The fair values of futures and options contracts are determined primarily from quotes listed on the applicable commodity exchanges. Fixed-price purchase and sales contracts are with various counter-parties and the fair value of such contracts are determined from the market price of the underlying product. We are exposed to loss in the event of nonperformance by the counter-parties to these contracts. The risk of nonperformance is routinely monitored and provisions recorded if necessary to account for potential nonperformance. Different assumptions, changes in economic circumstances or the deterioration of the financial condition of the counter-parties to these contracts could result in additional provisions and increased expense reflected in cost of goods sold. 

goodwill Goodwill represents the excess of costs of businesses acquired over the fair market value of net tangible and identifiable intangible assets. Statement of Financial Accounting Standards No.142, Goodwill and Other Intangible Assets (SFAS No.142), requires that goodwill be tested for impairment annually. In assessing the recovery of goodwill, projections regarding estimated discounted future cash flows and other factors are used to deter- mine the fair value of the reporting units and the respective assets. These projections are based on historical data, anticipated market conditions and management plans. If these estimates or related projections change in the future, we may be required to record additional impairment charges. In the fourth quarter of 2004, we performed our annual impairment test and determined that there were no impairments of goodwill. 

intangible assets and long-lived assets Long-lived assets include property, plant and equipment and identifiable intangible assets. When facts and circumstances indicate that the carrying values of long-lived assets may be impaired, an evaluation of recoverability is performed by comparing the carrying value of the assets to the projected future cash flows to be generated by such assets. If it appears that the carrying value of our assets is not recoverable, we recognize an impairment loss as a charge against results of operations. Our judgments related to the expected useful lives of long-lived assets and our ability to realize undis- counted cash flows in excess of the carrying amount of such assets are affected by factors such as the ongoing maintenance of the assets, changes in economic conditions and changes in operating performance. As we assess the ongoing expected cash flows and carrying amounts of our long-lived assets, changes in these factors could cause us to realize material impairment charges. 

## management’s discussion and analysis of financial condition and results of operations 

In 2004, we recorded a pretax impairment charge in our agri- business segment of $10 million relating to fixed assets in one of our Western European oilseed processing facilities and $7 million relating to certain of our North and South American edible oil facilities. Certain refining and packaging operations in our Western European oilseed processing facility are being closed and the North and South American edible oil facilities, which are older and less efficient, are being replaced by new facilities. 

contingencies We are a party to a large number of claims and lawsuits, primarily tax and labor claims in Brazil, arising in the normal course of business, and have accrued our estimate of the probable costs to resolve these claims. This estimate has been developed in consultation with in-house and outside counsel and is based on an analysis of potential results, assuming a combination of litigation and settlement strategies. Future results of operations for any particular quarterly or annual period could be materially affected by changes in our assumptions or the effectiveness of our strategies relating to these proceedings. 

employee benefit plans We sponsor various pension and postretirement benefit plans. In connection with the plans, we make various assumptions in the determination of projected benefit obligations and expense recognition related to pension and postretirement obligations. Key assumptions include discount rates, rates of return on plan assets, asset allocations and rates of future compensation increases. Management develops its assumptions based on its experience and by reference to market related data. All assumptions are reviewed periodically and adjusted as necessary. 

In 2004, we lowered the weighted average discount rate assump- tion used to calculate projected benefit obligations under the plans from 6.0% at the September 30, 2003 measurement date to 5.7% at the September 30, 2004 measurement date, largely based on decreases in the market rates of U.S. Aa-rated corpo- rate bonds with similar maturities. U.S.-based plans represent approximately 85% of total projected benefit obligations. The weighted average rate of return assumption on assets of funded plans declined from 8.4% to 8.0% as of the 2004 measurement date due to a reduction in the assumed rate of return for certain U.S.-based plans and the average targeted assumed asset allo- cations of 60% equity securities and 40% fixed income securities such as government and corporate debt securities for the signif- icant plans. 

