 27 million respectively december 31 2019 3 million total unrecognized compensation expense related option grants amounts recognized compensation expense next two years 2 million 1 million respectively company’s 2009 incentive compensation plan provides granting restricted stock restricted stock units restricted stock awards cost certain officers key employees addition company’s 2009 incentive compensation plan also provides granting performance stock units psus cost certain officers key employees restricted stock awards made common stock units equivalent rights vest end restriction period three years awards psus made common stock units vest end vesting period three years subject attainment certain future service performance criteria based company’s adjusted return invested capital roic adjusted earnings taxes interest depreciation amortization ebitda total shareholder return tsr years ended december 31 2019 2018 2017 26 million 25 million 22 million common stock units respectively granted restricted stock awards psus december 31 2019 52 million shares available future grants pursuant 2009 plan fair value restricted stock awards determined based market value company’s shares grant date fair value psus based weightedaverage values adjusted roic adjusted ebitda tsr adjusted roic adjusted ebitda fair value determined based market value companys shares grant date tsr fair value determined using monte carlo simulation weightedaverage grantdate fair values awards granted years ended december 31 2019 2018 2017 4211 4272 4438 respectively archerdanielsmidland company notes consolidated financial statements continued note 11 stock compensation continued summary restricted stock awards psus activity 2019 presented december 31 2019 102 million total unrecognized compensation expense related restricted stock awards psus amounts recognized compensation expense next three years 71 million 28 million 3 million respectively total grantdate fair value restricted stock awards vested year ended december 31 2019 54 million compensation expense option grants restricted stock awards psus granted employees generally recognized straightline basis service period respective grant certain company’s option grants restricted stock awards psus continue vest upon recipient’s retirement company compensation expense related option grants restricted stock awards granted retirementeligible employees recognized earnings date grant compensation expense psus based probability meeting performance criteria total compensation expense option grants restricted stock awards psus recognized years ended december 31 2019 2018 2017 89 million 109 million 66 million respectively changes incentive compensation expense primarily caused level attainment psu performance criteria described note 12 income expense net following table sets forth items income expense individually significant items included table gains loss sales assets year ended december 31 2019 included loss sale companys equity investment cip partially offset gains sale certain assets stepup gains equity investments gains disposals individually insignificant assets ordinary course business gains sales assets businesses year ended december 31 2018 included gains sale companys oilseeds operations bolivia equity investment individually insignificant assets ordinary course business gains sales assets businesses year ended december 31 2017 included gains related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business archerdanielsmidland company notes consolidated financial statements continued note 12 income expense net continued pension settlement year ended december 31 2018 related purchase group annuity contract irrevocably transferred future benefit obligations annuity administration certain retirees companys adm retirement plan loss debt extinguishment year ended december 31 2017 related early redemption company’s 559 million notes due march 15 2018 realized gains losses sales availableforsale marketable securities immaterial periods presented net year ended december 31 2019 included income nonservice components net pension benefit income 15 million partially offset foreign exchange losses net year ended december 31 2018 included foreign exchange losses partially offset income nonservice components net benefit income 10 million net year ended december 31 2017 included provisions contingent losses related certain legal settlement items oilseeds nutrition segments foreign exchange losses nonservice components net benefit cost 27 million partially offset income note 13 income taxes following table sets forth geographic split earnings income taxes significant components income taxes follows 1 includes impact tax cuts jobs act discussed page 85 archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued significant components deferred tax liabilities assets follows archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued reconciliation statutory federal income tax rate company’s effective income tax rate earnings follows low 2019 effective tax rate primarily due impact us tax credits including 2018 2019 biodiesel tax credit railroad maintenance tax credit signed law december 2019 effective tax rate 2018 included 2017 biodiesel tax credit recorded first quarter 2018 additional trueup adjustments related 2017 us tax reform along certain favorable discrete tax items foreign rate differential primarily due lower tax rates companys operations switzerland asia caribbean company’s foreign earnings taxed rates lower us rate generated jurisdictions 61 56 59 foreign earnings taxes fiscal years 2019 2018 2017 respectively undistributed earnings company’s foreign subsidiaries approximately 116 billion december 31 2019 company’s undistributed foreign subsidiaries earnings continue indefinitely reinvested foreign operations income taxes transition tax us tax undistributed subpart f minimum tax global intangible low taxed income gilti provided practicable determine amount unrecognized deferred tax liability related remaining undistributed foreign subsidiaries earnings subject transition tax entities tax cuts jobs act “act” enacted december 22 2017 income tax effects changes tax laws recognized period enacted act provides numerous significant tax law changes modifications varying effective dates include reducing us federal corporate income tax rate 35 21 creating territorial tax system onetime transition tax previously deferred foreign earnings broadening tax base allowing immediate capital expensing certain qualified property result company made reasonable estimate effects existing deferred tax balances onetime transition tax recognized net provisional benefit 379 million included component income tax expense year ended december 31 2017 net provisional benefit consisted net tax benefit 528 million related remeasurement deferred tax balance beneficial impact 220 million reserves previously established asc subtopic 74030 income taxes considerations special areas partially offset 369 million provisional impact transition tax company performed quarterly review provisional tax liability recorded 2017 new guidance act issued company updated calculation transition tax recorded immaterial expense 2019 benefit 29 million 2018 company elected pay onetime transition tax eight years december 31 2019 companys remaining transition tax liability 183 million paid installments 2025 archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued act also contains new provisions related gilti foreign derived intangible income fdii effective fiscal year 2018 company incurred additional us taxable income 105 million 101 million related gilti deducted 1 million 101 million related fdii fiscal years 2019 2018 respectively company made accounting policy election treat gilti period cost 2018 us tax authorities issued proposed treasury regulations addressing tax reform items effective 2018 company recorded continue record impact tax reform items us tax authorities issue treasury regulations guidance addressing tax reformrelated changes also reasonable expect global taxing authorities reviewing current legislation potential modifications reaction implementation act additional guidance along potential additional global tax legislation changes may affect significant deductions income inclusions could material adverse effect companys net income cash flow company 411 million 313 million tax assets related net operating loss carryforwards certain international subsidiaries december 31 2019 2018 respectively december 31 2019 approximately 312 million assets expiration date remaining 99 million expire various times fiscal 2028 annual usage certain assets limited percentage taxable income respective foreign subsidiary year company recorded valuation allowance 193 million 166 million tax assets december 31 2019 2018 respectively due uncertainty realization company 62 million 55 million tax assets related foreign domestic capital loss carryforwards december 31 2019 2018 respectively company recorded valuation allowance 62 million 55 million tax assets december 31 2019 2018 respectively company 74 million tax assets related state income tax attributes incentive credits net operating loss carryforwards net federal tax benefit december 31 2019 2018 expire various times fiscal 2038 due uncertainty realization company recorded valuation allowance 70 million 68 million related state income tax assets net federal tax benefit december 31 2019 2018 respectively company remains subject federal examination us calendar tax years 2016 2017 2018 2019 following table sets forth rollforward activity unrecognized tax benefits year ended december 31 2019 2018 follows additions reductions unrecognized tax benefits shown table included effects related net income shareholders’ equity changes unrecognized tax benefits material effect company’s net income cash flow december 31 2019 2018 company accrued interest penalties unrecognized tax benefits 26 million 24 million respectively archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued company subject income taxation routine examinations many jurisdictions around world frequently faces challenges regarding amount taxes due challenges include positions taken company related timing nature amount deductions allocation income among various jurisdictions routine evaluations exposure associated various tax filing positions company recognizes liability necessary estimated potential tax owed company accordance applicable accounting standards resolution related tax positions negotiations relevant tax authorities litigation may take years complete therefore difficult predict timing resolution tax positions company cannot predict provide assurance ultimate outcome ongoing future examinations however company anticipate total amount unrecognized tax benefits increase decrease significantly next twelve months given long periods time involved resolving tax positions company expect recognition unrecognized tax benefits material impact company’s effective income tax rate given period total amount unrecognized tax benefits recognized company one time would reduction 130 million tax expense period company’s whollyowned subsidiary adm brasil ltda adm brasil received three separate tax assessments brazilian federal revenue service bfrs challenging tax deductibility commodity hedging losses related expenses tax years 2004 2006 2007 assessments totaled approximately 104 million tax 307 million interest penalties december 31 2019 adjusted variation currency exchange rates statute limitations tax years 2005 20082011 expired company expect receive additional tax assessments respect issue adm brasil enters commodity hedging transactions result gains included adm brasil’s calculation taxable income brazil losses adm brasil deducts taxable income brazil company evaluated tax position regarding hedging transactions concluded based upon advice brazilian legal counsel appropriate recognize gains losses resulting hedging transactions determining brazilian income tax expense therefore company continued recognize tax benefit hedging losses financial statements recorded tax liability amounts assessed bfrs adm brasil filed administrative appeal assessments january 2020 secondlevel administrative appeal panel found favor adm brasil cancelled assessments unclear bfrs appeal company intends vigorously defend position appeal could made administrative panel superior tax chamber company expects know ruling appealed first half 2020 based upon view external counsel unlikely bfrs successful appealing matter company believes consolidated financial statements properly reflect tax deductibility hedging losses ultimate resolution matter could result future recognition additional payments expense income tax associated interest penalties company’s subsidiaries argentina adm agro srl formerly adm argentina sa alfred c toepfer argentina srl received tax assessments challenging transfer prices used price grain exports tax years 1999 2011 december 31 2019 assessments totaled 14 million tax 53 million interest adjusted variation currency exchange rates argentine tax authorities conducted review income taxes paid large exporters processors cereals agricultural commodities resulting allegations income tax evasion company strongly believes complied argentine tax laws date company received assessments closed years subsequent 2011 considering statute limitation tax years 2012 2013 expired however cannot rule receiving additional assessments challenging transfer prices used price grain exports years subsequent 2014 estimates potential assessments could approximately 43 million tax 22 million interest adjusted variation currency exchange rates december 31 2019 company believes appropriately evaluated transactions underlying assessments concluded based argentine tax law tax position would sustained accordingly recorded tax liability assessments company intends vigorously defend position current assessments similar assessments may issued years subsequent 2011 archerdanielsmidland company notes consolidated financial statements continued note 13 income taxes continued accordance accounting requirements uncertain tax positions company recorded uncertain tax liability assessments concluded likely prevail brazil argentina matters based upon technical merits taxing jurisdictions’ processes provide mechanism settling less full amount assessment company’s consideration tax assessments requires judgments application income tax regulations specific facts circumstances final outcome matters cannot reliably predicted may take many years resolve could result financial impacts entire amount assessments 2014 company’s whollyowned subsidiary netherlands adm europe bv received tax assessment netherlands tax authority challenging transfer pricing aspects 2009 business reorganization involved two subsidiary companies netherlands december 31 2019 assessment 91 million tax 34 million interest adjusted variation currency exchange rates september 2019 company received interim decision appeal directed parties work toward settlement december 31 2019 agreement reached company awaiting additional guidance court could include assigning matter third party expert establish valuation subsequent appeals may take extended period time could result additional financial impacts entire amount assessment company carefully evaluated underlying transactions concluded amount gain recognized reorganization tax purposes appropriate company accrued best estimate believes likely outcome litigation vigorously defend position assessment note 14 leases lessee accounting company leases certain transportation equipment plant equipment office equipment land buildings storage facilities leases include options renew renewal terms extend lease term 1 month 49 years certain leases also include index nonindex escalation clauses options purchase leased property leases accounted finance leases immaterial december 31 2019 accounting policy election company apply recognition requirements topic 842 shortterm leases underlying asset categories company recognizes shortterm lease payments earnings straightline basis lease term variable lease payments period obligation payments incurred following table sets forth amounts relating company’s total lease cost information archerdanielsmidland company notes consolidated financial statements continued note 14 leases continued tabular disclosure future annual undiscounted cash flows operating lease liabilities december 31 2019 1 calculated using implicit rate lease available incremental borrowing rate appropriate tenor geography lease december 31 2019 company 971 million rightofuse assets included assets 215 million current lease liabilities included accrued expenses payables 781 million noncurrent lease liabilities included longterm liabilities consolidated balance sheet tabular disclosure future minimum lease payments noncancellable operating leases including time charters ocean going vessels initial remaining terms excess one year december 31 2018 note 15 employee benefit plans company provides substantially us employees certain foreign subsidiaries retirement benefits including defined benefit pension plans defined contribution plans company provides certain eligible us employees retire qualifying conditions subsidized postretirement health care coverage health care reimbursement accounts april 2019 company announced enhanced early retirement eligible employees us canada result company recognized pension remeasurement charge 48 million second quarter 2019 employees electing retire early also given option receive benefit form lump sum payment resulted pension settlement charge 51 million second half year archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued october 2018 company amended adm retirement plan “plan” entered binding agreement purchase group annuity contract prudential insurance company america “prudential” irrevocably transferring future benefit obligations annuity administration approximately 3800 retirees plan prudential purchase group annuity contract funded directed plan’s assets completed november 2 2018 reduced companys pension obligations approximately 528 million result transaction company recognized noncash pension settlement charge approximately 117 million fourth quarter 2018 july 2017 company announced participants company’s us salaried pension plan supplemental executive retirement plan serp begin accruing benefits cash balance formula effective january 1 2022 benefits participants accruing final average pay formula frozen december 31 2021 including pay service date change along changes participation associated divestitures restructuring triggered remeasurement salaried pension plan serp resulting decreases fiscal 2017 pension expense accumulated comprehensive loss underfunded status 18 million 164 million 182 million respectively 2017 company also changed method used estimate service interest cost components net periodic pension postretirement benefit costs plans new method uses spot rate yield curve approach estimate service interest costs previously costs determined using single weightedaverage discount rate applied future cash outflows change affect measurement company’s benefit obligations accounted change accounting estimate accordance guidance asc topic 250 accounting estimates error corrections thereby impacting current future periods impact change aftertax earnings diluted earnings per share year ended december 31 2017 immaterial company maintains 401k plans covering substantially us employees company contributes cash plans match qualifying employee contributions also provides nonmatching employer contribution 1 pay eligible participants employee stock ownership component 401k plans employees may choose invest companys stock part investment elections employer contributions expensed paid assets company’s 401k plans consist primarily listed common stocks pooled funds company’s 401k plans held 8 million shares company common stock december 31 2019 market value 384 million cash dividends received shares company common stock plans year ended december 31 2019 12 million following table sets forth components retirement plan expense years ended december 31 2019 2018 2017 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth changes defined benefit obligation fair value defined benefit plan assets years ended december 31 2019 2018 included aoci pension benefits december 31 2019 following amounts yet recognized net periodic pension cost unrecognized prior service credit 133 million unrecognized actuarial loss 572 million prior service credit actuarial loss included aoci expected recognized net periodic pension cost 2020 20 million 37 million respectively included aoci postretirement benefits december 31 2019 following amounts yet recognized net periodic postretirement benefit cost unrecognized prior service credit 15 million unrecognized actuarial loss 47 million prior service credit 14 million actuarial loss 5 million included aoci expected recognized net periodic benefit cost 2020 archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth principal assumptions used developing net periodic benefit cost following table sets forth principal assumptions used developing yearend actuarial present value projected benefit obligations projected benefit obligation accumulated benefit obligation fair value plan assets pension plans projected benefit obligations excess plan assets 23 billion 22 billion 16 billion respectively december 31 2019 20 billion 19 billion 14 billion respectively december 31 2018 projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 22 billion 21 billion 15 billion respectively december 31 2019 19 billion 18 billion 13 billion respectively december 31 2018 accumulated benefit obligation pension plans december 31 2019 2018 26 billion 22 billion respectively postretirement benefit measurement purposes 69 annual rate increase per capita cost covered health care benefits assumed year ended december 31 2019 rate assumed decrease gradually 45 2026 remain level thereafter 1 change assumed health care cost trend rates would following effects 1 increase 1 decrease millions effect accumulated postretirement benefit obligations 4 effect combined service interest cost components immaterial archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued plan assets company’s employee benefit plan assets principally comprised following types investments common stock equity securities valued based quoted exchange prices classified within level 1 valuation hierarchy mutual funds mutual funds valued closing price reported active market traded classified within level 1 valuation hierarchy common collective trust cct funds fair values ccts valued using net asset value nav investments ccts comprised international equity shortterm investments valued nav provided administrators funds corporate debt instruments corporate debt instruments valued using thirdparty pricing services classified within level 2 valuation hierarchy us treasury instruments us treasury instruments valued closing price reported active market traded classified within level 1 valuation hierarchy us government agency state local government bonds us government agency obligations state municipal debt securities valued using thirdparty pricing services classified within level 2 valuation hierarchy methods described may produce fair value calculation may indicative net realizable value reflective future fair values furthermore company believes valuation methods appropriate consistent market participants’ methods use different methodologies assumptions determine fair value certain financial instruments could result different fair value measurement reporting date archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following tables set forth level within fair value hierarchy fair value plan assets december 31 2019 2018 level 3 gains losses plan assets classified level 3 fair value hierarchy therefore gains losses associated level 3 assets archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following table sets forth actual asset allocation company’s global pension plan assets measurement date 1 company’s us pension plans contain approximately 73 company’s global pension plan assets actual asset allocation company’s us pension plans measurement date consists 60 equity securities 40 debt target asset allocation company’s us pension plans approximately actual asset allocation actual asset allocation company’s foreign pension plans measurement date consists 35 equity securities 24 debt securities 41 investments target asset allocation company’s foreign pension plans approximately actual asset allocation 2 company’s pension plans directly hold shares company common stock december 31 2019 2018 measurement dates investment objectives company’s plan assets • optimize longterm return plan assets acceptable level risk • maintain broad diversification across asset classes among investment managers • maintain careful control risk level within asset class asset allocation targets promote optimal expected return volatility characteristics given longterm time horizon fulfilling obligations pension plans selection targeted asset allocation plan assets based upon review expected return risk characteristics asset class well correlation returns among asset classes us pension plans target asset allocation also based asset liability study updated periodically investment guidelines established investment manager guidelines provide parameters within investment managers agree operate including criteria determine eligible ineligible securities diversification requirements credit quality standards applicable countries derivatives may used gain market exposure efficient timely manner however derivatives may used leverage portfolio beyond market value underlying investments company uses external consultants assist monitoring investment strategy asset mix company’s plan assets develop company’s expected longterm rate return assumption plan assets company generally uses longterm historical return information targeted asset mix identified asset liability studies adjustments made expected longterm rate return assumption deemed necessary based upon revised expectations future investment performance overall investment markets contributions expected future benefit payments based actuarial calculations company expects contribute 27 million pension plans 16 million postretirement benefit plan 2020 company may elect make additional discretionary contributions period archerdanielsmidland company notes consolidated financial statements continued note 15 employee benefit plans continued following benefit payments reflect expected future service expected paid benefit plans note 16 shareholders’ equity company authorized one billion shares common stock 500000 shares preferred stock zero par value preferred stock issued december 31 2019 2018 company approximately 1588 million shares 1571 million shares respectively common shares treasury stock 54 billion 53 billion december 31 2019 2018 respectively recorded cost reduction common stock following tables set forth changes aoci component reclassifications aoci years ended december 31 2019 2018 change foreign currency translation adjustment 2019 primarily due us dollar appreciation impacting eurodenominated equities companys foreign subsidiaries change 2018 primarily due us dollar appreciation impacting euro british pounddenominated equities company’s foreign subsidiaries archerdanielsmidland company notes consolidated financial statements continued note 16 shareholders’ equity continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information effective july 1 2019 company changed segment reporting reflect creation combined ag services oilseeds segment former origination oilseeds businesses merged combined ag services oilseeds segment enables company better respond market changes integrating supply value chains risk management delivering significant simplification efficiency daytoday business part company’s efforts streamlined management structure combined segment led former president oilseeds expanding role president ag services oilseeds prior period results reclassified conform current period segment presentation company’s operations organized managed classified three reportable business segments ag services oilseeds carbohydrate solutions nutrition segments organized based upon nature products services offered company’s remaining operations reportable segments defined applicable accounting standard classified ag services oilseeds segment includes global activities related origination merchandising transportation storage agricultural raw materials crushing processing oilseeds soybeans soft seeds cottonseed sunflower seed canola rapeseed flaxseed vegetable oils protein meals oilseeds products produced marketed segment include ingredients food feed energy industrial customers crude vegetable oils produced segment’s crushing activities sold “as is” processed refining blending bleaching deodorizing salad oils salad oils sold “as is” processed hydrogenating andor interesterifying margarine shortening food products partially refined oils used produce biodiesel glycols sold manufacturers use chemicals paints industrial products oilseed protein meals principally sold third parties used ingredients commercial livestock poultry feeds ag services oilseeds segment also major supplier peanuts tree nuts peanutderived ingredients us export markets north america cotton cellulose pulp manufactured sold chemical paper industrial markets ag services oilseeds segments grain sourcing handling transportation network including barge oceangoing vessel truck rail container freight services provides reliable efficient services companys customers agricultural processing operations ag services oilseeds segment also includes agricultural commodity feed product import export global distribution structured trade finance activities segment also includes companys share results equity investment wilmar share results pacificor stratas foods llc edible beans oils limited olenex soyven joint ventures february 2019 company purchased remaining 50 interest owned invivo group gleadell agriculture ltd joint venture located united kingdom carbohydrate solutions segment engaged corn wheat wet dry milling activities carbohydrate solutions segment converts corn wheat products ingredients used food beverage industry including sweeteners corn wheat starches syrup glucose wheat flour dextrose starch used carbohydrate solutions segment feedstocks bioproducts operations fermentation dextrose carbohydrate solutions segment produces alcohol food animal feed ingredients ethyl alcohol produced company industrial use ethanol beverage grade ethanol gasoline increases octane used extender oxygenate corn gluten feed meal well distillers’ grains produced use animal feed ingredients corn germ byproduct wet milling process processed vegetable oil protein meal carbohydrate solutions products include citric acids used various food industrial products segment also includes company’s share results equity investments hungrana ltd almidones mexicanos sa red star yeast company llc aston foods food ingredients archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued nutrition segment serves customer needs food beverages health wellness segment engages manufacturing sale distribution wide array products nature including plantbased proteins natural flavor ingredients flavor systems natural colors emulsifiers soluble fiber polyols hydrocolloids natural health nutrition products including probiotics prebiotics enzymes botanical extracts specialty food feed ingredients nutrition segment includes activities related procurement processing distribution edible beans nutrition segment also includes activities related processing distribution formula feeds animal health nutrition products manufacture contract private label pet treats foods 2019 adm completed acquisitions neovia frenchbased global provider valueadded animal nutrition solutions 72 production facilities presence 25 countries fcc one world’s largest producers citrus oils ingredients ziegler leading european provider natural citrus flavor ingredients includes company’s financial business units related futures commission insurance activities may 1 2017 company completed sale crop risk services business validus holdings global group insurance reinsurance companies intersegment sales recorded amounts approximating market operating profit segment based net sales less identifiable operating expenses also included operating profit segment equity earnings affiliates based equity method accounting specified items included total segment operating profit certain corporate items allocated company’s individual business segments operating performance business segment evaluated management exclusive items corporate results principally include impact liforelated adjustments unallocated corporate expenses interest cost net investment income company’s share results equity investment cip sold december 2019 archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued segment information archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued 1 gains 2019 consisted gain sale certain assets stepup gain equity investmentthe gains 2018 related sale businesses assets gains 2017 related sale crop risk services business disposals individually insignificant assets ordinary course business partially offset adjustment proceeds 2015 sale cocoa business 2 charges 2019 primarily related impairment certain longlived assetsthe charges 2018 consisted impairment certain assets restructuring settlement charges 2017 consisted asset impairments related closure facility reconfiguration company’s peoria illinois ethanol complex settlement charges several individually insignificant asset impairments restructuring charges 3 hedge timing effects relate hedge ineffectiveness associated documented hedge programs archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued archerdanielsmidland company notes consolidated financial statements continued note 17 segment geographic information continued geographic information following geographic data include revenues attributed countries based location subsidiary making sale longlived assets based physical location longlived assets represent net book value property plant equipment archerdanielsmidland company notes consolidated financial statements continued note 18 asset impairment exit restructuring costs following table sets forth charges included asset impairment exit restructuring costs 1 restructuring exit costs year ended december 31 2019 consisted restructuring pension settlement remeasurement charges 159 million corporate primarily related early retirement reorganization initiatives several individually insignificant restructuring charges presented specified items within segment operating profit restructuring exit costs year ended december 31 2018 consisted restructuring charges 24 million corporate primarily related reorganization services corporate several individually insignificant restructuring charges presented specified items within segment operating profit restructuring exit costs year ended december 31 2017 consisted restructuring charges 54 million corporate primarily related reduction certain positions within companys global workforce several individually insignificant restructuring charges presented specified items within segment operating profit 2 impairment charge equity method investment consisted impairment charge equity investment presented specified item within segment operating profit 3 impairment charge goodwill intangible assets year ended december 31 2019 consisted goodwill intangible asset impairments ag services oilseeds presented specified items within segment operating profit impairment charge goodwill intangible assets year ended december 31 2018 consisted intangible asset impairment ag services oilseeds presented specified items within segment operating profit 4 impairment charge longlived assets year ended december 31 2019 consisted 130 million asset impairments related certain facilities vessels longlived assets ag services oilseeds 1 million asset impairments related certain longlived assets carbohydrate solutions presented specified items within segment operating profit impairment charge longlived assets year ended december 31 2018 consisted 61 million asset impairments related longterm receivable certain longlived assets ag services oilseeds 11 million asset impairments related certain longlived assets nutrition presented specified items within segment operating profit 49 million charge related discontinued software project corporate impairment charge longlived assets year ended december 31 2017 consisted 63 million asset impairments primarily related configuration companys peoria illinois ethanol complex 20 million asset impairments related closure facility several individually insignificant asset charges presented specified items within segment operating profit archerdanielsmidland company notes consolidated financial statements continued note 19 sale accounts receivable company accounts receivable securitization program “program” certain commercial paper conduit purchasers committed purchasers collectively “purchasers” program certain usoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm receivables llc “adm receivables” adm receivables turn transfers purchased accounts receivable entirety purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm receivables receives cash payment 13 billion additional amount upon collection accounts receivable deferred consideration program terminates june 18 2020 unless extended company also accounts receivable securitization program “second program” certain commercial paper conduit purchasers committed purchasers collectively “second purchasers” second program certain nonusoriginated trade accounts receivable sold whollyowned bankruptcyremote entity adm ireland receivables company “adm ireland receivables” adm ireland receivables turn transfers purchased accounts receivable entirety second purchasers pursuant receivables purchase agreement exchange transfer accounts receivable adm ireland receivables receives cash payment 06 billion €05 billion additional amount upon collection accounts receivable deferred consideration second program terminates march 13 2020 unless extended program second program collectively “programs” adm receivables adm ireland receivables use cash proceeds transfer receivables purchasers second purchasers collectively purchasers consideration finance purchase receivables company adm subsidiaries originating receivables company accounts transfers sales company retained interests transferred receivables collection administrative responsibilities right deferred consideration december 31 2019 2018 company record servicing asset liability related retained responsibility based assessment servicing fee market values similar transactions cost servicing receivables sold december 31 2019 2018 fair value trade receivables transferred purchasers programs derecognized company’s consolidated balance sheet 19 billion exchange transfer december 31 2019 2018 company received cash 14 billion 15 billion recorded receivable deferred consideration included current assets 446 million 379 million respectively cash collections customers receivables sold 338 billion 348 billion 335 billion years ended december 31 2019 2018 2017 respectively amount 131 billion 148 billion 125 billion cash collections deferred consideration reflected cash inflows investing activities years ended december 31 2019 2018 2017 respectively deferred consideration paid company cash behalf purchasers receivables collected however revolving facility cash collected company’s customers reinvested purchasers daily new receivable purchases programs company’s risk loss following transfer accounts receivable programs limited deferred consideration outstanding company carries deferred consideration fair value determined calculating expected amount cash received principally based observable inputs level 2 measurement applicable accounting standards consisting mainly face amount receivables adjusted anticipated credit losses discounted appropriate market rate receipt deferred consideration subject significant risks delinquencies credit losses accounts receivable transferred programs historically insignificant transfers receivables programs years ended december 31 2019 2018 2017 resulted expense loss sale 18 million 18 million 10 million respectively classified selling general administrative expenses consolidated statements earnings company reflects cash flows related programs operating activities consolidated statements cash flows cash received purchasers upon sale collection receivables subject significant interest rate risk given shortterm nature company’s trade receivables archerdanielsmidland company notes consolidated financial statements continued note 20 legal proceedings company routinely involved number actual threatened legal actions including involving alleged personal injuries employment law product liability intellectual property environmental issues alleged tax liability see note 13 information income tax matters class actions company also routinely receives inquiries regulators government authorities relating various aspects business given time company matters various stages resolution outcomes matters within complete control may known prolonged periods time actions claimants seek damages well relief including injunctive relief could require significant expenditures result lost revenues accordance applicable accounting standards company records liability consolidated financial statements material loss contingencies loss known considered probable amount reasonably estimated reasonable estimate known probable loss range amount within range better estimate minimum amount range accrued material loss contingency reasonably possible known probable reasonably estimated loss range loss disclosed notes consolidated financial statements determining estimated loss range loss significant judgment required estimate amount timing loss recorded estimates probable losses resulting litigation governmental proceedings involving company inherently difficult predict particularly matters early procedural stages incomplete facts legal discovery involve unsubstantiated indeterminate claims damages potentially involve penalties fines disgorgement punitive damages could result change business practice company party numerous lawsuits pending various us state federal courts arising syngenta corporation’s “syngenta” marketing distribution genetically modified corn products us first company brought state court action louisiana syngenta 2014 alleging syngenta negligent commercializing products approved china december 2017 company syngenta reached confidential settlement action second syngenta brought thirdparty claims company 2015 federal multidistrict litigation “mdl” kansas city kansas consolidated state court litigation minneapolis minnesota courts seeking contribution event syngenta held liable class actions farmers parties december 2017 settlement syngenta agreed dismiss thirdparty claims company third farmers parties sued company grain companies numerous individual purported class action suits illinois state federal courts beginning fourth quarter 2015 alleging company grain companies negligent failing screen genetically modified corn claims dismissed subject appeal several orders entered august 17 2016 federal court minneapolis january 4 2017 federal court southern district illinois august 18 2017 state court illinois subsequently 2019 number additional plaintiffs filed substantially similar claims company grain companies illinois state court company filed motion apply courts prior dismissal order additional complaints motion court indicated grant upon submission proposed order parties thus pending anticipated application prior dismissal order additional illinois state court complaints subject appeals company defendant remaining actions company denies liability actions named defendant thirdparty defendant vigorously defend appeal cases time company unable predict final outcome matter reasonable degree certainty believes outcome material adverse effect financial condition results operations cash flows september 4 2019 aot holding ag “aot” filed putative class action us commodities exchange act federal district court urbana illinois alleging company sought manipulate benchmark price used price settle ethanol derivatives traded futures exchanges aot alleges members putative class suffered “hundreds millions dollars damages” result company’s alleged actions company filed motion dismiss suit november 2019 motion awaiting decision court company denies liability vigorously defending action pretrial proceedings company unable time predict final outcome reasonable degree certainty believes outcome material adverse effect financial condition results operations cash flows archerdanielsmidland company notes consolidated financial statements continued note 20 legal proceedings guarantees commitments continued september 5 2019 dm farms mark hasty dustin land filed putative class action behalf purported class peanut farmers us federal antitrust laws federal court norfolk virginia alleging company’s subsidiary golden peanut another peanut shelling company conspired fix price paid farmers raw peanuts company filed motion dismiss suit october 2019 motion awaiting decision court company denies liability vigorously defending action pretrial proceedings company unable time predict final outcome reasonable degree certainty believes outcome material adverse effect financial condition results operations cash flows note 21 quarterly financial data unaudited net earnings attributable controlling interest first quarter year ended december 31 2019 included aftertax gains 9 million equal 002 per share related sale certain assets stepup gain equity investment aftertax charges 10 million equal 002 per share related impairment certain assets restructuring aftertax charges 9 million equal 002 per share related neovia acquisition tax expense adjustment 17 million equal 003 per share related us tax reform certain discrete items net earnings attributable controlling interest second quarter year ended december 31 2019 included aftertax charges 105 million equal 018 per share related impairment certain assets restructuring pension remeasurement tax benefit adjustment 19 million equal 003 per share related us tax reform certain discrete items net earnings attributable controlling interest third quarter year ended december 31 2019 included aftertax charges 41 million equal 008 per share related impairment certain assets restructuring pension settlement tax benefit adjustment 5 million equal 001 per share related us tax reform certain discrete items archerdanielsmidland company notes consolidated financial statements continued note 21 quarterly financial data unaudited continued net earnings attributable controlling interest fourth quarter year ended december 31 2019 included aftertax loss 133 million equal 024 per share related sale equity investment aftertax charges 93 million equal 016 per share related impairment certain assets restructuring pension settlement aftertax charges 2 million equal 000 per share related certain acquisitions tax expense adjustment 46 million equal 008 per share related us tax reform certain discrete items net earnings attributable controlling interests first quarter year ended december 31 2018 included aftertax charges 12 million equal 002 per share primarily related impairment equity investment several individually insignificant asset impairments restructuring charges 14 million equal 003 per share provisional tax benefit adjustment related enactment act net earnings attributable controlling interests second quarter year ended december 31 2018 included aftertax charges 16 million equal 003 per share primarily related impairment longterm financing receivable several individually insignificant restructuring charges 7 million equal 001 per share provisional tax expense adjustment related enactment act certain discrete items net earnings attributable controlling interests third quarter year ended december 31 2018 included aftertax gains 20 million equal 004 per share related sale business equity investment 3 million equal 001 per share provisional tax expense adjustment related enactment act net earnings attributable controlling interests fourth quarter year ended december 31 2018 included aftertax losses 7 million equal 002 per share primarily related sale asset business aftertax charges 196 million equal 035 per share consisting noncash pension settlement charge related transfer future benefit obligations annuity administration certain retirees companys adm retirement plan charge related discontinued software project corporate asset impairments related certain longlived assets restructuring charges primarily related reorganization services corporate settlement charges aftertax charges 9 million equal 001 per share related acquisition expenses net losses foreign currency derivative contracts economically hedge certain acquisitions 29 million equal 005 per share provisional tax benefit adjustment related enactment act certain discrete items note 22 subsequent events january 7 2020 company announced acquired yerbalatina phytoactives natural plantbased extracts ingredients manufacturer january 2020 secondlevel administrative appeal panel found favor adm brasil cancelled assessments bfrs unclear bfrs appeal company intends vigorously defend position appeal could made administrative panel superior tax chamber company expects know ruling appealed first half 2020 based upon view external counsel unlikely bfrs successful appealing matter see note 13 information report independent registered public accounting firm board directors shareholders archerdanielsmidland company opinion financial statements audited accompanying consolidated balance sheets archerdanielsmidland company december 31 2019 2018 related consolidated statements income comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2019 related notes financial statement schedule listed index item 15a2 collectively referred “financial statements” opinion financial statements present fairly material respects financial position company december 31 2019 2018 results operations cash flows three years period ended december 31 2019 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states pcaob companys internal control financial reporting december 31 2019 based criteria established internal controlintegrated framework issued committee sponsoring organizations treadway commission 2013 framework report dated february 18 2020 expressed unqualified opinion thereon basis opinion financial statements responsibility company’s management responsibility express opinion company’s financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement financial statements whether due error fraud performing procedures respond risks procedures include examining test basis evidence regarding amounts disclosures financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation financial statements believe audits provide reasonable basis opinion critical audit matters critical audit matters communicated matters arising current period audit financial statements communicated required communicated audit committee 1 relate accounts disclosures material financial statements 2 involved especially challenging subjective complex judgments communication critical audit matters alter way opinion financial statements taken whole communicating critical audit matters providing separate opinions critical audit matters accounts disclosures relate fair value basis adjustments inventories carried market forward commodity contracts description matter explained notes 1 4 financial statements estimated fair values inventories carried market forward commodity purchase sale contracts based exchangequoted prices adjusted differences local markets andor quality referred basis market valuations inventories fair values forward commodity purchase sales contracts adjusted location quality differences basis exchangequoted prices represent contracts standardized terms commodity quantity future delivery period delivery location commodity quality grade stated fair values december 31 2019 inventories commodity contracts asset position commodity contracts liability position 4704 million 478 million 574 million respectively auditing estimated fair values inventories carried market forward commodity purchase sale contracts complex due judgment involved determining market prices specifically related determining estimated basis adjustment basis adjustment impacted specific local supply demand characteristics facility overall market factors substitute products weather fuel costs contract terms futures prices also impact basis adjustment addressed matter audit obtained understanding evaluated design tested operating effectiveness controls company’s determination estimated fair values inventories carried market forward commodity purchase sale contracts tests included controls estimation process supporting basis adjustments test estimated fair values inventories carried market forward commodity purchase sale contracts audit procedures included among others evaluating companys selection principal market ii inputs basis adjustments iii completeness accuracy underlying data supporting basis adjustments example evaluated management’s methodology determining basis adjustment assessing principal market identified sources utilized management support basis adjustment specifically compared basis adjustments used management broker quotes trade publications andor recent trade prices including recently executed transactions investigated extent necessary basis adjustments inconsistent third party available information finally evaluated adequacy company’s financial statement disclosures related estimated fair value inventories carried market forward commodity purchase sale contracts valuation acquired intangible assets neovia sas neovia description matter february 1 2019 company completed acquisition neovia net consideration 1692 million disclosed note 3 financial statements consideration transferred allocated various assets acquired liabilities assumed estimated fair values acquisition date residual consideration allocated goodwill auditing companys accounting acquisition neovia complex due significant judgments estimates assumptions made management respect intangible assets intangible assets related neovia approximately 669 million december 31 2019 principally consisted trademarksbrands customer lists intellectual property determined primarily using discounted cash flow models estimates discounted cash flow models include limited certain assumptions form basis forecasted results eg revenue growth rates customer attrition rates royalty rates addressed matter audit obtained understanding evaluated design tested operating effectiveness controls company’s accounting acquisition tests included controls estimation process supporting recognition measurement intangible assets also tested management’s review assumptions used valuation models test estimated fair values intangible assets performed audit procedures included among others evaluating companys selection valuation methodology ii methods significant assumptions used company iii completeness accuracy underlying data supporting significant assumptions estimates example compared significant assumptions historical data comparable market data ernst young llp served companys auditor since 1930 saint louis missouri february 18 2020 report independent registered public accounting firm board directors shareholders archerdanielsmidland company opinion internal control financial reporting audited archerdanielsmidland company’s internal control financial reporting december 31 2019 based criteria established internal control integrated framework issued committee sponsoring organizations treadway commission 2013 framework coso criteria opinion archerdanielsmidland company maintained material respects effective internal control financial reporting december 31 2019 based coso criteria indicated accompanying management’s report internal control financial reporting management’s assessment conclusion effectiveness internal control financial reporting include internal controls neovia sas neovia included 2019 consolidated financial statements company constituted approximately 53 43 total net assets respectively december 31 2019 28 01 revenues net income respectively year ended audit internal control financial reporting company also include evaluation internal control financial reporting neovia also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets archerdanielsmidland company december 31 2019 2018 related consolidated statements earnings comprehensive income loss shareholders’ equity cash flows three years period ended december 31 2019 related notes financial statement schedule listed index item 15a2 report dated february 18 2020 expressed unqualified opinion thereon basis opinion companys management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying management’s report internal control financial reporting responsibility express opinion company’s internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting company’s internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles company’s internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition company’s assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate ernst young llp saint louis missouri february 18 2020 item 9 nannannannannannannannanitem 15 exhibits financial statement schedules reports form 8k a1 following consolidated financial statements financial data registrant subsidiaries included annual report company shareholders year ended june 30 2003 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 2003 2002 consolidated statements earningsyears ended june 30 2003 2002 2001 consolidated statements shareholders equity years ended june 30 2003 2002 2001 consolidated statements cash flowsyears ended june 30 2003 2002 2001 notes consolidated financial statementsjune 30 2003 summary significant accounting policies quarterly financial data unaudited item 15 exhibits financial statement schedules reports form 8k continued a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3i composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended restated filed may 12 2000 exhibit 3ii form 10q quarter ended march 31 2000 file 144 incorporated herein reference instruments defining rights security holders including indenture dated june 1 1986 registrant chase manhattan bank formerly known chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating item 15 exhibits financial statement schedules reports form 8k continued 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15c form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii exhibit 4 registration statement 33351381 form s8 dated april 30 1998 relating archerdanielsmidland company 1996 stock option plan iv archerdanielsmidland company stock unit plan nonemployee directors incorporated reference exhibit 10 companys quarterly report form 10q quarter ended december 31 1997 file 144 exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees archerdanielsmidland company incentive compensation plan incorporated reference exhibit companys definitive proxy statement filed securities exchange commission september 15 1999 file 144 item 15 exhibits financial statement schedules reports form 8k continued exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective 1 registration statement 33342612 form s8 dated august 8 2000 exhibit 43 registration statement 33367962 form s8 dated august 20 2001 relating adm deferred compensation plan selected management employees archerdanielsmidland company voluntary employee payroll deduction stock purchase plan 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent auditors 24 powers attorney 311 certificate chief executive officer pursuant section 302 sarbanesoxley act 2002 312 certificate chief financial officer pursuant section 302 sarbanesoxley act 2002 321 certificate chief executive officer pursuant section 906 sarbanesoxley act 2002 322 certificate chief financial officer pursuant section 906 sarbanesoxley act 2002 b reports form 8k form 8k filed april 25 2003 connection issuance press release announcing companys results quarter ended march 31 2003 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 3 2003 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed september 3 2003 following persons behalf registrant capacities indicated g andreas mcmurtrie g andreas mrs mcmurtrie chief executive director principal executive officer j mimran sd j schmalz j mimran j schmalz director senior vice president chief financial officer b mulroney principal financial officer b mulroney director ss r mills r mills j k vanier group vice president controller j k vanier controller director h de boon g webb h de boon g webb director h carter young h carter young director r joslin j smith r joslin attorneyinfact director powers attorney authorizing j schmalz r mills j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules reports form 8k a1 following consolidated financial statements financial data registrant subsidiaries included annual report company shareholders year ended june 30 2004 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 2004 2003 consolidated statements earningsyears ended june 30 2004 2003 2002 consolidated statements shareholders equity years ended june 30 2004 2003 2002 consolidated statements cash flowsyears ended june 30 2004 2003 2002 notes consolidated financial statementsjune 30 2004 summary significant accounting policies quarterly financial data unaudited a2 financial statement schedules either required applicable information otherwise included item 15 exhibits financial statement schedules reports form 8k continued a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended restated filed may 12 2000 exhibit 3ii form 10q quarter ended march 31 2000 file 144 incorporated herein reference 4 instruments defining rights security holders including indenture dated june 1 1986 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument item 15 exhibits financial statement schedules reports form 8k continued 10 material contractscopies companys stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15c form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed secruities exchange commission september 25 1996 file 144 iv archerdanielsmidland company stock unit plan nonemployee directors incorporated reference exhibit 10 companys quarterly report form 10q quarter ended december 31 1997 file 144 v exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees vi archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 1999 file 144 vii exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective 1 registration statement 33342612 form s8 dated august 8 2000 viii exhibit 43 registration statement 33367962 form s8 dated august 20 2001 relating adm deferred compensation plan selected management employees item 15 exhibits financial statement schedules reports form 8k continued ix archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a 14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a 14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 b reports form 8k form 8k filed april 30 2004 connection issuance press release announcing company’s results quarter ended march 31 2004 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 8 2004 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed september 8 2004 following persons behalf registrant capacities indicated g andreas p j moore g andreas p j moore chief executive director principal executive officer b mulroney sd j schmalz b mulroney j schmalz director senior vice president chief financial officer j k vanier principal financial officer j k vanier director ss r mills r mills g webb group vice president controller g webb controller director h carter k r westbrook h carter k r westbrook director r joslin j smith r joslin attorneyinfact director j mimran j mimran director powers attorney authorizing j schmalz r mills j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 following consolidated financial statements financial data registrant subsidiaries included annual report company shareholders year ended june 30 2005 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 2005 2004 consolidated statements earningsyears ended june 30 2005 2004 2003 consolidated statements shareholders equity years ended june 30 2005 2004 2003 consolidated statements cash flowsyears ended june 30 2005 2004 2003 notes consolidated financial statementsjune 30 2005 summary significant accounting policies quarterly financial data unaudited a2 financial statement schedules either required applicable information otherwise included item 15 exhibits financial statement schedules continued a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended restated filed may 12 2000 exhibit 3ii form 10q quarter ended march 31 2000 file 144 incorporated herein reference 4 instruments defining rights security holders including indenture dated june 1 1986 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument item 15 exhibits financial statement schedules continued 10 material contractscopies companys stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15c form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed secruities exchange commission september 25 1996 file 144 iv archerdanielsmidland company amended restated stock unit plan nonemployee directors incorporated reference exhibit 993 companys current report form 8k filed securities exchange commission december 23 2004 file 144 v exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees vi archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 file 144 vii exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective amendment 1 registration statement 33342612 form s8 dated august 8 2000 viii adm deferred compensation plan selected management employees ii adopted december 1 2004incorporated reference exhibit 991 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 ix adm supplemental retirement plan ii adopted december 1 2004 incorporated reference exhibit 992 company’s current report form 8k field securities exchange commission december 23 2004 file 144 item 15 exhibits financial statement schedules continued x archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 xi management compensation arrangements incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xii form stock option agreement incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiii form restricted stock agreement incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a 14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a 14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 8 2005 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed september 8 2005 following persons behalf registrant capacities indicated g andreas p j moore g andreas p j moore chief executive director principal executive officer b mulroney sd j schmalz b mulroney j schmalz director senior vice president chief financial officer f o’neill principal financial officer f o’neill director ss r mills r mills g webb group vice president controller g webb controller director l boeckmann k r westbrook l boeckmann k r westbrook director h carter j smith h carter attorneyinfact director r joslin r joslin director powers attorney authorizing j schmalz r mills j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 following consolidated financial statements financial data registrant subsidiaries included annual report company shareholders year ended june 30 2006 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 2006 2005 consolidated statements earningsyears ended june 30 2006 2005 2004 consolidated statements shareholders equity years ended june 30 2006 2005 2004 consolidated statements cash flowsyears ended june 30 2006 2005 2004 notes consolidated financial statementsjune 30 2006 summary significant accounting policies quarterly financial data unaudited item 15 exhibits financial statement schedules continued a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended restated filed may 12 2000 exhibit 3ii form 10q quarter ended march 31 2000 file 144 incorporated herein reference 4 instruments defining rights security holders including indenture dated june 1 1986 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 item 15 exhibits financial statement schedules continued copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15c form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 1996 file 144 iv archerdanielsmidland company amended restated stock unit plan nonemployee directors incorporated reference exhibit 993 companys current report form 8k filed securities exchange commission december 23 2004 file 144 v exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees vi archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 file 144 vii exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective amendment 1 registration statement 33342612 form s8 dated august 8 2000 viii adm deferred compensation plan selected management employees ii adopted december 1 2004 incorporated reference exhibit 991 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 ix adm supplemental retirement plan ii adopted december 1 2004 incorporated reference exhibit 992 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 item 15 exhibits financial statement schedules continued x archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 xi management compensation arrangements incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xii form stock option agreement incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiii form restricted stock agreement incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiv separation agreement archerdanielsmidland company paul b mulhollem dated september 29 2005 filed september 30 2005 exhibit 10 company’s current report form 8k file 144 xv agreement regarding terms employment dated april 27 2006 patricia woertz filed may 1 2006 exhibit 101 company’s current report form 8k file 144 xvi transition agreement archerdanielsmidland company g allen andreas dated may 5 2006 filed may 8 2006 exhibit 101 company’s current report form 8k file 144 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a 14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a 14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 8 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed september 8 2006 following persons behalf registrant capacities indicated p woertz maciel p woertz maciel chief executive officer president director principal executive officer p j moore j schmalz p j moore j schmalz director senior vice president chief financial officer b mulroney principal financial officer b mulroney director r mills r mills f o’neill group vice president controller f o’neill controller director g andreas g webb g andreas g webb chairman board director k r westbrook l boeckmann k r westbrook l boeckmann director j smith h carter attorneyinfact h carter director r joslin r joslin director powers attorney authorizing j schmalz r mills j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included item 15 exhibits financial statement schedules continued a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended filed february 6 2007 exhibit 3ii form 8k file 144 incorporated herein reference 4 instruments defining rights security holders including indenture dated june 1 1986 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 ii indenture dated september 20 2006 company bank new york trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2015 1750000000 470 debentures due june 1 2041 iii indenture dated february 22 2007 company bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv registration rights agreement dated february 22 2007 among company citigroup global markets inc jp morgan securities inc merrill lynch co merrill lynch pierce fenner smith incorporated banc america securities llc barclays capital inc bnp paribas securities corp deutsche bank securities inc goldman sachs co hsbc securities usa inc incorporated reference exhibit 42 form 8k file 144 filed february 22 2007 item 15 exhibits financial statement schedules continued copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument v purchase contract pledge agreement dated june 3 2008 among adm bank new york purchase contract agent bank new york collateral agent custodial agent securities intermediary including form corporate units form treasury units form remarketing agreement incorporated reference exhibit 41 form 8k file 144 filed june 3 2008 10 material contracts copies company’s stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 1996 file 144 iv archerdanielsmidland company amended restated stock unit plan nonemployee directors incorporated reference exhibit 993 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 v exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees vi archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 1999 file 144 vii exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective amendment 1 registration statement 33342612 form s8 dated august 8 2000 viii adm deferred compensation plan selected management employees ii adopted december 1 2004 incorporated reference exhibit 991 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 item 15 exhibits financial statement schedules continued ix adm supplemental retirement plan ii adopted december 1 2004 incorporated reference exhibit 992 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 x archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 xi management compensation arrangements incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xii form stock option agreement incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiii form restricted stock agreement incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiv separation agreement archerdanielsmidland company paul b mulhollem dated september 29 2005 filed september 30 2005 exhibit 10 company’s current report form 8k file 144 xv agreement regarding terms employment dated april 27 2006 patricia woertz filed may 1 2006 exhibit 101 company’s current report form 8k file 144 xvi transition agreement archerdanielsmidland company g allen andreas dated may 5 2006 filed may 8 2006 exhibit 101 company’s current report form 8k file 144 xvii annual cash incentive program incorporated reference description thereof included item 502 company’s current report form 8k file 144 filed july 3 2007 xviii separation agreement dated november 26 2007 archerdanielsmidland company william h camp filed november 30 2007 exhibit 101 company’s current report form 8k file 144 xix separation agreement dated february 6 2008 archerdanielsmidland company douglas j schmalz filed february 7 2008 exhibit 101 company’s current report form 8k file 144 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended item 15 exhibits financial statement schedules continued 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date august 28 2008 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed ugust 28 2008 following persons behalf registrant capacities indicated p woertz v f haynes p woertz v f haynes chairman chief executive officer president director principal executive officer maciel r mills maciel r mills director executive vice president chief financial officer p j moore principal financial officer p j moore director j p stott j p stott b mulroney vice president controller b mulroney controller director l boeckmann f o’neill l boeckmann f o’neill director g w buckley k r westbrook g w buckley k r westbrook director h carter j smith h carter attorneyinfact director powers attorney authorizing r mills j p stott j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended filed august 12 2009 exhibit 3ii form 8k file 144 incorporated herein reference item 15 exhibits financial statement schedules continued 4 instruments defining rights security holders including indenture dated june 1 1986 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 ii indenture dated september 20 2006 company bank new york trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2015 1750000000 470 debentures due june 1 2041 iii indenture dated february 22 2007 company bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv registration rights agreement dated february 22 2007 among company citigroup global markets inc jp morgan securities inc merrill lynch co merrill lynch pierce fenner smith incorporated banc america securities llc barclays capital inc bnp paribas securities corp deutsche bank securities inc goldman sachs co hsbc securities usa inc incorporated reference exhibit 42 form 8k file 144 filed february 22 2007 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument item 15 exhibits financial statement schedules continued v purchase contract pledge agreement dated june 3 2008 among adm bank new york purchase contract agent bank new york collateral agent custodial agent securities intermediary including form corporate units form treasury units form remarketing agreement incorporated reference exhibit 41 form 8k file 144 filed june 3 2008 10 material contracts copies company’s stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 1996 file 144 iv archerdanielsmidland company amended restated stock unit plan nonemployee directors incorporated reference exhibit 993 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 v exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees vi archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 1999 file 144 vii exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective amendment 1 registration statement 33342612 form s8 dated august 8 2000 viii adm deferred compensation plan selected management employees ii adopted december 1 2004 incorporated reference exhibit 991 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 ix adm supplemental retirement plan ii adopted december 1 2004 incorporated reference exhibit 992 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 x archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 item 15 exhibits financial statement schedules continued xi management compensation arrangements incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xii form stock option agreement incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiii form restricted stock agreement incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiv separation agreement archerdanielsmidland company paul b mulhollem dated september 29 2005 filed september 30 2005 exhibit 10 company’s current report form 8k file 144 xv agreement regarding terms employment dated april 27 2006 patricia woertz filed may 1 2006 exhibit 101 company’s current report form 8k file 144 xvi transition agreement archerdanielsmidland company g allen andreas dated may 5 2006 filed may 8 2006 exhibit 101 company’s current report form 8k file 144 xvii annual cash incentive program incorporated reference description thereof included item 502 company’s current report form 8k file 144 filed july 3 2007 xviii separation agreement dated november 26 2007 archerdanielsmidland company william h camp filed november 30 2007 exhibit 101 company’s current report form 8k file 144 xix separation agreement dated february 6 2008 archerdanielsmidland company douglas j schmalz filed february 7 2008 exhibit 101 company’s current report form 8k file 144 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date august 26 2009 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed august 26 2009 following persons behalf registrant capacities indicated p woertz v f haynes p woertz v f haynes chairman chief executive officer president director principal executive officer maciel r mills maciel r mills director executive vice president chief financial officer p j moore principal financial officer p j moore director j p stott j p stott b mulroney vice president controller b mulroney controller director g w buckley f o’neill g w buckley f o’neill director h carter k r westbrook h carter k r westbrook director e felsinger j smith e felsinger attorneyinfact director powers attorney authorizing r mills j p stott j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended filed august 12 2009 exhibit 3ii form 8k file 144 incorporated herein reference item 15 exhibits financial statement schedules continued 4 instruments defining rights security holders including indenture dated june 1 1986 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 ii indenture dated september 20 2006 company bank new york formerly known successor jpmorgan chase bank na trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 supplemental indenture dated june 3 2008 registrant bank new york incorporated reference exhibit 46 form 8k file 144 filed june 3 2008 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2015 1750000000 470 debentures due june 1 2041 iii indenture dated february 22 2007 company bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv registration rights agreement dated february 22 2007 among company citigroup global markets inc jp morgan securities inc merrill lynch pierce fenner smith incorporated banc america securities llc barclays capital inc bnp paribas securities corp deutsche bank securities inc goldman sachs co hsbc securities usa inc incorporated reference exhibit 42 form 8k file 144 filed february 22 2007 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument item 15 exhibits financial statement schedules continued v purchase contract pledge agreement dated june 3 2008 among adm bank new york purchase contract agent bank new york collateral agent custodial agent securities intermediary including form corporate units form treasury units form remarketing agreement incorporated reference exhibit 41 form 8k file 144 filed june 3 2008 10 material contracts copies company’s equity compensation plans deferred compensation plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows exhibit 4c registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan ii archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 1996 file 144 iii archerdanielsmidland company deferred compensation plan selected management employees amended iv archerdanielsmidland company deferred compensation plan selected management employees ii amended v archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 1999 file 144 vi archerdanielsmidland company supplemental retirement plan amended vii archerdanielsmidland company amended restated stock unit plan nonemployee directors amended viii archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 ix management compensation arrangements incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended march 31 2005 file 144 x form stock option agreement incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xi form restricted stock agreement incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xii form performance share unit award agreement item 15 exhibits financial statement schedules continued xiii form restricted stock unit award agreement xiv agreement regarding terms employment dated april 27 2006 patricia woertz filed may 1 2006 exhibit 101 company’s current report form 8k file 144 xv archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement file 144 filed september 25 2009 xvi annual cash incentive program incorporated reference description thereof included item 502 company’s current report form 8k file 144 filed july 3 2007 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date august 27 2010 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed august 27 2010 following persons behalf registrant capacities indicated p woertz e felsinger p woertz e felsinger chairman chief executive officer president director principal executive officer v f haynes r mills v f haynes r mills director executive vice president chief financial officer maciel principal financial officer maciel director j p stott j p stott p j moore vice president controller p j moore controller director g w buckley f o’neill g w buckley f o’neill director h carter k r westbrook h carter k r westbrook director p dufour j smith p dufour attorneyinfact director powers attorney authorizing r mills j p stott j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended filed august 12 2009 exhibit 3ii form 8k file 144 incorporated herein reference item 15 exhibits financial statement schedules continued 4 instruments defining rights security holders including indenture dated june 1 1986 registrant bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant bank new york mellon formerly known successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 ii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 first supplemental indenture dated june 3 2008 registrant bank new york mellon formerly known bank new york incorporated reference exhibit 46 form 8k file 144 filed june 3 2008 second supplemental indenture dated november 29 2010 registrant bank new york mellon incorporated reference exhibit 43 form 8k file 144 filed november 30 2010 third supplemental indenture dated april 4 2011 registrant bank new york mellon incorporated reference exhibit 44 form 8k file 144 filed april 8 2011 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2015 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 iii indenture dated february 22 2007 company bank new york mellon formerly known bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument item 15 exhibits financial statement schedules continued 10 material contracts copies company’s equity compensation plans deferred compensation plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows exhibit 4c registration statement 3349409 form s8 dated march 15 1993 relating archerdanielsmidland 1991 incentive stock option plan ii archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 1996 file 144 iii archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 iv archerdanielsmidland company deferred compensation plan selected management employees ii amended incorporated reference exhibit 10iv company’s annual report form 10k year ended june 30 2010 file 144 v second amendment adm deferred compensation plan selected management employees ii incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended december 31 2010 file 144 vi archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 1999 file 144 vii archerdanielsmidland company supplemental retirement plan amended incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 viii second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 ix archerdanielsmidland company amended restated stock unit plan nonemployee directors amended incorporated reference exhibit 10vii company’s annual report form 10k year ended june 30 2010 file 144 x archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 xi management compensation arrangements incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xii form stock option agreement incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiii form restricted stock agreement incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 item 15 exhibits financial statement schedules continued xiv form performance share unit award agreement incorporated reference exhibit 10xii company’s annual report form 10k year ended june 30 2010 file 144 xv form restricted stock unit award agreement incorporated reference exhibit10xiii company’s annual report form 10k year ended june 30 2010 file 144 xvi agreement regarding terms employment dated april 27 2006 patricia woertz filed may 1 2006 exhibit 101 company’s current report form 8k file 144 xvii archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement file 144 filed september 25 2009 xviii annual cash incentive program incorporated reference description thereof included item 502 company’s current report form 8k file 144 filed july 3 2007 xix form performance share unit award agreement march 2011 incorporated reference exhibit 101 form 8k file 144 filed march 25 2011 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date august 24 2011 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed august 24 2011 following persons behalf registrant capacities indicated p woertz e felsinger p woertz e felsinger chairman chief executive officer president director principal executive officer v f haynes r g young v f haynes r g young director senior vice president chief financial officer maciel principal financial officer maciel director j p stott j p stott p j moore vice president controller p j moore controller director g w buckley f o’neill g w buckley f o’neill director h carter k r westbrook h carter k r westbrook director k crews j smith k crews attorneyinfact director p dufour p dufour director powers attorney authorizing r g young j p stott j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended filed august 12 2009 exhibit 3ii form 8k file 144 incorporated herein reference item 15 exhibits financial statement schedules continued 4 instruments defining rights security holders including indenture dated june 1 1986 registrant bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 38 debentures due april 15 2017 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due 2097 ii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 first supplemental indenture dated june 3 2008 registrant bank new york mellon formerly known bank new york incorporated reference exhibit 46 form 8k file 144 filed june 3 2008 second supplemental indenture dated november 29 2010 registrant bank new york mellon incorporated reference exhibit 43 form 8k file 144 filed november 30 2010 third supplemental indenture dated april 4 2011 registrant bank new york mellon incorporated reference exhibit 44 form 8k file 144 filed april 8 2011 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2018 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 1500000000 floating rate notes due august 13 2012 527688000 4535 debentures due march 26 2042 iii indenture dated february 22 2007 company bank new york mellon formerly known bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument item 15 exhibits financial statement schedules continued 10 material contracts copies company’s equity compensation plans deferred compensation plans agreements executive officers pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 1996 file 144 ii archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 iii archerdanielsmidland company deferred compensation plan selected management employees ii amended incorporated reference exhibit 10iv company’s annual report form 10k year ended june 30 2010 file 144 iv second amendment adm deferred compensation plan selected management employees ii incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended december 31 2010 file 144 v archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 1999 file 144 vi archerdanielsmidland company supplemental retirement plan amended incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 vii second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 viii archerdanielsmidland company amended restated stock unit plan nonemployee directors amended incorporated reference exhibit 10vii company’s annual report form 10k year ended june 30 2010 file 144 ix archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 x form stock option agreement nonneo employees xi form restricted stock award agreement nonneo employees xii form restricted stock unit award agreement nonneo employees xiii form stock option agreement neos xiv form restricted stock award agreement neos xv form restricted stock unit award agreement neos xvi form stock option agreement international employees item 15 exhibits financial statement schedules continued 12 calculation ratio earnings fixed charges 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date august 24 2012 archerdanielsmidland company smith senior vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed august 24 2012 following persons behalf registrant capacities indicated p woertz p dufour p woertz p dufour chairman chief executive officer president director principal executive officer e felsinger r g young e felsinger r g young director senior vice president chief financial officer maciel principal financial officer maciel director j p stott j p stott p j moore vice president controller p j moore controller director l boeckmann f o’neill l boeckmann f o’neill director g w buckley k r westbrook g w buckley k r westbrook director h carter smith h carter attorneyinfact director k crews k crews director powers attorney authorizing r g young j p stott smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended filed february 11 2013 exhibit 3ii form 8k file 144 incorporated herein reference 4 instruments defining rights security holders including indenture dated june 1 1986 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 38 debentures due april 15 2017 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due 2097 item 15 exhibits financial statement schedules continued ii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 first supplemental indenture dated june 3 2008 registrant bank new york mellon formerly known bank new york incorporated reference exhibit 46 form 8k file 144 filed june 3 2008 second supplemental indenture dated november 29 2010 registrant bank new york mellon incorporated reference exhibit 43 form 8k file 144 filed november 30 2010 third supplemental indenture dated april 4 2011 registrant bank new york mellon incorporated reference exhibit 44 form 8k file 144 filed april 8 2011 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2018 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 527688000 4535 debentures due march 26 2042 iii indenture dated february 22 2007 company bank new york mellon formerly known bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv indenture dated october 16 2012 company bank new york mellon trustee incorporated reference exhibit 41 form 8k file 144 filed october 17 2012 relating 570425000 aggregate principal amount 4016 debentures due april 16 2043 v copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument 10 material contracts copies company’s equity compensation plans deferred compensation plans agreements executive officers pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 ii archerdanielsmidland company deferred compensation plan selected management employees ii amended restated iii archerdanielsmidland company supplemental retirement plan amended incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 iv second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 v archerdanielsmidland company amended restated stock unit plan nonemployee directors amended incorporated reference exhibit 10vii company’s annual report form 10k year ended june 30 2010 file 144 item 15 exhibits financial statement schedules continued vi archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 vii agreement regarding terms employment dated april 27 2006 patricia woertz incorporated reference exhibit 101 company’s current report form 8k file 144 filed may 1 2006 viii archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement file 144 filed september 25 2009 ix form stock option agreement nonneo employees us incorporated reference exhibit 10i companys quarterly report form 10q file 144 quarter ended march 31 2013 x form restricted stock unit award agreement nonneo employees us incorporated reference exhibit 10ii companys quarterly report form 10q file 144 quarter ended march 31 2013 xi form stock option agreement neos incorporated reference exhibit 10iii companys quarterly report form 10q file 144 quarter ended march 31 2013 xii form restricted stock unit award agreement neos incorporated reference exhibit 10iv company’s quarterly report form 10q file 144 quarter ended march 31 2013 xiii form stock option agreement international employees incorporated reference exhibit 10v company’s quarterly report form 10q file 144 quarter ended march 31 2013 xiv form restricted stock unit award agreement international employees incorporated reference exhibit 10vi company quarterly report form 10q file 144 quarter ended march 31 2013 xv form performance share unit award agreement incorporated reference exhibit 10vii company quarterly report form 10q file 144 quarter ended march 31 2013 xvi form performance share unit award agreement grant j luciano incorporated reference exhibit 101 company’s current report form 8k file 144 filed march 25 2011 xvii form performance share unit award agreement grant jansen incorporated reference exhibit 10xxvi company’s transition report form 10kt file 144 period ended december 31 2012 12 calculation ratio earnings fixed charges 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended item 15 exhibits financial statement schedules continued 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date february 26 2014 archerdanielsmidland company c findlay c findlay senior vice president general counsel secretary pursuant requirements securities exchange act 1934 report signed february 26 2014 following persons behalf registrant capacities indicated p woertz e felsinger p woertz e felsinger chairman chief executive officer director principal executive officer maciel r g young maciel r g young director senior vice president chief financial officer p j moore principal financial officer p j moore director j p stott j p stott f o’neill vice president controller f o’neill controller director l boeckmann daniel shih l boeckmann shih director h carter k r westbrook h carter k r westbrook director k crews c findlay k crews c findlay director attorneyinfact p dufour p dufour director powers attorney authorizing r g young j p stott c findlay sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended november 5 2015 4 instruments defining rights security holders including indenture dated june 1 1986 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 38 debentures due april 15 2017 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due 2097 item 15 exhibits financial statement schedules continued ii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 first supplemental indenture dated june 3 2008 registrant bank new york mellon formerly known bank new york incorporated reference exhibit 46 form 8k file 144 filed june 3 2008 second supplemental indenture dated november 29 2010 registrant bank new york mellon incorporated reference exhibit 43 form 8k file 144 filed november 30 2010 third supplemental indenture dated april 4 2011 registrant bank new york mellon incorporated reference exhibit 44 form 8k file 144 filed april 8 2011 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2018 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 527688000 4535 debentures due march 26 2042 iii indenture dated february 22 2007 company bank new york mellon formerly known bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv indenture dated october 16 2012 company bank new york mellon trustee incorporated reference exhibit 41 form 8k file 144 filed october 17 2012 relating 570425000 4016 debentures due april 16 2043 €600000000 1750 note due 2023 €500000000 floating rate note due 2019 v copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument 10 material contracts copies company’s equity compensation plans deferred compensation plans agreements executive officers pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 ii archerdanielsmidland company deferred compensation plan selected management employees ii amended restated incorporated reference exhibit 10ii company’s annual report form 10k year ended december 31 2013 file 144 iii archerdanielsmidland company supplemental retirement plan amended incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 iv second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 item 15 exhibits financial statement schedules continued v archerdanielsmidland company amended restated stock unit plan nonemployee directors amended vi archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement file 144 filed september 25 2002 vii archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement file 144 filed september 25 2009 viii form stock option agreement nonneo employees us incorporated reference exhibit 10i company’s quarterly report form 10q quarter ended march 31 2013 file 144 ix form restricted stock unit award agreement nonneo employees us incorporated reference exhibit 10ii company’s quarterly report form 10q quarter ended march 31 2013 file 144 x form stock option agreement neos incorporated reference exhibit 10iii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xi form restricted stock unit award agreement neos incorporated reference exhibit 10iv company’s quarterly report form 10q quarter ended march 31 2013 file 144 xii form stock option agreement international employees incorporated reference exhibit 10v company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiii form restricted stock unit award agreement international employees incorporated reference exhibit 10vi company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiv form performance share unit award agreement incorporated reference exhibit 10vii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xv form performance share unit award agreement grant j luciano incorporated reference exhibit 101 company’s current report form 8k file 144 filed march 25 2011 12 calculation ratio earnings fixed charges 21 subsidiaries company 23 consent independent registered public accounting firm 24 powers attorney item 15 exhibits financial statement schedules continued 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date february 19 2016 archerdanielsmidland company c findlay c findlay senior vice president general counsel secretary pursuant requirements securities exchange act 1934 report signed february 3 2016 following persons behalf registrant capacities indicated j r luciano p dufour c findlay j r luciano p dufour c findlay chairman chief executive officer director attorneyinfact president director principal executive officer e felsinger e felsinger r g young director r g young executive vice president neto chief financial officer neto principal financial officer director j p stott p j moore j p stott p j moore group vice president finance director corporate controller principal accounting officer f o’neill f o’neill l boeckmann director l boeckmann director f sanchez f sanchez h carter director h carter director shih k crews director k crews director k r westbrook k r westbrook director powers attorney authorizing r g young j p stott c findlay sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended incorporated reference exhibit 3i company’s form 10q quarter ended september 30 2001 file 144 ii bylaws amended february 9 2017 incorporated reference exhibit 3 company’s form 8k filed february 13 2017 file 144 4 instruments defining rights security holders including indenture dated june 1 1986 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a companys registration statement form s3 file 336721 amended supplemented supplemental indenture dated august 1 1989 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c post effective amendment 3 companys registration statement form s3 336721 relating 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due december 15 2097 item 15 exhibits financial statement schedules continued ii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 companys registration statement form s3 file 333137541 amended supplemented first supplemental indenture dated june 3 2008 company bank new york mellon formerly known bank new york incorporated reference exhibit 46 companys current report form 8k filed june 3 2008 file 144 second supplemental indenture dated november 29 2010 company bank new york mellon incorporated reference exhibit 43 companys current report form 8k filed november 30 2010 file 144 third supplemental indenture dated april 4 2011 company bank new york mellon incorporated reference exhibit 44 companys current report form 8k filed april 8 2011 file 144 relating 500000000 645 debentures due january 15 2038 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 527688000 4535 debentures due march 26 2042 iii indenture dated october 16 2012 company bank new york mellon trustee incorporated reference exhibit 41 companys current report form 8k filed october 17 2012 file 144 relating 570425000 4016 debentures due april 16 2043 €600000000 1750 notes due june 23 2023 €500000000 floating rate notes due june 24 2019 1000000000 2500 notes due august 11 2026 500000000 3750 notes due 2047 iv copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis company hereby agrees upon request sec furnish sec copy instrument 10 copies company’s equity compensation plans deferred compensation plans agreements executive officers incorporated herein reference pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k follows archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 ii archerdanielsmidland company deferred compensation plan selected management employees ii amended restated incorporated reference exhibit 10ii company’s annual report form 10k year ended december 31 2013 file 144 iii archerdanielsmidland company supplemental retirement plan amended restated incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 iv second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 item 15 exhibits financial statement schedules continued v archerdanielsmidland company amended restated stock unit plan nonemployee directors amended incorporated reference exhibit 10v companys annual report form 10k year ended december 31 2016 file 144 vi archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2002 file 144 vii form stock option agreement companys 2002 incentive compensation plan incorporated reference exhibit 102 companys quarterly report form 10q quarter ended march 31 2005 file 144 viii form restricted stock agreement companys 2002 incentive compensation plan incorporated reference exhibit 103 companys quarterly report form 10q quarter ended march 31 2005 file 144 ix form performance share unit award agreement companys 2002 incentive compensative plan incorporated reference exhibit 10xii companys annual report form 10k year ended june 30 2010 file 144 x form restricted stock unit award agreement companys 2002 incentive compensation plan incorporated reference exhibit 10xiii companys annual report form 10k year ended june 30 2010 file 144 xi archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2009 file 144 xii form stock option agreement us employees companys 2009 incentive compensation plan incorporated reference exhibit 10i company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiii form restricted stock unit award agreement us employees companys 2009 incentive compensation plan incorporated reference exhibit 10ii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiv form stock option agreement named executive officers companys 2009 incentive compensation plan incorporated reference exhibit 10iii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xv form restricted stock unit award agreement named executive officers companys 2009 incentive compensation plan incorporated reference exhibit 10iv company’s quarterly report form 10q quarter ended march 31 2013 file 144 xvi form stock option agreement international employees companys 2009 incentive compensation plan incorporated reference exhibit 10v company’s quarterly report form 10q quarter ended march 31 2013 file 144 xvii form restricted stock unit award agreement international employees companys 2009 incentive compensation plan incorporated reference exhibit 10vi company’s quarterly report form 10q quarter ended march 31 2013 file 144 xviii form performance share unit award agreement companys 2009 incentive compensation plan incorporated reference exhibit 10vii company’s quarterly report form 10q quarter ended march 31 2013 file 144 item 15 exhibits financial statement schedules continued xix form performance share unit award agreement companys 2009 incentive compensation plan grant j luciano incorporated reference exhibit 101 company’s current report form 8k filed march 25 2011 file 144 xx form nonqualified stock option award agreement executive officers companys 2009 incentive compensation plan incorporated reference exhibit 101 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxi form nonqualified stock option award agreement us employees companys 2009 incentive compensation plan incorporated reference exhibit 102 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxii form restricted stock unit award agreement executive officers companys 2009 incentive compensation plan incorporated reference exhibit 103 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxiii form restricted stock unit award agreement us employees companys 2009 incentive compensation plan incorporated reference exhibit 104 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxiv form restricted stock unit award agreement companys 2009 incentive compensation plan incorporated reference exhibit 101 companys quarterly report form 10q quarter ended march 31 2017 file 144 xxv form performance share unit award agreement companys 2009 incentive compensation plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2017 file 144 12 calculation ratio earnings fixed charges 21 subsidiaries company 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act 1934 amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act 1934 amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file applicable signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date february 16 2018 archerdanielsmidland company c findlay c findlay senior vice president general counsel secretary pursuant requirements securities exchange act 1934 report signed february 16 2018 following persons behalf registrant capacities indicated j r luciano e felsinger c findlay j r luciano e felsinger c findlay chairman chief executive officer director attorneyinfact president director principal executive officer f harrison f harrison r g young director r g young executive vice president p j moore chief financial officer p j moore principal financial officer director j p stott f j sanchez j p stott f j sanchez group vice president finance director corporate controller principal accounting officer sandler l boeckmann director l boeckmann director shih k crews director k crews director k r westbrook k r westbrook p dufour director p dufour director powers attorney authorizing r g young j p stott c findlay sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15exhibits financial statement schedules a1see item 8 “financial statements supplementary data” list financial statements a2financial statement schedules either required applicable information otherwise included a3list exhibits 3icomposite certificate incorporation amended incorporated reference exhibit 3i company’s form 10q quarter ended september 30 2001 3iibylaws amended may 1 2019 incorporated reference exhibit 3ii company’s form 8k filed may 7 2019 4instruments defining rights security holders including idescription securities registrant iiindenture dated june 1 1986 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a company’s registration statement form s3 file 336721 amended supplemented supplemental indenture dated august 1 1989 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c post effective amendment 3 companys registration statement form s3 336721 relating 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due december 15 2097 item 15exhibits financial statement schedules continued iiiindenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 company’s registration statement form s3 amended supplemented first supplemental indenture dated june 3 2008 company bank new york mellon formerly known bank new york incorporated reference exhibit 46 company’s current report form 8k filed june 3 2008 second supplemental indenture dated november 29 2010 company bank new york mellon incorporated reference exhibit 43 company’s current report form 8k filed november 30 2010 third supplemental indenture dated april 4 2011 company bank new york mellon incorporated reference exhibit 44 company’s current report form 8k filed april 8 2011 relating 500000000 645 debentures due january 15 2038 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 527688000 4535 debentures due march 26 2042 ivindenture dated october 16 2012 company bank new york mellon trustee incorporated reference exhibit 41 company’s current report form 8k filed october 17 2012 relating 570425000 4016 debentures due april 16 2043 €600000000 1750 notes due june 23 2023 1000000000 2500 notes due august 11 2026 500000000 3750 notes due september 15 2047 €650000000 100 notes due september 12 2025 400000000 3375 notes due march 15 2022 600000000 4500 notes due march 15 2049 500000000 2750 notes due march 27 2025 1000000000 3250 notes due march 27 2030 vcopies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis company hereby agrees upon request sec furnish sec copy instrument 10copies company’s equity compensation plans deferred compensation plans agreements executive officers incorporated herein reference pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k follows ithe archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 iithe archerdanielsmidland company deferred compensation plan selected management employees ii amended restated incorporated reference exhibit 10ii company’s annual report form 10k year ended december 31 2013 iiithe archerdanielsmidland company supplemental retirement plan amended restated incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 item 15exhibits financial statement schedules continued ivsecond amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 vthe archerdanielsmidland company amended restated stock unit plan nonemployee directors amended incorporated reference exhibit 10v company’s annual report form 10k year ended december 31 2016 vithe archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2002 viiform stock option agreement company’s 2002 incentive compensation plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 viiiform restricted stock agreement company’s 2002 incentive compensation plan incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 ixform performance share unit award agreement company’s 2002 incentive compensative plan incorporated reference exhibit 10xii company’s annual report form 10k year ended june 30 2010 xform restricted stock unit award agreement company’s 2002 incentive compensation plan incorporated reference exhibit 10xiii company’s annual report form 10k year ended june 30 2010 xithe archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2009 xiiform stock option agreement us employees company’s 2009 incentive compensation plan incorporated reference exhibit 10i company’s quarterly report form 10q quarter ended march 31 2013 xiiiform restricted stock unit award agreement us employees company’s 2009 incentive compensation plan incorporated reference exhibit 10ii company’s quarterly report form 10q quarter ended march 31 2013 xivform stock option agreement named executive officers company’s 2009 incentive compensation plan incorporated reference exhibit 10iii company’s quarterly report form 10q quarter ended march 31 2013 xvform restricted stock unit award agreement named executive officers company’s 2009 incentive compensation plan incorporated reference exhibit 10iv company’s quarterly report form 10q quarter ended march 31 2013 xviform stock option agreement international employees company’s 2009 incentive compensation plan incorporated reference exhibit 10v company’s quarterly report form 10q quarter ended march 31 2013 xviiform restricted stock unit award agreement international employees company’s 2009 incentive compensation plan incorporated reference exhibit 10vi company’s quarterly report form 10q quarter ended march 31 2013 item 15exhibits financial statement schedules continued xviiiform performance share unit award agreement company’s 2009 incentive compensation plan incorporated reference exhibit 10vii company’s quarterly report form 10q quarter ended march 31 2013 xixform performance share unit award agreement company’s 2009 incentive compensation plan grant j luciano incorporated reference exhibit 101 company’s current report form 8k filed march 25 2011 xxform nonqualified stock option award agreement executive officers company’s 2009 incentive compensation plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended september 30 2016 xxiform nonqualified stock option award agreement us employees company’s 2009 incentive compensation plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended september 30 2016 xxiiform restricted stock unit award agreement executive officers company’s 2009 incentive compensation plan incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended september 30 2016 xxiiiform restricted stock unit award agreement us employees company’s 2009 incentive compensation plan incorporated reference exhibit 104 company’s quarterly report form 10q quarter ended september 30 2016 xxivform restricted stock unit award agreement company’s 2009 incentive compensation plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended march 31 2017 xxvform performance share unit award agreement company’s 2009 incentive compensation plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2017 xxviadm employee stock purchase plan incorporated reference exhibit 43 company’s registration statement form s8 filed may 15 2018 xxviiarcherdanielsmidland company 2020 incentive compensation plan incorporated reference annex b company’s definitive proxy statement filed march 25 2020 xxviiiform performance share unit award agreement company’s 2020 incentive plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended june 30 2020 xxixform restricted stock unit award agreement company’s 2020 incentive plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended june 30 2020 21subsidiaries company 23consent independent registered public accounting firm 24powers attorney item 15exhibits financial statement schedules continued 311certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act 1934 amended 312certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act 1934 amended 321certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101interactive data file 104cover page interactive data file formatted inline xbrl incorporated reference exhibit 101 applicable signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date february 18 2021 archerdanielsmidland company c findlay c findlay senior vice president general counsel secretary pursuant requirements securities exchange act 1934 report signed february 18 2021 following persons behalf registrant capacities indicated j r lucianos e felsingers c findlay j r lucianod e felsingerd c findlay chairman chief executive officerdirectorattorneyinfact president director principal executive officers f harrison f harrison r g youngdirector r g young executive vice president ands p j moore chief financial officerp j moore principal financial officerdirector j p stotts f j sanchez j p stottf j sanchez group vice president finance director corporate controller principal accounting officers sandler ms burkedirector burke directors l z schlitz l z schlitz k crewsdirector k crews directors k r westbrook k r westbrook p dufourdirector p dufour director powers attorney authorizing r g young j p stott c findlay sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules reports form 8k a1 following consolidated financial statements financial data registrant subsidiaries included annual report company shareholders year ended june 30 2002 incorporated reference item 8 also incorporated herein reference consolidated balance sheetsjune 30 2002 2001 consolidated statements earningsyears ended june 30 2002 2001 2000 consolidated statements shareholders equity years ended june 30 2002 2001 2000 item 15 exhibits financial statement schedules reports form 8k consolidated statements cash flowsyears ended june 30 2002 2001 2000 notes consolidated financial statementsjune 30 2002 summary significant accounting policies quarterly financial data unaudited a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3i composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 incorporated herein reference ii bylaws amended restated filed may 12 2000 exhibit 3ii form 10q quarter ended march 31 2000 incorporated herein reference item 15 exhibits financial statement schedules reports form 8kcontinued instruments defining rights security holders including indenture dated june 1 1986 registrant chase manhattan bank formerly known chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant chemical bank successor manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 6 14 notes due may 15 2003 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4 iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request commission furnish commission copy instrument 10 material contractscopies companys stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction 10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 14c form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii exhibit 4 registration statement 33351381 form s8 dated april 30 1998 relating archerdanielsmidland company 1996 stock option plan item 15 exhibits financial statement schedules reports form 8kcontinued iv archerdanielsmidland company stock unit plan nonemployee directors incorporated reference exhibit 10 companys quarterly report form 10q quarter ended december 31 1997 file 144 exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees archerdanielsmidland company incentive compensation plan incorporated reference exhibit companys definitive proxy statement filed securities exchange commission september 15 1999 file 144 exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective 1 registration statement 33342612 form s8 dated august 8 2000 exhibit 43 registration statement 33367962 form s8 dated august 20 2001 relating adm deferred compensation plan selected management employees archerdanielsmidland company voluntary employee payroll deduction stock purchase plan 13 portions annual report shareholders incorporated reference 21 subsidiaries registrant 23 consent independent auditors 24 powers attorney b reports form 8k form 8k filed quarter ended june 30 2002 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date september 20 2002 archerdanielsmidland company j smith j smith senior vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed september 20 2002 following persons behalf registrant capacities indicated g andreas mcmurtrie g andreas mrs mcmurtrie chief executive director principal executive officer j mimran sd j schmalz j mimran j schmalz director senior vice president chief financial officer b mulroney principal financial officer b mulroney director ss r mills r mills j k vanier group vice president controller j k vanier controller director h de boon g webb h de boon g webb director mrs h carter young mrs h carter young director r joslin j smith r joslin attorneyinfact director powers attorney authorizing j schmalz r mills j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commission certification pursuant section 302 sarbanesoxley act 2002 g andreas certify reviewed annual report form 10k archerdanielsmidland company based knowledge annual report contain untrue statement material fact omit state material fact necessary make statements made light circumstances statements made misleading respect period covered annual report based knowledge financial statements financial information included annual report fairly present material respects financial condition results operations cash flows registrant periods presented annual report date september 20 2002 g andreas g andreas chairman chief executive certification pursuant section 302 sarbanesoxley act 2002 j schmalz certify 1 reviewed annual report form 10k archerdanielsmidland company 2 based knowledge annual report contain untrue statement material fact omit state material fact necessary make statements made light circumstances statements made misleading respect period covered annual report 3 based knowledge financial statements financial information included annual report fairly present material respects financial condition results operations cash flows registrant periods presented annual report date september 20 2002 j schmalz j schmalz senior vice president chief financial officeritem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included item 15 exhibits financial statement schedules continued a3 list exhibits 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended filed february 6 2007 exhibit 3ii form 8k file 144 incorporated herein reference 4 instruments defining rights security holders including indenture dated june 1 1986 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant jpmorgan chase formerly known successor chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 78 debentures due april 15 2011 300000000 8 38 debentures due april 15 2017 300000000 8 18 debentures due june 1 2012 250000000 7 18 debentures due march 1 2013 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 250000000 6 78 debentures due december 15 2097 196210000 5 78 debentures due november 15 2010 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 ii indenture dated september 20 2006 company bank new york trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 iii indenture dated february 22 2007 company bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv registration rights agreement dated february 22 2007 among company citigroup global markets inc jp morgan securities inc merrill lynch co merrill lynch pierce fenner smith incorporated banc america securities llc barclays capital inc bnp paribas securities corp deutsche bank securities inc goldman sachs co hsbc securities usa inc incorporated reference exhibit 42 form 8k file 144 filed february 22 2007 item 15 exhibits financial statement schedules continued copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument 10 material contractscopies company’s stock option stock unit plans deferred compensation plan savings investment plans pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15c form 10k incorporated herein reference follows exhibits 4c 4d registration statement 3349409 form s8 dated march 15 1993 relating archer daniels midland 1991 incentive stock option plan archer daniels midland company savings investment plan ii exhibits 4c 4d registration statement 33339605 form s8 dated november 5 1997 relating adm savings investment plan salaried employees adm savings investment plan hourly employees iii archerdanielsmidland 1996 stock option plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 1996 file 144 iv archerdanielsmidland company amended restated stock unit plan nonemployee directors incorporated reference exhibit 993 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 v exhibits 4c 4d registration statement 33375073 form s8 dated march 26 1999 relating adm employee stock ownership plan salaried employees adm employee stock ownership plan hourly employees vi archerdanielsmidland company incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 15 1999 file 144 vii exhibits 43 44 registration statement 33342612 form s8 dated july 31 2000 relating adm 401k plan salaried employees adm 401k plan hourly employees amended posteffective amendment 1 registration statement 33342612 form s8 dated august 8 2000 viii adm deferred compensation plan selected management employees ii adopted december 1 2004 incorporated reference exhibit 991 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 ix adm supplemental retirement plan ii adopted december 1 2004 incorporated reference exhibit 992 company’s current report form 8k filed securities exchange commission december 23 2004 file 144 item 15 exhibits financial statement schedules continued x archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 xi management compensation arrangements incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xii form stock option agreement incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiii form restricted stock agreement incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 xiv separation agreement archerdanielsmidland company paul b mulhollem dated september 29 2005 filed september 30 2005 exhibit 10 company’s current report form 8k file 144 xv agreement regarding terms employment dated april 27 2006 patricia woertz filed may 1 2006 exhibit 101 company’s current report form 8k file 144 xvi transition agreement archerdanielsmidland company g allen andreas dated may 5 2006 filed may 8 2006 exhibit 101 company’s current report form 8k file 144 xvii annual cash incentive program incorporated reference description thereof included item 502 company’s current report form 8k file 144 filed july 3 2007 21 subsidiaries registrant 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date august 27 2007 archerdanielsmidland company j smith j smith executive vice president secretary general counsel pursuant requirements securities exchange act 1934 report signed august 27 2007 following persons behalf registrant capacities indicated p woertz maciel p woertz maciel chairman chief executive officer president director principal executive officer p j moore j schmalz p j moore j schmalz director senior vice president chief financial officer b mulroney principal financial officer b mulroney director j p stott j p stott f o’neill vice president controller f o’neill controller director l boeckmann g webb l boeckmann g webb director h carter k r westbrook h carter k r westbrook director r joslin j smith r joslin attorneyinfact director powers attorney authorizing j schmalz r mills j smith sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 2 sale purchase agreement dated july 5 2014 among archerdanielsmidland europe bv archer daniels midland europoort bv adm worldwide holdings lp dr hanspeter wild kkr columba four sarl filed july 8 2014 exhibit 21 form 8k file 144 incorporated herein reference 3 composite certificate incorporation amended filed november 13 2001 exhibit 3i form 10q quarter ended september 30 2001 file 144 incorporated herein reference ii bylaws amended filed february 11 2013 exhibit 3ii form 8k file 144 incorporated herein reference 4 instruments defining rights security holders including indenture dated june 1 1986 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c posteffective amendment 3 registration statement 336721 relating 300000000 8 38 debentures due april 15 2017 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due 2097 item 15 exhibits financial statement schedules continued ii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 first supplemental indenture dated june 3 2008 registrant bank new york mellon formerly known bank new york incorporated reference exhibit 46 form 8k file 144 filed june 3 2008 second supplemental indenture dated november 29 2010 registrant bank new york mellon incorporated reference exhibit 43 form 8k file 144 filed november 30 2010 third supplemental indenture dated april 4 2011 registrant bank new york mellon incorporated reference exhibit 44 form 8k file 144 filed april 8 2011 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2018 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 527688000 4535 debentures due march 26 2042 iii indenture dated february 22 2007 company bank new york mellon formerly known bank new york trustee including form 0875 convertible senior notes due 2014 incorporated reference exhibit 41 form 8k file 144 filed february 22 2007 iv indenture dated october 16 2012 company bank new york mellon trustee incorporated reference exhibit 41 form 8k file 144 filed october 17 2012 relating 570425000 aggregate principal amount 4016 debentures due april 16 2043 v copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument 10 material contracts copies company’s equity compensation plans deferred compensation plans agreements executive officers pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 ii archerdanielsmidland company deferred compensation plan selected management employees ii amended restated incorporated reference exhibit 10ii company’s annual report form 10k year ended december 31 2013 file 144 iii archerdanielsmidland company supplemental retirement plan amended incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 iv second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 item 15 exhibits financial statement schedules continued v archerdanielsmidland company amended restated stock unit plan nonemployee directors amended incorporated reference exhibit 10vii company’s annual report form 10k year ended june 30 2010 file 144 vi archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed securities exchange commission september 25 2002 file 144 vii agreement regarding terms employment dated april 27 2006 patricia woertz incorporated reference exhibit 101 company’s current report form 8k file 144 filed may 1 2006 viii archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement file 144 filed september 25 2009 ix form stock option agreement nonneo employees us incorporated reference exhibit 10i companys quarterly report form 10q file 144 quarter ended march 31 2013 x form restricted stock unit award agreement nonneo employees us incorporated reference exhibit 10ii companys quarterly report form 10q file 144 quarter ended march 31 2013 xi form stock option agreement neos incorporated reference exhibit 10iii companys quarterly report form 10q file 144 quarter ended march 31 2013 xii form restricted stock unit award agreement neos incorporated reference exhibit 10iv company’s quarterly report form 10q file 144 quarter ended march 31 2013 xiii form stock option agreement international employees incorporated reference exhibit 10v company’s quarterly report form 10q file 144 quarter ended march 31 2013 xiv form restricted stock unit award agreement international employees incorporated reference exhibit 10vi company quarterly report form 10q file 144 quarter ended march 31 2013 xv form performance share unit award agreement incorporated reference exhibit 10vii company quarterly report form 10q file 144 quarter ended march 31 2013 xvi form performance share unit award agreement grant j luciano incorporated reference exhibit 101 company’s current report form 8k file 144 filed march 25 2011 xvii form performance share unit award agreement grant jansen incorporated reference exhibit 10xxvi company’s transition report form 10kt file 144 period ended december 31 2012 12 calculation ratio earnings fixed charges 21 subsidiaries company 23 consent independent registered public accounting firm 24 powers attorney item 15 exhibits financial statement schedules continued 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date february 20 2015 archerdanielsmidland company c findlay c findlay senior vice president general counsel secretary pursuant requirements securities exchange act 1934 report signed february 5 2015 following persons behalf registrant capacities indicated p woertz k crews k r westbrook p woertz k crews k r westbrook chairman board director jr luciano p dufour c findlay jr luciano p dufour c findlay chief executive officer president director attorneyinfact director principal executive officer e felsinger e felsinger r g young director r g young senior vice president maciel chief financial officer maciel principal financial officer director j p stott p j moore j p stott p j moore group vice president finance director corporate controller principal accounting officer f o’neill f o’neill l boeckmann director l boeckmann director f sanchez f sanchez h carter director h carter director daniel shih director powers attorney authorizing r g young j p stott c findlay sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended incorporated reference exhibit 3i companys form 10q quarter ended september 30 2001 file 144 ii bylaws amended february 9 2017 incorporated reference exhibit 3 companys form 8k filed february 13 2017 file 144 4 instruments defining rights security holders including indenture dated june 1 1986 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a registration statement 336721 supplemental indenture dated august 1 1989 registrant bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c post effective amendment 3 registration statement 336721 relating 300000000 8 38 debentures due april 15 2017 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due december 15 2097 item 15 exhibits financial statement schedules continued ii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 registration statement form s3 registration 333137541 first supplemental indenture dated june 3 2008 registrant bank new york mellon formerly known bank new york incorporated reference exhibit 46 form 8k file 144 filed june 3 2008 second supplemental indenture dated november 29 2010 registrant bank new york mellon incorporated reference exhibit 43 form 8k file 144 filed november 30 2010 third supplemental indenture dated april 4 2011 registrant bank new york mellon incorporated reference exhibit 44 form 8k filed april 8 2011 file 144 relating 500000000 645 debentures due january 15 2038 700000000 545 notes due march 15 2018 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 527688000 4535 debentures due march 26 2042 iii indenture dated october 16 2012 company bank new york mellon trustee incorporated reference exhibit 41 form 8k filed october 17 2012 file 144 relating 570425000 4016 debentures due april 16 2043 €600000000 1750 note due june 23 2023 €500000000 floating rate note due june 24 2019 1000000000 2500 notes due august 11 2026 iv copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis registrant hereby agrees upon request sec furnish sec copy instrument 10 material contracts copies company’s equity compensation plans deferred compensation plans agreements executive officers pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k incorporated herein reference follows archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 ii archerdanielsmidland company deferred compensation plan selected management employees ii amended restated incorporated reference exhibit 10ii company’s annual report form 10k year ended december 31 2013 file 144 iii archerdanielsmidland company supplemental retirement plan amended incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 iv second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 v archerdanielsmidland company amended restated stock unit plan nonemployee directors amended item 15 exhibits financial statement schedules continued vi archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2002 file 144 vii archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2009 file 144 viii form stock option agreement nonneo employees us incorporated reference exhibit 10i company’s quarterly report form 10q quarter ended march 31 2013 file 144 ix form restricted stock unit award agreement nonneo employees us incorporated reference exhibit 10ii company’s quarterly report form 10q quarter ended march 31 2013 file 144 x form stock option agreement neos incorporated reference exhibit 10iii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xi form restricted stock unit award agreement neos incorporated reference exhibit 10iv company’s quarterly report form 10q quarter ended march 31 2013 file 144 xii form stock option agreement international employees incorporated reference exhibit 10v company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiii form restricted stock unit award agreement international employees incorporated reference exhibit 10vi company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiv form performance share unit award agreement incorporated reference exhibit 10vii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xv form performance share unit award agreement grant j luciano incorporated reference exhibit 101 company’s current report form 8k filed march 25 2011 file 144 xvi form nonqualified stock option award executive officers incorporated reference exhibit 101 companys quarterly report form 10q quarter ended september 30 2016 file 144 xvii form nonqualified stock option award us employees incorporated reference exhibit 102 companys quarterly report form 10q quarter ended september 30 2016 file 144 xviii form restricted stock unit award executive officers incorporated reference exhibit 103 companys quarterly report form 10q quarter ended september 30 2016 file 144 xix form restricted stock unit award us employees incorporated reference exhibit 104 companys quarterly report form 10q quarter ended september 30 2016 file 144 12 calculation ratio earnings fixed charges 21 subsidiaries company 23 consent independent registered public accounting firm 24 powers attorney item 15 exhibits financial statement schedules continued 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file applicable signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date february 17 2017 archerdanielsmidland company c findlay c findlay senior vice president general counsel secretary pursuant requirements securities exchange act 1934 report signed february 17 2017 following persons behalf registrant capacities indicated j r luciano p dufour c findlay j r luciano p dufour c findlay chairman chief executive officer director attorneyinfact president director principal executive officer e felsinger e felsinger r g young director r g young executive vice president maciel chief financial officer maciel principal financial officer director j p stott p j moore j p stott p j moore group vice president finance director corporate controller principal accounting officer f sanchez f sanchez l boeckmann director l boeckmann director sandler h carter director h carter director shih k crews director k crews director k r westbrook k r westbrook director powers attorney authorizing r g young j p stott c findlay sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended incorporated reference exhibit 3i company’s form 10q quarter ended september 30 2001 file 144 ii bylaws amended february 9 2017 incorporated reference exhibit 3 company’s form 8k filed february 13 2017 file 144 4 instruments defining rights security holders including indenture dated june 1 1986 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a companys registration statement form s3 file 336721 amended supplemented supplemental indenture dated august 1 1989 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c post effective amendment 3 companys registration statement form s3 336721 relating 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due december 15 2097 ii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 companys registration statement form s3 file 333137541 amended item 15 exhibits financial statement schedules continued supplemented first supplemental indenture dated june 3 2008 company bank new york mellon formerly known bank new york incorporated reference exhibit 46 companys current report form 8k filed june 3 2008 file 144 second supplemental indenture dated november 29 2010 company bank new york mellon incorporated reference exhibit 43 companys current report form 8k filed november 30 2010 file 144 third supplemental indenture dated april 4 2011 company bank new york mellon incorporated reference exhibit 44 companys current report form 8k filed april 8 2011 file 144 relating 500000000 645 debentures due january 15 2038 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 527688000 4535 debentures due march 26 2042 iii indenture dated october 16 2012 company bank new york mellon trustee incorporated reference exhibit 41 companys current report form 8k filed october 17 2012 file 144 relating 570425000 4016 debentures due april 16 2043 €600000000 1750 notes due june 23 2023 €500000000 floating rate notes due june 24 2019 1000000000 2500 notes due august 11 2026 500000000 3750 notes due september 15 2047 €650000000 100 notes due september 12 2025 400000000 3375 notes due march 15 2022 600000000 4500 notes due march 15 2049 iv copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis company hereby agrees upon request sec furnish sec copy instrument 10 copies company’s equity compensation plans deferred compensation plans agreements executive officers incorporated herein reference pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k follows archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 ii archerdanielsmidland company deferred compensation plan selected management employees ii amended restated incorporated reference exhibit 10ii company’s annual report form 10k year ended december 31 2013 file 144 iii archerdanielsmidland company supplemental retirement plan amended restated incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 iv second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 item 15 exhibits financial statement schedules continued v archerdanielsmidland company amended restated stock unit plan nonemployee directors amended incorporated reference exhibit 10v company’s annual report form 10k year ended december 31 2016 file 144 vi archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2002 file 144 vii form stock option agreement company’s 2002 incentive compensation plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 viii form restricted stock agreement company’s 2002 incentive compensation plan incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 ix form performance share unit award agreement company’s 2002 incentive compensative plan incorporated reference exhibit 10xii company’s annual report form 10k year ended june 30 2010 file 144 x form restricted stock unit award agreement company’s 2002 incentive compensation plan incorporated reference exhibit 10xiii company’s annual report form 10k year ended june 30 2010 file 144 xi archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2009 file 144 xii form stock option agreement us employees company’s 2009 incentive compensation plan incorporated reference exhibit 10i company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiii form restricted stock unit award agreement us employees company’s 2009 incentive compensation plan incorporated reference exhibit 10ii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiv form stock option agreement named executive officers company’s 2009 incentive compensation plan incorporated reference exhibit 10iii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xv form restricted stock unit award agreement named executive officers company’s 2009 incentive compensation plan incorporated reference exhibit 10iv company’s quarterly report form 10q quarter ended march 31 2013 file 144 xvi form stock option agreement international employees company’s 2009 incentive compensation plan incorporated reference exhibit 10v company’s quarterly report form 10q quarter ended march 31 2013 file 144 xvii form restricted stock unit award agreement international employees companys 2009 incentive compensation plan incorporated reference exhibit 10vi company’s quarterly report form 10q quarter ended march 31 2013 file 144 xviii form performance share unit award agreement company’s 2009 incentive compensation plan incorporated reference exhibit 10vii company’s quarterly report form 10q quarter ended march 31 2013 file 144 item 15 exhibits financial statement schedules continued xix form performance share unit award agreement companys 2009 incentive compensation plan grant j luciano incorporated reference exhibit 101 company’s current report form 8k filed march 25 2011 file 144 xx form nonqualified stock option award agreement executive officers companys 2009 incentive compensation plan incorporated reference exhibit 101 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxi form nonqualified stock option award agreement us employees companys 2009 incentive compensation plan incorporated reference exhibit 102 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxii form restricted stock unit award agreement executive officers companys 2009 incentive compensation plan incorporated reference exhibit 103 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxiii form restricted stock unit award agreement us employees companys 2009 incentive compensation plan incorporated reference exhibit 104 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxiv form restricted stock unit award agreement companys 2009 incentive compensation plan incorporated reference exhibit 101 companys quarterly report form 10q quarter ended march 31 2017 file 144 xxv form performance share unit award agreement companys 2009 incentive compensation plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2017 file 144 xxvi adm employee stock purchase plan incorporated reference exhibit 43 companys registration statement form s8 filed may 15 2018 file 333224944 21 subsidiaries company 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act 1934 amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act 1934 amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file applicable signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date february 19 2019 archerdanielsmidland company c findlay c findlay senior vice president general counsel secretary pursuant requirements securities exchange act 1934 report signed february 19 2019 following persons behalf registrant capacities indicated j r luciano p dufour k r westbrook j r luciano p dufour k r westbrook chairman chief executive officer director president director principal executive officer e felsinger c findlay e felsinger c findlay r g young director attorneyinfact r g young executive vice president f harrison chief financial officer f harrison principal financial officer director j p stott p j moore j p stott p j moore group vice president finance director corporate controller principal accounting officer f j sanchez f j sanchez l boeckmann director l boeckmann director sandler ms burke director burke director shih k crews director k crews director powers attorney authorizing r g young j p stott c findlay sign form 10k behalf abovenamed officers directors company copies filed securities exchange commissionitem 15 exhibits financial statement schedules a1 see item 8 “financial statements supplementary data” list financial statements a2 financial statement schedules either required applicable information otherwise included a3 list exhibits 3 composite certificate incorporation amended incorporated reference exhibit 3i company’s form 10q quarter ended september 30 2001 file 144 ii bylaws amended may 1 2019 incorporated reference exhibit 3ii company’s form 8k filed may 7 2019 file 144 4 instruments defining rights security holders including description securities registrant ii indenture dated june 1 1986 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4a companys registration statement form s3 file 336721 amended supplemented supplemental indenture dated august 1 1989 company bank new york mellon successor jpmorgan chase manhattan bank chemical bank manufacturers hanover trust company trustee incorporated reference exhibit 4c post effective amendment 3 companys registration statement form s3 336721 relating 350000000 7 12 debentures due march 15 2027 200000000 6 34 debentures due december 15 2027 300000000 6 58 debentures due may 1 2029 400000000 7 debentures due february 1 2031 500000000 5935 debentures due october 1 2032 600000000 5375 debentures due september 15 2035 250000000 695 debentures due december 15 2097 iii indenture dated september 20 2006 company bank new york mellon successor jpmorgan chase bank na trustee incorporated reference exhibit 4 companys registration statement form s3 file 333137541 amended supplemented first supplemental indenture dated june 3 2008 company bank new york mellon formerly known bank new york incorporated item 15 exhibits financial statement schedules continued reference exhibit 46 companys current report form 8k filed june 3 2008 file 144 second supplemental indenture dated november 29 2010 company bank new york mellon incorporated reference exhibit 43 companys current report form 8k filed november 30 2010 file 144 third supplemental indenture dated april 4 2011 company bank new york mellon incorporated reference exhibit 44 companys current report form 8k filed april 8 2011 file 144 relating 500000000 645 debentures due january 15 2038 750000000 4479 notes due march 1 2021 1000000000 5765 debentures due march 1 2041 527688000 4535 debentures due march 26 2042 iv indenture dated october 16 2012 company bank new york mellon trustee incorporated reference exhibit 41 companys current report form 8k filed october 17 2012 file 144 relating 570425000 4016 debentures due april 16 2043 €600000000 1750 notes due june 23 2023 1000000000 2500 notes due august 11 2026 500000000 3750 notes due september 15 2047 €650000000 100 notes due september 12 2025 400000000 3375 notes due march 15 2022 600000000 4500 notes due march 15 2049 v copies constituent instruments defining rights holders longterm debt company subsidiaries indentures specified herein filed herewith pursuant instruction b4iiia item 601 regulation sk total amount securities authorized instrument exceed 10 total assets company subsidiaries consolidated basis company hereby agrees upon request sec furnish sec copy instrument 10 copies company’s equity compensation plans deferred compensation plans agreements executive officers incorporated herein reference pursuant instruction b10iiia item 601 regulation sk management contract compensation plan arrangement required filed exhibit pursuant item 15b form 10k follows archerdanielsmidland company deferred compensation plan selected management employees amended incorporated reference exhibit 10iii company’s annual report form 10k year ended june 30 2010 file 144 ii archerdanielsmidland company deferred compensation plan selected management employees ii amended restated incorporated reference exhibit 10ii company’s annual report form 10k year ended december 31 2013 file 144 iii archerdanielsmidland company supplemental retirement plan amended restated incorporated reference exhibit 10vi company’s annual report form 10k year ended june 30 2010 file 144 iv second amendment adm supplemental retirement plan incorporated reference exhibit 101 company’s quarterly report form 10q quarter ended december 31 2010 file 144 v archerdanielsmidland company amended restated stock unit plan nonemployee directors amended incorporated reference exhibit 10v company’s annual report form 10k year ended december 31 2016 file 144 item 15 exhibits financial statement schedules continued vi archerdanielsmidland 2002 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2002 file 144 vii form stock option agreement company’s 2002 incentive compensation plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2005 file 144 viii form restricted stock agreement company’s 2002 incentive compensation plan incorporated reference exhibit 103 company’s quarterly report form 10q quarter ended march 31 2005 file 144 ix form performance share unit award agreement company’s 2002 incentive compensative plan incorporated reference exhibit 10xii company’s annual report form 10k year ended june 30 2010 file 144 x form restricted stock unit award agreement company’s 2002 incentive compensation plan incorporated reference exhibit 10xiii company’s annual report form 10k year ended june 30 2010 file 144 xi archerdanielsmidland company 2009 incentive compensation plan incorporated reference exhibit company’s definitive proxy statement filed september 25 2009 file 144 xii form stock option agreement us employees company’s 2009 incentive compensation plan incorporated reference exhibit 10i company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiii form restricted stock unit award agreement us employees company’s 2009 incentive compensation plan incorporated reference exhibit 10ii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xiv form stock option agreement named executive officers company’s 2009 incentive compensation plan incorporated reference exhibit 10iii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xv form restricted stock unit award agreement named executive officers company’s 2009 incentive compensation plan incorporated reference exhibit 10iv company’s quarterly report form 10q quarter ended march 31 2013 file 144 xvi form stock option agreement international employees company’s 2009 incentive compensation plan incorporated reference exhibit 10v company’s quarterly report form 10q quarter ended march 31 2013 file 144 xvii form restricted stock unit award agreement international employees companys 2009 incentive compensation plan incorporated reference exhibit 10vi company’s quarterly report form 10q quarter ended march 31 2013 file 144 xviii form performance share unit award agreement company’s 2009 incentive compensation plan incorporated reference exhibit 10vii company’s quarterly report form 10q quarter ended march 31 2013 file 144 xix form performance share unit award agreement companys 2009 incentive compensation plan grant j luciano incorporated reference exhibit 101 company’s current report form 8k filed march 25 2011 file 144 item 15 exhibits financial statement schedules continued xx form nonqualified stock option award agreement executive officers companys 2009 incentive compensation plan incorporated reference exhibit 101 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxi form nonqualified stock option award agreement us employees companys 2009 incentive compensation plan incorporated reference exhibit 102 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxii form restricted stock unit award agreement executive officers companys 2009 incentive compensation plan incorporated reference exhibit 103 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxiii form restricted stock unit award agreement us employees companys 2009 incentive compensation plan incorporated reference exhibit 104 companys quarterly report form 10q quarter ended september 30 2016 file 144 xxiv form restricted stock unit award agreement companys 2009 incentive compensation plan incorporated reference exhibit 101 companys quarterly report form 10q quarter ended march 31 2017 file 144 xxv form performance share unit award agreement companys 2009 incentive compensation plan incorporated reference exhibit 102 company’s quarterly report form 10q quarter ended march 31 2017 file 144 xxvi adm employee stock purchase plan incorporated reference exhibit 43 companys registration statement form s8 filed may 15 2018 file 333224944 21 subsidiaries company 23 consent independent registered public accounting firm 24 powers attorney 311 certification chief executive officer pursuant rule 13a14a rule 15d14a securities exchange act 1934 amended 312 certification chief financial officer pursuant rule 13a14a rule 15d14a securities exchange act 1934 amended 321 certification chief executive officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant 18 usc 1350 adopted pursuant section 906 sarbanesoxley act 2002 101 interactive data file 104 cover page interactive data file formatted inline xbrl incorporated reference exhibit 101 applicable signatures pursuant requirements section 13 securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized date february 18 2020 archerdanielsmidland company c findlay c findlay senior vice president general counsel secretary pursuant requirements securities exchange act 1934 report signed february 18 2020 following persons behalf registrant capacities indicated j r luciano e felsinger c findlay j r luciano e felsinger c findlay chairman chief executive officer director attorneyinfact president director principal executive officer f harrison f harrison r g young director r g young executive vice president p j moore chief financial officer p j moore principal financial officer director j p stott f j sanchez j p stott f j sanchez group vice president finance director corporate controller principal accounting officer sandler ms burke director burke director l z schlitz l z schlitz k crews director k crews director k r westbrook k r westbrook p dufour director p dufour director powers attorney authorizing r g young j p stott c findlay sign form 10k behalf abovenamed officers directors company copies filed securities exchange commission