UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-44

ARCHER-DANIELS-MIDLAND CO~~MPANY~~COMPANY

(Exact name of registrant as specified in its charter)



Delaware		41-0129150
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)

77 West Wacker Drive, Suite 4600
Chicago,	Illinois	60601
(Address of principal executive offices)		(Zip Code)

(~~312~~) 312) 634-8100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	ADM	NYSE
1.000% Notes due 2025		NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Emerging Growth Company

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, no par value – ~~556,389,049~~559,366,478 shares

(~~October 29, 2020)~~July 26, 2021)

SAFE HARBOR STATEMENT

This Form 10-Q contains forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995 that is subject to risks and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking information. Risks and uncertainties that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A, “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as may be updated in our subsequent Quarterly Reports on Form 10-Q. To the extent permitted under applicable law, the Company assumes no obligation to update any forward-looking statements as a result of new information or future events.

PART I - FINANCIAL INFORMATION


~~ITEM 1.~~	~~FINANCIAL STATEMENTS~~

ITEM 1. FINANCIAL STATEMENTS

Archer-Daniels-Midland Company

Consolidated Statements of Earnings

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In millions, except per share amounts)

Revenues	$	22,926	$	16,281	$	41,819	$	31,251
Cost of products sold	21,463		15,173		38,808		29,192
Gross Profit	1,463		1,108		3,011		2,059

Selling, general, and administrative expenses	739		638		1,488		1,302
Asset impairment, exit, and restructuring costs	23		16		82		57
Equity in (earnings) losses of unconsolidated affiliates	(163)		(103)		(288)		(243)
Investment income	(50)		(26)		(63)		(74)
Interest expense	40		87		127		170
Other (income) expense – net	49		(56)		16		(80)
Earnings Before Income Taxes	825		552		1,649		927

Income tax expense	113		80		244		64
Net Earnings Including Noncontrolling Interests	712		472		1,405		863

Less: Net earnings attributable to noncontrolling interests	0		3		4		3

Net Earnings Attributable to Controlling Interests	$	712	$	469	$	1,401	$	860

Average number of shares outstanding – basic	564		561		563		562

Average number of shares outstanding – diluted	566		562		565		563

Basic earnings per common share	$	1.26	$	0.84	$	2.49	$	1.53

Diluted earnings per common share	$	1.26	$	0.84	$	2.48	$	1.53

Dividends per common share	$	0.37	$	0.36	$	0.74	$	0.72

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions, except per share amounts)

Revenues $ 15,126
$ 16,726
$ 46,377
$ 48,327
Cost of products sold 14,084
15,648
43,276
45,349
Gross Profit 1,042
1,078
3,101
2,978

Selling, general, and administrative expenses 636
578
1,938
1,839
Asset impairment, exit, and restructuring costs 4
53
61
200
Interest expense 100
97
270
307
Equity in (earnings) losses of unconsolidated affiliates (160 ) (88 ) (403 ) (279 )
Interest income (16 ) (47 ) (71 ) (142 )
Other (income) expense – net 278
(18 ) 179
(39 )
Earnings Before Income Taxes 200
503
1,127
1,092

Income tax (benefit) expense (26 ) 95
38
212
Net Earnings Including Noncontrolling Interests 226
408
1,089
880

Less: Net earnings attributable to noncontrolling interests 1
1
4
5

Net Earnings Attributable to Controlling Interests $ 225
$ 407
$ 1,085
$ 875

Average number of shares outstanding – basic 561
562
561
564

Average number of shares outstanding – diluted 562
563
563
565

Basic earnings per common share $ 0.40
$ 0.72
$ 1.93
$ 1.55

Diluted earnings per common share $ 0.40
$ 0.72
$ 1.93
$ 1.55

Dividends per common share $ 0.36
$ 0.35
$ 1.08
$ 1.05

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In millions)

Net earnings including noncontrolling interests	$	712	$	472	$	1,405	$	863
Other comprehensive income (loss):
Foreign currency translation adjustment	35		(34)		329		(275)
Tax effect	8		28		(48)		(14)
Net of tax amount	43		(6)		281		(289)

Pension and other postretirement benefit liabilities adjustment	71		1		89		5
Tax effect	(22)		0		(27)		(12)
Net of tax amount	49		1		62		(7)

Deferred gain (loss) on hedging activities	82		81		183		(1)
Tax effect	(15)		(15)		(40)		(1)
Net of tax amount	67		66		143		(2)

Unrealized gain (loss) on investments	(1)		(3)		(2)		3
Tax effect	(1)		1		(1)		(1)
Net of tax amount	(2)		(2)		(3)		2
Other comprehensive income (loss)	157		59		483		(296)
Comprehensive income (loss) including noncontrolling interests	869		531		1,888		567

Less: Comprehensive income (loss) attributable to noncontrolling interests	0		3		4		7

Comprehensive income (loss) attributable to controlling interests	$	869	$	528	$	1,884	$	560

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions)

Net earnings including noncontrolling interests $ 226
$ 408
$ 1,089
$ 880
Other comprehensive income (loss):
Foreign currency translation adjustment (154 ) (251 ) (429 ) (236 )
Tax effect 51
(35 ) 37
(38 )
Net of tax amount (103 ) (286 ) (392 ) (274 )

Pension and other postretirement benefit liabilities adjustment (5 ) 7
0
10
Tax effect 3
0
(9 ) 15
Net of tax amount (2 ) 7
(9 ) 25

Deferred gain (loss) on hedging activities 112
(2 ) 111
(65 )
Tax effect (22 ) 8
(23 ) 13
Net of tax amount 90
6
88
(52 )

Unrealized gain (loss) on investments (28 ) 7
(25 ) 12
Tax effect 0
0
(1 ) (1 )
Net of tax amount (28 ) 7
(26 ) 11
Other comprehensive income (loss) (43 ) (266 ) (339 ) (290 )
Comprehensive income (loss) including noncontrolling interests 183
142
750
590

Less: Comprehensive income (loss) attributable to noncontrolling interests 2
0
9
4

Comprehensive income (loss) attributable to controlling interests $ 181
$ 142
$ 741
$ 586

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Balance Sheets


(In millions)	September 30, 2020			December 31, 2019			(In millions)	June 30, 2021		December 31, 2020
	(Unaudited)							(Unaudited)
Assets							Assets
Current Assets							Current Assets
Cash and cash equivalents	$	948		$	852		Cash and cash equivalents	$	869	$	666

Segregated cash and investments	5,484			4,458			Segregated cash and investments	7,114		5,890
Trade receivables	2,616			2,267			Trade receivables	3,478		2,793
Inventories	8,762			9,170			Inventories	11,446		11,713

Other current assets	4,956			4,600			Other current assets	5,597		6,224
Total Current Assets	22,766			21,347			Total Current Assets	28,504		27,286

Investments and Other Assets							Investments and Other Assets
Investments in and advances to affiliates	4,771			5,132			Investments in and advances to affiliates	5,113		4,913

Goodwill and other intangible assets	5,275			5,476			Goodwill and other intangible assets	5,266		5,413
Right of use assets							Right of use assets	1,043		1,102
Other assets	2,167			1,936			Other assets	1,159		1,054
Total Investments and Other Assets	12,213			12,544			Total Investments and Other Assets	12,581		12,482

Property, Plant, and Equipment							Property, Plant, and Equipment
Land and land improvements	538			592			Land and land improvements	534		545
Buildings	5,429			5,381			Buildings	5,563		5,522
Machinery and equipment	18,992			19,005			Machinery and equipment	19,359		19,154
Construction in progress	1,037			1,021			Construction in progress	1,091		1,118
	25,996			25,999				26,547		26,339
Accumulated depreciation	(16,180		)	(15,893		)	Accumulated depreciation	(16,674)		(16,388)
Net Property, Plant, and Equipment	9,816			10,106			Net Property, Plant, and Equipment	9,873		9,951

Total Assets	$	44,795		$	43,997		Total Assets	$	50,958	$	49,719

Liabilities, Temporary Equity, and Shareholders’ Equity							Liabilities, Temporary Equity, and Shareholders’ Equity
Current Liabilities							Current Liabilities
Short-term debt	$	209		$	1,202		Short-term debt	$	1,289	$	2,042
Trade payables	3,347			3,746			Trade payables	3,441		4,474
Payables to brokerage customers	6,069			5,022			Payables to brokerage customers	7,819		6,460
Accrued expenses and other payables	4,280			3,757			Accrued expenses and other payables	4,479		4,943
Current lease liabilities							Current lease liabilities	268		261
Current maturities of long-term debt	2			7			Current maturities of long-term debt	0		2

Total Current Liabilities	13,907			13,734			Total Current Liabilities	17,296		18,182

Long-Term Liabilities							Long-Term Liabilities
Long-term debt	7,922			7,672			Long-term debt	8,432		7,885
Deferred income taxes	1,344			1,194			Deferred income taxes	1,371		1,302
Non-current lease liabilities							Non-current lease liabilities	800		863
Other	2,196			2,114			Other	1,385		1,391
Total Long-Term Liabilities	11,462			10,980			Total Long-Term Liabilities	11,988		11,441

Temporary Equity - Redeemable noncontrolling interest	85			58			Temporary Equity - Redeemable noncontrolling interest	71		74

Shareholders’ Equity							Shareholders’ Equity
Common stock	2,760			2,655			Common stock	2,941		2,824
Reinvested earnings	19,311			18,958			Reinvested earnings	20,762		19,780
Accumulated other comprehensive income (loss)	(2,749		)	(2,405		)	Accumulated other comprehensive income (loss)	(2,121)		(2,604)
Noncontrolling interests	19			17			Noncontrolling interests	21		22
Total Shareholders’ Equity	19,341			19,225			Total Shareholders’ Equity	21,603		20,022
Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	44,795		$	43,997		Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	50,958	$	49,719

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Cash Flows

(Unaudited)


(In millions)	Six Months Ended June 30,
	2021		2020


Operating Activities
Net earnings including noncontrolling interests	$	1,405	$	863
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	492		489
Asset impairment charges	54		47
Deferred income taxes	(37)		49
Equity in earnings of affiliates, net of dividends	(23)		(93)
Stock compensation expense	114		75

Loss on debt extinguishment	0		14
Deferred cash flow hedges	183		(1)
Gains on sales of assets and businesses/investment revaluation	(79)		(64)
Other – net	93		232
Changes in operating assets and liabilities
Segregated investments	610		570
Trade receivables	(710)		(364)
Inventories	223		1,439
Deferred consideration in securitized receivables	0		(2,456)
Other current assets	780		(1,058)
Trade payables	(1,023)		(819)
Payables to brokerage customers	1,349		881
Accrued expenses and other payables	(424)		(240)
Total Operating Activities	3,007		(436)

Investing Activities
Purchases of property, plant, and equipment	(427)		(360)
Proceeds from sales of assets and businesses	58		91
Net assets of businesses acquired	(5)		(3)
Purchases of marketable securities	0		(3)

Investments in and advances to affiliates	(8)		(5)
Distributions from affiliates	5		0
Investments in retained interest in securitized receivables	0		(2,121)
Proceeds from retained interest in securitized receivables	0		4,577
Other – net	(17)		(3)
Total Investing Activities	(394)		2,173

Financing Activities
Long-term debt borrowings	595		1,478
Long-term debt payments	(2)		(525)
Net borrowings (payments) under lines of credit agreements	(752)		(667)

Share repurchases	0		(112)
Cash dividends	(417)		(405)

Other – net	0		3
Total Financing Activities	(576)		(228)

Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	2,037		1,509
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	4,646		2,990

Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	6,683	$	4,499

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated balance sheets

Cash and cash equivalents	$	869	$	1,203
Restricted cash and restricted cash equivalents included in segregated cash and investments	5,814		3,296
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	6,683	$	4,499

Supplemental Disclosure of Noncash Investing Activity:
Retained interest in securitized receivables	$	0	$	3,383

(In millions) Nine Months Ended
September 30,
2020 2019
Operating Activities
Net earnings including noncontrolling interests $ 1,089
$ 880
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities

Depreciation and amortization 727
742
Asset impairment charges 50
50
Deferred income taxes 57
8
Equity in earnings of affiliates, net of dividends (165 ) (92 )
Stock compensation expense 114
66
Loss on debt extinguishment 410
0
Deferred cash flow hedges 111
(65 )
Gains on sales of assets and businesses (132 ) (37 )
Other – net 34
148
Changes in operating assets and liabilities

Segregated investments 147
300
Trade receivables (343 ) 276
Inventories 370
994
Deferred consideration in securitized receivables (4,603 ) (5,714 )
Other current assets (467 ) (444 )
Trade payables (389 ) (808 )
Payables to brokerage customers 1,060
263
Accrued expenses and other payables 414
(206 )
Total Operating Activities (1,516 ) (3,639 )

Investing Activities

Purchases of property, plant, and equipment (558 ) (566 )
Proceeds from sales of assets and businesses 708
43
Net assets of businesses acquired (3 ) (1,946 )
Purchases of marketable securities (2 ) (26 )
Proceeds from sales of marketable securities 1
67
Investments in and advances to affiliates (5 ) (12 )
Investments in retained interest in securitized receivables (2,121 ) (3,813 )
Proceeds from retained interest in securitized receivables 6,724
9,527
Other – net (16 ) (23 )
Total Investing Activities 4,728
3,251

Financing Activities

Long-term debt borrowings 1,790
3
Long-term debt payments (2,032 ) (615 )
Net borrowings (payments) under lines of credit agreements (993 ) 960
Share repurchases (117 ) (150 )
Cash dividends (607 ) (592 )
Other – net 16
(36 )
Total Financing Activities (1,943 ) (430 )

Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents 1,269
(818 )
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period 2,990
3,843
Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period $ 4,259
$ 3,025

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated balance sheets

Cash and cash equivalents $ 948
$ 932
Restricted cash and restricted cash equivalents included in segregated cash and investments 3,311
2,093
Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 4,259
$ 3,025

Supplemental Disclosure of Noncash Investing Activity:
Retained interest in securitized receivables $ 4,656
$ 5,657

See notes to consolidated financial statements.

Archer-Daniels-Midland-Company

Consolidated Statements of Shareholders’ Equity

(Unaudited)


	Common Stock					Reinvested Earnings				Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests				Total Shareholders’ Equity					Common Stock					Reinvested Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total Shareholders’ Equity
(In millions, except per share amounts)	Shares		Amount						(In millions, except per share amounts)				Shares								Amount
Balance, June 30, 2020	556		$	2,705					$		19,293					$	(2,705			)		$	18	$	19,311
Balance, March 31, 2021																					Balance, March 31, 2021		559			$	2,858		$	20,261		$	(2,278)		$	20		$	20,861
Comprehensive income																					Comprehensive income
Net earnings																					Net earnings							712						0
Other comprehensive income (loss)																					Other comprehensive income (loss)										157			0
Total comprehensive income																					Total comprehensive income																869
Dividends paid - $0.37 per share																					Dividends paid - $0.37 per share							(209)									(209)

Stock compensation expense																					Stock compensation expense		0			38											38
Other																					Other		0			45		(2)			0			1			44
Balance, June 30, 2021																					Balance, June 30, 2021		559			$	2,941	$	20,762		$	(2,121)		$	21		$	21,603

Balance, December 31, 2020																					Balance, December 31, 2020		556			$	2,824	$	19,780		$	(2,604)		$	22		$	20,022
Comprehensive income																					Comprehensive income
Net earnings																					Net earnings							1,401						4
Other comprehensive income (loss)																					Other comprehensive income (loss)										483			0
Total comprehensive income																					Total comprehensive income																1,888
Dividends paid - $0.74 per share																					Dividends paid - $0.74 per share							(417)									(417)

Stock compensation expense																					Stock compensation expense		3			114											114

Other																					Other		0			3		(2)			0			(5)			(4)
Balance, June 30, 2021																					Balance, June 30, 2021		559			$	2,941	$	20,762		$	(2,121)		$	21		$	21,603

Balance, March 31, 2020																					Balance, March 31, 2020		555			$	2,690	$	19,026		$	(2,764)		$	24		$	18,976

Comprehensive income																					Comprehensive income
Net earnings						225								1							Net earnings							469						3
Other comprehensive income (loss)										(44		)		1							Other comprehensive income (loss)										59			0
Total comprehensive income																		183			Total comprehensive income																531
Dividends paid - $0.36 per share						(202		)										(202		)	Dividends paid - $0.36 per share							(202)									(202)
Share repurchases	0					(5		)										(5		)

Stock compensation expense	0		39															39			Stock compensation expense		1			24											24
Other	0		16			0				0				(1		)		15			Other		0			(9)		0			0			(9)			(18)
Balance, September 30, 2020	556		$	2,760		$	19,311			$	(2,749	)		$	19			$	19,341
Balance, June 30, 2020																					Balance, June 30, 2020		556			$	2,705	$	19,293		$	(2,705)		$	18		$	19,311

Balance, December 31, 2019	557		$	2,655		$	18,958			$	(2,405	)		$	17			$	19,225		Balance, December 31, 2019		557			$	2,655	$	18,958		$	(2,405)		$	17		$	19,225
Impact of ASC 326 (see Note 2)						(8		)										(8		)
Impact of ASC 326 (see Note 1)																					Impact of ASC 326 (see Note 1)							(8)									(8)
Balance, January 1, 2020	557		$	2,655		$	18,950			$	(2,405	)		$	17			$	19,217		Balance, January 1, 2020		557			2,655		18,950			(2,405)			17			19,217
Comprehensive income																					Comprehensive income
Net earnings						1,085								4							Net earnings							860						3
Other comprehensive income (loss)										(344		)		5							Other comprehensive income (loss)										(300)			4
Total comprehensive income																		750			Total comprehensive income																567
Dividends paid - $1.08 per share						(607		)										(607		)
Dividends paid - $0.72 per share																					Dividends paid - $0.72 per share							(405)									(405)
Share repurchases	(3	)				(117		)										(117		)	Share repurchases		(3)					(112)									(112)
Stock compensation expense	2		114															114			Stock compensation expense		2			75											75
Other	0		(9		)	0								(7		)		(16		)	Other		0			(25)		0			0			(6)			(31)
Balance, September 30, 2020	556		$	2,760		$	19,311			$	(2,749	)		$	19			$	19,341
Balance, June 30, 2020																					Balance, June 30, 2020		556			$	2,705	$	19,293		$	(2,705)		$	18		$	19,311


Balance, June 30, 2019	558		$	2,588		$	18,497			$	(2,130	)		$	24			$	18,979
Comprehensive income
Net earnings						407								1
Other comprehensive income (loss)										(265		)		(1		)
Total comprehensive income																		142
Dividends paid - $0.35 per share						(197		)										(197		)
Share repurchases	(2	)				(56		)										(56		)
Stock compensation expense	1		21															21
Other	0		8			0				0				(2		)		6
Balance, September 30, 2019	557		$	2,617		$	18,651			$	(2,395	)		$	22			$	18,895

Balance, December 31, 2018	559		$	2,560		$	18,527			$	(2,106	)		$	15			$	18,996
Comprehensive income
Net earnings						875								5
Other comprehensive income (loss)										(289		)		(1		)
Total comprehensive income																		590
Dividends paid - $1.05 per share						(592		)										(592		)
Share repurchases	(4	)				(150		)										(150		)
Stock compensation expense	2		66															66
Other	0		(9		)	(9		)		0				3				(15		)
Balance, September 30, 2019	557		$	2,617		$	18,651			$	(2,395	)		$	22			$	18,895

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements

(Unaudited)


~~Note 1.~~	Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all of the information and footnotes required by generally accepted accounting principles for audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020~~.2021. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~.2020.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company consolidates all entities, including variable interest entities (VIEs), in which it has a controlling financial interest. For VIEs, the Company assesses whether it is the primary beneficiary as defined under the applicable accounting standard. Investments in affiliates, including VIEs through which the Company exercises significant influence but does not control the investee and is not the primary beneficiary of the investee’s activities, are carried at cost plus equity in undistributed earnings since acquisition and are adjusted, where appropriate, for basis differences between the investment balance and the underlying net assets of the investee. The Company’s portion of the results of certain affiliates and results of certain VIEs are included using the most recent available financial statements. In each case, the financial statements are within 93 days of the Company’s year end and are consistent from period to period.

~~Reclassifications~~

Effective January 1, 2020, the Company started reporting its newly created dry mill ethanol subsidiary, Vantage Corn Processors (VCP), as a sub-segment within the Carbohydrate Solutions segment. VCP replaces the Bioproducts sub-segment which included the combined results of the Company’s corn dry and wet mill ethanol operations. The wet mill ethanol operations that were previously reported in Bioproducts are now included in the Starches and Sweeteners sub-segment. In addition to dry mill ethanol production, VCP sells/brokers ADM’s wet mill ethanol production as the sole marketer of ethanol produced at the Company’s facilities. The change does not have an impact on the total results of the Carbohydrate Solutions segment.

~~Prior period information in Notes 4 and 14 has been reclassified to conform to the current period segment presentation.~~

Segregated Cash and Investments

The Company segregates certain cash, cash equivalents, and investment balances in accordance with regulatory requirements, commodity exchange requirements, and insurance arrangements. These balances represent deposits received from customers of the Company’s registered futures commission merchant and commodity brokerage services, cash margins and securities pledged to commodity exchange clearinghouses, and cash pledged as security under certain insurance arrangements. Segregated cash and investments also include restricted cash collateral for the various insurance programs of the Company’s captive insurance business. To the degree these segregated balances are comprised of cash and cash equivalents, they are considered restricted cash and cash equivalents on the consolidated statements of cash flows.

Receivables

The Company records receivables at net realizable value in trade receivables, other current assets, and other assets. These amounts include allowances for estimated uncollectible accounts totaling ~~$105~~$86 million and ~~$110~~$100 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, to reflect any loss anticipated on the accounts receivable balances including any accrued interest receivables thereon. Long-term receivables recorded in other assets were not material to the Company’s overall receivables portfolio.

A~~rcher-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~Note 1.~~	~~Basis of Presentation (Continued)~~

Effective January 1, 2020, the Company adopted Accounting Standards Codification (ASC) Topic 326, Financial Instruments - Credit Losses (Topic 326), and developed a new methodology for estimating uncollectible accounts. Under this methodology, receivables are pooled according to type, region, credit risk rating, and age. Each pool is assigned an expected loss co-efficient to arrive at a general reserve based on historical write-offs adjusted, as needed, for regional, economic, and other forward-looking factors. The Company minimizes credit risk due to the large and diversified nature of its worldwide customer base. ADM manages its exposure to counter-party credit risk through credit analysis and approvals, credit limits, and monitoring procedures. The Company recorded a cumulative effect adjustment to retained earnings at January 1, 2020 of $8 million as a result of the adoption of Topic 326.

The Company recorded bad debt expense in selling, general, and administrative expenses of $7$4 million and ~~$32~~$8 million in the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, and $3$14 million and ~~$10~~$25 million in the three and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 1. Basis of Presentation (Continued)

Inventory Valuation

Effective January 1, 2020, the Company changed the method of accounting for certain of its agricultural commodity inventories from the last-in, first-out (LIFO) method to market value in the Ag Services and Oilseeds segment. As of December 31, 2019, inventories accounted for using LIFO at the lower of cost or net realizable value represented approximately 10% of consolidated inventories. The Company believes market value is preferable because it: (i) conforms to the inventory valuation methodology used for the majority of ADM’s agricultural commodity inventories; (ii) enhances the matching of inventory costs with revenues and better reflects the current cost of inventory on the Company’s balance sheet; and (iii) provides better comparability with the Company’s peers.

The Company concluded that the accounting change ~~does~~did not have a material effect on prior periods’ financial statements and elected not to apply the change on a retrospective basis. As a result, the Company recorded a reduction in cost of products sold of $91 million ($69 million after tax, equal to $0.12 per diluted share) for the cumulative effect of the change in the ~~three~~six months ended ~~March 31,~~June 30, 2020 with no impact to the statement of cash flows. ~~The Company does not expect~~

Reclassification

During the ~~change to have a material impact on its results for the year ending December 31, 2020.~~

Ifquarter and six months ended June 30, 2021, the Company ~~had not made the accounting change, the effect of LIFO valuation~~recorded a $40 million revaluation gain on ~~ADM’s operating results would have been~~a cost method investment in connection with an ~~increase~~observable third-party transaction in ~~cost of products sold of $50 million ($38 million after tax, equal to $0.07 per diluted share)~~investment income (previously interest income) in the ~~three~~consolidated statements of earnings. Revaluation gains previously recorded in other (income) expense - net of $11 million and $19 million in the quarter and six months ended ~~September~~June 30, 2020, ~~and an increase in cost of goods sold of $7 million ($5 million after tax, equal~~respectively, were reclassified to ~~$0.01 per diluted share) in the nine months ended September 30, 2020, with no impact~~conform to the ~~consolidated statement of cash flows.~~current presentation.


~~Note 2.~~	Note 2. New Accounting Standards

Effective January 1, 2020, the Company adopted the amended guidance of Topic 326, which is intended to improve financial reporting by requiring more timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amended guidance replaces the prior “incurred loss” approach with an “expected loss” model and requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company was required to adopt the amended guidance on a modified retrospective basis through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The Company evaluated its current methodology of estimating allowance for doubtful accounts and the risk profile of its receivable portfolio and developed a model that includes the qualitative and forecasting aspects of the “expected loss” model under the amended guidance. The Company finalized its assessment of the impact of the amended guidance and recorded a $8 million cumulative effect adjustment to retained earnings at January 1, 2020. For more information about the Company’s receivables, see Note 1.

Effective January 1, ~~2020,~~2021, the Company adopted the amended guidance of ASC Topic ~~820,~~740, ~~Fair Value Measurement~~Income Taxes (Topic 740), which ~~modifies~~simplifies the ~~disclosure requirements on fair value measurements.~~accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also simplify and improve consistent application of other areas of Topic 740. The adoption of ~~this~~the amended guidance did not have a significant impact on the Company’s consolidated financial ~~results.~~statements.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~Note 3.~~	Note 3. Pending Accounting Standards

~~Effective December 31, 2020, the Company will be required to adopt the amended guidance of ASC Subtopic 715-20,~~
~~Compensation - Retirement Benefits - Defined Benefit Plans - General~~, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Early adoption is permitted. The adoption of this amended guidance will not impact the Company’s financial results.

~~Effective January 1, 2021, the Company will be required to adopt the amended guidance of ASC Topic 740,~~ ~~Income Taxes~~ (Topic 740), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify other areas of Topic 740. Early adoption is permitted. The Company has not yet completed its assessment of the impact of the amended guidance on the consolidated financial statements but does not expect the adoption of the amendments to have a significant impact on its financial results.

Through December 31, 2022, the Company has the option to adopt the amended guidance of ASC Topic 848, Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amended guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company plans to adopt the expedients and exceptions provided by the amended guidance before the December 31, 2022 expiry date but has not yet completed its assessment of the impact on the consolidated financial statements.


~~Note 4.~~	~~Revenues~~

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Revenues

Revenue Recognition

The Company principally generates revenue from merchandising and transporting agricultural commodities, and manufactured products ~~used as ingredients~~for use in food, beverages, feed, energy, and industrial ~~products.~~applications, and ingredients and solutions for human and animal nutrition. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product or service to a customer. The majority of the Company’s contracts with customers have one performance obligation and a contract duration of one year or less. The Company applies the practical expedient in paragraph 10-50-14 of ASC 606, Revenue from Contracts with Customers (Topic 606) and does not disclose information about remaining performance obligations that have original expected durations of one year or less. For transportation service contracts, the Company recognizes revenue over time as the barge, ocean-going vessel, truck, rail, or container freight moves towards its destination in accordance with the transfer of control guidance of Topic 606. The Company recognized revenue from transportation service contracts of ~~$87~~$151 million and ~~$310~~$255 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively, and ~~$134~~$106 million and ~~$377~~$223 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20).

Shipping and Handling Costs

Shipping and handling costs related to contracts with customers for the sale of goods are accounted for as a fulfillment activity and are included in cost of products sold. Accordingly, amounts billed to customers for such costs are included as a component of revenues.

Taxes Collected from Customers and Remitted to Governmental Authorities

The Company does not include taxes assessed by governmental authorities that are (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers, in the measurement of transactions prices or as a component of revenues and cost of products sold.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~Note 4.~~	~~Revenues (Continued)~~

Contract Liabilities

Contract liabilities relate to advance payments from customers for goods and services that the Company has yet to provide. Contract liabilities of ~~$344~~$357 million and ~~$604~~$626 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheets. Contract liabilities recognized as revenues ~~for the three and nine months ended September 30, 2020~~ were ~~$121~~$287 million and ~~$742 million, respectively, and $193 million and $519~~$569 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2021, respectively, and $339 million and $621 million for the three and six months ended June 30, 2020, respectively.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Revenues (Continued)

Disaggregation of Revenues

The following tables present revenue disaggregated by timing of recognition and major product lines for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.


	Three Months Ended June 30, 2021
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)









Ag Services and Oilseeds
Ag Services	$	802	$	151	$	953	$	11,862	$	12,815
Crushing	92		—		92		2,735		2,827
Refined Products and Other	659		—		659		1,970		2,629
Total Ag Services and Oilseeds	1,553		151		1,704		16,567		18,271
Carbohydrate Solutions
Starches and Sweeteners	1,449		—		1,449		397		1,846
Vantage Corn Processors	974		—		974		—		974
Total Carbohydrate Solutions	2,423		—		2,423		397		2,820
Nutrition
Human Nutrition	848		—		848		—		848
Animal Nutrition	885		—		885		—		885
Total Nutrition	1,733		—		1,733		—		1,733

Other Business	102		—		102		—		102
Total Revenues	$	5,811	$	151	$	5,962	$	16,964	$	22,926

Three Months Ended September 30, 2020
Topic 606 Revenue
Topic 815⁽¹⁾
Total
Point in Time Over Time Total Revenue Revenues
(In millions)
Ag Services and Oilseeds
Ag Services $ 776
$ 87
$ 863
$ 6,489
$ 7,352
Crushing 113
—
113
2,204
2,317
Refined Products and Other 462
—
462
1,396
1,858
Total Ag Services and Oilseeds 1,351
87
1,438
10,089
11,527
Carbohydrate Solutions
Starches and Sweeteners 1,162
—
1,162
412
1,574
Vantage Corn Processors 490
—
490
—
490
Total Carbohydrate Solutions 1,652
—
1,652
412
2,064
Nutrition
Human Nutrition 719
—
719
—
719
Animal Nutrition 732
—
732
—
732
Total Nutrition 1,451
—
1,451
—
1,451

Other Business 84
—
84
—
84
Total Revenues $ 4,538
$ 87
$ 4,625
$ 10,501
$ 15,126

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


~~Note 4.~~	~~Revenues (Continued)~~

Note 4. Revenues (Continued)


	Six Months Ended June 30, 2021
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	1,464	$	255	$	1,719	$	21,242	$	22,961
Crushing	216		—		216		5,353		5,569
Refined Products and Other	1,171		—		1,171		3,577		4,748
Total Ag Services and Oilseeds	2,851		255		3,106		30,172		33,278
Carbohydrate Solutions
Starches and Sweeteners	2,810		—		2,810		781		3,591
Vantage Corn Processors	1,452		—		1,452		—		1,452
Total Carbohydrate Solutions	4,262		—		4,262		781		5,043
Nutrition
Human Nutrition	1,602		—		1,602		—		1,602
Animal Nutrition	1,694		—		1,694		—		1,694
Total Nutrition	3,296		—		3,296		—		3,296

Other Business	202		—		202		—		202
Total Revenues	$	10,611	$	255	$	10,866	$	30,953	$	41,819


	Three Months Ended June 30, 2020
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)









Ag Services and Oilseeds
Ag Services	$	877	$	106	$	983	$	7,669	$	8,652
Crushing	200		—		200		2,205		2,405
Refined Products and Other	521		—		521		1,163		1,684
Total Ag Services and Oilseeds	1,598		106		1,704		11,037		12,741
Carbohydrate Solutions
Starches and Sweeteners	1,137		—		1,137		408		1,545
Vantage Corn Processors	469		—		469		—		469
Total Carbohydrate Solutions	1,606		—		1,606		408		2,014
Nutrition
Human Nutrition	723		—		723		—		723
Animal Nutrition	714		—		714		—		714
Total Nutrition	1,437		—		1,437		—		1,437

Other Business	89		—		89		—		89
Total Revenues	$	4,730	$	106	$	4,836	$	11,445	$	16,281

Nine Months Ended September 30, 2020
Topic 606 Revenue
Topic 815⁽¹⁾
Total
Point in Time Over Time Total Revenue Revenues
(In millions)
Ag Services and Oilseeds
Ag Services $ 2,504
$ 310
$ 2,814
$ 20,116
$ 22,930
Crushing 493
—
493
6,542
7,035
Refined Products and Other 1,501
—
1,501
3,881
5,382
Total Ag Services and Oilseeds 4,498
310
4,808
30,539
35,347
Carbohydrate Solutions
Starches and Sweeteners 3,539
—
3,539
1,230
4,769
Vantage Corn Processors 1,625
—
1,625
—
1,625
Total Carbohydrate Solutions 5,164
—
5,164
1,230
6,394
Nutrition
Human Nutrition 2,161
—
2,161
—
2,161
Animal Nutrition 2,198
—
2,198
—
2,198
Total Nutrition 4,359
—
4,359
—
4,359

Other Business 277
—
277
—
277
Total Revenues $ 14,298
$ 310
$ 14,608
$ 31,769
$ 46,377

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


~~Note 4.~~	~~Revenues (Continued)~~

Note 4. Revenues (Continued)

Three Months Ended September 30, 2019
Topic 606 Revenue
Topic 815⁽¹⁾
Total
Point in Time Over Time Total Revenue Revenues
(In millions)
Ag Services and Oilseeds
Ag Services $ 1,369
$ 134
$ 1,503
$ 6,743
$ 8,246
Crushing 175
—
175
2,290
2,465
Refined Products and Other 628
—
628
1,277
1,905
Total Ag Services and Oilseeds 2,172
134
2,306
10,310
12,616
Carbohydrate Solutions
Starches and Sweeteners 1,098
—
1,098
428
1,526
Vantage Corn Processors 1,039
—
1,039
—
1,039
Total Carbohydrate Solutions 2,137
—
2,137
428
2,565
Nutrition
Human Nutrition 703
—
703
—
703
Animal Nutrition 754
—
754
—
754
Total Nutrition 1,457
—
1,457
—
1,457

Other Business 88
—
88
—
88
Total Revenues $ 5,854
$ 134
$ 5,988
$ 10,738
$ 16,726

Nine Months Ended September 30, 2019
Topic 606 Revenue
Topic 815⁽¹⁾
Total
Point in Time Over Time Total Revenue Revenues
(In millions)
Ag Services and Oilseeds
Ag Services $ 2,509
$ 377
$ 2,886
$ 20,767
$ 23,653
Crushing 546
—
546
6,584
7,130
Refined Products and Other 1,665
—
1,665
3,934
5,599
Total Ag Services and Oilseeds 4,720
377
5,097
31,285
36,382
Carbohydrate Solutions
Starches and Sweeteners 3,507
—
3,507
1,275
4,782
Vantage Corn Processors 2,627
—
2,627
—
2,627
Total Carbohydrate Solutions 6,134
—
6,134
1,275
7,409
Nutrition
Human Nutrition 2,105
—
2,105
—
2,105
Animal Nutrition 2,158
—
2,158
—
2,158
Total Nutrition 4,263
—
4,263
—
4,263

Other Business 273
—
273
—
273
Total Revenues $ 15,390
$ 377
$ 15,767
$ 32,560
$ 48,327


	Six Months Ended June 30, 2020
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	1,728	$	223	$	1,951	$	13,627	$	15,578
Crushing	380		—		380		4,338		4,718
Refined Products and Other	1,039		—		1,039		2,485		3,524
Total Ag Services and Oilseeds	3,147		223		3,370		20,450		23,820
Carbohydrate Solutions
Starches and Sweeteners	2,377		—		2,377		818		3,195
Vantage Corn Processors	1,135		—		1,135		—		1,135
Total Carbohydrate Solutions	3,512		—		3,512		818		4,330
Nutrition
Human Nutrition	1,442		—		1,442		—		1,442
Animal Nutrition	1,466		—		1,466		—		1,466
Total Nutrition	2,908		—		2,908		—		2,908

Other Business	193		—		193		—		193
Total Revenues	$	9,760	$	223	$	9,983	$	21,268	$	31,251

(1) Topic 815 revenue relates to the physical delivery or the settlement of the Company’s sales contracts that are accounted for as derivatives and are outside the scope of Topic 606.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~Note 4.~~	~~Revenues (Continued)~~

Ag Services and Oilseeds

The Ag Services and Oilseeds segment generates revenue from the sale of commodities, from service fees for the transportation of goods, ~~and~~ from the sale of products manufactured in its global processing ~~facilities.~~facilities, and from its structured trade finance activities. Revenue is measured based on the consideration specified in the contract and excludes any sales incentives and amounts collected on behalf of third parties. Revenue is recognized when a performance obligation is satisfied by transferring control over a product or providing service to a customer. For transportation service contracts, the Company recognizes revenue over time as the barge, ocean-going vessel, truck, rail, or container freight moves towards its destination in accordance with the transfer of control guidance of Topic 606. The amount of revenue recognized follows the contractually specified price which may include freight or other contractually specified cost components. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20.

Carbohydrate Solutions

The Carbohydrate Solutions segment generates revenue from the sale of products manufactured at the Company’s global corn and wheat milling facilities around the world. Revenue is recognized when control over products is transferred to the customer. Products are shipped to customers from the Company’s various facilities and from its network of storage terminals. The amount of revenue recognized is based on the consideration specified in the contract which could include freight and other costs depending on the specific shipping terms of each contract. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Revenues (Continued)

Nutrition

The Nutrition segment sells ~~specialty products~~a wide array of ingredients and solutions including plant-based proteins, natural ~~flavor ingredients,~~flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, enzymes, botanical extracts, edible beans, formula feeds, animal health and nutrition products, and other specialty food and feed ingredients. Revenue is recognized when control over products is transferred to the customer. The amount of revenue recognized follows the contracted price or the mutually agreed price of the product. Freight and shipping are recognized as a component of revenue at the same time control transfers to the customer.

Other Business

Other Business includes the Company’s futures commission business whose primary sources of revenue are commissions and brokerage income generated from executing orders and clearing futures contracts and options on futures contracts on behalf of its customers. Commissions and brokerage revenue are recognized on the date the transaction is executed. Other Business also includes the Company’s captive insurance business which generates third party revenue through its proportionate share of premiums from third-party reinsurance pools. Reinsurance premiums are recognized on a straight-line basis over the period underlying the policy.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~Note 5.~~	Note 5. Fair Value Measurements

The following tables set forth, by level, the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~.2020.


	Fair Value Measurements at June 30, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In millions)

Assets:
Inventories carried at market	$	0	$	4,698	$	2,824	$	7,522
Unrealized derivative gains:
Commodity contracts	0		1,317		551		1,868
Foreign currency contracts	0		324		0		324
Interest rate contracts	0		89		0		89

Cash equivalents	332		0		0		332

Segregated investments	1,001		0		0		1,001

Total Assets	$	1,333	$	6,428	$	3,375	$	11,136

Liabilities:
Unrealized derivative losses:
Commodity contracts	$	0	$	892	$	1,037	$	1,929
Foreign currency contracts	0		252		0		252
Interest rate contracts	0		1		0		1
Debt conversion option	0		0		24		24
Inventory-related payables	0		568		38		606

Total Liabilities	$	0	$	1,713	$	1,099	$	2,812

Fair Value Measurements at September 30, 2020

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Total
(In millions)

Assets:
Inventories carried at market $ 0
$ 3,572
$ 2,092
$ 5,664
Unrealized derivative gains:
Commodity contracts 0
894
580
1,474
Foreign currency contracts 0
292
0
292
Interest rate contracts 0
32
0
32
Cash equivalents 496
0
0
496
Marketable securities 9
0
0
9
Segregated investments 1,158
0
0
1,158
Deferred receivables consideration 0
272
0
272
Total Assets $ 1,663
$ 5,062
$ 2,672
$ 9,397

Liabilities:
Unrealized derivative losses:
Commodity contracts $ 0
$ 592
$ 796
$ 1,388
Foreign currency contracts 0
547
0
547
Interest rate contracts 0
34
0
34
Debt conversion option 0
0
32
32
Inventory-related payables 0
482
7
489
Total Liabilities $ 0
$ 1,655
$ 835
$ 2,490

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


~~Note 5.~~	~~Fair Value Measurements (Continued)~~

Fair Value Measurements at December 31, 2019

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Total
(In millions)

Assets:
Inventories carried at market $ 0
$ 3,227
$ 1,477
$ 4,704
Unrealized derivative gains:
Commodity contracts 0
277
201
478
Foreign currency contracts 0
138
0
138
Interest rate contracts 0
3
0
3
Cash equivalents 505
0
0
505
Marketable securities 5
0
0
5
Segregated investments 628
0
0
628
Deferred receivables consideration 0
446
0
446
Total Assets $ 1,138
$ 4,091
$ 1,678
$ 6,907

Liabilities:
Unrealized derivative losses:
Commodity contracts $ 0
$ 375
$ 199
$ 574
Foreign currency contracts 0
125
0
125
Interest rate contracts 0
43
0
43
Inventory-related payables 0
702
27
729
Total Liabilities $ 0
$ 1,245
$ 226
$ 1,471

Note 5. Fair Value Measurements (Continued)


	Fair Value Measurements at December 31, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In millions)

Assets:
Inventories carried at market	$	0	$	5,758	$	2,183	$	7,941
Unrealized derivative gains:
Commodity contracts	0		1,905		859		2,764
Foreign currency contracts	0		283		0		283
Interest rate contracts	0		61		0		61
Cash equivalents	297		0		0		297
Marketable securities	1		0		0		1
Segregated investments	1,067		0		0		1,067

Total Assets	$	1,365	$	8,007	$	3,042	$	12,414

Liabilities:
Unrealized derivative losses:
Commodity contracts	$	0	$	1,116	$	918	$	2,034
Foreign currency contracts	0		535		0		535
Interest rate contracts	0		15		0		15
Debt conversion option	0		0		34		34
Inventory-related payables	0		498		11		509
Total Liabilities	$	0	$	2,164	$	963	$	3,127

Estimated fair values for inventories carried at market are based on exchange-quoted prices, adjusted for differences in local markets and quality, referred to as basis. Market valuations for the Company’s inventories are adjusted for location and quality (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis adjustments are generally determined using the inputs from broker or dealer quotations or market transactions in either the listed or over the counter (OTC) markets and are considered observable. In some cases, the basis adjustments are unobservable because they are supported by little to no market activity. When unobservable inputs have a significant impact on the measurement of fair value, the inventory is classified in Level 3. Changes in the fair value of inventories are recognized in the consolidated statements of earnings as a component of cost of products sold.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


~~Note 5.~~	~~Fair Value Measurements (Continued)~~

Note 5. Fair Value Measurements (Continued)

Derivative contracts include exchange-traded commodity futures and options contracts, forward commodity purchase and sale contracts, and OTC instruments related primarily to agricultural commodities, energy, interest rates, and foreign currencies. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified in Level 1. The majority of the Company’s exchange-traded futures and options contracts are cash-settled on a daily basis and, therefore, are not included in these tables. Fair value for forward commodity purchase and sale contracts is estimated based on exchange-quoted prices adjusted for differences in local markets. Market valuations for the Company’s forward commodity purchase and sale contracts are adjusted for location (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis adjustments are generally determined using inputs from broker or dealer quotations or market transactions in either the listed or OTC markets and are considered observable. In some cases, the basis adjustments are unobservable because they are supported by little to no market activity. When observable inputs are available for substantially the full term of the contract, it is classified in Level 2. When unobservable inputs have a significant impact (more than 10%) on the measurement of fair value, the contract is classified in Level 3. Except for certain derivatives designated as cash flow hedges, changes in the fair value of commodity-related derivatives are recognized in the consolidated statements of earnings as a component of cost of products sold. Changes in the fair value of foreign currency-related derivatives are recognized in the consolidated statements of earnings as a component of revenues, cost of products sold, or other (income) expense - net, depending upon the purpose of the contract. The changes in the fair value of derivatives designated as effective cash flow hedges are recognized in the consolidated balance sheets as a component of accumulated other comprehensive income (loss) (AOCI) until the hedged items are recorded in earnings or it is probable the hedged transaction will no longer occur.

The Company’s cash equivalents are comprised of money market funds valued using quoted market prices and are classified as Level 1.

The Company’s segregated investments are comprised of U.S. Treasury securities. U.S. Treasury securities are valued using quoted market prices and are classified in Level 1.

The ~~Company has deferred consideration under its accounts receivable securitization program (the “First Program”) which represents notes receivable from~~debt conversion option is the ~~purchasers under~~equity linked embedded derivative related to the ~~First Program (see Note 16 for more information). This amount is reflected~~exchangeable bonds issued in other current assets on the consolidated balance sheets (see Note 7 for more information). The Company carries the deferred receivables consideration at fair value determined by calculating the expected amount of cash to be received.August 2020. The fair value ~~is principally based on observable inputs (a Level 2 measurement) consisting mainly~~ of the ~~face amount~~embedded derivative is included in long-term debt, with changes in fair value recognized as interest, and is valued with the assistance of the receivables adjusted for anticipated credit losses and discounted at the appropriate market rate. Payment of deferred receivables consideration is not subject to significant risks other than delinquencies and credit losses on accounts receivable transferreda third-party pricing service (a level 3 measurement under ~~the First Program, which have historically been insignificant.~~

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~Note 5.~~	~~Fair Value Measurements (Continued)~~

applicable accounting standards).

The following table presents a rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended ~~September~~June 30, ~~2020~~2021.

Level 3 Fair Value Asset Measurements at
September 30, 2020

Inventories
Carried at
Market

Commodity
Derivative
Contracts
Gains

Total
Assets
(In millions)

Balance, June 30, 2020 $ 1,399
$ 442
$ 1,841
Total increase (decrease) in net realized/unrealized gains included in cost of products sold* 258
286
544
Purchases 3,181
0
3,181
Sales (2,703 ) 0
(2,703 )
Settlements 0
(96 ) (96 )
Transfers into Level 3 290
13
303
Transfers out of Level 3 (333 ) (65 ) (398 )
Ending balance, September 30, 2020 $ 2,092
$ 580
$ 2,672


	Level 3 Fair Value Asset Measurements at
	June 30, 2021
	Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
	(In millions)

Balance, March 31, 2021	$	3,070	$	684	$	3,754
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	75		273		348
Purchases	7,163		0		7,163
Sales	(7,356)		0		(7,356)
Settlements	0		(395)		(395)
Transfers into Level 3	410		22		432
Transfers out of Level 3	(538)		(33)		(571)
Ending balance, June 30, 2021	$	2,824	$	551	$	3,375

* Includes increase in unrealized gains of ~~$392~~$380 million relating to Level 3 assets still held at ~~September~~June 30, ~~2020~~2021.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Fair Value Measurements (Continued)

The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended ~~September~~June 30, ~~2020~~2021.

Level 3 Fair Value Liability Measurements at
September 30, 2020

Inventory-
related
Payables

Commodity
Derivative
Contracts
Losses
Debt Conversion Option

Total
Liabilities
(In millions)

Balance, June 30, 2020 $ 14
$ 363
$ 0
$ 377
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense* (3 ) 618
15
630
Purchases and issuance of debt conversion option 3
0
17
20
Sales (7 ) 0
—
(7 )
Settlements 0
(188 ) —
(188 )
Transfers into Level 3 0
24
—
24
Transfers out of Level 3 0
(21 ) —
(21 )
Ending balance, September 30, 2020 $ 7
$ 796
$ 32
$ 835


	Level 3 Fair Value Liability Measurements at
	June 30, 2021
	Inventory- related Payables		Commodity Derivative Contracts Losses		Foreign Currency Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
	(In millions)

Balance, March 31, 2021	$	21	$	648	$	11	$	54	$	734
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	0		681		0		(30)		651
Purchases	17		0		0		0		17

Settlements	0		(447)		0		—		(447)
Transfers into Level 3	0		170		0		—		170
Transfers out of Level 3	0		(15)		(11)		—		(26)
Ending balance, June 30, 2021	$	38	$	1,037	$	0	$	24	$	1,099

* Includes increase in unrealized losses of ~~$635~~$683 million relating to Level 3 liabilities still held at ~~September~~June 30, ~~2020~~2021.

~~Archer-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~Note 5.~~	~~Fair Value Measurements (Continued)~~


	Level 3 Fair Value Asset Measurements at
	June 30, 2020
	Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
	(In millions)

Balance, March 31, 2020	$	1,938	$	391	$	2,329
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	279		229		508
Purchases	3,012		0		3,012
Sales	(3,625)		0		(3,625)
Settlements	0		(190)		(190)
Transfers into Level 3	306		23		329
Transfers out of Level 3	(511)		(11)		(522)
Ending balance, June 30, 2020	$	1,399	$	442	$	1,841

Level 3 Fair Value Asset Measurements at
September 30, 2019

Inventories
Carried at
Market

Commodity
Derivative
Contracts
Gains

Total
Assets
(In millions)

Balance, June 30, 2019 $ 1,388
$ 159
$ 1,547
Total increase (decrease) in net realized/unrealized gains included in cost of products sold* 27
91
118
Purchases 2,772
0
2,772
Sales (2,643 ) 0
(2,643 )
Settlements 0
(106 ) (106 )
Transfers into Level 3 213
21
234
Transfers out of Level 3 (327 ) (4 ) (331 )
Ending balance, September 30, 2019 $ 1,430
$ 161
$ 1,591

* Includes increase in unrealized gains of ~~$165~~$422 million relating to Level 3 assets still held at ~~September~~June 30, ~~2019~~2020.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Fair Value Measurements (Continued)


	Level 3 Fair Value Liability Measurements at
	June 30, 2020
	Inventory- related Payables		Commodity Derivative Contracts Losses		Total Liabilities
	(In millions)

Balance, March 31, 2020	$	20	$	309	$	329
Total increase (decrease) in net realized/unrealized losses included in cost of products sold*	1		247		248
Purchases	2		0		2
Sales	(9)		0		(9)
Settlements	0		(211)		(211)
Transfers into Level 3	0		19		19
Transfers out of Level 3	0		(1)		(1)
Ending balance, June 30, 2020	$	14	$	363	$	377

Level 3 Fair Value Liability Measurements at
September 30, 2019

Inventory-
related
Payables

Commodity
Derivative
Contracts
Losses

Total
Liabilities
(In millions)

Balance, June 30, 2019 $ 22
$ 216
$ 238
Total increase (decrease) in net realized/unrealized losses included in cost of products sold* (3 ) 82
79
Purchases 26
0
26
Sales (4 ) 0
(4 )
Settlements 0
(167 ) (167 )
Transfers into Level 3 0
13
13
Transfers out of Level 3 0
(4 ) (4 )
Ending balance, September 30, 2019 $ 41
$ 140
$ 181

* Includes increase in unrealized losses of ~~$81~~$253 million relating to Level 3 liabilities still held at ~~September~~June 30, ~~2019~~.2020.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


~~Note 5.~~	~~Fair Value Measurements (Continued)~~

Note 5. Fair Value Measurements (Continued)

The following table presents a rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~.2021.

Level 3 Fair Value Asset Measurements at
September 30, 2020

Inventories
Carried at
Market

Commodity
Derivative
Contracts
Gains

Total
Assets
(In millions)

Balance, December 31, 2019 $ 1,477
$ 201
$ 1,678
Total increase (decrease) in net realized/unrealized gains included in cost of products sold* 626
732
1,358
Purchases 9,600
0
9,600
Sales (9,838 ) 0
(9,838 )
Settlements 0
(331 ) (331 )
Transfers into Level 3 290
57
347
Transfers out of Level 3 (63 ) (79 ) (142 )
Ending balance, September 30, 2020 $ 2,092
$ 580
$ 2,672


	Level 3 Fair Value Asset Measurements at
	June 30, 2021
	Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
	(In millions)

Balance, December 31, 2020	$	2,183	$	859	$	3,042
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	805		516		1,321
Purchases	13,548		0		13,548
Sales	(13,988)		0		(13,988)
Settlements	0		(823)		(823)
Transfers into Level 3	926		45		971
Transfers out of Level 3	(650)		(46)		(696)
Ending balance, June 30, 2021	$	2,824	$	551	$	3,375

* Includes increase in unrealized gains of $1.2 billion relating to Level 3 assets still held at ~~September~~June 30, ~~2020~~2021.

The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~.2021.

Level 3 Fair Value Liability Measurements at
September 30, 2020

Inventory-
related
Payables

Commodity
Derivative
Contracts
Losses
Debt Conversion Option

Total
Liabilities
(In millions)

Balance, December 31, 2019 $ 27
$ 199
$ 0
$ 226
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense* 1
1,070
15
1,086
Purchases and issuance of debt conversion option 11
0
17
28
Sales (32 ) 0
(32 )
Settlements 0
(521 ) (521 )
Transfers into Level 3 0
79
79
Transfers out of Level 3 0
(31 ) (31 )
Ending balance, September 30, 2020 $ 7
$ 796
$ 32
$ 835


	Level 3 Fair Value Liability Measurements at
	June 30, 2021
	Inventory- related Payables		Commodity Derivative Contracts Losses		Foreign Currency Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
	(In millions)

Balance, December 31, 2020	$	11	$	918	$	0	$	34	$	963
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	0		1,062		0		(10)		1,052
Purchase	29		0		0		0		29
Sales	(2)		0		0		—		(2)
Settlements	0		(1,013)		0		—		(1,013)
Transfers into Level 3	0		224		11		—		235
Transfers out of Level 3	0		(154)		(11)		—		(165)
Ending balance, June 30, 2021	$	38	$	1,037	$	0	$	24	$	1,099

* Includes increase in unrealized losses of $1.1 billion relating to Level 3 liabilities still held at ~~September~~June 30, ~~2020~~.2021.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


~~Note 5.~~	~~Fair Value Measurements (Continued)~~

Note 5. Fair Value Measurements (Continued)

Level 3 Fair Value Asset Measurements at
September 30, 2019

Inventories
Carried at
Market

Commodity
Derivative
Contracts
Gains

Total
Assets
(In millions)

Balance, December 31, 2018 $ 1,515
$ 155
$ 1,670
Total increase (decrease) in net realized/unrealized gains included in cost of products sold* 148
319
467
Purchases 8,118
0
8,118
Sales (8,425 ) 0
(8,425 )
Settlements 0
(346 ) (346 )
Transfers into Level 3 213
54
267
Transfers out of Level 3 (139 ) (21 ) (160 )
Ending balance, September 30, 2019 $ 1,430
$ 161
$ 1,591


	Level 3 Fair Value Asset Measurements at
	June 30, 2020
	Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
	(In millions)

Balance, December 31, 2019	$	1,477	$	201	$	1,678
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	396		446		842
Purchases	6,419		0		6,419
Sales	(7,135)		0		(7,135)
Settlements	0		(235)		(235)
Transfers into Level 3	306		44		350
Transfers out of Level 3	(64)		(14)		(78)
Ending balance, June 30, 2020	$	1,399	$	442	$	1,841

* Includes increase in unrealized gains of ~~$656~~$804 million relating to Level 3 assets still held at ~~September~~June 30, ~~2019~~2020.

Level 3 Fair Value Liability Measurements at
September 30, 2019

Inventory-
related
Payables

Commodity
Derivative
Contracts
Losses

Total
Liabilities
(In millions)

Balance, December 31, 2018 $ 18
$ 245
$ 263
Total increase (decrease) in net realized/unrealized losses included in cost of products sold* (2 ) 254
252
Purchases 41
0
41
Sales (16 ) 0
(16 )
Settlements 0
(354 ) (354 )
Transfers into Level 3 0
37
37
Transfers out of Level 3 0
(42 ) (42 )
Ending balance, September 30, 2019 $ 41
$ 140
$ 181


	Level 3 Fair Value Liability Measurements at
	June 30, 2020
	Inventory- related Payables		Commodity Derivative Contracts Losses		Total Liabilities
	(In millions)

Balance, December 31, 2019	$	27	$	199	$	226
Total increase (decrease) in net realized/unrealized losses included in cost of products sold*	4		452		456
Purchases	8		0		8
Sales	(25)		0		(25)
Settlements	0		(333)		(333)
Transfers into Level 3	0		55		55
Transfers out of Level 3	0		(10)		(10)
Ending balance, June 30, 2020	$	14	$	363	$	377

* Includes increase in unrealized losses of ~~$258~~$463 million relating to Level 3 liabilities still held at ~~September~~June 30, ~~2019~~.2020.

Transfers into Level 3 of assets and liabilities previously classified in Level 2 were due to the relative value of unobservable inputs to the total fair value measurement of certain products and derivative contracts rising above the 10% threshold. Transfers out of Level 3 were primarily due to the relative value of unobservable inputs to the total fair value measurement of certain products and derivative contracts falling below the 10% threshold and thus permitting reclassification to Level 2.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


~~Note 5.~~	~~Fair Value Measurements (Continued)~~

Note 5. Fair Value Measurements (Continued)

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


~~Note 14.~~	~~Segment Information (Continued)~~

Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2020 2019 2020 2019
Gross revenues
Ag Services and Oilseeds $ 13,415
$ 14,440
$ 40,196
$ 41,041
Carbohydrate Solutions 2,335
3,018
7,102
8,472
Nutrition 1,481
1,481
4,471
4,322
Other Business 84
88
277
273
Intersegment elimination (2,189 ) (2,301 ) (5,669 ) (5,781 )
Total gross revenues $ 15,126
$ 16,726
$ 46,377
$ 48,327

Intersegment sales

Ag Services and Oilseeds $ 1,888
$ 1,824
$ 4,849
$ 4,659
Carbohydrate Solutions 271
453
708
1,063
Nutrition 30
24
112
59
Total intersegment sales $ 2,189
$ 2,301
$ 5,669
$ 5,781

Revenues from external customers

Ag Services and Oilseeds
Ag Services $ 7,352
$ 8,246
$ 22,930
$ 23,653
Crushing 2,317
2,465
7,035
7,130
Refined Products and Other 1,858
1,905
5,382
5,599
Total Ag Services and Oilseeds 11,527
12,616
35,347
36,382
Carbohydrate Solutions
Starches and Sweeteners 1,574
1,526
4,769
4,782
Vantage Corn Processors 490
1,039
1,625
2,627
Total Carbohydrate Solutions 2,064
2,565
6,394
7,409
Nutrition
Human Nutrition 719
703
2,161
2,105
Animal Nutrition 732
754
2,198
2,158
Total Nutrition 1,451
1,457
4,359
4,263

Other Business 84
88
277
273
Total revenues from external customers $ 15,126
$ 16,726
$ 46,377
$ 48,327

A~~rcher-Daniels-Midland Company~~Note 13. Segment Information (Continued)

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~


~~Note 14.~~	~~Segment Information (Continued)~~

Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2020 2019 2020 2019
Segment operating profit
Ag Services and Oilseeds $ 436
$ 417
$ 1,271
$ 1,196
Carbohydrate Solutions 246
182
509
470
Nutrition 147
118
447
316
Other Business 20
47
69
72
Specified Items:
Gains (losses) on sales of assets and businesses⁽¹⁾
57
0
80
12
Impairment, restructuring, and settlement charges⁽²⁾
(2 ) (6 ) (60 ) (52 )
Total segment operating profit 904
758
2,316
2,014
Corporate (704 ) (255 ) (1,189 ) (922 )
Earnings before income taxes $ 200
$ 503
$ 1,127
$ 1,092


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2021		2020		2021		2020
Segment operating profit


Ag Services and Oilseeds	$	570	$	413	$	1,347	$	835
Carbohydrate Solutions	383		195		642		263
Nutrition	201		158		355		300
Other Business	6		38		15		49
Specified Items:
Gains (losses) on sales of assets and businesses(1)	22		23		22		23
Impairment, restructuring, and settlement charges(2)	(37)		(14)		(131)		(58)

Total segment operating profit	1,145		813		2,250		1,412
Corporate	(320)		(261)		(601)		(485)

Earnings before income taxes	$	825	$	552	$	1,649	$	927

⁽¹⁾ ~~Current quarter and year-to-date gain consisted~~Consists of ~~a gain on the sale of a portion of the Company’s shares in Wilmar and certain other assets. Prior year-to-date~~ gains ~~consisted of a gain~~ on the sale of certain assets ~~and a step-up gain on an equity investment.~~in all periods presented.

⁽²⁾ Current quarter ~~and year-to-date~~ charges related to the impairment of certain long-lived assets ~~restructuring,~~ and restructuring. Current year-to-date charges also included a legal settlement. Prior quarter and year-to-date charges related to the impairment of certain long-lived assets and ~~a settlement.~~restructuring.

Note ~~15.~~14. Asset Impairment, Exit, and Restructuring Costs

Asset impairment, exit, and restructuring costs in the three months ended ~~September~~June 30, 2021 consisted of $23 million of impairments related to certain long-lived assets and $1 million of restructuring charges, presented as specified items within segment operating profit, and a restructuring adjustment of $1 million in Corporate. Asset impairment, exit, and restructuring costs in the six months ended June 30, 2021 consisted of $54 million of impairments related to certain long-lived assets and $24 million of restructuring charges, presented as specified items within segment operating profit, and $4 million of restructuring charges in Corporate.

Asset impairment, exit, and restructuring costs in the three months ended June 30, 2020 consisted of individually insignificant long-lived asset impairments of $3 million and restructuring charges of $1$13 million. Asset impairment, exit, and restructuring costs in the ~~nine~~six months ended ~~September~~June 30, 2020 consisted ~~primarily~~ of ~~$50~~$47 million of impairments related to certain intangible and other long-lived assets and ~~$11~~$10 million of restructuring charges.

Asset impairment, exit, and restructuring costs in the three and nine months ended September 30, 2019 consisted of $6 million and $50 million, respectively, of impairments related to certain long-lived assets presented as specified items within segment operating profit and $47 million and $150 million, respectively, of restructuring and pension settlement and remeasurement charges in Corporate primarily related to early retirement and reorganization initiatives.

The Company recorded a $35 million impairment related to a Company facility in the nine months ended September 30, 2019, based on the fair value of the asset determined using a third-party market participant’s offer to purchase the facility.

In April 2020, the Company temporarily idled ethanol production at its corn dry mill facilities in Cedar Rapids, Iowa, and Columbus, Nebraska. During the quarter ended September 30, 2020, the Company performed an impairment assessment on its corn processing business, which includes all assets where ethanol is produced, and determined that no impairment was required based on the Company’s forecast of undiscounted cash flows. The Company currently expects that the idled facilities will be restarted as demand for ethanol improves within the next 12 months.

Note ~~16.~~15. Sale of Accounts Receivable

The Company has an accounts receivable securitization program (the “First Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the “First Purchasers”). Under the First Program, certain U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Receivables, LLC (“ADM Receivables”). Prior to October 1, 2020, ADM Receivables ~~in turn transfers~~transferred such purchased accounts receivable in their entirety to the First Purchasers pursuant to a receivables purchase agreement. In exchange for the transfer of the accounts receivable, ADM Receivables ~~receives~~received a cash payment of up to ~~$1.2 billion~~a certain amount and an additional amount upon the collection of the accounts receivable (deferred consideration). On October 1, 2020, the Company restructured the First Program from a deferred purchase price to a pledge structure. Under the new structure, ADM Receivables transfers certain of the purchased accounts receivable to each of the First Purchasers together with a security interest in all of its right, title, and interest in the remaining purchased accounts receivable. In exchange, ADM Receivables receives a cash payment of up to $1.4 billion, an increase from $1.2 billion as of December 31, 2020, for the accounts receivable transferred. The First Program terminates on May 18, ~~2021,~~2022, unless extended.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~16.~~15. Sale of Accounts Receivable (Continued)

The Company also has an accounts receivable securitization program (the “Second Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the “Second Purchasers”). Under the Second Program, certain non-U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Ireland Receivables Company (ADM Ireland Receivables). Prior to April 1, 2020, ADM Ireland Receivables transferred such purchased accounts receivable in their entirety to the Second Purchasers pursuant to a receivables purchase agreement. In exchange for the transfer of the accounts receivable, ADM Ireland Receivables received a cash payment up to a certain amount and an additional amount upon the collection of the accounts receivable (deferred consideration). On April 1, 2020, the Company restructured the Second Program from a deferred purchase price to a pledge structure. Under the new structure, ADM Ireland Receivables transfers ~~a portion~~certain of the purchased accounts receivable to each of the Second Purchasers together with ~~an equally proportional~~a security interest in all of its right, title, and interest in the remaining purchased accounts ~~receivable to each of the Second Purchasers.~~receivable. In exchange, ADM Ireland Receivables receives a cash payment of up to $0.6 billion (€0.5 billion) for the accounts receivables transferred. The Second Program terminates on ~~March 12, 2021,~~February 14, 2022, unless extended.

Under the First and Second Programs (collectively, the “Programs”), ADM Receivables and ADM Ireland Receivables use the cash proceeds from the transfer of receivables to the First Purchasers and Second Purchasers (collectively, the “Purchasers”) and other consideration, as applicable, to finance the purchase of receivables from the Company and the ADM subsidiaries originating the receivables. The Company accounts for these transfers as sales. The Company has no retained interests in the transferred receivables, other than collection and administrative ~~responsibilities~~responsibilities. At June 30, 2021 and ~~its right to the deferred consideration under the First Program. At~~ ~~September 30, 2020~~ ~~and~~ December 31, ~~2019~~,2020, the Company did not record a servicing asset or liability related to its retained responsibility, based on its assessment of the servicing fee, market values for similar transactions, and its insignificant cost of servicing the receivables sold.

As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair value of trade receivables transferred to the Purchasers under the Programs and derecognized from the Company’s consolidated balance sheets was ~~$1.7~~$2.0 billion and ~~$1.9~~$1.6 billion, respectively. ~~In exchange~~Total receivables sold were $24.8 billion and $16.8 billion for the ~~transfers as of~~ ~~September~~six months ended June 30, ~~2020~~2021 and ~~December 31, 2019, the Company received cash of~~ ~~$1.4 billion~~ ~~and $1.4 billion, respectively, and recorded a receivable for deferred consideration included in other current assets of~~ ~~$0.3 billion~~ ~~and $0.4 billion,~~2020, respectively. Cash collections from customers on receivables sold were ~~$24.2~~$22.5 billion and ~~$25.1~~$16.4 billion for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, respectively. Of the amount in the six months ended June 30, 2020, ~~and~~ ~~2019, respectively. Of this amount, $6.7 billion and $9.5~~$4.6 billion were cash collections on the deferred receivables consideration reflected as cash inflows from investing activities for the ~~nine~~six months ended ~~September~~June 30, 2020. As of June 30, 2021 and December 31, 2020, ~~and~~ ~~2019, respectively. Deferred~~ receivables ~~consideration is paid~~pledged as collateral to the ~~Company in cash on behalf of~~Purchasers were $0.6 billion and $0.4 billion, respectively.

Under the ~~First Purchasers as receivables are collected; however, as this is a revolving facility, cash collected from~~Programs’ previous structure, the ~~Company’s customers is reinvested by the First Purchasers daily in new receivable purchases under the First Program.~~

~~The~~ Company’s risk of loss following the transfer of accounts receivable ~~under the First Program is~~was limited to the deferred receivables consideration outstanding. The Company ~~carries~~carried the deferred receivables consideration at fair value determined by calculating the expected amount of cash to be received and iswas principally based on observable inputs (a Level 2 measurement under the applicable accounting standards) consisting mainly of the face amount of the receivables adjusted for anticipated credit losses and discounted at the appropriate market rate. Payment of deferred receivables consideration iswas not subject to significant risks other than delinquencies and credit losses on accounts receivable transferred under the ~~First Program~~Programs which ~~have~~had historically been insignificant.

Transfers of receivables under the Programs resulted in an expense for the loss on sale of $2 million and $6 million for the three and six months ended June 30, 2021, respectively, and $3 million and $5 million for the three and six months ended ~~September~~June 30, 2020, ~~and 2019, respectively, and $7 million and $14 million for the nine months ended September 30, 2020 and 2019,~~ respectively, which is classified as selling, general, and administrative expenses in the consolidated statements of earnings.

In accordance with the amended guidance of Topic 230, the Company ~~reflects~~reflected cash flows related to the deferred receivables consideration as investing activities in its consolidated statements of cash flows. All other cash flows are classified as operating activities because the cash received from the Purchasers upon both the sale and collection of the receivables is not subject to significant interest rate risk given the short-term nature of the Company’s trade receivables.

A~~rcher-Daniels-Midland Company~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

Note 16. ~~Sale of Accounts Receivable (Continued)~~

Subsequent Event

On ~~October 1, 2020,~~July 26, 2021, the Company ~~restructured the First Program from~~announced that it has reached an agreement to acquire Sojaprotein, a ~~deferred purchase price~~leading European provider of non-GMO soy ingredients. The acquisition is subject to a pledge structure. Under the new structure, ADM Receivables transfers a portion of the purchased accounts receivable together with an equally proportional security interest in all of its right, title, and interest in the remaining purchased accounts receivable to each of the First Purchasers. In exchange, ADM Receivables receives a cash payment for the accounts receivables transferred.regulatory approvals.


~~ITEM 2.~~	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Company Overview

This MD&A should be read in conjunction with the accompanying unaudited consolidated financial statements.

ADM is a global leader in human and animal nutrition and one of the world’s premier agricultural origination and processing companies. It is one of the world’s leading producers of ingredients for human and animal nutrition, and other products made from nature. The Company uses its significant global asset base to originate and transport agricultural commodities, connecting to markets in ~~more than 190~~200 countries. The Company also processes corn, oilseeds, and wheat into products for food, animal feed, chemical and energy uses. The Company also engages in the manufacturing, sale, and distribution of specialty products including natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products, and other specialty food and feed ingredients. The Company uses its global asset network, business acumen, and its relationships with suppliers and customers to efficiently connect the harvest to the home thereby generating returns for our shareholders, principally from margins earned on these activities.

~~Prior period results have been reclassified to conform to the current period segment presentation.~~

The Company’s operations are organized, managed, and classified into three reportable business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Each of these segments is organized based upon the nature of products and services offered. The Company’s remaining operations are not reportable business segments, as defined by the applicable accounting standard, and are classified as Other Business. Financial information with respect to the Company’s reportable business segments is set forth in Note 1413 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements”.

The Company’s recent significant portfolio actions and announcements include:

•the ~~acquisition~~announcement in ~~January 2020~~March 2021 of ~~Yerbalatina,~~ a ~~natural plant-based extracts~~new ADM policy to protect forests, biodiversity and ~~ingredients manufacturer in Brazil;~~communities, furthering the Company’s commitment to sustainable, ethical, and responsible production;

•the ~~temporary idling~~announcement in April ~~2020~~2021 of ~~ethanol production at~~ the ~~corn~~resumption of dry mill ~~facilities~~ethanol production;

•the announcement in ~~Cedar Rapids, Iowa,~~May 2021 of ADM’s participation as a signatory to the German Charter for Diversity in the Workplace which aims to advance the recognition and ~~Columbus, Nebraska due to reduced demand. To better align production with current demand,~~ inclusion of diversity in companies;

•the Company has also reduced the ethanol grind at its corn wet mill plants and rebalanced grind to produce more industrial alcohol for the sanitizer market and industrial starches for the container board market;

~~the sale~~announcement in ~~August 2020~~May 2021 of a ~~portion~~plan to build a dedicated soybean crushing plant and refinery in North Dakota to meet fast-growing demand from food, feed, industrial and biofuel customers, including producers of renewable diesel, which is expected to be open in 2023;

•the announcement in June 2021 of ADM Ventures, the corporate venture capital arm of ADM, joining the Genesis Consortium, a global alliance of venture capital firms and corporations dedicated to supporting startups that leverage biology to promote human and planetary health; and

•the announcement in July 2021 of an agreement to purchase, subject to regulatory approvals, Sojaprotein, a leading European provider of non-GMO soy ingredients.

The next phase of the Company’s ~~shares in Wilmar~~strategic transformation is focused on two strategic pillars: Productivity and Innovation.

The Productivity pillar includes (1) advancing the ~~issuance of $300 million aggregate principal amount of zero-coupon bonds, exchangeable into Wilmar shares;~~

~~the repurchase and redemption in September 2020 of $1.2 billion aggregate principal amount of debentures and notes;~~

~~the announcement in October 2020 of an agreement with Spiber Inc. (Spiber) to expand the production of Spiber’s innovative Brewed Protein™ polymers for use in apparel and other consumer products;~~

~~the announcement in October 2020~~roles of the Company’s ~~plan~~Centers of Excellence in procurement, supply chain, and operations to ~~construct a new,~~deliver additional efficiencies across the enterprise; (2) continued roll out of the 1ADM business transformation program and implementation of improved standardized business processes; and (3) increased use of technology, analytics, and automation at production facilities, in offices, and with customers.

Innovation activities includes expansions and investments in (1) improving the customer experience, including leveraging producer relationships and enhancing the use of state-of-the-art ~~facility in Valencia, Spain, that will expand its~~digital technology to help customers grow; (2) sustainability-driven innovation, which encompasses the full range of products, solutions, capabilities, and commitments to serve customers’ needs; and (3) growth initiatives, including organic growth to support additional capacity and meet growing demand, ~~for microbiome solutions;~~ and mergers and acquisitions opportunities.

ADM will support both pillars with investments in technology, which include expanding digital capabilities and investing further in product research and development. All of these efforts will continue to be strengthened by the Company’s ongoing commitment to Readiness.


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

The tables below provide a reconciliation of earnings before income taxes to adjusted EBITDA and adjusted EBITDA by segment for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.


	Three months ended
	June 30,
(In millions)	2021		2020		Change
Earnings before income taxes	$	825	$	552	$	273
Interest expense	40		87		(47)
Depreciation and amortization	243		244		(1)
(Gains) losses on sales of assets and businesses	(22)		(23)		1
Early debt retirement charges	—		14		(14)
Railroad maintenance expenses	3		—		3
Asset impairment, restructuring, and settlement charges	118		16		102
Adjusted EBITDA	$	1,207	$	890	$	317


	Three months ended
	June 30,
(In millions)	2021		2020		Change


Ag Services and Oilseeds	$	661	$	502	$	159
Carbohydrate Solutions	467		274		193
Nutrition	253		217		36
Other Business	7		39		(32)
Corporate	(181)		(142)		(39)
Adjusted EBITDA	$	1,207	$	890	$	317

Three months ended
September 30,
(In millions) 2020 2019 Change
Earnings before income taxes $ 200
$ 503
$ (303 )
Interest expense 100
97
3
Depreciation and amortization 238
249
(11 )
LIFO —
(16 ) 16
(Gains) losses on sales of assets and businesses (57 ) —
(57 )
Early debt retirement charges 396
—
396
Railroad maintenance expenses 28
—
28
Asset impairment, restructuring, and settlement charges 8
53
(45 )
Adjusted EBITDA $ 913
$ 886
$ 27

Three months ended
September 30,
(In millions) 2020 2019 Change
Ag Services and Oilseeds $ 527
$ 511
$ 16
Carbohydrate Solutions 323
264
59
Nutrition 201
175
26
Other Business 21
55
(34 )
Corporate (159 ) (119 ) (40 )
Adjusted EBITDA $ 913
$ 886
$ 27

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

Market Factors Influencing Operations or Results in the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, North American ~~crushing margins were volatile due to slow farmer selling and COVID-19 impacts on~~origination volumes benefited from strong export demand ~~for meal and oil earlier~~early in the year ~~but strengthened~~while South American origination volumes were impacted by the delayed harvest and low farmer selling activity. Crushing margins benefited from tight soybean and canola/rapeseed stocks. Demand for refined oils was strong, driven by the regional lifting of COVID-19 restrictions in the ~~third quarter~~U.S. and demand for renewable green diesel. Biodiesel margins were negatively impacted by high vegetable oil values. In Carbohydrate Solutions, margins in starches and sweeteners were solid despite softer sweetener demand early in the year due to ~~the increasingly tight soybean stocks in South America. South America saw record origination volumes in~~continued COVID-19 restrictions. Starch demand continued to be robust. Co-product prices were strong. Ethanol demand and margins improved throughout the first half of ~~the year~~2021 as it benefited from strong farmer selling in Brazil driven by the devaluation of the Brazilian Real. Demand and margins for biodiesel remained solid in North and South America. Margins for starches and sweeteners and wheat flour remained solid while demand was soft due to the impacts of COVID-19 ~~in the food service sector. Ethanol margins~~restrictions were mixed as U.S. industry ethanol production exceeded demand and inventories remained high early in the year, but improved in the second and third quarters as ADM and many ethanol producers idled some capacity due to the low demand.lifted regionally. Nutrition benefited from ~~growing~~overall strong demand in various product categories. In human nutrition, demand for flavors, ~~pet~~flavor systems, specialty proteins, bioactives, and fibers were strong. In animal nutrition, weak demand and higher input costs in South America as a result of COVID-19 were partially offset by the growing demand in complete food ~~feed~~ for ~~livestock, plant-based proteins,~~petfood and ~~probiotics. Lower out-of-home consumption caused by COVID-19 lockdown measures negatively impacted flavors volumes, especially in the food service channel,~~livestock. Amino acids pricing and ~~demand for aqua feed and amino acids. Global demand for amino acids was~~margins improved due to a tighter global supply environment. Favorable product mix also ~~negatively impacted by lower livestock counts following an African swine fever outbreak.~~

contributed to improved margins.

~~Nine~~

Six Months Ended ~~September~~June 30, ~~2020~~2021 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020

Net earnings attributable to controlling interests increased ~~$0.2~~$0.5 billion to ~~$1.1~~$1.4 billion. Segment operating profit increased ~~$0.3~~$0.8 billion to $2.3 billion. Included in segment operating profit in the current period was a net ~~income~~charge of ~~$20~~$109 million consisting of gains on the sale of ~~a portion~~certain assets of ~~the Company’s shares in Wilmar~~$22 million and ~~certain other assets, partially offset by~~ asset impairment, restructuring, and settlement ~~charges.~~charges of $131 million. Included in segment operating profit in the prior period was a net charge of ~~$40~~$35 million consisting of asset impairment and ~~settlement~~restructuring charges of $23 million and a gain on the sale of certain assets ~~and a step-up gain on an equity investment.~~of $58 million. Adjusted segment operating profit increased ~~$0.2~~$0.9 billion to ~~$2.3~~$2.4 billion due primarily to higher results in Ag Services ~~Refined Products~~ and ~~Other, Vantage Corn Processors, Human and Animal~~Oilseeds, Carbohydrate Solutions, Nutrition, and higher equity earnings from the Wilmar investment, partially offset by lower results in ~~Crushing, Starches and Sweeteners, and~~ Other Business. Corporate results were a net charge of ~~$1.2~~$0.6 billion ~~for~~in the ~~nine months~~current period compared to ~~$0.9~~$0.5 billion in the ~~same period last year.~~prior period. Corporate results in the current period included a pension settlement charge of $82 million, a mark-to-market gain of $10 million on the conversion option of the exchangeable bonds issued in August 2020, and a restructuring charge of $4 million. Corporate results in the prior period included a credit of $91 million from the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020 and early debt ~~retirement charges~~repayment expenses of $410 million, a mark-to-market loss of $15 million on the conversion option of the exchangeable bonds issued in August 2020, and an impairment charge of $5 million for the nine months, compared to restructuring and pension settlement and remeasurement charges of $150 million related to early retirement and reorganization initiatives and a charge of $10 million from the effect of changes in agricultural commodity prices on LIFO inventory valuation reserves during the same period last year.$14 million.

Income taxes of ~~$38~~$244 million ~~decreased $174~~increased $180 million. The Company’s effective tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~3.4%~~14.8% compared to ~~19.4%~~6.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The ~~change in~~favorable 2020 tax rate was primarily due ~~primarily~~ to the impact of U.S. tax credits signed into law in December 2019, including a $73 million discrete tax benefit related to 45G railroad ~~tax credits recognized in the quarter ended March 31, 2020. The 45G railroad tax credits have an offsetting expense in cost of products sold.~~maintenance expenses.

In March 2020, the CARES Act was signed into law in the United States. The Company does not expect the provisions of the CARES Act to have a material impact on the annual effective tax rate for the year ending December 31, 2020.

Analysis of Statements of Earnings

Processed volumes by product for the ~~nine~~six months are as follows (in metric tons):


	Six Months Ended
	June 30,
(In thousands)	2021	2020	Change
Oilseeds	17,738	18,266	(528)
Corn	8,692	9,633	(941)
Total	26,430	27,899	(1,469)

Nine Months Ended
September 30,
(In thousands) 2020 2019 Change
Oilseeds 27,236
27,002
234
Corn 13,717
16,297
(2,580 )
Total 40,953
43,299
(2,346 )


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. The overall ~~increase~~decrease in oilseeds isprocessed volumes was due to ~~increased capacity utilization at new plants combined with downtime~~cold weather and natural gas curtailments in ~~the prior year due to weather-related issues.~~North America and delays in soybean harvest in South America. The overall decrease in corn processed iswas primarily related to the idling of two dry mill facilities in the second quarter ~~due~~of 2020 and the intentional slowdown of wet mill ethanol production in response to the ~~current low ethanol demand.~~challenging operating environment. The Company ~~currently expects that the~~restarted these idled facilities ~~will be restarted as demand for ethanol improves within the next 12 months.~~in April 2021.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Revenues by segment for the ~~nine~~six months are as follows:

Nine Months Ended
September 30,
2020 2019 Change
(In millions)
Ag Services and Oilseeds
Ag Services $ 22,930
$ 23,653
$ (723 )
Crushing 7,035
7,130
(95 )
Refined Products and Other 5,382
5,599
(217 )
Total Ag Services and Oilseeds 35,347
36,382
(1,035 )

Carbohydrate Solutions
Starches and Sweeteners 4,769
4,782
(13 )
Vantage Corn Processors 1,625
2,627
(1,002 )
Total Carbohydrate Solutions 6,394
7,409
(1,015 )

Nutrition
Human Nutrition 2,161
2,105
56
Animal Nutrition 2,198
2,158
40
Total Nutrition 4,359
4,263
96

Other Business 277
273
4
Total $ 46,377
$ 48,327
$ (1,950 )


	Six Months Ended
	June 30,
	2021		2020		Change
	(In millions)












Ag Services and Oilseeds
Ag Services	$	22,961	$	15,578	$	7,383
Crushing	5,569		4,718		851
Refined Products and Other	4,748		3,524		1,224
Total Ag Services and Oilseeds	33,278		23,820		9,458

Carbohydrate Solutions
Starches and Sweeteners	3,591		3,195		396
Vantage Corn Processors	1,452		1,135		317
Total Carbohydrate Solutions	5,043		4,330		713

Nutrition
Human Nutrition	1,602		1,442		160
Animal Nutrition	1,694		1,466		228
Total Nutrition	3,296		2,908		388

Other Business	202		193		9
Total	$	41,819	$	31,251	$	10,568

Revenues and cost of products sold in a commodity merchandising and processing business are significantly correlated to the underlying commodity prices and volumes. During periods of significant changes in commodity prices, the underlying performance of the Company is better evaluated by looking at margins because both revenues and cost of products sold, particularly in Ag Services and Oilseeds, generally have a relatively equal impact from commodity price changes which generally result in an insignificant impact to gross profit.

Revenues ~~decreased $2.0~~increased $10.6 billion to ~~$46.4~~$41.8 billion due to ~~lower~~higher sales prices ($10.4 billion) and sales volumes ~~partially offset by higher sales prices. Lower sales volumes of rice, alcohol, oils, and soybeans and lower~~($0.1 billion). Higher sales prices of soybeans, corn, meal, oils, alcohol, and biodiesel and higher sales volumes corn and soybeans, were partially offset by ~~higher~~lower sales volumes of ~~biodiesel~~alcohol and ~~corn and higher sales prices of oils and soybeans.~~oils. Ag Services and Oilseeds revenues ~~decreased 3%~~increased 40% to ~~$35.3~~$33.3 billion due to ~~lower~~higher sales prices ($8.8 billion) and higher sales volumes ($~~1.3~~0.6 billion). Carbohydrate Solutions revenues increased 16% to $5.0 billion due to higher sales prices ($1.1 billion), partially offset by ~~higher sales prices ($0.3 billion). Carbohydrate Solutions revenues decreased 14% to $6.4 billion due to~~ lower sales volumes ($~~0.8 billion) and lower sales prices ($0.2~~0.4 billion). Nutrition revenues increased 2%13% to ~~$4.4~~$3.3 billion due to higher sales prices ($0.5 billion), partially offset by lower sales volumes ~~and prices.~~($0.1 billion).


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

Cost of products sold ~~decreased $2.1~~increased $9.6 billion to ~~$43.3~~$38.8 billion due to principally to ~~lower volumes.~~higher average commodity costs. Included in cost of products sold in the prior period was a credit of $91 million from the effect of the elimination of the LIFO reserve in connection with the accounting change ~~in the current period compared to a charge of $10 million from the effect of changes in agricultural commodity prices on LIFO inventory valuation reserves in the prior period.~~effective January 1, 2020. Manufacturing expenses ~~decreased~~increased $0.1 billion to ~~$4.2~~$2.9 billion due principally to ~~lower~~higher energy costs, increased contracted labor and ~~decreased operating~~maintenance, maintenance supplies, and ~~maintenance expenses,~~salaries and benefits, partially offset by railroad maintenance ~~expenses.~~expenses of $73 million in the prior period.

Foreign currency translation impacts ~~decreased both~~increased revenues by $0.9 billion and cost of products sold by ~~$0.4~~$0.8 billion.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Gross profit increased ~~$0.1~~$1.0 billion or 4%46% to ~~$3.1 billion. Higher~~$3.0 billion due to higher results in ~~Human and Animal Nutrition ($154 million),~~ Ag Services and Oilseeds ($~~117~~473 million), ~~Refined Products~~Carbohydrate Solutions ($368 million), Nutrition ($92 million), and Other ($~~74 million), and Vantage Corn Processors ($42 million) were partially offset by lower results in Crushing ($273 million) and Starches and Sweeteners ($15~~56 million). These factors are explained in the segment operating profit discussion on page ~~52.~~49. In Corporate, ~~the positive period over period impact from LIFO of $101 million due to~~ the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020 ~~and the changes in agricultural commodity prices~~had a positive impact on ~~LIFO inventory valuation reserves~~gross profit of $91 million in the prior ~~period were offset by railroad maintenance expenses of $101 million.~~period.

Selling, general, and administrative expenses increased ~~$0.1~~$0.2 billion to ~~$1.9~~$1.5 billion due principally to higher ~~variable performance-related~~salaries and benefits and performance-based compensation ~~expense accruals compared to lower accruals in the prior period.~~accruals.

Asset impairment, exit, and restructuring costs ~~decreased $139~~increased $25 million to ~~$61~~$82 million. Charges in the current period consisted ~~primarily~~ of ~~$50~~$54 million of impairments related to certain long-lived assets and $24 million of restructuring charges, presented as specified items within segment operating profit, and $4 million of restructuring charges in Corporate. Charges in the prior period consisted of $47 million of impairments related to certain intangible and other long-lived assets and ~~$11~~$10 million of restructuring charges. ~~Prior period charges consisted~~

Equity in earnings of $50 million of impairments related to certain long-lived assets presented as specified items within segment operating profit, and $150 million of restructuring and pension settlement and remeasurement charges in Corporate primarily related to early retirement and reorganization initiatives.

~~Interest expense decreased $37~~unconsolidated affiliates increased $45 million to ~~$270~~$288 million due to higher earnings from the Company’s investments in Wilmar and Stratas Foods.

Investment income decreased $11 million to $63 million due to lower interest rates on segregated funds in the Company’s futures commission and ~~net interest savings from cross currency swaps,~~brokerage business, partially offset by a $40 million investment revaluation gain in the ADM Ventures portfolio in the current period.

Interest expense decreased $43 million to $127 million due to the mark-to-market ~~loss~~gain adjustment related to the conversion option of the exchangeable bonds issued in August ~~2020.~~

~~Equity in earnings of unconsolidated affiliates increased $124 million to $403 million due to higher earnings from~~2020, lower interest rates, and the ~~Company’s investments in Wilmar and Pacificor, partially offset by a loss~~favorable liability management actions taken in the ~~current period from the Company’s investment in Olenex.~~prior year.

Other expense - net increased ~~$218~~$96 million to ~~$179~~$16 million. ~~Current period expense~~Expense in the current quarter included ~~charges~~a non-cash pension settlement charge of ~~$410~~$82 million related to ~~related to multiple early debt redemptions~~the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and ~~the $0.7 billion debt tender in September 2020~~annuity administration for certain salaried and ~~loss provisions related to~~hourly retirees and terminated vested participants under the Company’s ~~futures commission~~ADM Retirement Plant and ~~brokerage business,~~ADM Pension Plan for Hourly-Wage Employees, partially offset by gains ~~related to~~on the sale of ~~a portion~~certain assets and disposals of individually insignificant assets in the ~~Company’s shares in Wilmar and certain other assets,~~ordinary course of business, the non-service components of net pension benefit income, foreign exchange gains, and other income. ~~Prior~~Income in the prior period ~~income~~ included gains on the sale of certain assets ~~step-up gains on equity investments, gains on~~and disposals of individually insignificant assets in the ordinary course of business, an investment revaluation gain, foreign exchange gains, the non-service components of net pension benefit income, and other income, partially offset by ~~foreign exchange losses.~~loss provisions related to the Company’s futures commission and brokerage business and expenses related to the early repayment of debt.


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Segment operating profit, adjusted segment operating profit (a non-GAAP measure), and earnings before income taxes for the ~~nine~~six months are as follows:

Nine Months Ended
September 30,
Segment Operating Profit (Loss) 2020 2019 Change
(In millions)
Ag Services and Oilseeds

Ag Services $ 482
$ 326
$ 156
Crushing 249
493
(244 )
Refined Products and Other 286
223
63
Wilmar 254
154
100
Total Ag Services and Oilseeds 1,271
1,196
75

Carbohydrate Solutions

Starches and Sweeteners 533
547
(14 )
Vantage Corn Processors (24 ) (77 ) 53
Total Carbohydrate Solutions 509
470
39

Nutrition
Human Nutrition 372
293
79
Animal Nutrition 75
23
52
Total Nutrition 447
316
131

Other Business 69
72
(3 )

Specified Items:
Gains (losses) on sales of assets and businesses 80
12
68
Asset impairment, restructuring, and settlement charges (60 ) (52 ) (8 )
Total Specified Items 20
(40 ) 60

Total Segment Operating Profit $ 2,316
$ 2,014
$ 302

Adjusted Segment Operating Profit⁽¹⁾
$ 2,296
$ 2,054
$ 242

Segment Operating Profit $ 2,316
$ 2,014
$ 302
Corporate (1,189 ) (922 ) (267 )
Earnings Before Income Taxes $ 1,127
$ 1,092
$ 35


	Six Months Ended
	June 30,
Segment Operating Profit (Loss)	2021		2020		Change
	(In millions)











Ag Services and Oilseeds
Ag Services	$	399	$	335	$	64
Crushing	532		183		349
Refined Products and Other	231		159		72
Wilmar	185		158		27
Total Ag Services and Oilseeds	1,347		835		512

Carbohydrate Solutions
Starches and Sweeteners	528		276		252
Vantage Corn Processors	114		(13)		127
Total Carbohydrate Solutions	642		263		379

Nutrition
Human Nutrition	290		244		46
Animal Nutrition	65		56		9
Total Nutrition	355		300		55

Other Business	15		49		(34)

Specified Items:
Gains (losses) on sales of assets and businesses	22		23		(1)
Asset impairment, restructuring, and settlement charges	(131)		(58)		(73)

Total Specified Items	(109)		(35)		(74)

Total Segment Operating Profit	$	2,250	$	1,412	$	838

Adjusted Segment Operating Profit(1)	$	2,359	$	1,447	$	912

Segment Operating Profit	$	2,250	$	1,412	$	838
Corporate	(601)		(485)		(116)
Earnings Before Income Taxes	$	1,649	$	927	$	722

(1) Adjusted segment operating profit is segment operating profit excluding the above specified items.


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

Liquidity and Capital Resources

A Company objective is to have sufficient liquidity, balance sheet strength, and financial flexibility to fund the operating and capital requirements of a capital-intensive agricultural commodity-based business. The Company depends on access to credit markets, which can be impacted by its credit rating and factors outside of ADM’s control, to fund its working capital needs and capital expenditures. The primary source of funds to finance ADM’s operations, capital expenditures, and advancement of its growth strategy is cash generated by operations and lines of credit, including a commercial paper borrowing facility and accounts receivable securitization programs. In addition, the Company believes it has access to funds from public and private equity and debt capital markets in both U.S. and international markets.

Cash ~~used in~~provided by operating activities was ~~$1.5~~$3.0 billion for the ~~nine~~six months ended June 30, 2021 compared to ~~$3.6~~a use of $0.4 billion for the same period last year. Working capital changes ~~including the increase in deferred consideration, decreased~~as described below increased cash by ~~$3.8~~$0.8 billion for the ~~nine~~six months ended June 30, 2021 compared to ~~$5.3~~a decrease of $2.0 billion for the same period last ~~year.~~ year which included the impact of deferred consideration. During 2020, the Company restructured its accounts receivable securitization programs from a deferred purchase price to a pledge structure. As a result, operating cash flows in the current period no longer include the impact of deferred consideration which decreased operating cash flows in previous years.

Inventoriesdecreased approximately ~~$0.4~~$0.2 billion ~~primarily~~ due to lower inventory ~~quantities,~~volumes partially offset by higher inventory prices. Trade payables declined approximately ~~$0.4~~$1.0 billion principally reflecting seasonal cash payments for North American harvest-related grain purchases.

~~Increase in deferred~~Deferred consideration in securitized receivables of ~~$4.6 billion and $5.7~~$2.5 billion for the ~~nine~~six months ~~and the same period last year, respectively,~~ended June 30, 2020 was offset by ~~$4.6 billion and $5.7 billion~~the same amount of net consideration received for beneficial interest obtained for selling trade ~~receivables for the nine months and the same period last year, respectively.~~receivables.

Cash ~~provided by~~used in investing activities was ~~$4.7~~$0.4 billion for the ~~nine~~six months ended June 30, 2021 compared to ~~$3.3~~cash provided of $2.2 billion for the same period last year. Capital expenditures for the ~~nine~~six months ended June 30, 2021 of ~~$0.6~~$0.4 billion were comparable to the same period last year. Net assets of businesses acquired were $3$5 million for the ~~nine~~six months ended June 30, 2021 compared to ~~$1.9 billion~~$3 million for the same period last ~~year due to the acquisition of Neovia in 2019.~~year. Proceeds from sales of business and assets for the ~~nine~~six months ended June 30, 2021 of ~~$0.7 billion~~$58 million related to the sale of ~~a portion of the Company shares in Wilmar and~~ certain ~~other~~ assets compared to ~~$43~~$91 million for the same period last year. Net consideration received for beneficial interest obtained ~~for~~related to selling trade receivables was ~~$4.6~~$2.5 billion for the ~~nine~~six months ~~compared to $5.7 billion the same period last year.~~ended June 30, 2020.

Cash used in financing activities was ~~$1.9~~$0.6 billion for the ~~nine~~six months ended June 30, 2021 compared to ~~$0.4~~a use of $0.2 billion for the same period last year. Long-term debt borrowings for the ~~nine~~six months ended June 30, 2021 of ~~$1.8~~$0.6 billion consisted of the €0.5 billion aggregate principal amount of Fixed-to-Floating Rate Senior Notes due 2022 issued in a private placement on March 25, 2021, compared to long-term debt borrowings for the same period last year of $1.5 billion which consisted of the $0.5 billion and $1.0 billion aggregate principal amounts of 2.75% Notes due in 2025 and 3.25% Notes due in 2030, respectively, issued on March 27, 2020 and the $0.3 billion aggregate principal amount of zero coupon exchangeable bonds due in 2023 issued on August 26, 2020, compared to long-term borrowings of $3 million for the same period last year.2020. Commercial paper net payments for the ~~nine~~six months ended June 30, 2021 were ~~$1.0~~$0.8 billion compared to net ~~borrowings~~payments of ~~$1.0~~$0.7 billion for the same period last year. Proceeds from the borrowings in the current period ~~will be~~were used for general corporate ~~purposes, including~~purposes. Proceeds from the ~~reduction of~~borrowings in the prior period were also used to reduce short-term debt. Long-term debt payments for the ~~nine~~six months ~~of $2.0 billion related to the early redemption of the $0.5 billion and $0.4 billion aggregate principal amounts of 4.479% due in~~ended June 30, 2021 and 3.375% debentures due in 2022, respectively, the repurchase of $0.7 billion aggregate principal amount of Debentures, and the redemption of $0.1 billion aggregate principal amount of private placement notes due in 2021 and 2024,were $2 million compared to ~~$0.6~~$0.5 billion for the same period last year, which ~~primarily related to~~consisted of the ~~€0.5~~early redemption of the $0.5 billion ~~Floating Rate Notes that matured~~aggregate principal amount of 4.479% debentures due in ~~June 2019.~~2021. Share repurchases for the ~~nine~~six months ended June 30, 2021 were ~~$0.1 billion~~insignificant compared to ~~$0.2~~$0.1 billion for the same period last year. Dividends of ~~$0.6~~$0.4 billion for the ~~nine~~six months ~~were~~ended June 30, 2021were comparable to the same period last year.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

At ~~September~~June 30, ~~2020,~~2021, the Company had $0.9 billion of cash and cash equivalents ~~and short-term marketable securities~~ and a current ratio, defined as current assets divided by current liabilities, of 1.6 to 1. Included in working capital was ~~$5.6~~$7.5 billion of readily marketable commodity inventories. At ~~September~~June 30, ~~2020,~~2021, the Company’s capital resources included shareholders’ equity of ~~$19.3~~$21.6 billion and lines of credit, including the accounts receivable securitization programs described below, totaling ~~$10.7~~$11.9 billion, of which ~~$9.1~~$8.6 billion was unused. The Company’s ratio of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was ~~29%~~28% at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. The Company uses this ratio as a measure of the Company’s long-term indebtedness and an indicator of financial flexibility. The Company’s ratio of net debt (the sum of short-term debt, current maturities of long-term debt, and long-term debt less the sum of cash and cash equivalents and short-term marketable securities) to capital (the sum of net debt and shareholders’ equity) was ~~27%~~29% and ~~29%~~32% at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Of the Company’s total lines of credit, ~~$5.0~~$6.5 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was no$0.6 billion commercial paper outstanding at ~~September~~June 30, ~~2020.~~2021.


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)~~

COVID-19 has not significantly impacted ADM’s capital and financial resources, and pricing on its revolving credit facility remains unchanged. However, in line with the overall markets, COVID-19 has created dislocations in the credit markets during certain periods in the first half of 2020 with corporate spreads increasing, partially offset by a decline in benchmark yields. The Company has utilized its diversified sources of liquidity, including its inventory financing and bilateral bank facilities, to ensure it has ample cash and is prepared for possible unexpected credit market disruptions. Additionally, ADM has been accepted into the Federal Reserve’s Commercial Paper Financing Facility and the Bank of England’s COVID Corporate Financing Facility ensuring uninterrupted access to both the U.S. and European commercial paper markets. To date, the Company has not utilized these facilities.

During the second half of 2020, the global credit market stabilized with corporate credit spreads below pre-pandemic levels. Continued actions by central banks provided additional support in both the short-term and long-term funding markets further stabilizing corporate credit markets. Low benchmark yields and favorable credit spreads coupled with continued strong cash flow generation during the second half of the year presented opportunities for ADM to re-balance the company’s liability portfolio to pre-pandemic levels. Starting in June 2020, ADM began a series of liability management transactions including multiple early debt redemptions and the $0.7 billion debt tender in September 2020 to capitalize on all-time low interest rates.

As of ~~September~~June 30, ~~2020,~~2021, the Company had $0.9 billion of cash and cash equivalents, ~~$0.4~~$0.5 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested. Based on the Company’s historical ability to generate sufficient cash flows from its U.S. operations and unused and available U.S. credit capacity of ~~$6.2~~$6.9 billion, the Company has asserted that these funds are indefinitely reinvested outside the U.S.

The Company has accounts receivable securitization programs (the “Programs”) with certain commercial paper conduit purchasers and committed purchasers. The Programs provide the Company with up to $2.0 billion, an increase from $1.8 billion as of December 31, 2020, in funding against accounts receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 1615 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs). As of ~~September~~June 30, ~~2020,~~2021, the Company utilized ~~$1.4~~$2.0 billion of its facility under the Programs.

For the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company spent approximately ~~$0.6~~$0.4 billion in capital expenditures ~~$0.6~~and $0.4 billion in ~~dividends, and $0.1 billion in share repurchases.~~dividends. The Company has a stock repurchase program. Under the program, the Company acquired ~~3.5 million~~an insignificant number of shares for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, and has ~~104.9~~104.5 million shares remaining that may be repurchased until December 31, 2024.

~~The~~In 2021, the Company expects total capital expenditures of approximately $0.9 billion to $1.0 billion, approximately $0.8 billion in dividends, ~~of $0.8~~and up to $0.5 billion ~~and~~in share repurchases, subject to other strategic uses of ~~$0.1 billion during 2020.~~capital.

Contractual Obligations and Commercial Commitments

The Company’s purchase obligations as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$19.5~~$18.7 billion and ~~$12.2~~$19.7 billion, respectively. The ~~increase~~decrease is primarily related to obligations to purchase ~~higher~~lower quantities of agricultural commodity inventories. As of ~~September~~June 30, ~~2020,~~2021, the Company expects to make payments related to purchase obligations of ~~$18.1~~$17.1 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended ~~September~~June 30, ~~2020~~2021.

Off Balance Sheet Arrangements

On October 1, 2020, the Company restructured the First Program from a deferred purchase price to a pledge structure. Under the new structure, ADM Receivables transfers a portion of the purchased accounts receivable together with an equally proportional security interest in all of its right, title, and interest in the remaining purchased accounts receivable to each of the First Purchasers. In exchange, ADM Receivables receives a cash payment for the accounts receivables transferred. See Note 16 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information about the First Program.

There were no material changes in the Company’s off balance sheet arrangements during the quarter ended ~~September~~June 30, ~~2020~~2021.

Critical Accounting Policies

There were no material changes in the Company’s critical accounting policies during the quarter ended ~~September~~June 30, ~~2020.~~2021.


~~ITEM 3.~~	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk inherent in the Company’s market risk sensitive instruments and positions is the potential loss arising from adverse changes in: commodity market prices as they relate to the Company’s net commodity position, foreign currency exchange rates, and interest rates. Significant changes in market risk sensitive instruments and positions for the quarter ended ~~September~~June 30, ~~2020~~2021 are described below. There were no material changes during the period in the Company’s potential loss arising from changes in foreign currency exchange rates and interest rates.

For detailed information regarding the Company’s market risk sensitive instruments and positions, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~.2020.

Commodities

The availability and prices of agricultural commodities are subject to wide fluctuations due to factors such as changes in weather conditions, crop disease, plantings, government programs and policies, competition, changes in global demand, changes in customer preferences and standards of living, and global production of similar and competitive crops.

The fair value of the Company’s commodity position is a summation of the fair values calculated for each commodity by valuing all of the commodity positions at quoted market prices for the period, where available, or utilizing a close proxy. The Company has established metrics to monitor the amount of market risk exposure, which consist of volumetric limits and value-at-risk (VaR) limits. VaR measures the potential loss, at a 95% confidence level, that could be incurred over a one-year period. Volumetric limits are monitored daily and VaR calculations and sensitivity analysis are monitored weekly.

In addition to measuring the hypothetical loss resulting from an adverse two standard deviation move in market prices (assuming no correlations) over a one-year period using VaR, sensitivity analysis is performed measuring the potential loss in fair value resulting from a hypothetical 10% adverse change in market prices. The highest, lowest, and average weekly position together with the market risk from a hypothetical 10% adverse price change is as follows:


	Six months ended				Year ended
	June 30, 2021				December 31, 2020
Long/(Short) (In millions)	Fair Value		Market Risk		Fair Value		Market Risk
Highest position	$	1,426	$	143	$	966	$	97
Lowest position	396		40		(842)		(84)
Average position	1,002		100		111		11

Nine months ended Year ended
September 30, 2020 December 31, 2019
Long/(Short) (In millions)
Fair Value Market Risk Fair Value Market Risk
Highest position $ 668
$ 67
$ 576
$ 58
Lowest position (842 ) (84 ) (83 ) (8 )
Average position (131 ) (13 ) 280
28

The change in fair value of the average position was due to ~~a decrease~~an increase in average quantities and, to a lesser extent, ~~a decrease~~an increase in price underlying the weekly commodity position.


~~ITEM 4.~~	ITEM 4. CONTROLS AND PROCEDURES

As of ~~September~~June 30, ~~2020~~,2021, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure. There was no change in the Company’s internal controls over financial reporting during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.


~~ITEM 4.~~	~~CONTROLS AND PROCEDURES (Continued)~~

ITEM 4. CONTROLS AND PROCEDURES (Continued)



	Weighted Average % of Total Price
	September 30, 2020				December 31, 2019
Component Type	Assets		Liabilities		Assets		Liabilities
Inventories and Related Payables
Basis	20.6	%	56.4	%	28.2	%	14.7	%
Transportation cost	15.8	%	0	%	24.7	%	0	%

Commodity Derivative Contracts
Basis	12.6	%	18.7	%	16.0	%	20.2	%
Transportation cost	5.2	%	4.3	%	9.7	%	3.1	%



	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(In millions, except per share amounts)

Revenues	$	15,126		$	16,726		$	46,377		$	48,327
Cost of products sold	14,084			15,648			43,276			45,349
Gross Profit	1,042			1,078			3,101			2,978

Selling, general, and administrative expenses	636			578			1,938			1,839
Asset impairment, exit, and restructuring costs	4			53			61			200
Interest expense	100			97			270			307
Equity in (earnings) losses of unconsolidated affiliates	(160		)	(88		)	(403		)	(279		)
Interest income	(16		)	(47		)	(71		)	(142		)
Other (income) expense – net	278			(18		)	179			(39		)
Earnings Before Income Taxes	200			503			1,127			1,092

Income tax (benefit) expense	(26		)	95			38			212
Net Earnings Including Noncontrolling Interests	226			408			1,089			880

Less: Net earnings attributable to noncontrolling interests	1			1			4			5

Net Earnings Attributable to Controlling Interests	$	225		$	407		$	1,085		$	875

Average number of shares outstanding – basic	561			562			561			564

Average number of shares outstanding – diluted	562			563			563			565

Basic earnings per common share	$	0.40		$	0.72		$	1.93		$	1.55

Diluted earnings per common share	$	0.40		$	0.72		$	1.93		$	1.55

Dividends per common share	$	0.36		$	0.35		$	1.08		$	1.05



	Three Months Ended September 30, 2020
	Topic 606 Revenue						Topic 815⁽¹⁾		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	776	$	87	$	863	$	6,489	$	7,352
Crushing	113		—		113		2,204		2,317
Refined Products and Other	462		—		462		1,396		1,858
Total Ag Services and Oilseeds	1,351		87		1,438		10,089		11,527
Carbohydrate Solutions
Starches and Sweeteners	1,162		—		1,162		412		1,574
Vantage Corn Processors	490		—		490		—		490
Total Carbohydrate Solutions	1,652		—		1,652		412		2,064
Nutrition
Human Nutrition	719		—		719		—		719
Animal Nutrition	732		—		732		—		732
Total Nutrition	1,451		—		1,451		—		1,451

Other Business	84		—		84		—		84
Total Revenues	$	4,538	$	87	$	4,625	$	10,501	$	15,126



	Nine Months Ended September 30, 2020
	Topic 606 Revenue						Topic 815⁽¹⁾		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	2,504	$	310	$	2,814	$	20,116	$	22,930
Crushing	493		—		493		6,542		7,035
Refined Products and Other	1,501		—		1,501		3,881		5,382
Total Ag Services and Oilseeds	4,498		310		4,808		30,539		35,347
Carbohydrate Solutions
Starches and Sweeteners	3,539		—		3,539		1,230		4,769
Vantage Corn Processors	1,625		—		1,625		—		1,625
Total Carbohydrate Solutions	5,164		—		5,164		1,230		6,394
Nutrition
Human Nutrition	2,161		—		2,161		—		2,161
Animal Nutrition	2,198		—		2,198		—		2,198
Total Nutrition	4,359		—		4,359		—		4,359

Other Business	277		—		277		—		277
Total Revenues	$	14,298	$	310	$	14,608	$	31,769	$	46,377



	Three Months Ended September 30, 2019
	Topic 606 Revenue						Topic 815⁽¹⁾		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	1,369	$	134	$	1,503	$	6,743	$	8,246
Crushing	175		—		175		2,290		2,465
Refined Products and Other	628		—		628		1,277		1,905
Total Ag Services and Oilseeds	2,172		134		2,306		10,310		12,616
Carbohydrate Solutions
Starches and Sweeteners	1,098		—		1,098		428		1,526
Vantage Corn Processors	1,039		—		1,039		—		1,039
Total Carbohydrate Solutions	2,137		—		2,137		428		2,565
Nutrition
Human Nutrition	703		—		703		—		703
Animal Nutrition	754		—		754		—		754
Total Nutrition	1,457		—		1,457		—		1,457

Other Business	88		—		88		—		88
Total Revenues	$	5,854	$	134	$	5,988	$	10,738	$	16,726



	Nine Months Ended September 30, 2019
	Topic 606 Revenue						Topic 815⁽¹⁾		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	2,509	$	377	$	2,886	$	20,767	$	23,653
Crushing	546		—		546		6,584		7,130
Refined Products and Other	1,665		—		1,665		3,934		5,599
Total Ag Services and Oilseeds	4,720		377		5,097		31,285		36,382
Carbohydrate Solutions
Starches and Sweeteners	3,507		—		3,507		1,275		4,782
Vantage Corn Processors	2,627		—		2,627		—		2,627
Total Carbohydrate Solutions	6,134		—		6,134		1,275		7,409
Nutrition
Human Nutrition	2,105		—		2,105		—		2,105
Animal Nutrition	2,158		—		2,158		—		2,158
Total Nutrition	4,263		—		4,263		—		4,263

Other Business	273		—		273		—		273
Total Revenues	$	15,390	$	377	$	15,767	$	32,560	$	48,327



	Level 3 Fair Value Asset Measurements at
	September 30, 2019
	Inventories Carried at Market			Commodity Derivative Contracts Gains			Total Assets
	(In millions)

Balance, June 30, 2019	$	1,388		$	159		$	1,547
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	27			91			118
Purchases	2,772			0			2,772
Sales	(2,643		)	0			(2,643		)
Settlements	0			(106		)	(106		)
Transfers into Level 3	213			21			234
Transfers out of Level 3	(327		)	(4		)	(331		)
Ending balance, September 30, 2019	$	1,430		$	161		$	1,591


~~Note 6.~~	~~Derivative Instruments and Hedging Activities~~


					Other expense (income) - net
			Cost of				Interest
(In millions)	Revenues		products sold				expense
Three Months Ended June 30, 2021
Consolidated Statement of Earnings	$	22,926	$	21,463	$	49	$	40

Pre-tax gains (losses) on:





Foreign Currency Contracts	$	(43)	$	214	$	(45)	$	—
Commodity Contracts	—		(673)		0		—
Debt Conversion Option	—		—		—		30
Total gain (loss) recognized in earnings	$	(43)	$	(459)	$	(45)	$	30	$	(517)

Three Months Ended June 30, 2020
Consolidated Statement of Earnings	$	16,281	$	15,173	$	(56)	$	87

Pre-tax gains (losses) on:
Foreign Currency Contracts	$	11	$	(76)	$	(52)	$	—
Commodity Contracts	—		(29)		0		—
Total gain (loss) recognized in earnings	$	11	$	(105)	$	(52)	$	—	$	(146)


~~Note 6.~~	Note 6. Derivative Instruments and Hedging Activities (Continued)



	September 30,		December 31,
	2020		2019
	(In millions)
Unrealized gains on derivative contracts	$	1,798	$	619
Deferred receivables consideration	272		446
Customer omnibus receivable	888		1,014
Financing receivables - net ⁽¹⁾	331		395
Insurance premiums receivable	25		41
Prepaid expenses	308		318
Biodiesel tax credit	89		541
Tax receivables	665		579
Non-trade receivables ⁽²⁾	296		369
Other current assets	284		278
	$	4,956	$	4,600



	Three Months Ended				Nine Months Ended
	Sep 30, 2020		Sep 30, 2019		Sep 30, 2020			Sep 30, 2019
	(In millions)
Lease cost:
Operating lease cost	$	84	$	51	$	231		$	197
Short-term lease cost	19		24		73			71
Total lease cost	$	103	$	75	$	304		$	268

Other information:
Operating lease liability principal payments					$	222		$	149
Right-of-use assets obtained in exchange for new operating lease liabilities					$	244		$	192

					Sep 30, 2020			Dec 31, 2019
Weighted-average remaining lease term - operating leases (in years)					7			7
Weighted average discount rate - operating leases					4.3		%	4.6		%



	Undiscounted
	Cash Flows
	(In millions)
Remainder of 2020	$	76
2021	284
2022	252
2023	204
2024	144
2025	83
Thereafter	250
Total	1,293

Less interest ⁽¹⁾	(180		)
Lease liability	$	1,113



	Amount reclassified from AOCI
	Three months ended September 30,						Nine months ended September 30,						Affected line item in the consolidated statements of earnings
Details about AOCI components	2020			2019			2020			2019
	(In millions)
Foreign currency translation adjustment
	$	0		$	0		$	0		$	(1	)	Other (income) expense-net
	0			0			0			0			Tax
	$	0		$	0		$	0		$	(1	)	Net of tax

Deferred loss (gain) on hedging activities
	$	(1	)	$	(3	)	$	(9	)	$	5		Revenues
	(79		)	(1		)	(19		)	(7		)	Cost of products sold
	14			21			55			29			Other (income) expense-net
	0			0			8			0			Interest expense
	(66		)	17			35			27			Total before tax
	19			4			5			0			Tax
	$	(47	)	$	21		$	40		$	27		Net of tax

Pension liability adjustment
Amortization of defined benefit pension items:
Prior service credit	$	(9	)	$	0		$	(25	)	$	(13	)	Other (income) expense-net
Actuarial losses	9			3			30			10			Other (income) expense-net
	0			3			5			(3		)	Total before tax
	1			1			(10		)	16			Tax
	$	1		$	4		$	(5	)	$	13		Net of tax


	Amount reclassified from AOCI
	Three months ended June 30,				Six months ended June 30,				Affected line item in the consolidated statements of earnings
Details about AOCI components	2021		2020		2021		2020
	(In millions)





Deferred loss (gain) on hedging activities
	$	1	$	13	$	15	$	33	Revenues
	(239)		36		(328)		60		Cost of products sold

	0		8		0		8		Interest expense
	(238)		57		(313)		101		Total before tax
	57		(10)		79		(14)		Tax
	$	(181)	$	47	$	(234)	$	87	Net of tax

Pension liability adjustment
Amortization of defined benefit pension items:
Prior service credit	$	(61)	$	(8)	$	(67)	$	(16)	Other (income) expense-net
Actuarial losses	133		13		149		21		Other (income) expense-net
	72		5		82		5		Total before tax
	(22)		0		(26)		(11)		Tax
	$	50	$	5	$	56	$	(6)	Net of tax


~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program(2)	Number of Shares Remaining that May be Purchased Under the Program(2)
April 1, 2021 to
April 30, 2021	5,572	$	49.449	121	104,506,384

May 1, 2021 to
May 31, 2021	2,315	62.192		243	104,506,141

June 1, 2021 to
June 30, 2021	847	64.041		56	104,506,085
Total	8,734	$	54.242	420	104,506,085



Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program⁽²⁾	Number of Shares Remaining that May be Purchased Under the Program⁽²⁾
July 1, 2020 to
July 31, 2020	1,579	$	41.767	102	104,961,558

August 1, 2020 to
August 31, 2020	109,219	43.528		106,337	104,855,221

September 1, 2020 to
September 30, 2020	12,930	47.610		172	104,855,049
Total	123,728	$	43.932	106,611	104,855,049


~~(2)~~	On August 7, 2019, the Company’s Board of Directors approved the extension of the stock repurchase program through December 31, 2024 and the repurchase of up to an additional 100,000,000 shares under the extended program.



(3)(i)						Composite Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2001 (File No. 1-44))~~2001).

(3)(ii)						Bylaws, as amended through May 1, 2019 (incorporated by reference to Exhibit 3(ii) to the Company’s Current Report on Form 8-K filed on May 7, ~~2019 (File No. 1-44))~~2019).

(31.1)						Certification of Chief Executive Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a) of the Securities Exchange Act of 1934, as amended.

(31.2)						Certification of Chief Financial Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a) of the Securities Exchange Act of 1934, as amended.

(32.1)						Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32.2)						Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(101)						Inline XBRL file set for the consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

(104)						Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL file set.


			ARCHER-DANIELS-MIDLAND COMPANY


			~~ARCHER-DANIELS-MIDLAND COMPANY~~



	/s/ R. G. Young
			R. G. Young
			Executive Vice President and Chief Financial Officer



			/s/ D. C. Findlay
			D. C. Findlay
			Senior Vice President, General Counsel, and Secretary