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 30, 2021~~March 31, 2022

☐ 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 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) 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 – ~~559,441,260~~562,707,786 shares

(~~October~~April 25, ~~2021)~~2022)

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, ~~2020,~~2021, 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

Archer-Daniels-Midland Company

Consolidated Statements of Earnings

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions, except per share amounts)									(In millions, except per share amounts)

Revenues	Revenues	$	20,340	$	15,126	$	62,159	$	46,377	Revenues	$	23,650	$	18,893
Cost of products sold	Cost of products sold	19,014		14,084		57,822		43,276		Cost of products sold	21,753		17,345
Gross Profit	Gross Profit	1,326		1,042		4,337		3,101		Gross Profit	1,897		1,548

Selling, general, and administrative expenses	Selling, general, and administrative expenses	720		636		2,208		1,938		Selling, general, and administrative expenses	829		749
Asset impairment, exit, and restructuring costs	Asset impairment, exit, and restructuring costs	2		4		84		61		Asset impairment, exit, and restructuring costs	1		59
Equity in (earnings) losses of unconsolidated affiliates		(110)		(160)		(398)		(403)
Equity in earnings of unconsolidated affiliates										Equity in earnings of unconsolidated affiliates	(204)		(125)
Investment income	Investment income	(20)		(20)		(83)		(94)		Investment income	(59)		(13)
Interest expense	Interest expense	61		100		188		270		Interest expense	92		87
Other (income) expense – net		20		282		36		202
Other income – net										Other income – net	(33)		(33)
Earnings Before Income Taxes	Earnings Before Income Taxes	653		200		2,302		1,127		Earnings Before Income Taxes	1,271		824

Income tax expense (benefit)		120		(26)		364		38
Income tax expense										Income tax expense	207		131
Net Earnings Including Noncontrolling Interests	Net Earnings Including Noncontrolling Interests	533		226		1,938		1,089		Net Earnings Including Noncontrolling Interests	1,064		693

Less: Net earnings attributable to noncontrolling interests	Less: Net earnings attributable to noncontrolling interests	7		1		11		4		Less: Net earnings attributable to noncontrolling interests	10		4

Net Earnings Attributable to Controlling Interests	Net Earnings Attributable to Controlling Interests	$	526	$	225	$	1,927	$	1,085	Net Earnings Attributable to Controlling Interests	$	1,054	$	689

Average number of shares outstanding – basic	Average number of shares outstanding – basic	564		561		564		561		Average number of shares outstanding – basic	566		563

Average number of shares outstanding – diluted	Average number of shares outstanding – diluted	566		562		566		563		Average number of shares outstanding – diluted	568		564

Basic earnings per common share	Basic earnings per common share	$	0.93	$	0.40	$	3.42	$	1.93	Basic earnings per common share	$	1.86	$	1.22

Diluted earnings per common share	Diluted earnings per common share	$	0.93	$	0.40	$	3.41	$	1.93	Diluted earnings per common share	$	1.86	$	1.22

Dividends per common share	Dividends per common share	$	0.37	$	0.36	$	1.11	$	1.08	Dividends per common share	$	0.40	$	0.37

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)

Net earnings including noncontrolling interests	Net earnings including noncontrolling interests	$	533	$	226	$	1,938	$	1,089	Net earnings including noncontrolling interests	$	1,064	$	693
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	(24)		(154)		305		(429)		Foreign currency translation adjustment	149		294
Tax effect	Tax effect	(30)		51		(78)		37		Tax effect	(31)		(56)
Net of tax amount	Net of tax amount	(54)		(103)		227		(392)		Net of tax amount	118		238

Pension and other postretirement benefit liabilities adjustment	Pension and other postretirement benefit liabilities adjustment	13		(5)		102		—		Pension and other postretirement benefit liabilities adjustment	37		18
Tax effect	Tax effect	5		3		(22)		(9)		Tax effect	(7)		(5)
Net of tax amount	Net of tax amount	18		(2)		80		(9)		Net of tax amount	30		13

Deferred gain (loss) on hedging activities	Deferred gain (loss) on hedging activities	75		112		258		111		Deferred gain (loss) on hedging activities	282		101
Tax effect	Tax effect	(1)		(22)		(41)		(23)		Tax effect	(47)		(25)
Net of tax amount	Net of tax amount	74		90		217		88		Net of tax amount	235		76

Unrealized gain (loss) on investments	Unrealized gain (loss) on investments	6		(28)		4		(25)		Unrealized gain (loss) on investments	(5)		(1)
Tax effect	Tax effect	—		—		(1)		(1)		Tax effect	—		—
Net of tax amount	Net of tax amount	6		(28)		3		(26)		Net of tax amount	(5)		(1)
Other comprehensive income (loss)	Other comprehensive income (loss)	44		(43)		527		(339)		Other comprehensive income (loss)	378		326
Comprehensive income (loss) including noncontrolling interests	Comprehensive income (loss) including noncontrolling interests	577		183		2,465		750		Comprehensive income (loss) including noncontrolling interests	1,442		1,019

Less: Comprehensive income (loss) attributable to noncontrolling interests	Less: Comprehensive income (loss) attributable to noncontrolling interests	6		2		10		9		Less: Comprehensive income (loss) attributable to noncontrolling interests	5		4

Comprehensive income (loss) attributable to controlling interests	Comprehensive income (loss) attributable to controlling interests	$	571	$	181	$	2,455	$	741	Comprehensive income (loss) attributable to controlling interests	$	1,437	$	1,015

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Balance Sheets


(In millions)	(In millions)	September 30, 2021		December 31, 2020		(In millions)	March 31, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	1,083	$	666	Cash and cash equivalents	$	1,079	$	943

Segregated cash and investments	Segregated cash and investments	7,891		5,890		Segregated cash and investments	10,132		8,016
Trade receivables	Trade receivables	3,797		2,793		Trade receivables	4,235		3,311
Inventories	Inventories	11,169		11,713		Inventories	17,290		14,481
Current assets held for sale		130		—

Other current assets	Other current assets	5,220		6,224		Other current assets	7,717		5,158
Total Current Assets	Total Current Assets	29,290		27,286		Total Current Assets	40,453		31,909

Investments and Other Assets	Investments and Other Assets					Investments and Other Assets
Investments in and advances to affiliates	Investments in and advances to affiliates	5,148		4,913		Investments in and advances to affiliates	5,404		5,285

Goodwill and other intangible assets	Goodwill and other intangible assets	5,705		5,413		Goodwill and other intangible assets	6,750		6,747
Right of use assets	Right of use assets	1,005		1,102		Right of use assets	999		1,023
Other assets	Other assets	1,302		1,054		Other assets	1,466		1,369
Total Investments and Other Assets	Total Investments and Other Assets	13,160		12,482		Total Investments and Other Assets	14,619		14,424

Property, Plant, and Equipment	Property, Plant, and Equipment					Property, Plant, and Equipment
Land and land improvements	Land and land improvements	523		545		Land and land improvements	552		554
Buildings	Buildings	5,557		5,522		Buildings	5,614		5,597
Machinery and equipment	Machinery and equipment	18,955		19,154		Machinery and equipment	19,096		19,112
Construction in progress	Construction in progress	1,126		1,118		Construction in progress	1,086		960
		26,161		26,339			26,348		26,223
Accumulated depreciation	Accumulated depreciation	(16,313)		(16,388)		Accumulated depreciation	(16,554)		(16,420)
Net Property, Plant, and Equipment	Net Property, Plant, and Equipment	9,848		9,951		Net Property, Plant, and Equipment	9,794		9,803

Total Assets	Total Assets	$	52,298	$	49,719	Total Assets	$	64,866	$	56,136

Liabilities, Temporary Equity, and Shareholders’ Equity	Liabilities, Temporary Equity, and Shareholders’ Equity					Liabilities, Temporary Equity, and Shareholders’ Equity
Current Liabilities	Current Liabilities					Current Liabilities
Short-term debt	Short-term debt	$	314	$	2,042	Short-term debt	$	3,777	$	958
Trade payables	Trade payables	4,617		4,474		Trade payables	6,135		6,388
Payables to brokerage customers	Payables to brokerage customers	8,675		6,460		Payables to brokerage customers	11,425		8,965
Accrued expenses and other payables	Accrued expenses and other payables	4,121		4,943		Accrued expenses and other payables	6,363		4,790
Current lease liabilities	Current lease liabilities	268		261		Current lease liabilities	280		277
Current maturities of long-term debt	Current maturities of long-term debt	581		2		Current maturities of long-term debt	543		570

Total Current Liabilities	Total Current Liabilities	18,576		18,182		Total Current Liabilities	28,523		21,948

Long-Term Liabilities	Long-Term Liabilities					Long-Term Liabilities
Long-term debt	Long-term debt	8,039		7,885		Long-term debt	8,752		8,011
Deferred income taxes	Deferred income taxes	1,351		1,302		Deferred income taxes	1,604		1,412
Non-current lease liabilities	Non-current lease liabilities	759		863		Non-current lease liabilities	739		765
Other	Other	1,358		1,391		Other	1,231		1,233
Total Long-Term Liabilities	Total Long-Term Liabilities	11,507		11,441		Total Long-Term Liabilities	12,326		11,421

Temporary Equity - Redeemable noncontrolling interest	Temporary Equity - Redeemable noncontrolling interest	225		74		Temporary Equity - Redeemable noncontrolling interest	262		259

Shareholders’ Equity	Shareholders’ Equity					Shareholders’ Equity
Common stock	Common stock	2,964		2,824		Common stock	3,028		2,994
Reinvested earnings	Reinvested earnings	21,081		19,780		Reinvested earnings	22,483		21,655
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(2,076)		(2,604)		Accumulated other comprehensive income (loss)	(1,789)		(2,172)
Noncontrolling interests	Noncontrolling interests	21		22		Noncontrolling interests	33		31
Total Shareholders’ Equity	Total Shareholders’ Equity	21,990		20,022		Total Shareholders’ Equity	23,755		22,508
Total Liabilities, Temporary Equity, and Shareholders’ Equity	Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	52,298	$	49,719	Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	64,866	$	56,136

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Cash Flows

(Unaudited)


(In millions)	(In millions)	Nine Months Ended September 30,				(In millions)	Three Months Ended March 31,
		2021		2020			2022		2021

Operating Activities	Operating Activities					Operating Activities
Net earnings including noncontrolling interests	Net earnings including noncontrolling interests	$	1,938	$	1,089	Net earnings including noncontrolling interests	$	1,064	$	693
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities	Adjustments to reconcile net earnings to net cash provided by (used in) operating activities					Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	Depreciation and amortization	739		727		Depreciation and amortization	257		249
Asset impairment charges	Asset impairment charges	54		50		Asset impairment charges	1		31
Deferred income taxes	Deferred income taxes	(95)		57		Deferred income taxes	144		(7)
Equity in earnings of affiliates, net of dividends	Equity in earnings of affiliates, net of dividends	(36)		(165)		Equity in earnings of affiliates, net of dividends	(159)		(81)
Stock compensation expense	Stock compensation expense	135		114		Stock compensation expense	69		76

Loss on debt extinguishment		36		410

Deferred cash flow hedges	Deferred cash flow hedges	258		111		Deferred cash flow hedges	283		102
Gains on sales of assets and businesses/investment revaluation	Gains on sales of assets and businesses/investment revaluation	(95)		(132)		Gains on sales of assets and businesses/investment revaluation	(34)		(11)
Other – net	Other – net	156		34		Other – net	(9)		150
Changes in operating assets and liabilities	Changes in operating assets and liabilities					Changes in operating assets and liabilities
Segregated investments	Segregated investments	594		147		Segregated investments	(482)		666
Trade receivables	Trade receivables	(1,060)		(343)		Trade receivables	(937)		(515)
Inventories	Inventories	405		370		Inventories	(2,881)		(1,138)
Deferred consideration in securitized receivables		—		(4,603)

Other current assets	Other current assets	1,187		(467)		Other current assets	(2,141)		413
Trade payables	Trade payables	170		(389)		Trade payables	(245)		(441)
Payables to brokerage customers	Payables to brokerage customers	2,236		1,060		Payables to brokerage customers	2,501		561
Accrued expenses and other payables	Accrued expenses and other payables	(769)		414		Accrued expenses and other payables	1,363		(450)
Total Operating Activities	Total Operating Activities	5,853		(1,516)		Total Operating Activities	(1,206)		298

Investing Activities	Investing Activities					Investing Activities
Purchases of property, plant, and equipment	Purchases of property, plant, and equipment	(714)		(558)		Purchases of property, plant, and equipment	(217)		(174)
Proceeds from sales of assets and businesses	Proceeds from sales of assets and businesses	73		708		Proceeds from sales of assets and businesses	5		14
Net assets of businesses acquired		(501)		(3)

Investments in and advances to affiliates	Investments in and advances to affiliates	(7)		(5)		Investments in and advances to affiliates	(36)		(4)
Distributions from affiliates	Distributions from affiliates	5		—		Distributions from affiliates	—		5
Investments in retained interest in securitized receivables		—		(2,121)
Proceeds from retained interest in securitized receivables		—		6,724

Other – net	Other – net	(143)		(17)		Other – net	(94)		(10)
Total Investing Activities	Total Investing Activities	(1,287)		4,728		Total Investing Activities	(342)		(169)

Financing Activities	Financing Activities					Financing Activities
Long-term debt borrowings	Long-term debt borrowings	1,330		1,790		Long-term debt borrowings	750		593
Long-term debt payments		(533)		(2,032)
Net borrowings (payments) under lines of credit agreements		(1,726)		(993)

Share repurchases		—		(117)
Net borrowings (payments) under short-term credit agreements						Net borrowings (payments) under short-term credit agreements	2,824		729

Cash dividends	Cash dividends	(626)		(607)		Cash dividends	(226)		(208)

Other – net	Other – net	1		16		Other – net	(30)		(37)
Total Financing Activities	Total Financing Activities	(1,554)		(1,943)		Total Financing Activities	3,318		1,077

Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	3,012		1,269		Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	1,770		1,206
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	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 - beginning of period	7,454		4,646

Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	7,658	$	4,259	Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	9,224	$	5,852

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

Cash and cash equivalents	Cash and cash equivalents	$	1,083	$	948	Cash and cash equivalents	$	1,079	$	694
Restricted cash and restricted cash equivalents included in segregated cash and investments	Restricted cash and restricted cash equivalents included in segregated cash and investments	6,575		3,311		Restricted cash and restricted cash equivalents included in segregated cash and investments	8,145		5,158
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	7,658	$	4,259	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	9,224	$	5,852

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

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)	(In millions, except per share amounts)	Shares	Amount								(In millions, except per share amounts)	Shares								Amount
Balance, June 30, 2021		559	$	2,941			$	20,762							$	(2,121)			$	21		$	21,603

Balance, December 31, 2021																				Balance, December 31, 2021	560			$	2,994		$	21,655		$	(2,172)		$	31		$	22,508
Comprehensive income																				Comprehensive income
Net earnings																				Net earnings						1,054						10
Other comprehensive income (loss)																				Other comprehensive income (loss)									383			(5)
Total comprehensive income																				Total comprehensive income															1,442
Dividends paid - $0.40 per share																				Dividends paid - $0.40 per share						(226)									(226)

Stock compensation expense																				Stock compensation expense	3			69											69
Stock option exercises net of taxes																				Stock option exercises net of taxes	—			(36)											(36)

Other																				Other	—			1		—			0			(3)			(2)
Balance, March 31, 2022																				Balance, March 31, 2022	563			$	3,028	$	22,483		$	(1,789)		$	33		$	23,755

Balance, December 31, 2020																				Balance, December 31, 2020	556			$	2,824	$	19,780		$	(2,604)		$	22		$	20,022

Comprehensive income	Comprehensive income																			Comprehensive income
Net earnings	Net earnings				526								7							Net earnings						689						4
Other comprehensive income (loss)	Other comprehensive income (loss)								45				(1)							Other comprehensive income (loss)									326			—
Total comprehensive income	Total comprehensive income																577			Total comprehensive income															1,019
Dividends paid - $0.37 per share	Dividends paid - $0.37 per share				(209)												(209)			Dividends paid - $0.37 per share						(208)									(208)

Stock compensation expense	Stock compensation expense	—	21														21			Stock compensation expense	3			76											76
Stock option exercises net of taxes																				Stock option exercises net of taxes	—			(37)											(37)
Other	Other	—	2		2				—				(6)				(2)			Other	—			(5)		—			—			(6)			(11)
Balance, September 30, 2021		559	$	2,964	$	21,081			$	(2,076)			$	21			$	21,990
Balance, March 31, 2021																				Balance, March 31, 2021	559			$	2,858	$	20,261		$	(2,278)		$	20		$	20,861

Balance, December 31, 2020		556	$	2,824	$	19,780			$	(2,604)			$	22			$	20,022
Comprehensive income
Net earnings					1,927								11
Other comprehensive income (loss)									528				(1)
Total comprehensive income																	2,465
Dividends paid - $1.11 per share					(626)												(626)

Stock compensation expense		3	135														135

Other		—	5		—				0				(11)				(6)
Balance, September 30, 2021		559	$	2,964	$	21,081			$	(2,076)			$	21			$	21,990

Balance, June 30, 2020		556	$	2,705	$	19,293			$	(2,705)			$	18			$	19,311

Comprehensive income
Net earnings					225								1
Other comprehensive income (loss)									(44)				1
Total comprehensive income																	183
Dividends paid - $0.36 per share					(202)												(202)
Share repurchases		—			(5)												(5)
Stock compensation expense		—	39														39
Other		—	16		—				—				(1)				15
Balance, September 30, 2020		556	$	2,760	$	19,311			$	(2,749)			$	19			$	19,341

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

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements

(Unaudited)

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~~three months ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. 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, ~~2020.~~2021.

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.

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~~included allowances for estimated uncollectible accounts totaling ~~$82~~$137 million and ~~$100~~$122 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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.

~~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 $1$22 million and $9$4 million in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, respectively.

Cost Method Investments

Cost method investments of $434 million and $297 million as of March 31, 2022 and December 31, 2021, respectively, ~~and $7 million and $32~~were included in Other Assets in the Company’s consolidated balance sheets. Revaluation gains of $34 million in the ~~three and nine months~~quarter ended ~~September 30, 2020.~~March 31, 2022, in connection with observable third-party transactions, were recorded in investment income in the Company's consolidated statement of earnings. There were no revaluation gains in the quarter ended March 31, 2021.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 1. Basis of Presentation (Continued)

~~Inventory Valuation~~Operations in Ukraine and Russia

~~Effective January 1, 2020,~~ADM employs approximately 650 people in Ukraine and operates an oilseeds crushing plant, a grain port terminal, inland and river silos, and a trading office. Most of the ~~Company changed the method of accounting for certain of its agricultural commodity inventories from the last-in, first-out (LIFO) method~~facilities have been temporarily idled since February 24, 2022. The Company’s footprint in Russia is limited and operations have been recently scaled down 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) conformsthose related to the ~~inventory valuation methodology used for the majority~~production and transport of ~~ADM’s agricultural commodity inventories; (ii) enhances the matching of inventory costs with revenues~~essential food commodities and ~~better reflects the current cost of inventory on the Company’s balance sheet; and (iii) provides better comparability with the Company’s peers.~~ingredients.

~~The Company concluded that the accounting change 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 of the recent events in Ukraine, the Company reviewed the valuation of its assets and 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 nine months ended September 30, 2020 with no impact to the statement of cash flows.

~~Reclassification~~

During the quarter and nine months ended September 30, 2021, the Company recorded revaluation gains on cost method investments of $9 million and $49 million, respectively, in connection with observable third-party transactions in investment income (previously interest income) in the consolidated statements of earnings. Revaluation gains previously recorded in other (income) expense - net of $4 million and $23 millionimmaterial charges in the quarter ended March 31, 2022 related to receivables and ~~nine months ended September 30, 2020, respectively, were reclassified to conform~~inventories. As of March 31, 2022, ADM concluded that 1) receivables, net of allowances, are deemed collectible; and 2) market inventories presented as level 3 in the fair value measurements table in Note 4 are valued appropriately at the February 24, 2022 market price due to the ~~current presentation.~~

~~Note 2. New Accounting Standards~~

~~Effective January 1, 2021,~~temporary lack of a more recent market price. The temporarily idled property, plant, and equipment, which was immaterial, was not considered impaired. As the conflict in Ukraine evolves, the Company ~~adopted~~will continue to review the ~~amended guidance~~valuation of ~~ASC Topic 740,~~ ~~Income Taxes~~ ~~(Topic 740),~~these assets and make any required adjustments, which ~~simplifies the accounting for income taxes by removing certain exceptions~~are not expected to the general principles in Topic 740. The amendments also simplify and improve consistent application of other areas of Topic 740. The adoption of the amended guidance did not have a significant impact onbe material to the Company’s consolidated financial statements.

Note 3.2. Pending Accounting Standards

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~~and does not ~~yet completed its assessment~~expect the adoption of the amended guidance to have an impact on ~~the~~its consolidated financial statements.

Effective January 1, 2023, the Company will be required to adopt the amended guidance of ASC Topic 805, Business Combinations, which improves comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The amended guidance requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. Early adoption is permitted. The Company does not expect the adoption of this amended guidance to have a significant impact on its consolidated financial statements.

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

Note 4.3. Revenues

Revenue Recognition

The Company principally generates revenue from merchandising and transporting agricultural commodities, and manufacturing products for use in food, beverages, feed, energy, and industrial 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 ~~$153~~$175 million and ~~$408~~$104 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and $87 million and $310 million for the three and nine months ended September 30, 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).

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 3. Revenues (Continued)

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~~transaction prices or as a component of revenues and cost of products sold.

Contract Liabilities

Contract liabilities relate to advance payments from customers for goods and services that the Company has yet to provide. Contract liabilities of ~~$374~~$574 million and ~~$626~~$581 million as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheets. Contract liabilities recognized as revenues were ~~$128~~$324 million and ~~$697~~$282 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and $121 million and $742 million for the three and nine months ended September 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~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.


		Three Months Ended September 30, 2021											Three Months Ended March 31, 2022
		Topic 606 Revenue						Topic 815(1)		Total			Topic 606 Revenue						Topic 815(1)		Total
		Point in Time		Over Time		Total		Revenue		Revenues			Point in Time		Over Time		Total		Revenue		Revenues
		(In millions)											(In millions)

Ag Services and Oilseeds	Ag Services and Oilseeds											Ag Services and Oilseeds
Ag Services	Ag Services	$	616	$	153	$	769	$	9,130	$	9,899	Ag Services	$	970	$	175	$	1,145	$	10,702	$	11,847
Crushing	Crushing	119		—		119		2,723		2,842		Crushing	125		—		125		3,097		3,222
Refined Products and Other	Refined Products and Other	657		—		657		2,291		2,948		Refined Products and Other	632		—		632		2,552		3,184
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	1,392		153		1,545		14,144		15,689		Total Ag Services and Oilseeds	1,727		175		1,902		16,351		18,253
Carbohydrate Solutions	Carbohydrate Solutions											Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	1,516		—		1,516		456		1,972		Starches and Sweeteners	1,930		—		1,930		568		2,498
Vantage Corn Processors	Vantage Corn Processors	894		—		894		—		894		Vantage Corn Processors	868		—		868		—		868
Total Carbohydrate Solutions	Total Carbohydrate Solutions	2,410		—		2,410		456		2,866		Total Carbohydrate Solutions	2,798		—		2,798		568		3,366
Nutrition	Nutrition											Nutrition
Human Nutrition	Human Nutrition	808		—		808		—		808		Human Nutrition	958		—		958		—		958
Animal Nutrition	Animal Nutrition	889		—		889		—		889		Animal Nutrition	966		—		966		—		966
Total Nutrition	Total Nutrition	1,697		—		1,697		—		1,697		Total Nutrition	1,924		—		1,924		—		1,924

Other Business	Other Business	88		—		88		—		88		Other Business	107		—		107		—		107
Total Revenues	Total Revenues	$	5,587	$	153	$	5,740	$	14,600	$	20,340	Total Revenues	$	6,556	$	175	$	6,731	$	16,919	$	23,650

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4.3. Revenues (Continued)

Nine Months Ended September 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 $ 2,080 $ 408 $ 2,488 $ 30,372 $ 32,860
Crushing 335 — 335 8,076 8,411
Refined Products and Other 1,828 — 1,828 5,868 7,696
Total Ag Services and Oilseeds 4,243 408 4,651 44,316 48,967
Carbohydrate Solutions
Starches and Sweeteners 4,326 — 4,326 1,237 5,563
Vantage Corn Processors 2,346 — 2,346 — 2,346
Total Carbohydrate Solutions 6,672 — 6,672 1,237 7,909
Nutrition
Human Nutrition 2,410 — 2,410 — 2,410
Animal Nutrition 2,583 — 2,583 — 2,583
Total Nutrition 4,993 — 4,993 — 4,993
Other Business 290 — 290 — 290
Total Revenues $ 16,198 $ 408 $ 16,606 $ 45,553 $ 62,159


		Three Months Ended September 30, 2020											Three Months Ended March 31, 2021
		Topic 606 Revenue						Topic 815(1)		Total			Topic 606 Revenue						Topic 815(1)		Total
		Point in Time		Over Time		Total		Revenue		Revenues			Point in Time		Over Time		Total		Revenue		Revenues
		(In millions)											(In millions)

Ag Services and Oilseeds	Ag Services and Oilseeds											Ag Services and Oilseeds
Ag Services	Ag Services	$	776	$	87	$	863	$	6,489	$	7,352	Ag Services	$	662	$	104	$	766	$	9,380	$	10,146
Crushing	Crushing	113		—		113		2,204		2,317		Crushing	124		—		124		2,618		2,742
Refined Products and Other	Refined Products and Other	462		—		462		1,396		1,858		Refined Products and Other	512		—		512		1,607		2,119
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	1,351		87		1,438		10,089		11,527		Total Ag Services and Oilseeds	1,298		104		1,402		13,605		15,007
Carbohydrate Solutions	Carbohydrate Solutions											Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	1,162		—		1,162		412		1,574		Starches and Sweeteners	1,361		—		1,361		384		1,745
Vantage Corn Processors	Vantage Corn Processors	490		—		490		—		490		Vantage Corn Processors	478		—		478		—		478
Total Carbohydrate Solutions	Total Carbohydrate Solutions	1,652		—		1,652		412		2,064		Total Carbohydrate Solutions	1,839		—		1,839		384		2,223
Nutrition	Nutrition											Nutrition
Human Nutrition	Human Nutrition	719		—		719		—		719		Human Nutrition	754		—		754		—		754
Animal Nutrition	Animal Nutrition	732		—		732		—		732		Animal Nutrition	809		—		809		—		809
Total Nutrition	Total Nutrition	1,451		—		1,451		—		1,451		Total Nutrition	1,563		—		1,563		—		1,563

Other Business	Other Business	84		—		84		—		84		Other Business	100		—		100		—		100
Total Revenues	Total Revenues	$	4,538	$	87	$	4,625	$	10,501	$	15,126	Total Revenues	$	4,800	$	104	$	4,904	$	13,989	$	18,893

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 4. Revenues (Continued)~~

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

(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.

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, from the sale of products manufactured in its global processing 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 4.3. Revenues (Continued)

Nutrition

The Nutrition segment sells ~~a wide array of~~ ingredients and solutions including plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, enzymes, botanical extracts, edible beans, formula feeds, animal health and nutrition products, pet food and treats, 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.

~~Note 5. Acquisitions~~

During the nine months ended September 30, 2021, the Company’s Nutrition segment acquired Golden Farm Production & Commerce Company Limited and a 75% majority stake in PetDine, Pedigree Ovens, The Pound Bakery, and NutraDine (“P4”), premier providers of private label pet treats and supplements, for an aggregate consideration of $501 million in cash. The acquisition of P4 advances ADM’s growth strategy by significantly expanding the Company’s pet treat and supplements capabilities. The consideration paid for these acquisitions was allocated as follows, subject to final measurement period adjustments:


	~~(In Millions)~~
~~Working capital~~	$	11
~~Property, plant, and equipment~~	85
~~Goodwill~~	~~360~~
~~Other intangible assets~~	~~195~~


~~Temporary equity - redeemable noncontrolling interest~~	~~(150)~~
~~Aggregate cash consideration~~	$	~~501~~

The Company has the option to acquire the remaining 25% interest in P4 from December 31, 2023 to March 31, 2025, based on a fixed multiple of earnings before interest, taxes, depreciation, and amortization for the twelve months prior to the exercise of this option. The noncontrolling interest holders also have the option to put the 25% interest to the Company on the same terms. The Company records the 25% remaining interest in temporary equity - redeemable noncontrolling interest.

Goodwill recorded in connection with the acquisitions is primarily attributable to synergies expected to arise after the Company’s acquisition of the businesses, of which, $358 million is expected to be deductible for tax purposes.

~~Nutrition segment results include the post-acquisition financial results of these acquisitions which were immaterial.~~

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

Note 6.4. 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 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


		Fair Value Measurements at September 30, 2021									Fair Value Measurements at March 31, 2022
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
		(In millions)									(In millions)

Assets:	Assets:									Assets:
Inventories carried at market	Inventories carried at market	$	—	$	4,912	$	2,502	$	7,414	Inventories carried at market	$	—	$	8,033	$	3,959	$	11,992
Unrealized derivative gains:	Unrealized derivative gains:									Unrealized derivative gains:
Commodity contracts	Commodity contracts	—		963		485		1,448		Commodity contracts	—		1,578		828		2,406
Foreign currency contracts	Foreign currency contracts	—		337		—		337		Foreign currency contracts	—		461		—		461
Interest rate contracts	Interest rate contracts	—		58		—		58		Interest rate contracts	—		67		—		67

Cash equivalents	Cash equivalents	326		—		—		326		Cash equivalents	419		—		—		419

Segregated investments	Segregated investments	1,099		—		—		1,099		Segregated investments	1,548		—		—		1,548

Total Assets	Total Assets	$	1,425	$	6,270	$	2,987	$	10,682	Total Assets	$	1,967	$	10,139	$	4,787	$	16,893

Liabilities:	Liabilities:									Liabilities:
Unrealized derivative losses:	Unrealized derivative losses:									Unrealized derivative losses:
Commodity contracts	Commodity contracts	$	—	$	904	$	703	$	1,607	Commodity contracts	$	—	$	1,544	$	1,856	$	3,400
Foreign currency contracts	Foreign currency contracts	—		256		—		256		Foreign currency contracts	—		238		—		238
Interest rate contracts	Interest rate contracts	—		1		—		1		Interest rate contracts	—		1		—		1
Debt conversion option	Debt conversion option	—		—		17		17		Debt conversion option	—		—		30		30
Inventory-related payables	Inventory-related payables	—		735		15		750		Inventory-related payables	—		1,860		53		1,913

Total Liabilities	Total Liabilities	$	—	$	1,896	$	735	$	2,631	Total Liabilities	$	—	$	3,643	$	1,939	$	5,582

1512

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 6.4. Fair Value Measurements (Continued)


		Fair Value Measurements at December 31, 2020									Fair Value Measurements at December 31, 2021
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
		(In millions)									(In millions)

Assets:	Assets:									Assets:
Inventories carried at market	Inventories carried at market	$	—	$	5,758	$	2,183	$	7,941	Inventories carried at market	$	—	$	6,765	$	3,004	$	9,769
Unrealized derivative gains:	Unrealized derivative gains:									Unrealized derivative gains:
Commodity contracts	Commodity contracts	—		1,905		859		2,764		Commodity contracts	—		902		460		1,362
Foreign currency contracts	Foreign currency contracts	—		283		—		283		Foreign currency contracts	—		238		—		238
Interest rate contracts	Interest rate contracts	—		61		—		61		Interest rate contracts	—		46		—		46
Cash equivalents	Cash equivalents	297		—		—		297		Cash equivalents	448		—		—		448
Marketable securities		1		—		—		1

Segregated investments	Segregated investments	1,067		—		—		1,067		Segregated investments	1,338		—		—		1,338

Total Assets	Total Assets	$	1,365	$	8,007	$	3,042	$	12,414	Total Assets	$	1,786	$	7,951	$	3,464	$	13,201

Liabilities:	Liabilities:									Liabilities:
Unrealized derivative losses:	Unrealized derivative losses:									Unrealized derivative losses:
Commodity contracts	Commodity contracts	$	—	$	1,116	$	918	$	2,034	Commodity contracts	$	—	$	944	$	815	$	1,759
Foreign currency contracts	Foreign currency contracts	—		535		—		535		Foreign currency contracts	—		191		—		191
Interest rate contracts		—		15		—		15

Debt conversion option	Debt conversion option	—		—		34		34		Debt conversion option	—		—		15		15
Inventory-related payables	Inventory-related payables	—		498		11		509		Inventory-related payables	—		859		106		965
Total Liabilities	Total Liabilities	$	—	$	2,164	$	963	$	3,127	Total Liabilities	$	—	$	1,994	$	936	$	2,930

Estimated fair values for inventories and inventory-related payables 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 competitor and 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 (more than 10%) 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 6.4. 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 competitor and 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 in 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 debt conversion option is the equity-linked embedded derivative related to the exchangeable bonds issued in August 2020. The fair value of the embedded derivative is included in long-term debt, with changes in fair value recognized as interest, and is valued with the assistance of a third-party pricing service (a level 3 ~~measurement under applicable accounting standards)~~measurement).

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 30, 2021.~~March 31, 2022.


		Level 3 Fair Value Asset Measurements at							Level 3 Fair Value Asset Measurements at
		September 30, 2021							March 31, 2022
		Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets			Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
		(In millions)							(In millions)

Balance, June 30, 2021		$	2,824	$	551	$	3,375
Balance, December 31, 2021								Balance, December 31, 2021	$	3,004	$	460	$	3,464
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	70		288		358		Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	647		633		1,280
Purchases	Purchases	7,351		—		7,351		Purchases	9,552		—		9,552
Sales	Sales	(7,346)		—		(7,346)		Sales	(9,315)		—		(9,315)
Settlements	Settlements	—		(311)		(311)		Settlements	—		(276)		(276)
Transfers into Level 3		205		34		239
Transfers into Level 3**								Transfers into Level 3**	327		23		350
Transfers out of Level 3	Transfers out of Level 3	(602)		(77)		(679)		Transfers out of Level 3	(256)		(12)		(268)
Ending balance, September 30, 2021		$	2,502	$	485	$	2,987
Ending balance, March 31, 2022								Ending balance, March 31, 2022	$	3,959	$	828	$	4,787

* Includes increase in unrealized gains of ~~$435 million~~$1.4 billion relating to Level 3 assets still held at ~~September 30, 2021.~~March 31, 2022.

** Inventories carried at market includes Ukraine inventory as discussed in Note 1.

1714

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 6.4. 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 30, 2021.~~March 31, 2022.


		Level 3 Fair Value Liability Measurements at						Level 3 Fair Value Liability Measurements at
		September 30, 2021						March 31, 2022
		Inventory- related Payables		Commodity Derivative Contracts Losses		Debt Conversion Option			Total Liabilities			Inventory- related Payables		Commodity Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
		(In millions)						(In millions)

Balance, June 30, 2021		$	38	$	1,037	$	24		$	1,099
Balance, December 31, 2021											Balance, December 31, 2021	$	106	$	815	$	15	$	936
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	3		310		(7)			306		Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	(2)		1,376		15		1,389
Purchases	Purchases	1		—		—			1		Purchases	2		—		—		2
Sales	Sales	(27)		—		—			(27)		Sales	(53)		—		—		(53)
Settlements	Settlements	—		(654)		—			(654)		Settlements	—		(478)		—		(478)
Transfers into Level 3	Transfers into Level 3	—		60		—			60		Transfers into Level 3	—		161		—		161
Transfers out of Level 3	Transfers out of Level 3	—		(50)		—			(50)		Transfers out of Level 3	—		(18)		—		(18)
Ending balance, September 30, 2021		$	15	$	703	$	17		$	735
Ending balance, March 31, 2022											Ending balance, March 31, 2022	$	53	$	1,856	$	30	$	1,939

* Includes increase in unrealized losses of ~~$313 million~~$1.4 billion relating to Level 3 liabilities still held at ~~September 30, 2021.~~March 31, 2022.


		Level 3 Fair Value Asset Measurements at							Level 3 Fair Value Asset Measurements at
		September 30, 2020							March 31, 2021
		Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets			Inventories Carried at Market		Commodity Derivative Contracts Gains		Total Assets
		(In millions)							(In millions)

Balance, June 30, 2020		$	1,399	$	442	$	1,841
Balance, December 31, 2020								Balance, December 31, 2020	$	2,183	$	859	$	3,042
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	258		286		544		Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	730		243		973
Purchases	Purchases	3,181		—		3,181		Purchases	6,385		—		6,385
Sales	Sales	(2,703)		—		(2,703)		Sales	(6,632)		—		(6,632)
Settlements	Settlements	—		(96)		(96)		Settlements	—		(428)		(428)
Transfers into Level 3	Transfers into Level 3	290		13		303		Transfers into Level 3	516		23		539
Transfers out of Level 3	Transfers out of Level 3	(333)		(65)		(398)		Transfers out of Level 3	(112)		(13)		(125)
Ending balance, September 30, 2020		$	2,092	$	580	$	2,672
Ending balance, March 31, 2021								Ending balance, March 31, 2021	$	3,070	$	684	$	3,754

* Includes increase in unrealized gains of ~~$392~~$847 million relating to Level 3 assets still held at ~~September 30, 2020.~~March 31, 2021.

1815

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 6.4. Fair Value Measurements (Continued)


		Level 3 Fair Value Liability Measurements at									Level 3 Fair Value Liability Measurements at
		September 30, 2020									March 31, 2021
		Inventory- related Payables		Commodity Derivative Contracts Losses		Debt Conversion Option		Total Liabilities			Inventory- related Payables		Commodity Derivative Contracts Losses		Foreign Currency Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
		(In millions)									(In millions)

Balance, June 30, 2020		$	14	$	363	$	—	$	377
Balance, December 31, 2020										Balance, December 31, 2020	$	11	$	918	$	—	$	34	$	963
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	(3)		618		15		630		Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	—		381		—		20		401
Purchases	Purchases	3		—		17		20		Purchases	12		—		—		—		12
Sales	Sales	(7)		—		—		(7)		Sales	(2)		—		—		—		(2)
Settlements	Settlements	—		(188)		—		(188)		Settlements	—		(566)		—		—		(566)
Transfers into Level 3	Transfers into Level 3	—		24		—		24		Transfers into Level 3	—		54		11		—		65
Transfers out of Level 3	Transfers out of Level 3	—		(21)		—		(21)		Transfers out of Level 3	—		(139)		—		—		(139)
Ending balance, September 30, 2020		$	7	$	796	$	32	$	835
Ending balance, March 31, 2021										Ending balance, March 31, 2021	$	21	$	648	$	11	$	54	$	734

* Includes increase in unrealized losses of ~~$635~~$383 million relating to Level 3 liabilities still held at ~~September 30, 2020.~~

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 6. 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 months ended September 30,~~March 31, 2021.

Level 3 Fair Value Asset Measurements at
September 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* 875 804 1,679
Purchases 20,899 — 20,899
Sales (21,334) — (21,334)
Settlements — (1,134) (1,134)
Transfers into Level 3 1,131 79 1,210
Transfers out of Level 3 (1,252) (123) (1,375)
Ending balance, September 30, 2021 $ 2,502 $ 485 $ 2,987

* Includes increase in unrealized gains of $1.7 billion relating to Level 3 assets still held at September 30, 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 months ended September 30, 2021.~~

Level 3 Fair Value Liability Measurements at
September 30, 2021
Inventory-
related
Payables Commodity
Derivative
Contracts
Losses Debt Conversion Option

Total
Liabilities
(In millions)
Balance, December 31, 2020 $ 11 $ 918 $ 34 $ 963
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense* 3 1,372 (17) 1,358
Purchase 30 — — 30
Sales (29) — — (29)
Settlements — (1,667) — (1,667)
Transfers into Level 3 — 284 — 284
Transfers out of Level 3 — (204) — (204)
Ending balance, September 30, 2021 $ 15 $ 703 $ 17 $ 735

* Includes increase in unrealized losses of $1.4 billion relating to Level 3 liabilities still held at September 30, 2021.

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 6. 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 months ended September 30, 2020.~~

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 — 9,600
Sales (9,838) — (9,838)
Settlements — (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

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

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 $ — $ 226
Total increase (decrease) in net realized/unrealized losses included in cost of products sold* 1 1,070 15 1,086
Purchases 11 — 17 28
Sales (32) — — (32)
Settlements — (521) — (521)
Transfers into Level 3 — 79 — 79
Transfers out of Level 3 — (31) — (31)
Ending balance, September 30, 2020 $ 7 $ 796 $ 32 $ 835

* Includes increase in unrealized losses of $1.1 billion relating to Level 3 liabilities still held at September 30, 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 6. Fair Value Measurements (Continued)~~

In some cases, the price components that result in differences between exchange-traded prices and local prices for inventories and commodity purchase and sale contracts are observable based upon available quotations for these pricing components, and in some cases, the differences are unobservable. These price components primarily include transportation costs and other adjustments required due to location, quality, or other contract terms. In the table below, these other adjustments are referred to as basis. The changes in unobservable price components are determined by specific local supply and demand characteristics at each facility and the overall market. Factors such as substitute products, weather, fuel costs, contract terms, and futures prices also impact the movement of these unobservable price components.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Fair Value Measurements (Continued)

The following table sets forth the weighted average percentage of the unobservable price components included in the Company’s Level 3 valuations as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The Company’s Level 3 measurements may include basis only, transportation cost only, or both price components. As an example, for Level 3 inventories with basis, the unobservable component as of ~~September 30, 2021~~March 31, 2022 is a weighted average ~~33.3%~~28.9% of the total price for assets and ~~14.5%~~13.9% of the total price for liabilities.


		Weighted Average % of Total Price									Weighted Average % of Total Price
		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
Component Type	Component Type	Assets		Liabilities		Assets		Liabilities		Component Type	Assets		Liabilities		Assets		Liabilities
Inventories and Related Payables	Inventories and Related Payables									Inventories and Related Payables
Basis	Basis	33.3	%	14.5	%	4.3	%	13.7	%	Basis	28.9	%	13.9	%	28.7	%	13.1	%
Transportation cost	Transportation cost	16.2	%	—	%	10.6	%	—	%	Transportation cost	11.4	%	—	%	13.0	%	—	%

Commodity Derivative Contracts	Commodity Derivative Contracts									Commodity Derivative Contracts
Basis	Basis	25.6	%	33.5	%	28.3	%	0.7	%	Basis	22.1	%	22.5	%	30.0	%	27.1	%
Transportation cost	Transportation cost	3.7	%	3.4	%	1.9	%	1.3	%	Transportation cost	9.1	%	2.6	%	8.1	%	0.7	%

In certain of the Company’s principal markets, the Company relies on price quotes from third parties to value its inventories and physical commodity purchase and sale contracts. These price quotes are generally not further adjusted by the Company in determining the applicable market price. In some cases, availability of third-party quotes is limited to only one or two independent sources. In these situations, absent other corroborating evidence, the Company considers these price quotes as 100% unobservable and, therefore, the fair value of these items is reported in Level 3.

Note 7.5. Derivative Instruments and Hedging Activities

Derivatives Not Designated as Hedging Instruments

The majority of the Company’s derivative instruments have not been designated as hedging instruments. The Company uses exchange-traded futures and exchange-traded and OTC options contracts to manage its net position of merchandisable agricultural product inventories and forward cash purchase and sales contracts to reduce price risk caused by market fluctuations in agricultural commodities and foreign currencies. The Company also uses exchange-traded futures and exchange-traded and OTC options contracts as components of merchandising strategies designed to enhance margins. The results of these strategies can be significantly impacted by factors such as the correlation between the value of exchange-traded commodities futures contracts and the value of the underlying commodities, counterparty contract defaults, and volatility of freight markets. Derivatives, including exchange-traded contracts and ~~physical~~forward commodity purchase or sale contracts, and inventories of certain merchandisable agricultural ~~product inventories,~~products, which include amounts acquired under deferred pricing contracts, are stated at fair value or market value. Inventory is not a derivative and therefore fair values of and changes in fair values of inventories are not included in the tables below.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 7.5. Derivative Instruments and Hedging Activities (Continued)

The following table sets forth the fair value of derivatives not designated as hedging instruments as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.


		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Assets		Liabilities		Assets		Liabilities			Assets		Liabilities		Assets		Liabilities
		(In millions)									(In millions)

Foreign Currency Contracts	Foreign Currency Contracts	$	328	$	139	$	283	$	270	Foreign Currency Contracts	$	437	$	190	$	217	$	116

Interest Rate Contracts										Interest Rate Contracts	2		1		—		—
Commodity Contracts	Commodity Contracts	1,448		1,607		2,764		2,034		Commodity Contracts	2,280		3,400		1,276		1,759
Debt Conversion Option	Debt Conversion Option	—		17		—		34		Debt Conversion Option	—		30		—		15
Total	Total	$	1,776	$	1,763	$	3,047	$	2,338	Total	$	2,719	$	3,621	$	1,493	$	1,890

The following tables set forth the pre-tax gains (losses) on derivatives not designated as hedging instruments that have been included in the consolidated statements of earnings for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.


						Other expense (income) - net																				Other expense (income) - net
				Cost of				Interest												Cost of								Interest
(In millions)	(In millions)	Revenues		products sold				expense						(In millions)		Revenues				products sold								expense
Three Months Ended September 30, 2021
Three Months Ended March 31, 2022																	Three Months Ended March 31, 2022
Consolidated Statement of Earnings	Consolidated Statement of Earnings	$	20,340	$	19,014			$	20			$	61						Consolidated Statement of Earnings	$	23,650			$	21,753			$	(33)			$	92

Pre-tax gains (losses) on:	Pre-tax gains (losses) on:																Pre-tax gains (losses) on:

Foreign Currency Contracts	Foreign Currency Contracts	$	13	$	(92)	$	62			$	—						Foreign Currency Contracts	$	(38)			$	443			$	23			$	—
Commodity Contracts	Commodity Contracts	—		214		—				—							Commodity Contracts	—				(1,101)				—				—
Debt Conversion Option	Debt Conversion Option	—		—		—				7							Debt Conversion Option	—				—				—				(15)
Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	13	$	122	$	62			$	7			$	204		Total gain (loss) recognized in earnings	$	(38)			$	(658)			$	23			$	(15)			$	(688)

Three Months Ended September 30, 2020
Three Months Ended March 31, 2021																	Three Months Ended March 31, 2021
Consolidated Statement of Earnings	Consolidated Statement of Earnings	$	15,126	$	14,084	$	282			$	100						Consolidated Statement of Earnings	$	18,893			$	17,345			$	(33)			$	87

Pre-tax gains (losses) on:	Pre-tax gains (losses) on:																Pre-tax gains (losses) on:
Foreign Currency Contracts	Foreign Currency Contracts	$	8	$	(77)	$	(85)			$	—						Foreign Currency Contracts	$	30			$	(262)			$	120			$	—
Commodity Contracts	Commodity Contracts	—		(272)		—				—							Commodity Contracts	—				(782)				—				—
Debt Conversion Option	Debt Conversion Option	—		—		—				(15)							Debt Conversion Option	—				—				—				(20)
Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	8	$	(349)	$	(85)			$	(15)			$	(441)		Total gain (loss) recognized in earnings	$	30			$	(1,044)			$	120			$	(20)			$	(914)

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 7. Derivative Instruments and Hedging Activities (Continued)~~

Other expense (income) - net
Cost of Interest
(In millions) Revenues products sold expense
Nine Months Ended September 30, 2021
Consolidated Statement of Earnings $ 62,159 $ 57,822 $ 36 $ 188
Pre-tax gains (losses) on:
Foreign Currency Contracts $ — $ (140) $ 137 $ —
Commodity Contracts — (1,241) — —
Debt Conversion Option — — — 17
Total gain (loss) recognized in earnings $ — $ (1,381) $ 137 $ 17 $ (1,227)
Nine Months Ended September 30, 2020
Consolidated Statement of Earnings $ 46,377 $ 43,276 $ 202 $ 270
Pre-tax gains (losses) on:
Foreign Currency Contracts $ 54 $ (738) $ (13) $ —
Commodity Contracts — 321 55 —
Debt Conversion Option — — — (15)
Total gain (loss) recognized in earnings $ 54 $ (417) $ 42 $ (15) $ (336)

Changes in the market value of inventories of certain merchandisable agricultural ~~product inventories,~~commodities, forward cash purchase and sales contracts, exchange-traded futures and exchange-traded and OTC options contracts are recognized in earnings immediately 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, and other (income) expense - net depending on the purpose of the contract.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Derivative Instruments and Hedging Activities (Continued)

Derivatives Designated as Cash Flow and Net Investment Hedging Strategies

The Company had certain derivatives designated as cash flow and net investment hedges as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

For derivative instruments that are designated and qualify as net investment hedges, foreign exchange gains and losses related to changes in foreign currency exchange rates are deferred in AOCI until the underlying investment is divested.

The Company uses cross-currency swaps and foreign exchange forwards designated as net investment hedges to protect the Company’s investment in a foreign subsidiary against changes in foreign currency exchange rates. The Company executed USD-fixed to Euro-fixed cross-currency swaps with an aggregate notional amount of ~~$1.3~~$0.8 billion and $1.2 billion as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and foreign exchange forwards with an aggregate notional amount of ~~$1.7~~$2.3 billion and ~~$1.8~~$2.6 billion as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had after-tax losses of ~~$82~~$24 million and ~~$202~~$44 million in AOCI, respectively, related to foreign exchange gains and losses from these net investment hedge transactions. The amount is deferred in AOCI until the underlying investment is divested.

For derivative instruments that are designated and qualify as highly-effective cash flow hedges (i.e., hedging the exposure to variability in expected future cash flow that is attributable to a particular risk), the gain or loss on the derivative instrument is reported as a component of AOCI and as an operating activity in the statement of cash flows, and is reclassified into earnings in the same line item affected by the hedged transaction ~~and~~ in the same period or periods during which the hedged transaction affects earnings. Hedge components excluded from the assessment of effectiveness and gains and losses related to discontinued hedges are recognized in the consolidated statement of earnings during the current period.

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 7. Derivative Instruments and Hedging Activities (Continued)~~

The Company’s structured trade finance programs use interest rate swaps designated as cash flow hedges to hedge the forecasted interest payments on certain letters of credit from banks. The terms of the interest rate swaps match the terms of the forecasted interest payments. The deferred gains and losses are recognized in revenues over the period in which the related interest payments are paid to the banks. The amounts are recorded in revenues as the ~~underlying commodity trade flows~~related results are also recorded in revenues. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had interest rate swaps maturing on various dates with aggregate notional amounts of ~~$0.2 billion and $3.3 billion, respectively.~~$1.0 billion.

The Company also uses swap locks designated as cash flow hedges to hedge the changes in the forecasted interest payments due to changes in the benchmark rate leading up to future bond issuance dates. The terms of the swap locks match the terms of the forecasted interest payments. The deferred gains and losses will be recognized in interest expense over the period in which the related interest payments will be paid. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company executed swap locks maturing on various dates with an aggregate notional amount of $400 ~~million and $550 million, respectively.~~million.

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had after-tax gains of ~~$44~~$49 million and ~~$31~~$35 million in AOCI, respectively, related to the interest rate swaps and ~~the~~ swap locks. The Company expects to recognize ~~this amount~~amounts deferred in AOCI in its consolidated ~~statements~~statement of earnings during the life of the debt instruments.

For each of the hedge programs described below, the derivatives are designated as cash flow hedges. The changes in the market value of such derivative contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. Once the hedged item is recognized in earnings, the gains and losses arising from the hedge are reclassified from AOCI to either revenues or cost of products sold, as applicable. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had after-tax gains of ~~$371~~$370 million and ~~$164~~$161 million in AOCI, respectively, related to gains and losses from these programs. The Company expects to recognize ~~$371~~$370 million of the ~~September 30, 2021~~March 31, 2022 after-tax gains in its consolidated ~~statements~~statement of earnings during the next 12 months.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5. Derivative Instruments and Hedging Activities (Continued)

The Company uses futures or options contracts to hedge the purchase price of anticipated volumes of corn to be purchased and processed in a future month. The objective of this hedging program is to reduce the variability of cash flows associated with the Company’s forecasted purchases of corn. The Company’s corn processing plants normally grind approximately 7265 million bushels of corn per month. From April 2020 to March 2021, the Company temporarily idled dry mill assets and was grinding approximately 56 million bushels of corn per month. In April 2021, the Company resumed ethanol production at its two corn dry mill facilities. During the past 12 months, the Company hedged between ~~23%~~17% and ~~34%~~42% of its monthly grind. At ~~September 30, 2021,~~March 31, 2022, the Company had designated hedges representing between 3%0% and ~~31%~~29% of its anticipated monthly grind of corn for the next 12 months.

The Company, from time to time, also uses futures, options, and swaps to hedge the sales price of certain ethanol sales contracts. The Company has established hedging programs for ethanol sales contracts that are indexed to unleaded gasoline prices and to various exchange-traded ethanol contracts. The objective of these hedging programs is to reduce the variability of cash flows associated with the Company’s sales of ethanol. During the past 12 months and as of ~~September 30, 2021,~~March 31, 2022, the Company had no hedges related to ethanol sales under these programs.

The Company uses futures and options contracts to hedge the purchase price of the anticipated volumes of soybeans to be purchased and processed in a future month for certain of its U.S. soybean crush facilities, subject to certain program limits. The Company also uses futures or options contracts to hedge the sales prices of ~~the~~ anticipated soybean meal and soybean oil sales proportionate to the soybean crushing process at these facilities, subject to certain program limits. During the past 12 months, the Company hedged between ~~27%~~57% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities. At ~~September 30, 2021,~~March 31, 2022, the Company had designated hedges representing between 0% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities over the next 12 months.

The Company uses futures and OTC swaps to hedge the purchase price of anticipated volumes of natural gas consumption in a future month for certain of its facilities in North America and Europe, subject to certain program limits. During the past 12 months, the Company hedged between ~~20%~~0% and ~~94%~~84% of the anticipated monthly natural gas consumption at the designated facilities. At ~~September 30, 2021,~~March 31, 2022, the Company had designated hedges representing between ~~10%~~0% and ~~96%~~95% of the anticipated monthly natural gas consumption over the next 12 months.

The following table sets forth the fair value of derivatives designated as hedging instruments as of March 31, 2022 and December 31, 2021.


	March 31, 2022				December 31, 2021
	Assets		Liabilities		Assets		Liabilities
	(In millions)
Commodity Contracts	$	126	$	—	$	86	$	—
Foreign Currency Contracts	24		48		21		$	75
Interest Rate Contracts	65		—		46		—
Total	$	215	$	48	$	153	$	75

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 7.5. Derivative Instruments and Hedging Activities (Continued)

~~The following table sets forth the fair value of derivatives designated as hedging instruments as of September 30, 2021 and December 31, 2020.~~

September 30, 2021 December 31, 2020
Assets Liabilities Assets Liabilities
(In millions)
Foreign Currency Contracts $ 9 $ 117 $ — $ 265
Interest Rate Contracts 58 1 61 15
Total $ 67 $ 118 $ 61 $ 280

The following table sets forth the pre-tax gains (losses) on derivatives designated as hedging instruments that have been included in the consolidated statements of earnings for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.


				Cost of products sold									Cost of products sold
(In millions)	(In millions)	Revenues				(In millions)	Revenues				Cost of products sold
Three Months Ended September 30, 2021
Three Months Ended March 31, 2022										Three Months Ended March 31, 2022
Consolidated Statement of Earnings	Consolidated Statement of Earnings	$	20,340	$	19,014					Consolidated Statement of Earnings	$	23,650	$	21,753

Effective amounts recognized in earnings	Effective amounts recognized in earnings									Effective amounts recognized in earnings
Pre-tax gains (losses) on:	Pre-tax gains (losses) on:									Pre-tax gains (losses) on:

Commodity Contracts	Commodity Contracts	$	—	$	122					Commodity Contracts	$	—	$	98

Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	—	$	122			$	122	Total gain (loss) recognized in earnings	$	—	$	98	$	98

Three Months Ended September 30, 2020
Three Months Ended March 31, 2021										Three Months Ended March 31, 2021
Consolidated Statement of Earnings	Consolidated Statement of Earnings	$	15,126	$	14,084					Consolidated Statement of Earnings	$	18,893	$	17,345

Effective amounts recognized in earnings	Effective amounts recognized in earnings									Effective amounts recognized in earnings
Pre-tax gains (losses) on:	Pre-tax gains (losses) on:									Pre-tax gains (losses) on:

Commodity Contracts	Commodity Contracts	$	1	$	79					Commodity Contracts	$	—	$	89
Interest Contracts	Interest Contracts	(14)		—						Interest Contracts	(14)		—

Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	(13)	$	79			$	66	Total gain (loss) recognized in earnings	$	(14)	$	89	$	75

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 7. Derivative Instruments and Hedging Activities (Continued)~~

Cost of products sold Interest expense
(In millions) Revenues
Nine Months Ended September 30, 2021
Consolidated Statement of Earnings $ 62,159 $ 57,822 $ 188
Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Commodity Contracts $ — $ 450 $ —
Interest Contracts (15) — —
Total gain (loss) recognized in earnings $ (15) $ 450 $ — $ 435
Nine Months Ended September 30, 2020
Consolidated Statement of Earnings $ 46,377 $ 43,276 $ 270
Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Commodity Contracts $ 9 $ 19 $ —
Interest Contracts (55) — (8)
Total gain (loss) recognized in earnings $ (46) $ 19 $ (8) $ (35)

Other Net Investment Hedging Strategies

The Company has designated ~~€1.8~~€2.6 billion and ~~€1.5~~€1.8 billion of its outstanding long-term debt and commercial paper borrowings at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, as hedges of its net investment in a foreign subsidiary. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had after-tax gains of ~~$11~~$113 million and ~~losses of $87~~$55 million in AOCI, respectively, related to foreign exchange gains and losses from these net investment hedge transactions. The amount is deferred in AOCI until the underlying investment is divested.

2721

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 8.6. Other Current Assets

The following table sets forth the items in other current assets:


		September 30,		December 31,			March 31,		December 31,
		2021		2020			2022		2021
		(In millions)					(In millions)

Unrealized gains on derivative contracts	Unrealized gains on derivative contracts	$	1,843	$	3,108	Unrealized gains on derivative contracts	$	2,934	$	1,646

Margin deposits and grain accounts	Margin deposits and grain accounts	580		500		Margin deposits and grain accounts	1,112		600
Customer omnibus receivable	Customer omnibus receivable	1,075		860		Customer omnibus receivable	1,539		1,179
Financing receivables - net (1)	Financing receivables - net (1)	154		297		Financing receivables - net (1)	233		189
Insurance premiums receivable	Insurance premiums receivable	17		35		Insurance premiums receivable	26		20
Prepaid expenses	Prepaid expenses	325		290		Prepaid expenses	377		370
Biodiesel tax credit	Biodiesel tax credit	40		101		Biodiesel tax credit	70		79
Tax receivables	Tax receivables	765		680		Tax receivables	764		708
Non-trade receivables (2)	Non-trade receivables (2)	270		218		Non-trade receivables (2)	421		285
Other current assets	Other current assets	151		135		Other current assets	241		82
		$	5,220	$	6,224		$	7,717	$	5,158

(1) The Company provides financing to certain suppliers, primarily Brazilian farmers, to finance a portion of the suppliers’ production costs. The amounts are reported net of allowances of $3$5 million and $4 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Interest earned on financing receivables of ~~$2 million and $8~~$4 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively and $4 million and $15 million for the three and nine months ended September 30, 2020,~~ respectively, is included in investment income in the consolidated statements of earnings.

(2) Non-trade receivables included ~~$28 million and $40~~$27 million of reinsurance recoverables as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

2822

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 9.7. Accrued Expenses and Other Payables

The following table sets forth the items in accrued expenses and other payables:


		September 30,		December 31,			March 31,		December 31,
		2021		2020			2022		2021
		(In millions)					(In millions)

Unrealized losses on derivative contracts	Unrealized losses on derivative contracts	$	1,881	$	2,584	Unrealized losses on derivative contracts	$	3,639	$	1,950
Accrued compensation	Accrued compensation	421		396		Accrued compensation	332		445
Income tax payable	Income tax payable	132		41		Income tax payable	211		132
Other taxes payable	Other taxes payable	154		127		Other taxes payable	178		168

Insurance claims payable	Insurance claims payable	207		238		Insurance claims payable	235		220
Contract liability	Contract liability	374		626		Contract liability	574		581

Other accruals and payables	Other accruals and payables	952		931		Other accruals and payables	1,194		1,294
		$	4,121	$	4,943		$	6,363	$	4,790

Note ~~10.~~8. Debt and Financing Arrangements

On ~~September 10, 2021,~~February 28, 2022, the Company issued its first sustainability bond of $750 million aggregate principal amount of ~~2.700% Notes~~2.900% notes due ~~September 15, 2051 (the “Notes”).~~March 1, 2032. Net proceeds before expenses were ~~$732~~$748 million.

~~In September 2021,~~ The Company expects to apply an amount equal to the ~~Company used the~~net proceeds ~~of the Notes~~ to ~~redeem $500 million aggregate principal amount of 2.750% notes due March 27, 2025 and recognized a debt extinguishment charge of $36 million in the quarter ended September 30, 2021.~~

~~On March 25, 2021, the Company issued, in a private placement transaction, €500 million aggregate principal amount of Fixed-to-Floating Rate Senior Notes due September 25, 2022.~~finance or refinance eligible green projects and/or eligible social projects.

At ~~September 30, 2021,~~March 31, 2022, the fair value of the Company’s long-term debt exceeded the carrying value by ~~$1.7~~$1.0 billion, as estimated using quoted market prices (a Level 2 measurement under applicable accounting standards).

At ~~September 30, 2021,~~March 31, 2022, the Company had lines of credit, including the accounts receivable securitization programs described below, totaling ~~$12.4~~$14.3 billion, of which ~~$10.5~~$8.2 billion was unused. OfDuring the ~~Company’s total lines of credit, $6.5 billion supported~~quarter ended March 31, 2022, the Company expanded its combined U.S. and European commercial paper borrowing programs from $5.0 billion to $6.5 billion under the same terms, against which there was no$0.7 billion commercial paper outstanding at March 31, 2022. During the quarter ended March 31, 2022, the Company also added $1.5 billion of short-term borrowings at an average interest rate of 1.64% due in September ~~30, 2021.~~2022.

The Company has accounts receivable securitization programs (the “Programs”). The Programs provide the Company with up to ~~$2.1~~$2.3 billion in funding resulting from the sale of accounts receivable with ~~$0.6 billion~~$24 million unused capacity as of ~~September 30, 2021~~March 31, 2022 (see Note 1614 for more information about the Programs).

2923

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~11.~~9. Income Taxes

The Company’s effective tax ~~rates~~rate was 16.3% for the three ~~and nine~~ months ended ~~September 30, 2021 were 18.4% and 15.8%, respectively,~~March 31, 2022 compared to ~~a benefit of 13.0% and an expense of 3.4%~~15.9% for the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021. The ~~low rate~~change in the ~~three months September 30, 2020 included the effects of the significant early debt retirement, the sale of a portion of the Company’s shares in Wilmar and~~rate was primarily due to changes in the ~~forecasted geographical~~geographic mix of ~~pretax earnings on the 2020 annual effective tax rate in that period.~~ The favorable tax rate in the nine months ended September 30, 2020 was due 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 maintenance expenses, and changes in the forecasted geographical mix of pretax earnings.

The Company is subject to income taxation and routine examinations in many jurisdictions around the world and frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various tax jurisdictions. In its routine evaluations of the exposure associated with various tax filing positions, the Company recognizes a liability, when necessary, for estimated potential tax owed by the Company in accordance with applicable accounting standards. Resolution of the related tax positions, through negotiations with relevant tax authorities or through litigation, may take years to complete. Therefore, it is difficult to predict the timing for resolution of tax positions and the Company cannot predict or provide assurance as to the ultimate outcome of these ongoing or future examinations. However, the Company does not anticipate that the total amount of unrecognized tax benefits will increase or decrease significantly in the next twelve months. Given the long periods of time involved in resolving tax positions, the Company does not expect that the recognition of unrecognized tax benefits will have a material impact on the Company’s effective income tax rate in any given period.

The Company’s subsidiary in Argentina, ADM Agro SRL (formerly ADM Argentina SA and Alfred C. Toepfer Argentina SRL), received tax assessments challenging transfer prices used to price grain exports for the tax years 1999 through ~~2011.~~2011 and 2014. As of ~~September 30, 2021,~~March 31, 2022, these assessments totaled $9$8 million in tax and ~~$39~~up to $36 million in interest (adjusted for variation in currency exchange rates). The Argentine tax authorities conducted a review of income and other taxes paid by large exporters and processors of cereals and other agricultural commodities resulting in allegations of income tax evasion. The Company strongly believes that it has complied with all Argentine tax laws. To date, the Company has not received assessments for closed years subsequent to ~~2011.~~2014. While the statute of limitations has expired for tax years 2012 and 2013, the Company cannot rule out receiving additional assessments challenging transfer prices used to price grain exports for years subsequent to ~~2013,~~2014, and estimates that these potential assessments could be approximately ~~$62~~$104 million in tax and ~~$35~~$42 million in interest (adjusted for variation in currency exchange rates as of ~~September 30, 2021)~~March 31, 2022). ~~In the second quarter of 2021, Argentine tax authorities initiated criminal tax proceedings related to the Argentine tax matters.~~ The Company believes that it has appropriately evaluated the transactions underlying these assessments, and has concluded, based on Argentine tax law, that its tax position would be sustained, and accordingly, has not recorded a tax liability for these assessments. In accordance with the accounting requirements for uncertain tax positions, the Company has not recorded an uncertain tax liability for this assessment because it has concluded that it is more likely than not to prevail on the matter based upon its technical merits and because the taxing jurisdiction’s process does not provide a mechanism for settling at less than the full amount of the assessment. The Company intends to vigorously defend its position against the current assessments and any similar assessments that may be issued for years subsequent to ~~2013.~~2014.

In 2014, the Company’s wholly-owned subsidiary in the Netherlands, ADM Europe B.V., received a tax assessment from the Netherlands tax authority challenging the transfer pricing aspects of a 2009 business reorganization, which involved two of its subsidiary companies in the Netherlands. As of ~~September 30, 2021,~~March 31, 2022, this assessment was ~~$94~~$90 million in tax and ~~$33~~$32 million in interest (adjusted for variation in currency exchange rates). ~~In September 2019, the Company received an interim decision on its appeal which directed the parties to work toward a settlement.~~ On April 23, 2020, the court issued an unfavorable ruling and in October 2020, assigned a third party expert to establish a valuation by early 2021. During the second quarter of 2021, the third party expert issued a final valuation. The Company expects the court to issue a ruling on this matter in the ~~first~~second quarter of 2022. Subsequent appeals may take an extended period of time and could result in additional financial impacts of up to the entire amount of the assessment. The Company has carefully ~~reviewed the valuation and~~ evaluated the underlying transactions and has concluded that the amount of gain recognized on the reorganization for tax purposes was appropriate. As of ~~September 30, 2021,~~March 31, 2022, the Company has accrued its best estimate of what it believes will be the likely outcome of the ~~litigation and will vigorously defend its position against the assessment.~~litigation.

3024

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~12.~~10. Accumulated Other Comprehensive Income

The following tables set forth the changes in AOCI by component for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and the reclassifications out of AOCI for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three months ended September 30, 2021											Three months ended March 31, 2022
		Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total			Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total
		(In millions)											(In millions)
Balance at June 30, 2021		$	(2,143)	$	328	$	(303)	$	(3)	$	(2,121)
Balance at December 31, 2021												Balance at December 31, 2021	$	(2,248)	$	225	$	(147)	$	(2)	$	(2,172)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(149)		197		5		6		59		Other comprehensive income (loss) before reclassifications	31		380		6		(5)		412
Gain (loss) on net investment hedges	Gain (loss) on net investment hedges	126		—		—		—		126		Gain (loss) on net investment hedges	123		—		—		—		123
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		(122)		8		—		(114)		Amounts reclassified from AOCI	—		(98)		31		—		(67)
Tax effect	Tax effect	(30)		(1)		5		—		(26)		Tax effect	(31)		(47)		(7)		—		(85)
Net of tax amount	Net of tax amount	(53)		74		18		6		45		Net of tax amount	123		235		30		(5)		383
Balance at September 30, 2021		$	(2,196)	$	402	$	(285)	$	3	$	(2,076)
Balance at March 31, 2022												Balance at March 31, 2022	$	(2,125)	$	460	$	(117)	$	(7)	$	(1,789)

		Nine months ended September 30, 2021
		Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total
		(In millions)
Balance at December 31, 2020		$	(2,424)	$	185	$	(365)	$	—	$	(2,604)
Other comprehensive income (loss) before reclassifications		14		693		12		4		723
Gain (loss) on net investment hedges		292		—		—		—		292
Amounts reclassified from AOCI		—		(435)		90		—		(345)
Tax effect		(78)		(41)		(22)		(1)		(142)
Net of tax amount		228		217		80		3		528
Balance at September 30, 2021		$	(2,196)	$	402	$	(285)	$	3	$	(2,076)

A~~rcher-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 12. Accumulated Other Comprehensive Income (Continued)~~


		Amount reclassified from AOCI										Amount reclassified from AOCI
		Three months ended September 30,				Nine months ended September 30,				Affected line item in the consolidated statements of earnings		Three months ended March 31,				Affected line item in the consolidated statements of earnings
Details about AOCI components	Details about AOCI components	2021		2020		2021		2020			Details about AOCI components	2022		2021
		(In millions)										(In millions)

Deferred loss (gain) on hedging activities	Deferred loss (gain) on hedging activities										Deferred loss (gain) on hedging activities
		$	—	$	13	$	15	$	46	Revenues		$	—	$	14		Revenues
		(122)		(79)		(450)		(19)		Cost of products sold		(98)		(89)			Cost of products sold

		—		—		—		8		Interest expense
		(122)		(66)		(435)		35		Total before tax		(98)		(75)			Total before tax
		29		19		108		5		Tax		19		21			Tax
		$	(93)	$	(47)	$	(327)	$	40	Net of tax		$	(79)	$	(54)		Net of tax

Pension liability adjustment	Pension liability adjustment										Pension liability adjustment
Amortization of defined benefit pension items:	Amortization of defined benefit pension items:										Amortization of defined benefit pension items:
Prior service credit		$	(4)	$	(9)	$	(71)	$	(25)	Other (income) expense-net
Prior service loss (credit)											Prior service loss (credit)	$	8	$	(6)		Other (income) expense-net
Actuarial losses	Actuarial losses	12		9		161		30		Other (income) expense-net	Actuarial losses	23		16			Other (income) expense-net
		8		—		90		5		Total before tax		31		10			Total before tax
		6		1		(20)		(10)		Tax		(6)		(4)			Tax
		$	14	$	1	$	70	$	(5)	Net of tax		$	25	$	6		Net of tax

The Company’s accounting policy is to release the income tax effects from AOCI when the individual units of account are sold, terminated, or extinguished.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~13.~~11. Other (Income) Expense - Net

The following table sets forth the items in other (income) expense:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2021		2020		2021		2020			2022		2021
		(In millions)									(In millions)
Gains on sales of assets	Gains on sales of assets	$	(7)	$	(68)	$	(46)	$	(132)	Gains on sales of assets	$	—	$	(11)
Debt extinguishment charges		36		396		36		410
Pension settlement		1		—		83		—

Other – net	Other – net	(10)		(46)		(37)		(76)		Other – net	(33)		(22)
Other (Income) Expense - Net	Other (Income) Expense - Net	$	20	$	282	$	36	$	202	Other (Income) Expense - Net	$	(33)	$	(33)

Gains on sales of assets in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 consisted of gains on the sale of certain assets and disposals of individually insignificant assets in the ordinary course of business. Gains on sales of assets in the three and nine months ended September 30, 2020 included gains related to the sale of a portion of the Company's shares in Wilmar, which decreased the Company’s ownership interest from 24.8% as of December 31, 2019 to 22.1% as of September 30, 2020, and net gains on the sale of certain other assets, and disposals of individually insignificant assets in the ordinary course of business.

Debt extinguishment charges in the current period were related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025. Debt extinguishment charges in the prior period were related to multiple early debt redemptions.

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 13. Other (Income) Expense - Net (Continued)~~

Pension settlement in the three and nine months ended September 30, 2021 was related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the Company’s ADM Retirement Plan and ADM Pension Plan for Hourly-Wage Employees to independent third parties.

Other - net ~~in the three and nine months ended September 30, 2021~~ included the non-service components of net pension benefit income of $1$6 million, ~~and $12 million, respectively,~~ foreign exchange gains, and other ~~expense. Other - net~~income in the three ~~and nine~~ months ended ~~September 30, 2020 included the non-service components of net pension benefit income of $7 million~~March 31, 2022 and $28 million, respectively, and other income. Other - net in the nine months ended September 30, 2020 also included loss provisions related to the Company’s futures commission and brokerage business and foreign exchange gains.2021.

Note ~~14.~~12. Segment Information

The Company’s operations are organized, managed, and classified into 3 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 segments, as defined by the applicable accounting standard, and are classified as Other Business.

Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on net sales less identifiable operating expenses. Also included in operating profit for each segment is equity in earnings of affiliates based on the equity method of accounting. Specified items included in total segment operating profit and certain corporate items are not allocated to the Company’s individual business segments because operating performance of each business segment is evaluated by management exclusive of these items. Corporate results principally include ~~the impact of LIFO-related adjustments,~~ unallocated corporate expenses and interest expense net of interest income. Corporate results also include revaluation gains and losses on cost method investments and the share of the results of equity investments in early-stage start-up companies that ADM Ventures has investments in.

For more information about the Company’s business segments, refer to Note 17 of “Notes to Consolidated Financial Statements” included in Item 8, “Financial Statements and Supplementary Data” included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

2021.

3326

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~14.~~12. Segment Information (Continued)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)	2022		2021
Gross revenues	Gross revenues									Gross revenues

Ag Services and Oilseeds	Ag Services and Oilseeds	$	16,410	$	13,415	$	51,148	$	40,196	Ag Services and Oilseeds	$	19,132	$	15,939
Carbohydrate Solutions	Carbohydrate Solutions	3,227		2,335		9,132		7,102		Carbohydrate Solutions	4,180		2,634
Nutrition	Nutrition	1,755		1,481		5,172		4,471		Nutrition	1,966		1,624
Other Business	Other Business	88		84		290		277		Other Business	107		100
Intersegment elimination	Intersegment elimination	(1,140)		(2,189)		(3,583)		(5,669)		Intersegment elimination	(1,735)		(1,404)
Total gross revenues	Total gross revenues	$	20,340	$	15,126	$	62,159	$	46,377	Total gross revenues	$	23,650	$	18,893

Intersegment sales	Intersegment sales									Intersegment sales

Ag Services and Oilseeds	Ag Services and Oilseeds	$	721	$	1,888	$	2,181	$	4,849	Ag Services and Oilseeds	$	879	$	932
Carbohydrate Solutions	Carbohydrate Solutions	361		271		1,223		708		Carbohydrate Solutions	814		411
Nutrition	Nutrition	58		30		179		112		Nutrition	42		61

Total intersegment sales	Total intersegment sales	$	1,140	$	2,189	$	3,583	$	5,669	Total intersegment sales	$	1,735	$	1,404

Revenues from external customers	Revenues from external customers									Revenues from external customers

Ag Services and Oilseeds	Ag Services and Oilseeds									Ag Services and Oilseeds
Ag Services	Ag Services	$	9,899	$	7,352	$	32,860	$	22,930	Ag Services	$	11,847	$	10,146
Crushing	Crushing	2,842		2,317		8,411		7,035		Crushing	3,222		2,742
Refined Products and Other	Refined Products and Other	2,948		1,858		7,696		5,382		Refined Products and Other	3,184		2,119
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	15,689		11,527		48,967		35,347		Total Ag Services and Oilseeds	18,253		15,007
Carbohydrate Solutions	Carbohydrate Solutions									Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	1,972		1,574		5,563		4,769		Starches and Sweeteners	2,498		1,745
Vantage Corn Processors	Vantage Corn Processors	894		490		2,346		1,625		Vantage Corn Processors	868		478
Total Carbohydrate Solutions	Total Carbohydrate Solutions	2,866		2,064		7,909		6,394		Total Carbohydrate Solutions	3,366		2,223
Nutrition	Nutrition									Nutrition
Human Nutrition	Human Nutrition	808		719		2,410		2,161		Human Nutrition	958		754
Animal Nutrition	Animal Nutrition	889		732		2,583		2,198		Animal Nutrition	966		809
Total Nutrition	Total Nutrition	1,697		1,451		4,993		4,359		Total Nutrition	1,924		1,563

Other Business	Other Business	88		84		290		277		Other Business	107		100

Total revenues from external customers	Total revenues from external customers	$	20,340	$	15,126	$	62,159	$	46,377	Total revenues from external customers	$	23,650	$	18,893

3427

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~14.~~12. Segment Information (Continued)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(In millions)	(In millions)	2021		2020		2021		2020		(In millions)	2022		2021
Segment operating profit	Segment operating profit									Segment operating profit

Ag Services and Oilseeds	Ag Services and Oilseeds	$	618	$	436	$	1,965	$	1,271	Ag Services and Oilseeds	$	1,008	$	777
Carbohydrate Solutions	Carbohydrate Solutions	213		246		855		509		Carbohydrate Solutions	317		259
Nutrition	Nutrition	176		147		531		447		Nutrition	189		154
Other Business	Other Business	(5)		20		10		69		Other Business	42		9
Specified Items:	Specified Items:									Specified Items:
Gains (losses) on sales of assets and businesses(1)		—		57		22		80
Gains on sales of assets and businesses										Gains on sales of assets and businesses	1		—
Impairment, restructuring, and settlement charges~~(2)~~(1)	Impairment, restructuring, and settlement charges~~(2)~~(1)	(2)		(2)		(133)		(60)		Impairment, restructuring, and settlement charges~~(2)~~(1)	(18)		(94)

Total segment operating profit	Total segment operating profit	1,000		904		3,250		2,316		Total segment operating profit	1,539		1,105
Corporate	Corporate	(347)		(704)		(948)		(1,189)		Corporate	(268)		(281)

Earnings before income taxes	Earnings before income taxes	$	653	$	200	$	2,302	$	1,127	Earnings before income taxes	$	1,271	$	824

(1) Current year-to-date gains consisted of gains on the sale of certain assets. Prior quarter and year-to-date gains consisted of a gain on the sale of a portion of the Company’s shares in Wilmar and certain other assets.

~~(2)~~ ~~Current quarter charges were related to restructuring. Current year-to-date~~ charges related to the impairment of certain ~~long-lived~~Ukraine assets ~~restructuring, and a legal~~partially offset by an insurance settlement. Prior quarter ~~and year-to-date~~ charges were related to the impairment of certain long-lived assets, restructuring, and a legal settlement.

Note ~~15.~~13. Asset Impairment, Exit, and Restructuring Costs

Asset impairment, exit, and restructuring costs in the three months ended ~~September 30, 2021~~March 31, 2022 consisted of $2 million of restructuring charges, presented as specified items within segment operating profit. Asset impairment, exit, and restructuring costs in the nine months ended September 30, 2021 consisted of $54 million of impairments related to certain long-lived assets and $26 million of restructuring charges, presented as specified items within segment operating profit, and $4 million of restructuring charges in Corporate.

~~Long-lived assets held for sale with a net book value of $0.1 billion were not considered impaired as of September 30, 2021.~~immaterial charges.

Asset impairment, exit, and restructuring costs in the three months ended ~~September 30, 2020~~March 31, 2021 consisted of individually insignificant long-lived asset impairments of $3 million and restructuring charges of $1 million. Asset impairment, exit, and restructuring costs in the nine months ended September 30, 2020 consisted of $50$31 million of impairments related to certain ~~intangible and other~~ long-lived assets and ~~$11~~$23 million of restructuring ~~charges.~~charges, presented as specified items within segment operating profit, and $5 million of restructuring charges in Corporate.

Note ~~16.~~14. 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 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 received a cash payment up to 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 ~~$1.5~~$1.6 billion ~~an increase from $1.2 billion as of December 31, 2020,~~ for the accounts receivable transferred. The First Program terminates on May 18, 2022, unless extended.

A~~rcher-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 16. 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 certain of the purchased accounts receivable to each of the Second Purchasers together with a security interest in all of its right, title, and interest in the remaining purchased accounts receivable. In exchange, ADM Ireland Receivables receives a cash payment of up to ~~$0.6~~$0.7 billion (€~~0.5~~0.6 billion) for the accounts receivables transferred. The Second Program terminates on February ~~14, 2022,~~16, 2023, 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~~acts as a servicer for the transferred ~~receivables, other than collection and administrative responsibilities.~~receivables. At ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 14. Sale of Accounts Receivable (Continued)

As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the fair value of trade receivables transferred to the Purchasers under the Programs and derecognized from the Company’s consolidated balance sheets was ~~$1.5~~$2.3 billion and ~~$1.6~~$2.2 billion, respectively. Total receivables sold were ~~$36.7~~$14.3 billion and ~~$24.9~~$12.1 billion for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. Cash collections from customers on receivables sold were ~~$34.2~~$13.7 billion and ~~$24.2~~$10.5 billion for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. Of the amount in the nine months ended September 30, 2020, $6.7 billion were cash collections on the deferred receivables consideration reflected as cash inflows from investing activities for the nine months ended September 30, 2020. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, receivables pledged as collateral to the Purchasers were ~~$1.1~~$0.8 billion and ~~$0.4~~$0.5 billion, respectively.

Under the Programs’ previous structure, the Company’s risk of loss following the transfer of accounts receivable was limited to the deferred receivables consideration outstanding. The Company carried the deferred receivables consideration at fair value determined by calculating the expected amount of cash to be received and was 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 was not subject to significant risks other than delinquencies and credit losses on accounts receivable transferred under the Programs which had historically been insignificant.

Transfers of receivables under the Programs resulted in an expense for the loss on sale of $2$5 million and $8$4 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~respectively, and $2 million and $7 million for the three and nine months ended September 30, 2020,~~ 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 reflected~~All cash flows ~~related to~~under the ~~deferred receivables consideration as investing activities in its consolidated statements of cash flows. All other cash flows~~Programs 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.

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 17. Subsequent Events~~

In October 2021, the Company executed acquisition and investment agreements with a total aggregate consideration of approximately $0.7 billion. In addition, the Company executed an agreement to sell its ethanol production complex in Peoria, Illinois with a book value of approximately $0.1 billion, which will have an immaterial impact on operating results. These transactions are expected to close before December 31, 2021, subject to the satisfaction of customary closing conditions and regulatory approval.

3729

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 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.

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 1412 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements”.

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

•the ~~announcement~~acquisition in ~~March 2021~~February 2022 of Comhan, a ~~new ADM policy to protect forests, biodiversity and communities, furthering the Company’s commitment to sustainable, ethical, and responsible production;~~leading South African flavor distributor;

•the announcement in April ~~2021~~2022 of ~~the resumption of dry mill ethanol production;~~

•~~the acquisition in April 2021 of Golden Farm Production & Commerce Company Limited;~~

•~~the announcement in May 2021 of ADM’s participation as~~ a ~~signatory to the German Charter for Diversity~~growth investment in the ~~Workplace which aims to advance the recognition and inclusion of diversity~~Company’s oilseed facility in ~~companies;~~

•the announcement in May 2021 of a 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,Mainz, Germany, which is expected to be ~~open~~completed in Q3 2023;

•the announcement in ~~June 2021~~April 2022 of ~~ADM Ventures,~~a $300 million investment in Decatur, IL to expand alternative protein production and the ~~corporate venture capital arm~~opening of ~~ADM, joining the Genesis Consortium,~~ a ~~global alliance of venture capital firms~~new, state-of-the-art protein innovation center; and ~~corporations dedicated to supporting startups that leverage biology to promote human and planetary health;~~

•the announcement in ~~July 2021 of an agreement to purchase, subject to regulatory approvals, Sojaprotein for $0.4 billion, a leading European provider of non-GMO soy ingredients;~~

•~~the announcement in August 2021 of an agreement to form a joint venture with Marathon Petroleum Corp. for the production of soybean oil to supply rapidly growing demand for renewable diesel fuel;~~

•~~the acquisition in September 2021~~April 2022 of a ~~75% majority stake in P4, premier providers of private label pet treats and supplements;~~

•~~the announcement in September 2021 of a memorandum of understanding with LG Chem, a leading global diversified chemical company,~~commitment to ~~explore US-based production of lactic acid to meet growing demand for a wide variety of plant-based products, including bioplastics, through the creation of two joint ventures;~~

•~~the unveiling in September 2021 of a state-of-the-art, fully automated flavor production facility situated in Pinghu, Zhejiang Province, China;~~

•the announcement in October 2021 of an agreement with Qingdao Vland Biotech Group Co., Ltd., a leading producer of enzymes and probiotics, to form a joint venture, subject to regulatory approval, to manufacture and sell human probiotics to serve growing Chinese demand;

•~~the announcement in October 2021 of an agreement to sell the Company’s ethanol production complex in Peoria, Illinois to BioUrja Group;~~

•the announcement in October 2021 of an equity investment in Acies Bio, a Slovenia-based biotechnology company specializing in research and development and manufacturing services for developing and scaling synthetic biology and precision fermentation technologies for food, agriculture, and industrial applications; and

achieve 100% deforestation-free supply chains by 2025, five years earlier than previously targeted.

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

•~~the announcement~~Sustainability is a key driver in ~~October 2021~~ADM’s expanding portfolio of ~~a memorandum of understanding with Gevo, Inc., a pioneer in transforming renewable energy into low carbon, energy-dense liquid hydrocarbons,~~environmentally responsible, plant-derived products. Consumers today increasingly expect their food and drink to ~~support the production of up~~come from sustainable ingredients, produced by companies that share their values, and ADM is continually finding new ways to ~~500 million gallons of sustainable aviation fuel and other low carbon-footprint hydrocarbon fuels.~~meet those needs through its portfolio actions.

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

The Productivity pillar includes (1) advancing the roles of the Company’s Centers of Excellence in procurement, supply chain, and operations to 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 include expansions and investments in (1) improving the customer experience, including leveraging producer relationships and enhancing the use of state-of-the-art 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, 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)

Environmental and Social Responsibility

The Company’s ~~new~~ policy to protect forests, biodiversity, and communities includes provisions that promote conservation of water resources and biodiversity in agricultural landscapes, promote solutions to reduce climate change and greenhouse gas emissions, and support agriculture as a means to advance sustainable development by reducing poverty and increasing food security. Additionally, the policy confirms ADM’s commitment to protect human rights defenders, whistleblowers, complainants, and community spokespersons; ADM’s aspiration to cooperate with all parties necessary to enable access to fair and just remediation; and the Company’s non-compliance protocol for suppliers. By the end of 2022, the Company expects to achieve full traceability of its direct and indirect sourcing throughout its soy supply chains in Brazil, Paraguay, and Argentina. ADM aims to eliminate deforestation from all of the Company’s supply chains by ~~2030.~~2025.

In 2020, ADM announced ~~new~~its environmental stewardship goals, collectively called “Strive 35” – an ambitious plan to, by 2035, reduce absolute Scope 1 and 2 greenhouse gas (GHG) emissions by 25 percent from a 2019 baseline, reduce energy intensity by 15 percent, reduce water intensity by 10 percent, and achieve a 90 percent landfill diversion ~~rate, as part of an aggressive plan~~rate.

In 2021, ADM added 5-year interim targets to ~~continue~~ensure the Company stays on track to meet its 2035 goals. By 2025, the Company aims to reduce absolute GHG emissions by 1.5%, reduce energy and water intensity by 6% and 5%, respectively, and achieve 87% of its waste diverted from landfill.

In 2021, the ~~Company’s environmental footprint.~~Company announced its Scope 3 GHG reduction goal, focused upon the five most material Scope 3 categories for the Company; purchased goods and services; fuel and energy related emissions; upstream transportation and distribution; waste; and processing of solid products/goods. ADM aims to reduce its absolute Scope 3 emissions by 25% from a 2019 baseline by 2035.

Operating Performance Indicators

The Company is exposed to certain risks inherent to an agricultural-based commodity business. These risks are further described in Part I Item 1A, “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021 and in Part II Item 1A “Risk Factors” on page 44.

The Company’s Ag Services and Oilseeds operations are principally agricultural commodity-based businesses where changes in

selling prices move in relationship to changes in prices of the commodity-based agricultural raw materials. As a result, changes in agricultural commodity prices have relatively equal impacts on both revenues and cost of products sold. Therefore, changes in revenues of these businesses do not necessarily correspond to changes in margins or gross profit. Thus, gross margins per volume or metric ton are more meaningful than gross margins as percentage of revenues.

The Company’s Carbohydrate Solutions operations and Nutrition businesses also utilize agricultural commodities (or products derived from agricultural commodities) as raw materials. However, in these operations, agricultural commodity market price changes do not necessarily correlate to changes in cost of products sold. Therefore, changes in revenues of these businesses may correspond to changes in margins or gross profit. Thus, gross margin rates are more meaningful as a performance indicator in these businesses.

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

The Company has consolidated subsidiaries in more than 70 countries. For the majority of the Company’s subsidiaries located outside the United States, the local currency is the functional currency except for certain significant subsidiaries in Switzerland where Euro is the functional currency, and Brazil and Argentina where U.S. dollar is the functional currency. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the weighted average exchange rates for the applicable periods. For the majority of the Company’s business activities in Brazil and Argentina, the functional currency is the U.S. dollar; however, certain transactions, including taxes, occur in local currency and require remeasurement to the functional currency. Changes in revenues are expected to be correlated to changes in expenses reported by the Company caused by fluctuations in the exchange rates of foreign currencies, primarily the Euro, British pound, Canadian dollar, and Brazilian real, as compared to the U.S. dollar. Effective April 1, 2022, the Company changed the functional currency of its Turkish entities to the U.S. dollar which is not expected to have a material impact on the Company’s consolidated financial statements.

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

The Company measures its performance using key financial metrics including net earnings, gross margins, segment operating profit, adjusted segment operating profit, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted EBITDA, manufacturing expenses, selling, general, and administrative expenses, return on invested capital, ~~EBITDA,~~and economic value ~~added, manufacturing expenses,~~added. Some of these metrics are not defined by accounting principles generally accepted in the United States and ~~selling, general,~~should be considered in addition to, and ~~administrative expenses.~~not in lieu of, GAAP financial measures. For more information, see “Non-GAAP Financial Measures” on page 38. The Company’s financial results can vary significantly due to changes in factors such as fluctuations in energy prices, weather conditions, crop plantings, government programs and policies, trade policies, changes in global demand, general global economic conditions, changes in standards of living, ~~and~~ global production of similar and competitive ~~crops.~~crops, and geopolitics. Due to these unpredictable factors, the Company undertakes no responsibility for updating any forward-looking information contained within “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Operations in Ukraine and Russia

ADM employs approximately 650 people in Ukraine and operates an oilseeds crushing plant, a grain port terminal, inland and river silos, and a trading office. Most of the facilities have been temporarily idled since February 24, 2022. The Company’s footprint in Russia is limited and operations have been recently scaled down to those related to the production and transport of essential food commodities and ingredients.

On February 24, 2022, Russian troops invaded Ukraine. While the Company’s Ukraine and Russian operations have historically represented less than 0.1% of consolidated revenues, the direct and indirect impacts of the ongoing military action could negatively affect ADM’s future operating results. The conflict in Ukraine has created disruptions in global supply chains and is expected to create dislocations of key agricultural commodities. The indirect impact of these dislocations on the Company’s operating results will be a function of a number of variables including supply and demand responses from the rest of the world as well as the length of the conflict and the condition of the agricultural industry and export infrastructure after the conflict ends. For more information, refer to Part II, Item 1A, “Risk Factors”.

As of March 31, 2022, ADM’s assets in Ukraine consisted primarily of current assets that were less than 1% of the Company’s total current assets. Of the total current assets in Ukraine, 79% were inventories that represented less than 2% of ADM’s total inventories.

Market Factors Influencing Operations or Results in the Three Months Ended ~~September 30, 2021~~March 31, 2022

The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, ~~North~~tight global stocks driven by a short crop in South America ~~origination was impacted by widening elevation margins~~ and ~~Hurricane Ida impacting export execution.~~good global demand drove commodity prices higher. The conflict in Ukraine resulted in even tighter global stocks of commodities and created high volatility which had a positive impact on South American origination prices. Global Trade results were driven by tight supply, strong destination marketing volumes ~~were~~and margins, and firm ocean freight rates. North American origination was negatively impacted by ~~low farmer selling activity. Ocean freight rates remain high due to increased global demand and~~weather-related supply ~~chain bottlenecks.~~disruption. Crushing margins benefited from strong protein and renewable diesel demand and tight ~~soybean and canola/rapeseed~~oilseeds stocks. Refined oil margins were driven by strong oil demand ~~declining global oil stocks, and increased biofuels consumption.~~with volatile energy markets driving premiums up. In Carbohydrate Solutions, ~~margins~~demand in starches and sweeteners ~~were negatively impacted by~~was strong with margins remaining fairly steady on higher corn basis cost while demand remained steady. Ethanol demand and margins were negatively impacted early in the quarter due to the limited availability of affordable corn but improved when the North American corn harvest started. Increased corn prices drove ethanol industry production volumes lower causing stocks on hand to decline.input costs. Domestic ethanol demand ~~remained steady in~~improved significantly from the ~~quarter,~~prior year, but ~~slightly~~remained below pre-pandemic levels. Industry production of ethanol returned to pre-pandemic levels, with ethanol margins under pressure due to persistently high industry stocks. Corn milling margins benefited from strong co-product results, as prices for oil and feed products rose in line with higher underlying corn prices. Corn costs were volatile and higher, in part due to a relatively low projected corn stocks-to-use ratio and uncertainty caused by the conflict in Ukraine and other inflationary pressures. Nutrition benefited from overall strong demand in various product categories. In Human Nutrition, demand for flavors, flavor systems, specialty proteins, bioactives, and fibers ~~were strong.~~was strong, but increased energy and raw material costs adversely impacted results. In Animal Nutrition, ~~weak demand and higher input costs as a result of COVID-19 in South America were partially offset by the growing demand in complete food for petfood. Amino~~amino acids pricing and margins improved due to a tighter global supply environment.

~~Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020~~

~~Net earnings attributable to controlling interests increased $301 million from $225 million to $526 million. Segment operating profit increased $96 million from $904 million to $1.0 billion. Included~~ Growing demand in ~~segment operating profit in the current quarter were restructuring charges of $2 million. Included in segment operating profit in the prior year quarter~~complete food for petfood was ~~net income of $55 million consisting of gains related to the sale of a portion of the Company’s shares in Wilmar and certain other assets of $57 million,~~ partially offset by ~~asset impairment, restructuring,~~weak demand in other product lines with some customers cutting products out of formulation due to increased ingredient, freight, and settlement charges of $2 million. Adjusted segment operating profit increased $153 million to $1.0 billion due primarily to higher results in Crushing, Refined Products and Other, Vantage Corn Processors, and Human and Animal Nutrition, partially offset by lower results in Ag Services, Starches and Sweeteners, and Other Business, and lower equity earnings from the Wilmar investment. Corporate results were a net charge of $347 million in the current quarter compared to a net charge of $704 million in the prior year quarter. Corporate results in the current quarter included early debt retirement charges of $36 million, a mark-to-market gain of $7 million on the conversion option of the exchangeable bonds issued in August 2020, expenses related to an acquisition of $3 million, and a pension settlement charge of $1 million. Corporate results in the prior year quarter included early debt retirement charges of $396 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 $6 million.energy costs.

4032

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

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Net earnings attributable to controlling interests increased $0.4 billion from $0.7 billion to $1.1 billion. Segment operating profit increased $0.4 billion from $1.1 billion to $1.5 billion and included a net charge of $17 million consisting of asset impairment, restructuring, and settlement charges of $18 million and a gain on sale of assets of $1 million. Included in segment operating profit in the prior year quarter was $94 million of asset impairment, restructuring, and legal settlement charges. Adjusted segment operating profit (a non-GAAP measure) increased $0.4 billion to $1.6 billion due primarily to higher results in all businesses except in Vantage Corn Processors. Corporate results in the current quarter were a net charge of $268 million and included a mark-to-market loss of $15 million on the conversion option of the exchangeable bonds issued in August 2020. Corporate results in the prior year quarter were a net charge of $281 million and included a mark-to-market loss of $20 million on the conversion option of the exchangeable bonds issued in August 2020 and a restructuring charge of $5 million.

Income tax expense increased ~~$146~~$76 million to ~~$120~~$207 million. The ~~Company’s~~ effective tax rate for the quarter ended ~~September 30, 2021~~March 31, 2022 was ~~an expense of 18.4%~~16.3% compared to ~~a benefit of 13.0%~~15.9% for the quarter ended ~~September 30, 2020.~~March 31, 2021. The ~~low prior year quarter~~change in the rate ~~included the effects of the significant early debt retirement, the sale of a portion of the Company’s shares in Wilmar, and~~was due primarily to changes in the ~~forecasted geographical~~geographic mix of ~~pretax earnings on the 2020 annual effective tax rate in that period.~~earnings.

Analysis of Statements of Earnings

Processed volumes by product for the quarter are as follows (in metric tons):


		Three Months Ended				Three Months Ended
		September 30,				March 31,
(In thousands)	(In thousands)	2021	2020	Change	(In thousands)	2022	2021	Change
Oilseeds	Oilseeds	8,509	8,970	(461)	Oilseeds	8,491	8,960	(469)
Corn	Corn	5,051	4,084	967	Corn	4,812	3,650	1,162
Total	Total	13,560	13,054	506	Total	13,303	12,610	693

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 decrease in oilseeds processed volumes iswas primarily related to ~~scheduled downtime at multiple facilities~~decreased crush rates resulting from the decline in ~~North America during~~global demand for canola oil and the ~~quarter.~~indefinite shutdown of a Ukraine facility since February 2022. The overall increase in corn iswas primarily related to ~~the idling of~~ two dry mill facilities ~~in the second quarter of~~that were idled since April 2020 ~~in response to the challenging operating environment. The Company~~and restarted ~~these idled facilities~~ in April 2021, partially offset by the sale of the Peoria, IL facility in November 2021.

~~Revenues by segment for the quarter are as follows:~~

Three Months Ended
September 30,
2021 2020 Change
(In millions)
Ag Services and Oilseeds
Ag Services $ 9,899 $ 7,352 $ 2,547
Crushing 2,842 2,317 525
Refined Products and Other 2,948 1,858 1,090
Total Ag Services and Oilseeds 15,689 11,527 4,162
Carbohydrate Solutions
Starches and Sweeteners 1,972 1,574 398
Vantage Corn Processors 894 490 404
Total Carbohydrate Solutions 2,866 2,064 802
Nutrition
Human Nutrition 808 719 89
Animal Nutrition 889 732 157
Total Nutrition 1,697 1,451 246
Other Business 88 84 4
Total $ 20,340 $ 15,126 $ 5,214

4133

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

Revenues by segment for the quarter are as follows:


	Three Months Ended
	March 31,
	2022		2021		Change
	(In millions)












Ag Services and Oilseeds
Ag Services	$	11,847	$	10,146	$	1,701
Crushing	3,222		2,742		480
Refined Products and Other	3,184		2,119		1,065
Total Ag Services and Oilseeds	18,253		15,007		3,246

Carbohydrate Solutions
Starches and Sweeteners	2,498		1,745		753
Vantage Corn Processors	868		478		390
Total Carbohydrate Solutions	3,366		2,223		1,143

Nutrition
Human Nutrition	958		754		204
Animal Nutrition	966		809		157
Total Nutrition	1,924		1,563		361

Other Business	107		100		7

Total	$	23,650	$	18,893	$	4,757

Revenues and cost of products sold in ~~a commodity~~agricultural 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~~market price changes which generally result in an insignificant impact to gross profit.

Revenues increased ~~$5.2~~$4.8 billion to ~~$20.3~~$23.7 billion due to higher sales prices ($~~5.6~~4.6 billion) and higher sales volumes ($0.2 billion). Higher sales prices of oils, corn, soybeans, animal feeds, wheat, biodiesel, farming materials, alcohol, and flour, and higher volumes of alcohol and milled rice, were partially offset by lower sales volumes of oils and wheat. Ag Services and Oilseeds revenues increased 22% to $18.3 billion due to higher sales prices ($3.6 billion) partially offset by lower sales volumes ($0.4 billion). Higher sales prices of animal feeds, alcohol, biodiesel, meal, oils, corn, soybeans, and wheat, and higher volumes of wheat and cotton, were partially offset by lower sales volumes of soybeans. Ag Services and Oilseeds revenues increased 36% to $15.7 billion due to higher sales prices ($4.8 billion) partially offset by lower sales volumes ($0.60.3 billion). Carbohydrate Solutions revenues increased ~~39%~~51% to ~~$2.9~~$3.4 billion due to higher sales prices ($0.7 billion) and higher sales volumes ($~~0.1~~0.4 billion). despite the loss of USD-grade industrial alcohol volumes from the divested Peoria, IL facility. Nutrition revenues increased ~~17%~~23% to ~~$1.7~~$1.9 billion due to higher sales prices ($~~0.1~~0.3 billion) and higher sales volumes ($0.1 billion).

Cost of products sold increased ~~$4.9~~$4.4 billion to ~~$19.0~~$21.8 billion due principally to higher average commodity costs. Manufacturing expenses increased ~~$0.2~~$0.3 billion to ~~$1.6~~$1.7 billion due principally to higher energy costs, maintenance, and operating ~~supplies, storage and warehousing, and salaries and benefits.~~supplies.

Foreign currency translation ~~increased~~decreased revenues and cost of products sold by ~~$0.2 billion.~~$0.5 billion and $0.4 billion, respectively.

Gross profit increased ~~$0.3 billion~~$349 million or ~~27%~~23%, to ~~$1.3~~$1.9 billion due principally to higher results in ~~Crushing~~Ag Services and Oilseeds ($~~223~~182 million), ~~Refined Products~~Starches and Sweeteners ($106 million), Nutrition ($82 million), and Other ($~~103 million), and Nutrition ($56~~13 million), partially offset by lower results in ~~Ag Services~~Vantage Corn Processors ($~~53 million), Carbohydrate Solutions ($35 million) and Other ($7~~33 million). These factors are explained in the segment operating profit discussion on page ~~44.~~37.

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

Selling, general, and administrative expenses increased ~~$84~~$80 million to ~~$720~~$829 million due primarily to higher ~~salaries~~IT expenses and ~~benefits~~insurance costs, increased provisions for bad debt, and ~~IT expenses.~~

amortization of intangibles from new acquisitions.

Asset impairment, exit, and restructuring costs decreased $2$58 million to $2$1 million. Charges in the current quarter were not material. Charges in the prior year quarter consisted of $2$31 million of impairments related to certain long-lived assets and $23 million of restructuring charges, presented as specified items within segment operating ~~profit. Charges in the prior year quarter consisted~~profit, and $5 million of ~~individually insignificant long-lived asset impairments of $3 million and~~ restructuring charges ~~of $1 million.~~in Corporate.

Equity in earnings of unconsolidated affiliates ~~decreased $50~~increased $79 million to ~~$110~~$204 million due primarily to ~~lower~~higher earnings from the Company’s investments in Wilmar, Almidones Mexicanos S.A., ~~Olenex Sarl,~~ SoyVen, and ~~Hungrana Ltd., partially offset by higher earnings from the Company’s investment in~~ Stratas Foods LLC.

Investment income increased $46 million to $59 million due primarily to revaluation gains of ~~$20~~$34 million ~~was comparable~~and interest income of $11 million related to a tax item in the ~~prior period.~~current quarter.

Interest expense ~~decreased $39~~increased $5 million to ~~$61~~$92 million due to ~~lower~~higher debt balances and interest ~~rates and the favorable liability management actions taken in the prior year.~~related to a tax item. Interest expense in the current quarter also included a $7$15 million mark-to-market ~~gain~~loss adjustment related to the conversion option of the exchangeable bonds issued in August 2020, compared to a ~~$15~~$20 million mark-to-market loss adjustment in the prior year quarter.

Other ~~expense - net decreased $262~~income-net of $33 million was comparable to ~~$20 million. Expense~~the prior period. Income in the current quarter included ~~charges~~the non-service components of ~~$36 million related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025~~net pension benefit income, foreign exchange gains, and other ~~expense, partially offset by~~income. Income in the prior year quarter included gains on ~~the sale of certain assets and~~ disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, ~~and~~ foreign exchange gains. Expense in the prior year quarter included charges of $396 million related to multiple early debt redemptions, partially offset by a $58 million gain on the sale of a portion of the Company’s shares in Wilmar, gains, ~~on the sales of certain other assets, the non-service components of net pension benefit income,~~ and other income.

4235

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

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


		Three Months Ended							Three Months Ended
		September 30,							March 31,
Segment Operating Profit (Loss)	Segment Operating Profit (Loss)	2021		2020		Change		Segment Operating Profit (Loss)	2022		2021		Change
		(In millions)							(In millions)

Ag Services and Oilseeds	Ag Services and Oilseeds							Ag Services and Oilseeds
Ag Services	Ag Services	$	36	$	147	$	(111)	Ag Services	$	258	$	209	$	49
Crushing	Crushing	280		66		214		Crushing	428		382		46
Refined Products and Other	Refined Products and Other	236		127		109		Refined Products and Other	198		101		97
Wilmar	Wilmar	66		96		(30)		Wilmar	124		85		39
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	618		436		182		Total Ag Services and Oilseeds	1,008		777		231

Carbohydrate Solutions	Carbohydrate Solutions							Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	178		257		(79)		Starches and Sweeteners	316		222		94
Vantage Corn Processors	Vantage Corn Processors	35		(11)		46		Vantage Corn Processors	1		37		(36)
Total Carbohydrate Solutions	Total Carbohydrate Solutions	213		246		(33)		Total Carbohydrate Solutions	317		259		58

Nutrition	Nutrition							Nutrition
Human Nutrition	Human Nutrition	139		128		11		Human Nutrition	141		128		13
Animal Nutrition	Animal Nutrition	37		19		18		Animal Nutrition	48		26		22
Total Nutrition	Total Nutrition	176		147		29		Total Nutrition	189		154		35

Other Business	Other Business	(5)		20		(25)		Other Business	42		9		33

Specified Items:	Specified Items:							Specified Items:
Gains (losses) on sales of assets and businesses		—		57		(57)
Asset impairment and restructuring charges		(2)		(2)		—
Gains on sales of assets and businesses								Gains on sales of assets and businesses	1		—		1
Asset impairment, restructuring, and settlement charges								Asset impairment, restructuring, and settlement charges	(18)		(94)		76

Total Specified Items	Total Specified Items	(2)		55		(57)		Total Specified Items	(17)		(94)		77

Total Segment Operating Profit	Total Segment Operating Profit	$	1,000	$	904	$	96	Total Segment Operating Profit	$	1,539	$	1,105	$	434

Adjusted Segment Operating Profit(1)	Adjusted Segment Operating Profit(1)	$	1,002	$	849	$	153	Adjusted Segment Operating Profit(1)	$	1,556	$	1,199	$	357

Segment Operating Profit	Segment Operating Profit	$	1,000	$	904	$	96	Segment Operating Profit	$	1,539	$	1,105	$	434
Corporate	Corporate	(347)		(704)		357		Corporate	(268)		(281)		13
Earnings Before Income Taxes	Earnings Before Income Taxes	$	653	$	200	$	453	Earnings Before Income Taxes	$	1,271	$	824	$	447

(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)~~

Ag Services and Oilseeds operating profit increased 42%. Ag Services executed well in a challenging environment, including a rapid return to operation after Hurricane Ida. Overall results were significantly lower versus the prior-year quarter driven by net negative timing effects that should reverse in coming quarters and a $54 million insurance settlement recorded in the prior-year quarter and lower export volumes caused by Hurricane Ida. Global trade continued its strong performance. Crushing had substantially higher year-over-year results. The business executed well, delivering stronger margins in a dynamic environment that included strong demand for vegetable oil to support existing food customers as well as increasing production of renewable diesel. Results were also driven by net positive timing effects in the current quarter. Refined Products and Other results were significantly higher than the prior-year period, driven by positive timing effects that are expected to reverse in future quarters, along with strong execution in Europe, Middle East, and Africa (EMEA) and North American biodiesel and strong refining premiums due to demand for renewable diesel and foodservice recovery in North America. Equity earnings from Wilmar were lower versus the third quarter of 2020.

Carbohydrate Solutions operating profit decreased 13%. Starches and Sweeteners, including ethanol production from the wet mills, managed through dynamic market conditions, optimizing mix between sweeteners and ethanol production through the quarter. Year-over-year results were significantly lower primarily due to higher input costs. Vantage Corn Processors results were much higher versus the third quarter of 2020, supported by the resumption of production at the two dry mills and improved fuel ethanol margins, particularly late in the quarter.

~~Nutrition operating profit increased 20%~~. Human Nutrition results were higher than the prior-year quarter. Higher volume and improved product mix, with particular strength in beverage, drove support strong flavor results in EMEA and North America, partially offset by lower results in Asia Pacific (APAC). Specialty ingredients continued to benefit from strong demand for alternative proteins, offset by some higher costs. Health and wellness results were higher on robust sales growth in bioactives and fiber. Animal Nutrition results were higher year-over-year, driven primarily by strength in amino acids as well as feed additives and ingredients, partially offset by higher costs in Latin America and slower demand recovery in APAC.

~~Other Business operating profit decreased 125% driven primarily by captive insurance underwriting losses, most of which were offset by corresponding recoveries in other business segments.~~

~~Corporate results for the quarter are as follows:~~

Three Months Ended
September 30,
2021 2020 Change
(In millions)
Interest expense-net $ (66) $ (83) $ 17
Unallocated corporate costs (231) (196) (35)
Expenses related to acquisitions (3) — (3)
Debt extinguishment charges (36) (396) 360
Gain (loss) on debt conversion option 7 (15) 22
Asset impairment, restructuring, and settlement charges (1) (6) 5
Other income (charges) (17) (8) (9)
Total Corporate $ (347) $ (704) $ 357

4436

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

Ag Services and Oilseeds operating profit increased 30%. Ag Services and Oilseeds delivered substantially higher year-over-year results, effectively managing risk and executing well in a dynamic environment of robust global demand and tight supply, driven primarily by the short South American crop. Ag Services results were significantly higher versus the first quarter of 2021. Global trade results were higher, driven by strong performances in destination marketing and global ocean freight. North American origination margins and volumes were lower year-over-year, including negative timing effects. Crushing was higher year over year in a strong global margin environment driven by robust protein and vegetable oil demand. Improving margins in the quarter resulted in negative timing effects versus positive timing effects in the prior-year quarter.Refined Products and Other results were much higher than the prior-year quarter, driven by healthy refining premiums and good refined oils demand in North America, as well as strong biodiesel margins in Europe, Middle East, and Africa (EMEA) biodiesel as well as healthy refining premiums and good demand in North American refined oils. Equity earnings from Wilmar were significantly higher versus the first quarter of 2021.

Carbohydrate Solutions operating profit increased 22%. Carbohydrate Solutions delivered results that were substantially higher year-over-year. Starches and Sweeteners, including ethanol production from the wet mills, delivered much higher results versus the prior-year quarter, driven by higher corn co-product revenues and improved citric acid profits in North America; higher volumes and margins in EMEA; and higher volumes and margins in wheat milling. Sales volumes for starches and sweeteners continued their recovery. The biosolutions platform continued to deliver revenue growth as demand for plant-based products expands into more diverse applications. Vantage Corn Processors delivered solid execution margins but position losses on ethanol inventory as prices fell early in the quarter drove lower results versus the prior-year quarter, which benefited from demand for USP-grade industrial alcohol from the Peoria facility that was divested in November 2021.

Nutrition operating profit increased 23%. Nutrition delivered strong revenue growth of 23% and maintained healthy margins, driving substantially higher results. Human Nutrition delivered higher year-over-year results. Flavors continued to deliver solid revenue growth, offset by some higher costs. Strong sales growth in alternative proteins, including contribution from the Sojaprotein acquisition, and positive currency timing impacts in South America, offset some higher operating costs to help deliver better year-over-year results in Specialty Ingredients. Health and Wellness was also higher year-over-year, powered by probiotics, including contribution from the November 2021 Deerland Probiotics and Enzymes acquisition, and robust demand for fiber. Animal Nutrition profits were nearly double the prior-year quarter, due primarily to strength in amino acids, which was driven by a combination of product mix changes, improved North American demand and global supply chain disruptions.

Other Business operating profit increased $33 million, driven primarily by better performance in captive insurance, including reduced claim settlements versus the prior-year quarter.

Corporate results were a net charge of $347 million in the current quarter compared to a net charge of $704 million in the prior year quarter. Interest expense-net decreased $17 million due to lower interest rates and the favorable liability management actions taken in the prior year. Unallocated corporate costs increased $35 million due primarily to higher IT operating and project-related costs and the continued cost centralization in procurement, supply chain, and operations. Acquisition expenses were related to the P4 acquisition. Debt extinguishment charges in the current quarter were related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025. Debt extinguishment charges in the prior year quarter were related to multiple early debt redemptions. Gain (loss) on debt conversion option was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Other charges in the current quarter included railroad repairs and maintenance expenses of $31 million, partially offset by an investment revaluation gain of $9 million, the non-service components of net pension benefit income of $1 million, and other income. Other charges in the prior year quarter included railroad maintenance expenses of $28 million, partially offset by an investment revaluation gain of $4 million, the non-service components of net pension benefit income of $7 million, and other income.

~~Non-GAAP Financial Measures~~

The Company uses adjusted earnings per share (EPS), adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and adjusted segment operating profit, non-GAAP financial measures as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance. These performance measures are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.

~~Adjusted EPS is defined as diluted EPS adjusted~~ for the ~~effects on reported diluted EPS of specified items. Adjusted EBITDA is defined~~quarter are as earnings before interest, taxes, depreciation, and amortization, adjusted for specified items. The Company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.follows:

Management believes that adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are useful measures of the Company’s performance because they provide investors additional information about the Company’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. Adjusted EPS, adjusted EBITDA, and adjusted segment operating profit are not intended to replace or be an alternative to diluted EPS, earnings before income taxes, and segment operating profit, respectively, the most directly comparable amounts reported under GAAP.


	Three Months Ended
	March 31,
	2022		2021		Change
	(In millions)

Interest expense-net	$	(76)	$	(64)	$	(12)
Unallocated corporate costs	(209)		(202)		(7)
Loss on sale of assets	(3)		—		(3)
Expenses related to acquisitions	(2)		—		(2)

Loss on debt conversion option	(15)		(20)		5
Restructuring adjustment (charges)	1		(5)		6
Other income	36		10		26
Total Corporate	$	(268)	$	(281)	$	13

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

~~The table below provides a reconciliation of diluted EPS to adjusted EPS for the three months ended September 30, 2021 and 2020.~~

Three months ended September 30,
2021 2020
In millions Per share In millions Per share
Average number of shares outstanding - diluted 566 562
Net earnings and reported EPS (fully diluted) $ 526 $ 0.93 $ 225 $ 0.40
Adjustments:
(Gains) losses on sales of assets and businesses - net of tax of $3 million in 2020 (1)
— — (54) (0.10)
Debt extinguishment charges - net of tax of $9 million in 2021 and $96 million in 2020 (1)
27 0.05 300 0.53
(Gain) loss on debt conversion option - net of tax of $0 (1)
(7) (0.01) 15 0.03
Asset impairment, restructuring, and settlement charges - net of tax of $0 million in 2021 and $3 million in 2020 (1)
3 0.01 5 0.01
Expenses related to acquisitions - net of tax of $1 million in 2021 2 — — —
Certain discrete tax adjustments (3) (0.01) 8 0.02
Total adjustments 22 0.04 274 0.49
Adjusted net earnings and adjusted EPS $ 548 $ 0.97 $ 499 $ 0.89

~~(1)~~ ~~Tax effected using the U.S. and other applicable tax rates.~~

~~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 30, 2021 and 2020.~~

Three months ended
September 30,
(In millions) 2021 2020 Change
Earnings before income taxes $ 653 $ 200 $ 453
Interest expense 61 100 (39)
Depreciation and amortization 247 238 9
(Gains) losses on sales of assets and businesses — (57) 57
Debt extinguishment charges 36 396 (360)
Expenses related to acquisitions 3 — 3
Railroad maintenance expenses 31 28 3
Asset impairment, restructuring, and settlement charges 3 8 (5)
Adjusted EBITDA $ 1,034 $ 913 $ 121
Three months ended
September 30,
(In millions) 2021 2020 Change
Ag Services and Oilseeds $ 711 $ 527 $ 184
Carbohydrate Solutions 297 323 (26)
Nutrition 230 201 29
Other Business (3) 21 (24)
Corporate (201) (159) (42)
Adjusted EBITDA $ 1,034 $ 913 $ 121

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

~~Market Factors Influencing Operations or Results in the Nine Months Ended September 30, 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 origination volumes benefited from strong export demand early in the year while South American origination volumes were impacted by the delayed harvest and low farmer selling activity. Crushing margins benefited from strong demand and tight soybean and canola/rapeseed stocks. Demand for refined oils was strong, driven by the regional lifting of COVID-19 restrictions in the U.S. and demand for renewable green diesel. In Carbohydrate Solutions, margins in starches and sweeteners were solid despite softer sweetener demand early in the year due to continued COVID-19 restrictions. Starch demand continued to be robust. Co-product prices were strong. Ethanol demand remained steady as COVID-19 restrictions were lifted regionally. Ethanol margins were volatile initially supported by improving domestic demand, then challenged in the summer months prior to harvest due to limited availability of corn. Nutrition benefited from overall strong demand in various product categories. In Human Nutrition, demand for flavors, flavor systems, specialty proteins, bioactives, and fibers were strong. In Animal Nutrition, weak demand and higher input costs as a result of COVID-19 in South America were partially offset by the growing demand in complete food for petfood. Amino acids pricing and margins improved due to a tighter global supply environment.

~~Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020~~

Net earnings attributable to controlling interests increased $0.8 billion to $1.9 billion. Segment operating profit increased $0.9 billion to $3.3 billion. Included in segment operating profit in the current period was a net charge of $111 million consisting of asset impairment, restructuring, and settlement charges of $133 million, partially offset by gains on the sale of certain assets of $22 million. Included in segment operating profit in the prior period was net income of $20 million consisting of gains on the sale of a portion of the Company’s shares in Wilmar and certain other assets of $80 million, partially offset by asset impairment, restructuring, and settlement charges of $60 million. Adjusted segment operating profit increased $1.1 billion to $3.4 billion due primarily to higher results in Crushing, Refined Products and Other, Carbohydrate Solutions, and Human and Animal Nutrition, partially offset by lower results in Ag Services and Other Business, and lower equity earnings from the Wilmar investment. Corporate results were a net charge of $0.9 billion in the current period compared to $1.2 billion in the prior period. Corporate results in the current period included a pension settlement charge of $83 million, early debt retirement charges of $36 million, a mark-to-market gain of $17 million on the conversion option of the exchangeable bonds issued in August 2020, expenses related to an acquisition of $3 million, 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 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.

Income taxes of $364 million increased $326 million. The Company’s effective tax rate for the nine months ended September 30, 2021 was 15.8% compared to 3.4% for the nine months ended September 30, 2020. The favorable 2020 tax rate was due 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, and changes in the forecasted geographical mix of pretax earnings. The 45G railroad tax credits have an offsetting impact in cost of products sold.

~~Analysis of Statements of Earnings~~

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

Nine Months Ended
September 30,
(In thousands) 2021 2020 Change
Oilseeds 26,247 27,236 (989)
Corn 13,743 13,717 26
Total 39,990 40,953 (963)

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

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

Nine Months Ended
September 30,
2021 2020 Change
(In millions)
Ag Services and Oilseeds
Ag Services $ 32,860 $ 22,930 $ 9,930
Crushing 8,411 7,035 1,376
Refined Products and Other 7,696 5,382 2,314
Total Ag Services and Oilseeds 48,967 35,347 13,620

Carbohydrate Solutions
Starches and Sweeteners 5,563 4,769 794
Vantage Corn Processors 2,346 1,625 721
Total Carbohydrate Solutions 7,909 6,394 1,515
Nutrition
Human Nutrition 2,410 2,161 249
Animal Nutrition 2,583 2,198 385
Total Nutrition 4,993 4,359 634
Other Business 290 277 13
Total $ 62,159 $ 46,377 $ 15,782

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 increased $15.8 billion to $62.2 billion due to higher sales prices ($16.0 billion) partially offset by lower sales volumes ($0.2 billion). Higher sales prices of animal feed, alcohol, biodiesel, meal, oils, corn, soybeans, wheat, and corn by products and higher sales volumes of wheat, cotton, and barley, were partially offset by lower sales volumes of meal, oils, and soybeans. Ag Services and Oilseeds revenues increased 39% to $49.0 billion due to higher sales prices ($13.5 billion) and higher sales volumes ($0.1 billion). Carbohydrate Solutions revenues increased 24% to $7.9 billion due to higher sales prices ($1.8 billion), partially offset by lower sales volumes ($0.3 billion). Nutrition revenues increased 15% to $5.0 billion due to higher sales prices ($0.7 billion).

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

Cost of products sold increased $14.5 billion to $57.8 billion due principally to 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 effective January 1, 2020. Manufacturing expenses increased $0.3 billion to $4.5 billion due principally to higher energy costs, maintenance, storage and warehousing, operating supplies, salaries and benefits, and contracted labor, partially offset by lower railroad maintenance expenses.

~~Foreign currency translation impacts increased revenues and cost of goods sold by $1.0 billion.~~

Gross profit increased $1.2 billion or 40% to $4.3 billion due to higher results in Ag Services and Oilseeds ($746 million), Carbohydrate Solutions ($333 million), Nutrition ($148 million), and Other ($49 million). These factors are explained in the segment operating profit discussion on page 51. In Corporate, the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020 had a positive impact on gross profit of $91 million in the prior period.

Selling, general, and administrative expenses increased $0.3 billion to $2.2 billion due principally to higher salaries and benefits, performance-based compensation accruals, IT expenses, and a legal settlement.

Asset impairment, exit, and restructuring costs increased $23 million to $84 million. Charges in the current period consisted of $54 million of impairments related to certain long-lived assets and $26 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 $50 million of impairments related to certain intangible and other long-lived assets and $11 million of restructuring charges.

Equity in earnings of unconsolidated affiliates decreased $5 million to $398 million due to lower earnings from the Company’s investments in Wilmar, Olenex Sarl, SoyVen, and Hungrana Ltd., partially offset by higher earnings from the Company’s investment in Stratas Foods LLC.

Investment income decreased $11 million to $83 million due to lower interest rates on segregated funds in the Company’s futures commission and brokerage business, partially offset by a $49 million investment revaluation gain in the current period compared to a $23 million investment revaluation gain in the prior period.

Interest expense decreased $82 million to $188 million due to lower interest rates and the favorable liability management actions taken in the prior year. Interest expense in the current period also included a $17 million mark-to-market gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020 compared to a $15 million mark-to-market loss adjustment in the prior period.

Other expense - net decreased $166 million to $36 million. Expense in the current quarter included a non-cash pension settlement charge of $83 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the Company’s ADM Retirement Plant and ADM Pension Plan for Hourly-Wage Employees, charges of $36 million related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025, and other expense, partially offset by gains on the sale of certain assets and disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and foreign exchange gains. Expense in the prior period included charges of $410 million related to multiple early debt redemptions and loss provisions related to the Company’s futures commission and brokerage business, partially offset by gains related to the sale of a portion of the Company’s shares in Wilmar and certain other assets, the non-service components of net pension benefit income, foreign exchange gains, and other income.

~~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 months are as follows:~~

Nine Months Ended
September 30,
Segment Operating Profit (Loss) 2021 2020 Change
(In millions)
Ag Services and Oilseeds
Ag Services $ 435 $ 482 $ (47)
Crushing 812 249 563
Refined Products and Other 467 286 181
Wilmar 251 254 (3)
Total Ag Services and Oilseeds 1,965 1,271 694

Carbohydrate Solutions
Starches and Sweeteners 706 533 173
Vantage Corn Processors 149 (24) 173
Total Carbohydrate Solutions 855 509 346
Nutrition
Human Nutrition 429 372 57
Animal Nutrition 102 75 27
Total Nutrition 531 447 84
Other Business 10 69 (59)
Specified Items:
Gains (losses) on sales of assets and businesses 22 80 (58)
Asset impairment, restructuring, and settlement charges (133) (60) (73)
Total Specified Items (111) 20 (131)
Total Segment Operating Profit $ 3,250 $ 2,316 $ 934
Adjusted Segment Operating Profit(1)
$ 3,361 $ 2,296 $ 1,065
Segment Operating Profit $ 3,250 $ 2,316 $ 934
Corporate (948) (1,189) 241
Earnings Before Income Taxes $ 2,302 $ 1,127 $ 1,175

~~(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)~~

Ag Services and Oilseeds operating profit increased 55%. Ag Services results were lower than the prior year period. In North America, strong Chinese demand and favorable positions in a dynamic pricing environment delivered significantly higher results. South American origination results were significantly lower due to decreased farmer selling activity versus the prior year period and the effects from the slightly delayed harvest and higher freight costs. Global Trade results were impacted by negative timing effects related to ocean freight positions which are expected to reverse in the coming quarters. Crushing results were significantly higher due to strong softseed crush margins driven by tight supplies and negative timing impacts in the prior year period. Refined Products and Other results were higher year-over-year on stronger margins in North America and Europe, Middle East, Africa, and India (EMEAI), partially offset by impacts related to the reduction in Brazilian biodiesel mandates. Equity earnings from Wilmar were lower versus the prior year period.

Carbohydrate Solutions operating profit increased 68%. Starches and Sweeteners results, including ethanol production from the wet mills, were significantly higher than the prior year period. The business managed risk well, capitalizing on rising prices in the ethanol complex and favorable co-product values in an industry environment of improving margins, falling inventories, and higher input costs. Corn oil results significantly improved from the prior year period, which had been impacted by significant mark-to-market effects. Demand for flour by the foodservice sector remained below the prior year period. Vantage Corn Processors results were substantially higher, driven by improved margins on the distribution of fuel ethanol and strong performance in USP-grade alcohol and the resumption of production at the two dry mills.

Nutrition operating profit increased 19%. Human Nutrition results were higher than the prior year period. Flavors results were up, driven by strong sales across various market segments. In North America and EMEAI, the flavors business delivered strong volumes and improved product mix, particularly in the beverage segment. Specialty Ingredients delivered strong sales growth in specialty proteins, though results were negatively impacted by the effects of pantry loading in the prior year period, normalization of prices in the wholesale ingredients business, COVID-related shifts in demand across the portfolio, and higher costs. Health and Wellness results were strong, with robust demand driving strong results in probiotics and fibers. Animal Nutrition results were higher on favorable results in amino acids, driven by improved margins and product mix, partially offset by lower demand and higher input costs as a result of pandemic effects in South America.

Other Business operating profit decreased 86% primarily due to lower underwriting results from the captive insurance operations, most of which were offset by corresponding recoveries in other business segments.

~~Corporate results for the nine months are as follows:~~

Nine Months Ended
September 30,
2021 2020 Change
(In millions)
LIFO credit (charge) $ — $ 91 $ (91)
Interest expense-net (200) (246) 46
Unallocated corporate costs (681) (579) (102)
Expenses related to acquisitions (3) — (3)
Debt extinguishment charges (36) (410) 374
Gain (loss) on debt conversion option 17 (15) 32
Impairment, restructuring, and settlement charges (87) (5) (82)
Other income (charges) 42 (25) 67
Total Corporate $ (948) $ (1,189) $ 241

5137

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

Corporate results were a net charge of ~~$0.9 billion~~$268 million in the current ~~period~~quarter compared to ~~$1.2 billion in the prior period. The elimination~~a net charge of ~~the LIFO reserve in connection with the accounting change effective January 1, 2020 resulted in a credit of $91~~$281 million in the prior ~~period.~~year quarter. Interest expense-net ~~decreased $46~~increased $12 million due ~~principally~~ to ~~lower~~higher debt balances and interest ~~rates and the favorable liability management actions taken in the prior year.~~related to a tax item. Unallocated corporate costs increased ~~$102~~$7 million due primarily to higher ~~variable performance-related compensation expense accruals, the continued cost centralization in procurement, supply chain,~~IT operating and ~~operations,~~project-related costs and ~~additional investments in IT and related projects. Acquisition expenses were related to the P4 acquisition. Debt extinguishment charges~~higher costs in the ~~current period were related to the early redemption~~Company’s centers of ~~$500 million aggregate principal amount of 2.750% notes due in March 2025. Debt extinguishment charges in the prior period were related to multiple early debt redemptions. Gain (loss)~~excellence, partially offset by lower incentive compensation accruals. Loss on debt conversion option was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Impairment, restructuring, and settlement charges in the current period included a non-cash pension settlement charge of $83 million related to the purchase of group annuity contracts that irrevocably transferred the future benefit obligations and annuity administration for certain salaried and hourly retirees and terminated vested participants under the Company’s ADM Retirement Plant and ADM Pension Plan for Hourly-Wage Employees to independent third parties, and restructuring charges. Other income in the current ~~period~~quarter included the non-service components of net pension benefit income of ~~$12~~$6 million and an investment revaluation gain of ~~$49~~$34 million, ~~and other income,~~ partially offset by ~~railroad maintenance expenses of $34 million.~~foreign exchange losses. Other ~~charges~~income in the prior ~~period~~year quarter included ~~railroad maintenance expenses of $101 million that had an offsetting benefit in income tax expense, partially offset by an investment revaluation gain of $23 million, and~~ the non-service components of net pension benefit income of ~~$28~~$6 million and ~~other income.~~

foreign exchange gains.

Non-GAAP Financial Measures

The Company uses adjusted ~~EPS,~~earnings per share (EPS), adjusted EBITDA, and adjusted segment operating profit, non-GAAP financial measures as defined by the Securities and Exchange Commission, to evaluate the Company’s financial performance. These performance measures are not defined by accounting principles generally accepted in the United States and should be considered in addition to, and not in lieu of, GAAP financial measures.

Adjusted EPS is defined as diluted EPS adjusted for the effects on reported diluted EPS of specified items. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, and amortization, adjusted for specified items. The Company calculates adjusted EBITDA by removing the impact of specified items and adding back the amounts of interest expense and depreciation and amortization to earnings before income taxes. Adjusted segment operating profit is segment operating profit adjusted, where applicable, for specified items.

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

The table below provides a reconciliation of diluted EPS to adjusted EPS for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.


		Nine months ended September 30,								Three months ended March 31,
		2021				2020						2022				2021
		In millions		Per share		In millions		Per share				In millions		Per share		In millions		Per share
Average number of shares outstanding - diluted	Average number of shares outstanding - diluted	566				563					Average number of shares outstanding - diluted	568				564

Net earnings and reported EPS (fully diluted)	Net earnings and reported EPS (fully diluted)	$	1,927	$	3.41	$	1,085	$	1.93		Net earnings and reported EPS (fully diluted)	$	1,054	$	1.86	$	689	$	1.22
Adjustments:	Adjustments:										Adjustments:
LIFO charge (credit) - net of tax of $22 million (1)		—		—		(69)		(0.12)
(Gains) losses on sales of assets and businesses - net of tax of $5 million in 2021 and $8 million in 2020 (2)		(17)		(0.03)		(72)		(0.13)
Asset impairment, restructuring, and settlement charges - net of tax of $53 million in 2021 and $16 million in 2020 (2)		167		0.30		49		0.09
Expenses related to acquisitions - net of tax of $1 million (2)		2		—		—		—
Debt extinguishment charges - net of tax of $9 million in 2021 and $99 million in 2020 (2)		27		0.05		311		0.55
Gain (loss) on debt conversion option - net of tax of $0 (2)		(17)		(0.03)		15		0.03
Losses on sales of assets and businesses - net of tax of $0 million in 2022(1)											Losses on sales of assets and businesses - net of tax of $0 million in 2022(1)	2		—		—		—
Loss on debt conversion option - net of tax of $0 (1)											Loss on debt conversion option - net of tax of $0 (1)	15		0.03		20		0.04
Asset impairment, restructuring, and settlement charges - net of tax of $3 million in 2022 and $25 million in 2021 (1)											Asset impairment, restructuring, and settlement charges - net of tax of $3 million in 2022 and $25 million in 2021 (1)	14		0.02		74		0.13
Expenses related to acquisitions - net of tax of $1 million in 2022 (1)											Expenses related to acquisitions - net of tax of $1 million in 2022 (1)	1		—		—		—
Certain discrete tax adjustments	Certain discrete tax adjustments	(4)		(0.01)		16		0.03			Certain discrete tax adjustments	(4)		(0.01)		—		—
Total adjustments	Total adjustments	158		0.28		250		0.45			Total adjustments	28		0.04		94		0.17
Adjusted net earnings and adjusted EPS	Adjusted net earnings and adjusted EPS	$	2,085	$	3.69	$	1,335	$	2.38		Adjusted net earnings and adjusted EPS	$	1,082	$	1.90	$	783	$	1.39

(1)~~Tax effected using the Company’s U.S. tax rate. LIFO accounting was discontinued effective January 1, 2020.~~

~~(2)~~ Tax effected using the U.S. and other applicable tax rates.

5338

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 ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.


		Nine months ended							Three months ended
		September 30,							March 31,
(In millions)	(In millions)	2021		2020		Change		(In millions)	2022		2021		Change
Earnings before income taxes	Earnings before income taxes	$	2,302	$	1,127	$	1,175	Earnings before income taxes	$	1,271	$	824	$	447
Interest expense	Interest expense	188		270		(82)		Interest expense	92		87		5
Depreciation and amortization	Depreciation and amortization	739		727		12		Depreciation and amortization	257		249		8
LIFO		—		(91)		91
(Gains) losses on sales of assets and businesses		(22)		(80)		58
Debt extinguishment charges		36		410		(374)
Expenses related to acquisitions		3		—		3
Railroad maintenance expenses		34		101		(67)
Losses on sales of assets and businesses								Losses on sales of assets and businesses	2		—		2
Expenses related to acquisition								Expenses related to acquisition	2		—		2
Asset impairment, restructuring, and settlement charges	Asset impairment, restructuring, and settlement charges	220		65		155		Asset impairment, restructuring, and settlement charges	17		99		(82)
Adjusted EBITDA	Adjusted EBITDA	$	3,500	$	2,529	$	971	Adjusted EBITDA	$	1,641	$	1,259	$	382

		Nine months ended							Three months ended
		September 30,							March 31,
(In millions)	(In millions)	2021		2020		Change		(In millions)	2022		2021		Change

Ag Services and Oilseeds	Ag Services and Oilseeds	$	2,243	$	1,543	$	700	Ag Services and Oilseeds	$	1,096	$	871	$	225
Carbohydrate Solutions	Carbohydrate Solutions	1,106		745		361		Carbohydrate Solutions	396		342		54

Nutrition	Nutrition	692		617		75		Nutrition	254		209		45

Other Business	Other Business	15		75		(60)		Other Business	44		11		33

Corporate	Corporate	(556)		(451)		(105)		Corporate	(149)		(174)		25

Adjusted EBITDA	Adjusted EBITDA	$	3,500	$	2,529	$	971	Adjusted EBITDA	$	1,641	$	1,259	$	382

5439

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 ~~provided by~~used in operating activities was ~~$5.9~~$1.2 billion for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~a use~~cash provided of ~~$1.5~~$0.3 billion for the same period last year. Working capital changes ~~as described below increased~~decreased cash by $2.8 billion for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to a decrease of ~~$3.8~~$0.9 billion for the same period last 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.

~~Inventories decreased approximately $0.4~~year. Trade receivables increased $0.9 billion due to ~~lower~~higher revenues. Inventories increased approximately $2.9 billion due to higher inventory ~~volumes~~prices partially offset by ~~higher~~lower inventory ~~prices.~~volumes. Other current assets increased $2.1 billion primarily due to increases in contracts and futures gains and margin deposits and grain accounts. Brokerage payables increased approximately ~~$2.2~~$2.5 billion due to increased customer ~~segregated~~ trading ~~activity. Trade~~activity in the Company’s futures commission and brokerage business. Accrued expenses and other payables increased ~~approximately $0.2~~$1.4 billion ~~principally reflecting seasonal cash payments for North American harvest-related grain purchases.~~

~~Deferred consideration~~primarily due to increases in securitized receivables of $4.6 billion for the nine months ended September 30, 2020 was offset by the same amount of net consideration received for beneficial interest obtained for selling trade receivables.contracts and futures losses.

Cash used in investing activities was ~~$1.3~~$0.3 billion for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~cash provided of $4.7~~$0.2 billion for the same period last year. Capital expenditures for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 of $0.2 billion were ~~$0.7 billion compared~~comparable to ~~$0.6 billion for~~ the same period last year. ~~Net assets of businesses acquired were $0.5 billion~~Other-net for the ~~nine~~three months ended ~~September 30, 2021 compared to $3 million for the same period last year primarily due to the P4 acquisition in September 2021. Proceeds from sales~~March 31, 2022 of ~~business and assets for the nine months ended September 30, 2021 were~~ $0.1 billion ~~compared to $0.7 billion for the same period last year which related to the sale~~consisted of ~~a portion of the Company’s shares in Wilmar~~new and ~~certain other assets. Net consideration received for beneficial interest obtained related to selling trade receivables was $4.6 billion for the nine months ended September 30, 2020.~~additional cost method equity investments.

Cash ~~used in~~provided by financing activities was ~~$1.6~~$3.3 billion for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 compared to ~~$1.9~~$1.1 billion for the same period last year. Long-term debt borrowings for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 of ~~$1.3~~$0.8 billion consisted of the $750 million aggregate principal amount of ~~2.700% Notes~~2.900% notes due ~~2051 issued on September 10, 2021 and 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,~~2032, compared to long-term debt borrowings for the same period last year of ~~$1.8~~$0.6 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~~€0.5 billion aggregate principal amount of ~~zero coupon exchangeable bonds~~fixed-to-floating rate senior notes due 2022 issued in ~~2023 issued~~a private placement on ~~August 26, 2020. Proceeds~~March 25, 2021. The Company expects to apply an amount equal to the proceeds from the borrowings in the current period ~~were used~~ to ~~redeem debt and for general corporate purposes.~~finance or refinance eligible green projects and/or eligible social projects. Proceeds from the borrowings in the prior period were used ~~to reduce~~for general corporate purposes. Net borrowings from short-term ~~debt. Commercial paper net payments~~credit agreements for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 were ~~$1.7~~$2.8 billion compared to ~~$1.0~~$0.7 billion for the same period last year. ~~Long-term debt payments~~Proceeds from short-term borrowings were used to fund working capital needs. Dividends of ~~$0.5~~$0.2 billion for the ~~nine~~three months ended September 30, 2021 consisted of the early redemption of the $500 million aggregate principal amount of 2.750% notes due 2025 in September 2021, compared to $2.0 billion for the same period last year which consisted of the early redemption of the $0.5 billion and $0.4 billion aggregate principal amounts of 4.479% debentures due in 2021 and 3.375% debentures due inMarch 31, 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. Share repurchases for the nine months ended September 30, 2021 were ~~insignificant compared to $0.1 billion for the same period last year. Dividends of $0.6 billion for the nine months ended September 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 30, 2021,~~March 31, 2022, the Company had $1.1 billion of cash and cash equivalents and a current ratio, defined as current assets divided by current liabilities, of ~~1.6~~1.4 to 1. Included in working capital was ~~$7.4~~$12.0 billion of readily marketable commodity inventories. At ~~September 30, 2021,~~March 31, 2022, the Company’s capital resources included shareholders’ equity of ~~$22.0~~$23.8 billion and lines of credit, including the accounts receivable securitization programs described below, totaling ~~$12.4~~$14.3 billion, of which ~~$10.5~~$8.2 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 27% and ~~28%~~26% at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. 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 ~~26%~~34% and ~~32%~~28% at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Of the Company’s total lines of credit, $6.5 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was no$0.7 billion commercial paper outstanding at ~~September 30, 2021.~~March 31, 2022.

As of ~~September 30, 2021,~~March 31, 2022, the Company had $1.1 billion of cash and cash equivalents, ~~$0.5~~$0.4 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 ~~$8.1~~$6.5 billion, the Company has asserted that these funds are indefinitely reinvested outside the U.S.

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

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 ~~$2.1~~$2.3 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 1614 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs). As of ~~September 30, 2021,~~March 31, 2022, the Company ~~utilized $1.5 billion~~had $24 million unused capacity of its facility under the Programs.

As of March 31, 2022, the Company has total available liquidity of $9.3 billion comprised of cash and cash equivalents and unused lines of credit.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company spent approximately ~~$0.7~~$0.2 billion in capital expenditures and ~~$0.6~~$0.2 billion in dividends. The Company has a stock repurchase program. Under the program, the Company ~~acquired an insignificant number of shares for the nine months ended September 30, 2021, and~~ has 104.5 million shares remaining as of March 31, 2022 that may be repurchased until December 31, 2024.

In ~~2021,~~2022, the Company expects total capital expenditures of $1.3 billion and additional cash outlays of approximately $0.9 ~~billion to $1.0 billion, approximately $0.8~~ billion in dividends and up to ~~$0.5 billion~~$150 million in share repurchases, subject to other strategic uses of ~~capital.~~

~~In October 2021,~~capital and the ~~Company executed acquisition~~evolution of operating cash flows and ~~investment agreements with a total aggregate consideration of approximately $0.7 billion. In addition,~~ the Company executed an agreement to sell its ethanol production complex in Peoria, Illinois with a book value of approximately $0.1 billion, which will have an immaterial impact to operating results. These transactions are expected to close before December 31, 2021, subject toworking capital position throughout the ~~satisfaction of closing conditions and regulatory approval.~~ ~~In addition, the previously announced Sojaprotein acquisition of $0.4 billion is also expected to close before December 31, 2021.~~year.

Contractual Obligations and Commercial Commitments

The Company’s purchase obligations as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were ~~$16.9~~$22.9 billion and ~~$19.7~~$18.6 billion, respectively. The ~~decrease~~increase is primarily related to obligations to purchase ~~lower quantities of~~ agricultural commodity ~~inventories.~~inventories at higher prices. As of ~~September 30, 2021,~~March 31, 2022, the Company expects to make payments related to purchase obligations of ~~$12.9~~$21.8 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended ~~September 30, 2021.~~March 31, 2022.

Off Balance Sheet Arrangements

On September 24, 2021, the Company amended the First Program and increased the facility from $1.4 billion as of March 31, 2021 to $1.5 billion. 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 ~~other~~ material changes in the Company’s off balance sheet arrangements during the quarter ended ~~September 30, 2021.~~March 31, 2022.

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

Critical Accounting Policies

There were no material changes in the Company’s critical accounting policies during the quarter ended ~~September 30, 2021.~~March 31, 2022.

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 30, 2021~~March 31, 2022 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, ~~2020.~~2021.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Continued)

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:


		Nine months ended				Year ended					Three months ended				Year ended
		September 30, 2021				December 31, 2020					March 31, 2022				December 31, 2021
Long/(Short) (In millions)	Long/(Short) (In millions)	Fair Value		Market Risk		Fair Value		Market Risk		Long/(Short) (In millions)	Fair Value		Market Risk		Fair Value		Market Risk
Highest position	Highest position	$	1,426	$	143	$	966	$	97	Highest position	$	986	$	99	$	1,426	$	143
Lowest position	Lowest position	(98)		(10)		(842)		(84)		Lowest position	238		24		(98)		(10)
Average position	Average position	710		71		111		11		Average position	485		49		671		67

The change in fair value of the average position was due to ~~an increase~~the decrease in average quantities, partially offset by ~~a decrease~~the increase in ~~price~~prices of the underlying ~~the weekly commodity position.~~commodities.

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ITEM 4. CONTROLS AND PROCEDURES

As of ~~September 30, 2021,~~March 31, 2022, 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.

During 2018, the Company launched Readiness to drive new efficiencies and improve the customer experience in the Company’s existing businesses through a combination of data analytics, process simplification and standardization, and behavioral and cultural change, building upon its earlier 1ADM and operational excellence programs. As part of this transformation, the Company is implementing a new enterprise resource planning (ERP) system on a worldwide basis, which is expected to occur in phases over the next several years. The ~~Company is also beginning~~first phase of the ~~transition of certain portions of its corporate operations~~ERP system implementation occurred in October 2021 to a ~~global professional services firm which is expected to be substantially completed by end~~limited pilot scope of ~~fiscal 2021.~~legal entities. The Company continues to consider these changes in its design of and testing for effectiveness of internal controls over financial reporting and concluded, as part of the evaluation described in the above paragraph, that the implementation of the new ERP system ~~and the transition of certain corporate operations to a professional services firm~~ in these circumstances ~~have~~has not materially affected its internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is routinely involved in a number of actual or threatened legal actions, including those involving alleged personal injuries, employment law, product liability, intellectual property, environmental issues, alleged tax liability (see Note 119 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for information on income tax matters), and class actions. The Company also routinely receives inquiries from regulators and other government authorities relating to various aspects of ~~our~~its business, and at any given time, the Company has matters at various stages of resolution. The outcomes of these matters are not within ~~our~~the Company’s complete control and may not be known for prolonged periods of time. In some actions, claimants seek damages, as well as other relief including injunctive relief, that could require significant expenditures or result in lost revenues. In accordance with applicable accounting standards, the Company records a liability in its consolidated financial statements for material loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a material loss contingency is reasonably possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to predict, particularly when the matters are in early procedural stages, with incomplete facts or legal discovery; involve unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines, disgorgement, or punitive damages; or could result in a change in business practice.

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ITEM 1. LEGAL PROCEEDINGS (Continued)

On September 4, 2019, AOT Holding AG ~~(AOT)~~(“AOT”) filed a putative class action under the U.S. Commodities Exchange Act in federal district court in Urbana, Illinois, alleging that the Company sought to manipulate the benchmark price used to price and settle ethanol derivatives traded on futures exchanges. On March 16, 2021, AOT filed an amended complaint adding a second named plaintiff Maize Capital Group, ~~LLC.~~LLC (“Maize”). AOT and Maize allege that members of the putative class suffered “hundreds of millions of dollars in damages” as a result of the Company’s alleged actions. On July 14, 2020, Green Plains Inc. and its related entities (“GP”) filed a putative class action lawsuit, alleging substantially the same operative facts, in federal court in Nebraska, seeking to represent sellers of ethanol. On July 23, 2020, Midwest Renewable Energy, LLC (“MRE”) filed a putative class action in federal court in Illinois alleging substantially the same operative facts and asserting claims under the Sherman Act. On November 11, 2020, United Wisconsin Grain Producers LLC (“UWGP”) and five other ethanol producers filed a lawsuit in federal court in Illinois alleging substantially the same facts and asserting claims under the Sherman Act and Illinois, Iowa, and Wisconsin law. The court granted ADM’s motion to dismiss the MRE and UWGP complaints without prejudice on August 9, 2021 and September 28, 2021, respectively. On August 16, 2021, the court granted ADM’s motion to dismiss the GP complaint, dismissing one claim with prejudice and declining jurisdiction over the remaining state law claim. MRE filed an amended complaint on August 30, 2021, which ADM moved to dismiss on September 27, 2021. UWGP filed an amended complaint on October 19, 2021, which ADM moved to dismiss on December 9, 2021. On October 26, 2021, GP filed a new complaint in Nebraska federal district court, alleging substantially the same facts and asserting a claim for tortious interference with contractual relations. On March 18, 2022, the Nebraska federal district court granted ADM’s motion to transfer the GP case back to the Central District of Illinois for further proceedings. The Company denies liability, and is vigorously defending itself in these actions. As these actions are in pretrial proceedings, the Company is unable at this time to predict the final outcome with any reasonable degree of certainty, but believes the outcome will not have a material adverse effect on its financial condition, results of operations, or cash flows.

The Company is not currently a party to any legal proceeding or environmental claim that it believes would have a material adverse effect on its financial position, results of operations, or liquidity.

ITEM 1A. RISK FACTORS

~~There were no significant changes~~The information presented below updates, and should be read in conjunction with, the ~~Company’s~~ risk factors ~~during the quarter ended September 30, 2021. For further information about the Company’s risk factors, refer to~~in Part I, ~~“Item~~Item 1A. ~~Risk~~“Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Except as presented below, there were no other significant changes in the Company’s risk factors during the quarter ended March 31, 2022.

The Company faces risks related to international conflicts, terrorism or other geopolitical events, such as the conflict in Ukraine, and related sanctions and other economic disruptions.

ADM’s assets and operations located in the region affected by the conflict in Ukraine are at an increased risk to property damage, inventory loss, business disruption, and expropriation. The conflict could continue to impact global margins due to increased commodity, energy, and input costs. The Black Sea region is a major exporter of wheat and corn to the world, and the disruption of supply could cause volatility in prices and margins of these commodities and related products. Ukraine is also the largest supplier of sun seed and sun oil in the world which cannot be completely replaced from other origins. If current inventories are depleted prior to the restoration of operations, Europe will have to reformulate to alternative oils. In addition to ADM’s operations, one of the Company’s joint ventures is also exposed to the same risks. While the Company has a robust sanction program, there is a risk that ADM could trade with a sanctioned partner due to the number and fast-changing nature of sanctions being taken against Russia. The Company may also face increased cyber risk given that Russia is known to have extensive capabilities to engage in cyber attacks. Trade receivables may be at risk of higher defaults and other third-party risks could affect ADM’s ability to obtain inputs if suppliers are unable to perform or face insolvency, as certain supplies may not be attainable due to sanctions and/or restrictions on cross-border payment transactions. The Company could be materially impacted if, in the worst-case scenario, the conflict advances to other countries. In such circumstances, trade policies and the Company’s critical global supply chain and logistical networks could be affected, impairing the Company’s ability to satisfy contractual obligations and impacting working capital requirements. Insurance may not adequately cover these risks. In addition, provisions for certain products that ADM produces, particularly those that support the food services channels, could be materially impacted. The Company continues to monitor the conflict in Ukraine and evaluate alternatives to mitigate the impacts of these risks.

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

Issuer Purchases of Equity Securities

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, 2021 to
July 31, 2021 804 $ 59.498 191 104,505,894
August 1, 2021 to
August 31, 2021 6,748 60.602 85 104,505,809
September 1, 2021 to
September 30, 2021 4,308 60.424 106 104,505,703
Total 11,860 $ 60.462 382 104,505,703


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)
January 1, 2022 to
January 31, 2022	559	$	69.743	—	104,505,703

February 1, 2022 to
February 28, 2022	1,022,806	76.470		—	104,505,703

March 1, 2022 to
March 31, 2022	28,736	82.738		—	104,505,703
Total	1,052,101	$	76.638	—	104,505,703

(1)Total shares purchased represents those shares purchased in the open market as part of the Company’s publicly announced share repurchase program described below, shares received as payment for the exercise price of stock option exercises, and shares received as payment for the withholding taxes on vested restricted stock awards. During the three-month period ended ~~September 30, 2021,~~March 31, 2022, there were ~~11,478~~1,052,101 shares received as payments for the minimum withholding taxes on vested restricted stock awards and for the exercise price of stock option exercises.

(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.

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ITEM 6. EXHIBITS


(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).

(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).

(4.1)						Form of ~~2.700%~~2.9 00% Notes due ~~2051~~20 32 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on ~~September 10, 2021)~~February 28 , 202 2 ).

(10.1)						Form of Performance Share Unit Award Agreement under the Company’s 2020 Incentive Plan.

(10.2)						Form of Restricted Stock Unit Award Agreement under the Company’s 2020 Incentive Plan.

(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.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			ARCHER-DANIELS-MIDLAND COMPANY



			/s/ ~~R. G. Young~~V. Luthar
			~~R. G. Young~~V. Luthar
			~~Executive~~Senior Vice President and Chief Financial Officer



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

Dated: ~~October~~April 26, ~~2021~~2022

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	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