Note 18. Segment and Geographic Information

The Company is principally engaged in procuring, transporting, storing, processing, and merchandising agricultural commodities and products. The Company’s operations are organized, managed and classified into three reportable business segments: Oilseeds Processing, Corn Processing, and Agricultural Services. Each of these segments is organized based upon the nature of products and services offered. The Company’s remaining operations are not reportable segments, as defined by ASC Topic 280, Segment Reporting, and are classified as Other.

The Oilseeds Processing segment includes global activities related to the origination, merchandising, crushing, and further processing of oilseeds such as soybeans and soft seeds (cottonseed, sunflower seed, canola, rapeseed, and flaxseed) into vegetable oils and protein meals. Oilseeds products produced and marketed by the Company include ingredients for the food, feed, energy, and other industrial products industries. Crude vegetable oils produced by the segment’s crushing activities are sold “as is” or are further processed by refining, blending, bleaching, and deodorizing into salad oils. Salad oils are sold “as is” or are further processed by hydrogenating and/or interesterifying into margarine, shortening, and other food products. Partially refined oils are used to produce biodiesel or are sold to other manufacturers for use in chemicals, paints, and other industrial products. Oilseed protein meals are principally sold to third parties to be used as ingredients in commercial livestock and poultry feeds. The Oilseeds Processing segment also includes activities related to the procurement, transportation and processing of cocoa beans into cocoa liquor, cocoa butter, cocoa powder, chocolate, and various compounds in North America, South America, Europe, Asia, and Africa for the food processing industry. In Europe and South America, the Oilseeds Processing segment includes origination and merchandising activities as adjuncts to its oilseeds processing assets. These activities include a network of grain elevators, port facilities, and transportation assets used to buy, store, clean, and transport grains and oilseeds. The Oilseeds Processing segment produces natural health and nutrition products and other specialty food and feed ingredients. The Oilseeds Processing segment is a major supplier of peanuts and peanut-derived ingredients to both the U.S. and export markets. In North America, cottonseed flour is produced and sold primarily to the pharmaceutical industry and cotton cellulose pulp is manufactured and sold to the chemical, paper, and filter markets. In South America, the Oilseeds Processing segment operates fertilizer blending facilities. The Oilseeds Processing segment also includes the Company’s share of the results of its equity investment in Wilmar and its share of results for its Stratas Foods LLC and Edible Oils Limited joint ventures.

The Company’s Corn Processing segment is engaged in corn wet milling and dry milling activities, with its asset base primarily located in the central part of the United States. The Corn Processing segment converts corn into sweeteners and starches, and bioproducts. Its products include ingredients used in the food and beverage industry including sweeteners, starch, syrup, glucose, and dextrose. Dextrose and starch are used by the Corn Processing segment as feedstocks for its bioproducts operations. By fermentation of dextrose, the Corn Processing segment produces alcohol, amino acids, and other specialty food and animal feed ingredients. Ethyl alcohol is produced by the Company for industrial use as ethanol or as beverage grade. Ethanol, in gasoline, increases octane and is used as an extender and oxygenate. Bioproducts also include amino acids such as lysine and threonine that are vital compounds used in swine feeds to produce leaner animals and in poultry feeds to enhance the speed and efficiency of poultry production. Corn gluten feed and meal, as well as distillers’ grains, are produced for use as animal feed ingredients. Corn germ, a by-product of the wet milling process, is further processed into vegetable oil and protein meal. Other Corn Processing products include citric and lactic acids, lactates, sorbitol, xanthan gum, and glycols which are used in various food and industrial products. The Corn Processing segment includes the activities of a propylene and ethylene glycol facility and the Company’s Brazilian sugarcane ethanol plant and related operations. In fiscal 2012, the Company ended its commercial alliance with Metabolix, Inc. As a result of this decision, Telles LLC, the sales and marketing commercial alliance created to commercialize Mirel™, a bio-based plastic, will be dissolved and the production of Mirel™ on behalf of Telles LLC has ended. This segment also includes the Company’s share of the results of its equity investments in Almidones Mexicanos S.A., Eaststarch C.V., and Red Star Yeast Company LLC.

The Agricultural Services segment utilizes its extensive U.S. grain elevator, global transportation network, and port operations to buy, store, clean, and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats, rice, and barley, and resells these commodities primarily as food and feed ingredients and as raw materials for the agricultural processing industry. Agricultural Services’ grain sourcing, handling, and transportation network provides reliable and efficient services to the Company’s customers and agricultural processing operations. Agricultural Services’ transportation network capabilities include barge, ocean-going vessel, truck, and rail freight services. Agricultural Services segment also includes the activities related to the processing of wheat into wheat flour, the processing and distribution of formula feeds, animal health and nutrition products, and the procurement, processing, and distribution of edible beans. The Agricultural Services segment includes the activities of Alfred C. Toepfer International, an 80% owned global merchant of agricultural commodities and processed products. The Agricultural Services segment also includes the Company’s share of the results of its Kalama Export Company joint venture. In December 2012, the Company sold its equity investment in Gruma S.A.B. de C.V.

Other includes the Company’s remaining operations, primarily its financial business units, related principally to futures commission merchant activities and captive insurance. On September 30, 2011, the Company sold a majority ownership interest of the Bank. The Bank was deconsolidated from the Company’s consolidated financial statements in the first quarter of fiscal 2012 resulting in no material effect to the Company’s earnings. In December 2012, the Company sold its remaining common equity interest in the Bank resulting in no material effect to the Company’s earnings.

Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on net sales less identifiable operating expenses. Also included in segment operating profit is equity in earnings of affiliates based on the equity method of accounting. Certain Corporate items are not allocated to the Company’s reportable business segments. Corporate results principally include the impact of LIFO-related adjustments, unallocated corporate expenses, and interest cost net of investment income. Prior to January 1, 2012, Corporate results also included the after-tax elimination of income attributable to mandatorily redeemable interests in consolidated subsidiaries.

Segment Information




	Six Months Ended				Year Ended
(In millions)	December 31				June 30
	2012		2011		2012		2011		2010
			(Unaudited)
Sales to external customers
Oilseeds Processing	$	18,052	$	17,337	$	34,715	$	29,908	$	24,412
Corn Processing		6,167		6,451		12,114		9,908		7,874
Agricultural Services		22,441		21,364		42,082		40,750		29,301
Other		69		56		127		110		95
Total	$	46,729	$	45,208	$	89,038	$	80,676	$	61,682

Intersegment sales
Oilseeds Processing	$	1,413	$	736	$	2,275		2,103		1,334
Corn Processing		56		113		173		194		103
Agricultural Services		3,046		2,751		5,609		4,417		2,436
Other		82		80		161		155		151
Total	$	4,597	$	3,680	$	8,218	$	6,869	$	4,024

Net sales
Oilseeds Processing	$	19,465	$	18,073	$	36,990		32,011		25,746
Corn Processing		6,223		6,564		12,287		10,102		7,977
Agricultural Services		25,487		24,115		47,691		45,167		31,737
Other		151		136		288		265		246
Intersegment elimination		(4,597)		(3,680)		(8,218)		(6,869)		(4,024)
Total	$	46,729	$	45,208	$	89,038	$	80,676	$	61,682

Depreciation
Oilseeds Processing	$	113	$	108	$	228	$	215	$	243
Corn Processing		165		178		345		399		412
Agricultural Services		99		90		188		183		167
Other		2		2		4		5		6
Corporate		17		13		28		25		29
Total	$	396	$	391	$	793	$	827	$	857

Asset abandonments and write-downs
Oilseeds Processing	$	-	$	-	$	1		2		9
Corn Processing		-		337		360		-		-
Agricultural Services		146		-		2		-		-
Corporate		-		-		4		-		-
Total	$	146	$	337	$	367	$	2	$	9



	Six Months Ended				Year Ended
(In millions)	December 31				June 30
	2012		2011		2012		2011		2010
			(Unaudited)
Interest income
Oilseeds Processing	$	18	$	16	$	35	$	28	$	34
Corn Processing		1		-		1		-		1
Agricultural Services		18		10		22		23		18
Other		11		14		21		46		51
Corporate		11		22		33		39		22
Total	$	59	$	62	$	112	$	136	$	126

Equity in earnings of affiliates
Oilseeds Processing	$	96	$	129	$	226	$	213	$	306
Corn Processing		49		53		107		83		78
Agricultural Services		49		55		110		230		152
Other		-		-		-		9		9
Corporate		61		14		29		7		16
Total	$	255	$	251	$	472	$	542	$	561

Operating profit
Oilseeds Processing	$	747	$	429	$	1,302	$	1,690	$	1,551
Corn Processing		71		54		261		1,079		738
Agricultural Services		395		563		947		1,323		1,002
Other		93		17		15		39		46
Total operating profit		1,306		1,063		2,525		4,131		3,337
Corporate		(309)		(282)		(760)		(1,116)		(752)
Earnings before income taxes	$	997	$	781	$	1,765	$	3,015	$	2,585



Investments in and advances to affiliates
Oilseeds Processing	$	1,889	$	1,811	$	1648
Corn Processing		505		470		483
Agricultural Services		297		671		669
Other		18		46		22
Corporate		461		390		418
Total	$	3,170	$	3,388	$	3,240

Identifiable assets
Oilseeds Processing	$	15,856	$	17,041	$	16,576
Corn Processing		6,649		6,491		7,606
Agricultural Services		14,201		11,444		11,242
Other		5,912		5,028		6,010
Corporate		2,518		1,767		918
Total	$	45,136	$	41,771	$	42,352


	Six Months Ended		Year Ended
	December 31		June 30
	2012		2012		2011
	(In millions)
Gross additions to property, plant, and equipment
Oilseeds Processing	$	259	$	588	$	673
Corn Processing		169		349		349
Agricultural Services		182		740		442
Other		-		1		8
Corporate		31		41		40
Total	$	641	$	1,719	$	1,512

Geographic information: The following geographic data include net sales and other operating income attributed to the countries based on the location of the subsidiary making the sale and long-lived assets based on physical location. Long-lived assets represent the net book value of property, plant, and equipment.




	Six Months Ended				Year Ended
(In millions)	December 31				June 30
	2012		2011		2012		2011		2010
			(Unaudited)
Net sales and other operating income
United States	$	25,033	$	24,490	$	46,593	$	42,390	$	33,362
Switzerland		4,991		5,237		9,698		8,413		5,770
Germany		4,450		4,521		9,656		6,217		6,424
Other Foreign		12,255		10,960		23,091		23,656		16,126
	$	46,729	$	45,208	$	89,038	$	80,676	$	61,682

Long-lived assets
United States	$	7,287			$	7,288	$	7,234
Foreign		2,836				2,524		2,266
	$	10,123			$	9,812	$	9,500