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Segment Reporting
 6 Months Ended
Feb. 29, 2012
Segment Reporting [Abstract]  
Segment Reporting

Note 10.    Segment Reporting

We have aligned our segments based on an assessment of how our businesses operate and the products and services they sell.

Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag Business segment purchases and further processes or resells grains and oilseeds originated by our members or third parties, and also serves as a wholesaler and retailer of crop inputs. Corporate and Other primarily represents our non-consolidated wheat milling and packaged food joint ventures, as well as our business solutions operations, which consists of commodities hedging, insurance and financial services related to crop production.

Corporate administrative expenses are allocated to each business segment, and Corporate and Other, based on direct usage for services that can be tracked, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Many of our business activities are highly seasonal and operating results will vary throughout the year. Historically, our income is generally lowest during our second fiscal quarter and highest during our third fiscal quarter. Our business segments are subject to varying seasonal fluctuations. For example, in our Ag Business segment, agronomy and country operations businesses experience higher volumes and income during the spring planting season and in the fall, which corresponds to harvest. Also in our Ag Business segment, our grain marketing operations are subject to fluctuations in volumes and earnings based on producer harvests, world grain prices and demand. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may experience higher volumes and profitability during the winter heating and crop drying seasons.

Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as petroleum products, natural gas, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to disease or insects, drought, the availability and adequacy of supply, government regulations and policies, world events, and general political and economic conditions.

While our revenues and operating results are derived from businesses and operations which are wholly-owned and majority-owned, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less and do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. In our Ag Business segment, this principally includes our 50% ownership in TEMCO. In Corporate and Other, these investments principally include our 50% ownership in Ventura Foods and our 24% ownership in Horizon Milling and Horizon Milling G.P.

Reconciling Amounts represent the elimination of revenues between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of the individual business segments.

 

Segment information for the three and six months ended February 29, 2012 and February 28, 2011 is as follows:

 

                                         
          Ag     Corporate     Reconciling        
    Energy     Business     and Other     Amounts     Total  

For the Three Months Ended February 29, 2012

                                        

Revenues

   $ 2,918,852     $ 6,008,402     $ 15,656     $ (99,098 )    $ 8,843,812  

Cost of goods sold

     2,821,733       5,890,328       (728 )      (99,098 )      8,612,235  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

     97,119       118,074       16,384       —       231,577  

Marketing, general and administrative

     38,268       71,688       16,600               126,556  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings

     58,851       46,386       (216 )      —       105,021  

Loss on investments

             484                       484  

Interest, net

     18,803       12,837       2,991               34,631  

Equity income from investments

     (2,053 )      (3,088 )      (14,811 )              (19,952 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

   $ 42,101     $ 36,153     $ 11,604     $ —     $ 89,858  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Intersegment revenues

   $ (99,098 )                    $ 99,098     $ —  
   

 

 

                    

 

 

    

 

 

  

For the Three Months Ended February 28, 2011

                                        

Revenues

   $ 2,558,415     $ 5,215,991     $ 16,659     $ (84,946 )    $ 7,706,119  

Cost of goods sold

     2,417,440       5,081,404       (702 )      (84,946 )      7,413,196  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

     140,975       134,587       17,361       —       292,923  

Marketing, general and administrative

     33,937       51,704       16,751               102,392  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings

     107,038       82,883       610       —       190,531  

Gain on investments

             (66 )                      (66 ) 

Interest, net

     1,295       14,353       2,720               18,368  

Equity income from investments

     (1,467 )      (18,319 )      (22,145 )              (41,931 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

   $ 107,210     $ 86,915     $ 20,035     $ —     $ 214,160  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Intersegment revenues

   $ (84,946 )                    $ 84,946     $ —  
   

 

 

                    

 

 

    

 

 

  

For the Six Months Ended February 29, 2012

                                        

Revenues

   $ 6,315,826     $ 12,458,223     $ 33,150     $ (229,228 )    $ 18,577,971  

Cost of goods sold

     5,786,901       12,150,199       (1,485 )      (229,228 )      17,706,387  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

     528,925       308,024       34,635       —       871,584  

Marketing, general and administrative

     71,171       133,531       34,374               239,076  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings

     457,754       174,493       261       —       632,508  

Loss on investments

             446                       446  

Interest, net

     22,305       26,751       6,382               55,438  

Equity income from investments

     (3,943 )      (10,250 )      (29,888 )              (44,081 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

   $ 439,392     $ 157,546     $ 23,767     $ —     $ 620,705  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Intersegment revenues

   $ (229,228 )                    $ 229,228     $ —  
   

 

 

                    

 

 

    

 

 

  

Goodwill at February 29, 2012

   $ 1,165     $ 70,138     $ 6,898             $ 78,201  
   

 

 

    

 

 

    

 

 

            

 

 

  

Capital expenditures

   $ 126,200     $ 68,716     $ 2,971             $ 197,887  
   

 

 

    

 

 

    

 

 

            

 

 

  

Depreciation and amortization

   $ 53,031     $ 42,242     $ 9,459             $ 104,732  
   

 

 

    

 

 

    

 

 

            

 

 

  

Total identifiable assets at February 29, 2012

   $ 3,803,977     $ 5,694,095     $ 1,868,923             $ 11,366,995  
   

 

 

    

 

 

    

 

 

            

 

 

  

For the Six Months Ended February 28, 2011

                                        

Revenues

   $ 4,951,157     $ 11,031,505     $ 32,273     $ (173,712 )    $ 15,841,223  

Cost of goods sold

     4,722,883       10,691,724       (1,671 )      (173,712 )      15,239,224  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

     228,274       339,781       33,944       —       601,999  

Marketing, general and administrative

     64,013       104,591       32,182               200,786  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings

     164,261       235,190       1,762       —       401,213  

Gain on investments

             (66 )                      (66 ) 

Interest, net

     2,928       27,025       5,506               35,459  

Equity income from investments

     (3,133 )      (33,358 )      (43,075 )              (79,566 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

   $ 164,466     $ 241,589     $ 39,331     $ —     $ 445,386  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Intersegment revenues

   $ (173,712 )                    $ 173,712     $ —  
   

 

 

                    

 

 

    

 

 

  

Goodwill at February 28, 2011

   $ 1,165     $ 15,687     $ 6,898             $ 23,750  
   

 

 

    

 

 

    

 

 

            

 

 

  

Capital expenditures

   $ 90,756     $ 50,551     $ 1,223             $ 142,530  
   

 

 

    

 

 

    

 

 

            

 

 

  

Depreciation and amortization

   $ 59,017     $ 37,058     $ 8,041             $ 104,116  
   

 

 

    

 

 

    

 

 

            

 

 

  

Total identifiable assets at February 28, 2011

   $ 3,098,161     $ 6,021,339     $ 2,843,016             $ 11,962,516