UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q


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

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

For the quarterly period ended ~~September 30, 2017~~March 31, 2020


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

☐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~~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)		~~60601~~	(Zip Code)

(~~312) 634-8100~~
~~(Registrant’s telephone number, including area 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 x☒ No ¨☐.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes x☒ 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~~ x	~~Accelerated filer~~ o
~~Non-accelerated filer~~ o Large Accelerated Filer	~~Smaller reporting company~~ o ☒	Accelerated Filer	☐	Emerging Growth Company	☐
Non-accelerated Filer	~~Emerging growth company~~ o ☐	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. o☐

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

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 – ~~559,250,312~~555,496,210 shares

(~~October~~April 30, ~~2017)~~2020)

SAFE HARBOR STATEMENT

This Form 10-Q contains forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995 that is subject to risks and uncertainties that could cause actual results to differ materially from those projected, expressed, or implied by such forward-looking information. Risks and uncertainties that could cause or contribute to such differences include, but are not limited to, those discussed in Item 1A, “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2019, 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,
	2017			2016			2017			2016			2020			2019
	(In millions, except per share amounts)												(In millions, except per share amounts)

Revenues	$	14,827		$	15,832		$	44,758		$	45,845		$	14,970		$	15,304
Cost of products sold	14,015			14,742			42,191			43,237			14,019			14,376
Gross Profit	812			1,090			2,567			2,608			951			928

Selling, general, and administrative expenses	478			546			1,530			1,525			664			659
Asset impairment, exit, and restructuring costs	107			11			140			36			41			11
Interest expense	79			78			246			213			83			101
Equity in (earnings) losses of unconsolidated affiliates	(46		)	2			(327		)	(153		)	(140		)	(101		)
Interest income	(27		)	(23		)	(75		)	(68		)	(40		)	(49		)
Other (income) expense – net	(4		)	(4		)	(13		)	(138		)	(32		)	(8		)
Earnings Before Income Taxes	225			480			1,066			1,193			375			315

Income taxes	30			136			256			331
Income tax (benefit) expense													(16		)	81
Net Earnings Including Noncontrolling Interests	195			344			810			862			391			234

Less: Net earnings attributable to noncontrolling interests	3			3			3			7			—			1

Net Earnings Attributable to Controlling Interests	$	192		$	341		$	807		$	855		$	391		$	233

Average number of shares outstanding – basic	566			586			571			591			563			565

Average number of shares outstanding – diluted	569			589			574			593			564			566

Basic earnings per common share	$	0.34		$	0.58		$	1.41		$	1.45		$	0.69		$	0.41

Diluted earnings per common share	$	0.34		$	0.58		$	1.41		$	1.44		$	0.69		$	0.41

Dividends per common share	$	0.32		$	0.30		$	0.96		$	0.90		$	0.36		$	0.35

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,
	2017			2016			2017			2016			2020			2019
	(In millions)												(In millions)

Net earnings including noncontrolling interests	$	195		$	344		$	810		$	862		$	391		$	234
Other comprehensive income (loss):
Foreign currency translation adjustment	245			(41		)	628			(57		)	(241		)	(79		)
Tax effect	(40		)	5			(4		)	18			(42		)	(10		)
Net of tax amount	205			(36		)	624			(39		)	(283		)	(89		)

Pension and other postretirement benefit liabilities adjustment	174			11			193			27			4			7
Tax effect	(66		)	(4		)	(74		)	(7		)	(12		)	13
Net of tax amount	108			7			119			20			(8		)	20

Deferred gain (loss) on hedging activities	(26		)	1			12			(10		)	(82		)	(77		)
Tax effect	6			3			1			3			14			12
Net of tax amount	(20		)	4			13			(7		)	(68		)	(65		)

Unrealized gain (loss) on investments	6			(28		)	1			(16		)	6			(2		)
Tax effect	—			1			—			(2		)	(2		)	—
Net of tax amount	6			(27		)	1			(18		)	4			(2		)
Other comprehensive income (loss)	299			(52		)	757			(44		)	(355		)	(136		)
Comprehensive income (loss) including noncontrolling interests	494			292			1,567			818			36			98

Less: Comprehensive income (loss) attributable to noncontrolling interests	4			3			5			7			4			1

Comprehensive income (loss) attributable to controlling interests	$	490		$	289		$	1,562		$	811		$	32		$	97

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Balance Sheets


(In millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	518		$	619		$	4,734		$	852
Short-term marketable securities	261			296
Segregated cash and investments	5,040			5,011			5,098			4,458
Trade receivables	1,911			1,905			2,437			2,267
Inventories	8,326			8,831			8,830			9,170
Other current assets	3,084			4,383			5,047			4,600
Total Current Assets	19,140			21,045			26,146			21,347

Investments and Other Assets
Investments in and advances to affiliates	4,972			4,497			5,143			5,132
Long-term marketable securities	207			187
Goodwill and other intangible assets	3,939			3,703			5,194			5,476
Other assets	755			579			2,029			1,936
Total Investments and Other Assets	9,873			8,966			12,366			12,544

Property, Plant, and Equipment
Land	467			445
Land and land improvements							585			592
Buildings	4,974			4,679			5,339			5,381
Machinery and equipment	17,858			17,160			18,934			19,005
Construction in progress	1,166			1,213			951			1,021
	24,465			23,497			25,809			25,999
Accumulated depreciation	(14,509		)	(13,739		)	(15,926		)	(15,893		)
Net Property, Plant, and Equipment	9,956			9,758			9,883			10,106
Total Assets	$	38,969		$	39,769		$	48,395		$	43,997

Liabilities, Temporary Equity, and Shareholders’ Equity
Current Liabilities
Short-term debt	$	728		$	154		$	3,382		$	1,202
Trade payables	3,449			3,606			3,440			3,746
Payables to brokerage customers	5,135			5,158			5,778			5,022
Accrued expenses and other payables	2,548			3,982			4,209			3,757
Current maturities of long-term debt	13			273			508			7
Total Current Liabilities	11,873			13,173			17,317			13,734

Long-Term Liabilities
Long-term debt	6,595			6,504			8,613			7,672
Deferred income taxes	1,754			1,669			1,347			1,194
Other	1,117			1,218			2,071			2,114
Total Long-Term Liabilities	9,466			9,391			12,031			10,980

Temporary Equity - Redeemable noncontrolling interest	53			24			71			58

Shareholders’ Equity
Common stock	2,390			2,327			2,690			2,655
Reinvested earnings	17,023			17,444			19,026			18,958
Accumulated other comprehensive income (loss)	(1,843		)	(2,598		)	(2,764		)	(2,405		)
Noncontrolling interests	7			8			24			17
Total Shareholders’ Equity	17,577			17,181			18,976			19,225
Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	38,969		$	39,769		$	48,395		$	43,997

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Cash Flows

(Unaudited)


(In millions)	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
Operating Activities
Net earnings including noncontrolling interests	$	810		$	862		$	391		$	234
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	684			678			245			245
Asset impairment charges	81			28			44			9
Deferred income taxes	(27		)	36			64			39
Equity in earnings of affiliates, net of dividends	(131		)	25			(115		)	(4		)
Stock compensation expense	63			58			51			43
Deferred cash flow hedges	12			(10		)	(82		)	(77		)
Gains on sales of assets and businesses/revaluation	(66		)	(117		)
Gains on sales of assets and businesses							—			(15		)
Other – net	174			1			241			(8		)
Changes in operating assets and liabilities
Segregated investments	268			46			17			28
Trade receivables	106			(463		)	(251		)	34
Inventories	703			1,053			182			166
Deferred consideration in securitized receivables							(2,045		)	(1,778		)
Other current assets	1,317			(415		)	(436		)	(495		)
Trade payables	(259		)	(554		)	(260		)	(260		)
Payables to brokerage customers	(94		)	355			811			(27		)
Accrued expenses and other payables	(1,486		)	(287		)	488			(169		)
Total Operating Activities	2,155			1,296			(655		)	(2,035		)

Investing Activities
Purchases of property, plant, and equipment	(696		)	(621		)	(194		)	(198		)
Proceeds from sales of business and assets	172			104			7			18
Net assets of businesses acquired	(187		)	(136		)	(8		)	(1,876		)
Purchases of marketable securities	(499		)	(1,127		)
Proceeds from sales of marketable securities	572			1,162			5			50
Investments in and advances to affiliates	(281		)	(628		)	(3		)	(9		)
Investments in retained interest in securitized receivables							(1,271		)	(1,313		)
Proceeds from retained interest in securitized receivables							3,316			3,091
Other – net	(14		)	15			1			(34		)
Total Investing Activities	(933		)	(1,231		)	1,853			(271		)

Financing Activities
Long-term debt borrowings	509			1,036			1,481			—
Long-term debt payments	(840		)	(9		)	(1		)	(4		)
Net borrowings (payments) under lines of credit agreements	558			107			2,188			1,309
Share repurchases	(676		)	(754		)	(112		)	—
Cash dividends	(544		)	(528		)	(203		)	(198		)
Other – net	4			14			(11		)	(42		)
Total Financing Activities	(989		)	(134		)	3,342			1,065

Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	233			(69		)	4,540			(1,241		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	1,561			1,796			2,990			3,843
Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	1,794		$	1,727		$	7,530		$	2,602

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

Cash and cash equivalents	$	518		$	701		$	4,734		$	926
Restricted cash and restricted cash equivalents included in segregated cash and investments	1,276			1,026			2,796			1,676
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	1,794		$	1,727		$	7,530		$	2,602

Supplemental Disclosure of Noncash Investing Activity:
Retained interest in securitized receivables							$	2,105		$	1,831

See notes to consolidated financial statements.

Archer-Daniels-Midland-Company

Consolidated ~~Statement~~Statements of Shareholders’ Equity

(Unaudited)

Common Stock
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling
Interests

Total
Shareholders’
Equity
Shares Amount
(In millions)

Balance, December 31, 2016 573
$ 2,327
$ 17,444
$ (2,598 ) $ 8
$ 17,181
Impact of ASU 2016-16 (see Note 2) (7 ) (7 )
Balance, January 1, 2017 573
$ 2,327
$ 17,437
$ (2,598 ) $ 8
$ 17,174
Comprehensive income

Net earnings
807

3

   Other comprehensive
     income (loss)

755
2

      Total comprehensive
       income

1,567
Cash dividends paid- $0.96 per share

(544 )

(544 )
Share repurchases (16 ) (676 ) (676 )
Stock compensation expense 1
63

63
Other 1
—
(1 ) —
(6 ) (7 )
Balance, September 30, 2017 559
$ 2,390
$ 17,023
$ (1,843 ) $ 7
$ 17,577



	Common Stock					Reinvested Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total Shareholders’ Equity
(In millions, except per share amounts)	Shares		Amount			Reinvested Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Total Shareholders’ Equity

Balance, December 31, 2019	557		$	2,655		$	18,958		$	(2,405	)	$	17		$	19,225
Impact of ASC 326 (see Note 2)						(8		)							(8		)
Balance, January 1, 2020	557		$	2,655		$	18,950		$	(2,405	)	$	17		$	19,217
Comprehensive income
Net earnings						391						—
Other comprehensive income (loss)									(359		)	4
Total comprehensive income															36
Dividends paid - $0.36 per share						(203		)							(203		)
Share repurchases	(3	)				(112		)							(112		)
Stock compensation expense	1		51												51
Other			(16		)	—						3			(13		)
Balance, March 31, 2020	555		$	2,690		$	19,026		$	(2,764	)	$	24		$	18,976

Balance, December 31, 2018	559		$	2,560		$	18,527		$	(2,106	)	$	15		$	18,996
Comprehensive income
Net earnings						233						1
Other comprehensive income (loss)									(136		)	—
Total comprehensive income															98
Dividends paid - $0.35 per share						(198		)							(198		)
Stock compensation expense	1		43												43
Other	—		(19		)	(9		)	—			(1		)	(29		)
Balance, March 31, 2019	560		$	2,584		$	18,553		$	(2,242	)	$	15		$	18,910

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 ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017~~2020. 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, ~~2016~~2019.

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.

~~Retirement Benefit Changes~~Reclassifications

~~On July 31, 2017,~~Effective January 1, 2020, the Company ~~announced~~started reporting its newly created dry mill ethanol subsidiary, Vantage Corn Processors (VCP), as a sub-segment within the Carbohydrate Solutions segment. VCP replaces the Bioproducts sub-segment which included the combined results of the Company’s corn dry and wet mill ethanol operations. The wet mill ethanol operations that ~~all participants~~were previously reported in Bioproducts are now included in the Starches and Sweeteners sub-segment. In addition to dry mill ethanol production, VCP will sell/broker ADM’s wet mill ethanol production as the sole marketer of ethanol produced at the Company’s U.S. salaried pension plan and the Supplemental Executive Retirement Plan (SERP) will begin accruing benefits under the cash balance formula effective January 1, 2022. Benefits for participants who were accruing under the final average pay formula will be frozen as of December 31, 2021, including pay and service through that date.

This change, along with other changes in participation associated with divestitures and restructuring, triggered a remeasurement of the salaried pension plan and the SERP resulting in decreases in the fiscal 2017 pension expense, accumulated other comprehensive loss, and underfunded status by $18 million, $182 million, and $164 million, respectively.

Concurrent with this change, the Company also changed the method used to estimate the service and interest cost components of the net periodic pension and postretirement benefit costs for its U.S. plans. The new method uses the spot rate yield curve approach to estimate the service and interest costs. Previously, those costs were determined using a single weighted-average discount rate applied to all future cash outflows.facilities. The change does not ~~affect~~have an impact on the ~~measurement~~total results of the Carbohydrate Solutions segment.

Effective July 1, 2019, the Company changed its segment reporting to reflect the creation of the combined Ag Services and Oilseeds segment. The former Origination and Oilseeds businesses were merged into a combined Ag Services and Oilseeds segment which enables the Company to better respond to market changes by integrating the supply and value chains and risk management, while delivering significant simplification and efficiency to the day-to-day business. As part of the Company’s ~~benefit obligations~~efforts for a streamlined management structure, the combined segment is led by the former President of Oilseeds expanding his role to President of Ag Services and ~~was accounted for as a change in accounting estimate in accordance with the guidance of ASC Topic 250,~~ ~~Accounting Estimates and Error Corrections, thereby impacting the current and future quarters. The impact of this change on after-tax earnings and diluted earnings per share for the quarter ended September 30, 2017 was immaterial.~~Oilseeds.

~~Reclassifications~~

The Company classified $17 million and $49 million of fees from its U.S. futures commission brokerage business in cost of products sold in the quarter and nine months ended September 30, 2017, respectively. Prior period ~~amounts of $15 million~~information in Notes 4 and ~~$50 million in the quarter and nine months ended September 30, 2016, respectively, have~~14 has been reclassified ~~from selling, general, and administrative expenses in the consolidated statement of earnings~~ to conform to the current period segment presentation.

~~In the quarter ended June 30, 2017, the Company began presenting certain specified items separately from the individual business segments, as further described in Note 14.~~

A~~rcher-Daniels-Midland Company~~

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

~~(Unaudited)~~


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

In line with the futures brokerage industry practice, the Company has correctly classified $1.2 billion of segregated cash and cash equivalents as restricted cash and cash equivalents in the statement of cash flows effective September 30, 2017. Prior period amounts have been restated to conform to the current presentation which resulted in an increase of $145 million in total cash provided by operating activities for the nine months ended September 30, 2016 and an increase of $938 million in the ending balance of cash, cash equivalents, restricted cash, and restricted cash equivalents as of September 30, 2016.

Segregated Cash and Investments

The Company segregates certain cash, cash ~~equivalent,~~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 statement of cash flows.

~~Last-in, First-out (LIFO) Inventories~~

~~Interim period LIFO calculations~~

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Note 1.	Basis of Presentation (Continued)

Receivables

The Company records accounts receivable at net realizable value. This value includes an allowance for estimated uncollectible accounts of $112 million and $110 million at March 31, 2020 and December 31, 2019, respectively, to reflect any loss anticipated on the accounts receivable balances including any accrued interest receivables thereon. Portions of this allowance are recorded in trade receivables, other current assets, and other assets. 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 ~~interim period costs~~historical write-offs adjusted, as needed, for regional, economic, and ~~management’s estimates of year-end inventory levels. Because the availability and price of agricultural commodity-based LIFO inventories are unpredictable~~other forward-looking factors. The Company minimizes credit risk due to ~~factors such as weather, government farm programs~~the large and ~~policies,~~diversified nature of its worldwide customer base. ADM manages its exposure to counter-party credit risk through credit analysis and ~~changes~~approvals, credit limits, and monitoring procedures.

The Company recorded bad debt expense in ~~global demand, quantities~~selling, general, and administrative expenses of ~~LIFO-based~~$11 million in the three months ended March 31, 2020. There was 0 bad debt expense recorded in the three months ended March 31, 2019.

Inventory Valuation

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

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

If the Company had not made the accounting change, the effect of LIFO valuation on ADM’s operating results would have been a reduction in cost of products sold of $44 million ($33 million after tax, equal to $0.06 per diluted share) in the three months ended March 31, 2020 with no impact to the statement of cash flows.


Note 2.	New Accounting Standards

Effective January 1, ~~2017,~~2020, the Company adopted the amended guidance of Topic 326, which is intended to improve financial reporting by requiring more timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amended guidance replaces the prior “incurred loss” approach with an “expected loss” model and requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company was required to adopt the amended guidance on a modified retrospective basis through a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The Company evaluated its current methodology of estimating allowance for doubtful accounts and the risk profile of its receivable portfolio and developed a model that includes the qualitative and forecasting aspects of the “expected loss” model under the amended guidance. The Company finalized its assessment of the impact of the amended guidance and recorded a $8 million cumulative effect adjustment to retained earnings at January 1, 2020. For more information about the Company’s receivables, see Note 1.

Effective January 1, 2020, the Company adopted the amended guidance of ASC Topic ~~330,~~ ~~Inventory~~820, Fair Value Measurement, which ~~simplifies~~modifies the ~~measurement of inventory. The amended guidance requires an entity to measure its cost-based inventory at the lower of cost or net realizable~~disclosure requirements on fair value ~~where net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.~~

~~Effective January 1, 2017, the Company adopted the amended guidance of ASC Topic 323,~~ ~~Investments - Equity Method and Joint Ventures~~, which simplifies the transition to the equity method of accounting. The amended guidance eliminates the requirement of an investor to adjust the investment, results of operations, and retained earnings retroactively when an investment qualifies for equity method accounting as a result of an increase in the level of ownership interest or degree of influence. The amendments require the investor add the cost of acquiring the additional interest in the investee to the current basis of the investors’ previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting.measurements. The adoption of this amended guidance did not ~~have an~~ impact on the Company’s financial results.

~~Effective January 1, 2017, the Company adopted the amended guidance of ASC Topic 810,~~ ~~Consolidatio~~n, which affects reporting entities that are required to evaluate whether they should consolidate a variable interest entity in certain situations involving entities under common control. The amended guidance changes the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The Company was required to adopt the amended guidance using a retrospective transition approach to all periods presented. The adoption of this amended guidance did not result in the deconsolidation or consolidation of any of its variable interest entities.

~~Effective January 1, 2017, the Company adopted the amended guidance of ASC Topic 740,~~ ~~Income Taxes~~, which requires entities to recognize the income tax consequences of an intra-entity transfer, other than inventory, when the transfer occurs. Under the previous accounting rules, entities were prohibited from recognizing current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. The amended guidance does not change the accounting for the pre-tax effects of an intra-entity asset transfer or for an intra-entity transfer of inventory. The Company adopted the amended guidance on a modified retrospective approach basis through a $7 million cumulative effect adjustment to retained earnings as of January 1, 2017.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Note 3.	Pending Accounting Standards

Effective ~~January 1, 2018,~~December 31, 2020, the Company will be required to adopt the amended guidance of ASC Subtopic ~~825-10,~~ ~~Financial Instruments~~715-20, Compensation - ~~Overall~~Retirement Benefits - Defined Benefit Plans - General, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Early adoption is ~~intended to improve the recognition and measurement of financial instruments.~~permitted. The amended guidance requires an entity to measure equity investments, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, at fair value with changes in fair value recognized in net income and simplify the impairment assessment of equity investments without readily determinable fair values by using a qualitative assessment to identify impairment. The Company does not expect the adoption of this amended guidance ~~to have a significant~~will not impact on the Company’s financial results.

Effective January 1, ~~2018, the Company will be required to adopt the new guidance of ASC Topic 606,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606), which will supersede the revenue recognition requirements in ASC Topic 605,~~ ~~Revenue Recognition~~. Topic 606 requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance requires the Company to apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the Company satisfies a performance obligation. The Company will adopt Topic 606 on a modified retrospective basis and will be required to provide additional disclosures of the amount by which each financial statement line item is affected in the current reporting period, as compared to the guidance that was in effect before the change, and an explanation of the reasons for significant changes. The adoption of this new guidance will require expanded disclosures in the Company’s consolidated financial statements including separate quantitative disclosure of revenues within the scope of Topic 606 and revenues excluded from the scope of Topic 606. Many of the Company’s sales contracts are considered derivatives under ASC Topic 815, ~~Derivatives and Hedging~~, and are therefore excluded from the scope of Topic 606. The Company has established a cross-functional implementation team consisting of representatives from all of its business segments. The Company utilized surveys to validate all of its current revenue recognition streams and identify areas of its business where potential differences could result from applying the requirements of the new standard. The Company also conducted workshops and performed contract reviews to gather more information about the nature, magnitude, and frequency of the underlying transactions that drove the survey responses. Based on the surveys, workshops, and contract reviews, the Company identified potential accounting changes in the areas of control transfer, voyage charter revenue, bill and hold arrangements, and variable consideration. In the fourth quarter of 2017, the Company will complete the final phase of its revenue recognition implementation plan which includes quantification of the areas of accounting change, assessment of the financial impact of the new guidance on its consolidated financial statements, and finalization of its revenue recognition accounting policy and position papers.

~~Effective January 1, 2018,~~2021, the Company will be required to adopt the amended guidance of ASC Topic ~~805,~~ ~~Business Combinations~~740, Income Taxes (Topic 740),which ~~clarifies~~simplifies the ~~definition~~accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of ~~a business. The amended guidance is intended to help companies~~ and simplify other ~~organizations evaluate whether transactions should be accounted for as acquisitions (disposals)~~areas of ~~assets or businesses and provides a more robust framework to use in determining when a set of assets and activities is a business.~~Topic 740. Early adoption is permitted for transactions that have not been reported in financial statements that have been issued or made available for issuance. No disclosures are required at adoption. The Company plans to adopt the amended guidance on October 1, 2017.

~~Effective January 1, 2018, the Company will be required to adopt the amended guidance of ASC Topic 715,~~ ~~Compensation - Retirement Benefits~~, which requires that an employer report the service cost component in the same line or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The adoption of this amended guidance will require expanded disclosures and the reclassification of the other components of net benefit cost from cost of products sold and selling, general, and administrative expenses to other (income) expense - net in the Company’s consolidated statements of earnings but will not impact financial results.

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~


~~Note 3.~~	~~Pending Accounting Standards (Continued)~~

~~Effective January 1, 2018, the Company will be required to adopt the amended guidance of ASC Topic 718,~~ ~~Compensation - Stock Compensation~~ (Topic 718), which provides clarity and reduces diversity in practice as well as cost and complexity when applying the guidance in Topic 718 to the modification of the terms and conditions of a share-based payment. The amendments include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. Early adoption is permitted, including in any interim period for which financial statements have not yet been issued. The Company plans to adopt the amended guidance on October 1, 2017 and does not expect the adoption of this amended guidance to have a significant impact on the Company’s financial results.

~~Effective January 1, 2019, the Company will be required to adopt the new guidance of ASC Topic 842,~~ ~~Leases~~ ~~(Topic 842), which will supersede ASC Topic 840,~~ ~~Leases~~. Topic 842 requires lessees to recognize assets and liabilities for all leases with lease terms of more than 12 months. The Company expects to adopt Topic 842 using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The adoption of this new guidance will require expanded disclosures in the Company’s consolidated financial statements. The Company has established a cross-functional implementation team consisting of representatives from accounting, legal, procurement, and operations. The Company utilized surveys to centrally gather more information about its existing leases and lease processes and to gather lease contracts. To ensure completeness of the population of lease contracts, the results of the survey were cross-referenced against other available lease information (i.e., year-end disclosures and general ledger). The Company is also working with a vendor to implement a lease management system which will assist in delivering the required accounting changes and disclosures. The next phase of the implementation plan is the abstraction of the relevant lease contract data points which is expected to be completed in the first quarter of 2018. The impact of the new standard will be a significant increase to right of use assets and lease liabilities on the Company’s consolidated balance sheet, primarily as a result of operating leases currently not recognized on the balance sheet.permitted. The Company has not yet completed its assessment of the impact of the ~~new~~amended guidance on the consolidated financial statements but does not expect the adoption of the amendments to have a significant impact on its ~~consolidated statement of earnings.~~financial results.

~~Effective January 1, 2019,~~Through December 31, 2022, the Company ~~will be required~~has the option to adopt the amended guidance of ASC Topic ~~815,~~ ~~Derivatives and Hedging~~848, Reference Rate Reform, which ~~expands~~provides optional expedients and ~~refines hedge accounting~~exceptions for ~~both non-financial~~applying GAAP to contracts, hedging relationships, and ~~financial risk components~~other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and ~~aligns~~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 ~~recognition~~amended guidance do not apply to contract modifications made and ~~presentation~~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 ~~effects~~end of the hedging instrument and the hedged item in the financial statements. The amended guidance also simplifies the application of hedge accounting guidance and eases the administrative burden of hedge documentation requirements and assessing hedge effectiveness. Early adoption is permitted in any interim period with the effect of adoption reflected as an adjustment to the opening balance of retained earnings as of the beginning of the fiscal year of adoption.relationship. The Company ~~is considering adopting~~plans to adopt the expedients and exceptions provided by the amended guidance ~~on January 1, 2018~~before the December 31, 2022 expiry date but has not yet completed its assessment of the impact ~~of this amended guidance~~ on the consolidated financial statements.


Note 4.	Revenues

Revenue Recognition

The Company principally generates revenue from merchandising and transporting agricultural commodities and manufactured products used as ingredients in food, feed, energy, and industrial products. 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 ~~financial results.~~

~~Effective January 1, 2020,~~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 ~~will be required to adopt~~recognizes revenue over time as the ~~amended~~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 $117 million and $115 million for the three months ended March 31, 2020 and 2019, 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 ~~326,~~ ~~Financial Instruments - Credit Losses, which is intended~~610-20”).

Shipping and Handling Costs

Shipping and handling costs related to ~~improve financial reporting by requiring more timely recording~~contracts with customers for the sale of ~~credit losses on loans~~goods are accounted for as a fulfillment activity and ~~other financial instruments held by financial institutions~~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 other organizations. The amended guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Early adoption will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Remitted to Governmental Authorities

The Company does not ~~expect~~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 ~~adoption of this amended guidance to have a significant impact on the Company’s financial results.~~

~~Effective January 1, 2020, the Company will be required to adopt the amended guidance of ASC Topic 350,~~ ~~Goodwill and Other, which simplifies the subsequent~~ measurement of ~~goodwill. The amended guidance removes the second step~~transactions prices or as a component of ~~the goodwill impairment test~~revenues and ~~requires the application~~cost of a one-step quantitative test where the amount of goodwill impairment is the excess of a reporting unit's carrying amount over its fair value, but not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company plans to adopt the amended guidance on October 1, 2017 and does not expect the adoption of this amended guidance to have a significant impact on the Company’s financial results.products sold.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


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

~~During~~

Contract Liabilities

Contract liabilities relate to advance payments from customers for goods and services that the ~~nine~~Company has yet to provide. Contract liabilities of $512 million and $604 million as of March 31, 2020 and December 31, 2019, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheets. Contract liabilities recognized as revenues for the three months ended ~~September 30, 2017,~~March 31, 2020 and 2019 were $282 million and $166 million, respectively.

Disaggregation of Revenues

The following tables present revenue disaggregated by timing of recognition and major product lines for the ~~Company acquired Crosswind Industries, Inc., Chamtor SA, a 51% controlling interest in Industries Centers,~~three months ended March 31, 2020 and ~~an 89% controlling interest in Biopolis SL. The aggregate cash purchase price of these acquisitions of $187 million, net of cash acquired of $7 million, was preliminarily allocated as follows:~~2019.

(In millions)
Working capital $ 16
Property, plant, and equipment 111
Goodwill 34
Other intangible assets 50
Other long-term assets 6
Long-term liabilities (19 )
Noncontrolling interest (11 )
Aggregate cash purchase price, net of cash acquired $ 187



	Three Months Ended March 31, 2020
	Topic 606 Revenue						Topic 815⁽¹⁾		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	851	$	117	$	968	$	5,958	$	6,926
Crushing	180		—		180		2,133		2,313
Refined Products and Other	518		—		518		1,322		1,840
Total Ag Services and Oilseeds	1,549		117		1,666		9,413		11,079
Carbohydrate Solutions
Starches and Sweeteners	1,240		—		1,240		410		1,650
Vantage Corn Processors	666		—		666		—		666
Total Carbohydrate Solutions	1,906		—		1,906		410		2,316
Nutrition
Human Nutrition	719		—		719		—		719
Animal Nutrition	752		—		752		—		752
Total Nutrition	1,471		—		1,471		—		1,471

Other Business	104		—		104		—		104
Total Revenues	$	5,030	$	117	$	5,147	$	9,823	$	14,970

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Note 4.	Revenues (Continued)



	Three Months Ended March 31, 2019
	Topic 606 Revenue						Topic 815⁽¹⁾		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	592	$	115	$	707	$	6,670	$	7,377
Crushing	171		—		171		2,178		2,349
Refined Products and Other	512		—		512		1,300		1,812
Total Ag Services and Oilseeds	1,275		115		1,390		10,148		11,538
Carbohydrate Solutions
Starches and Sweeteners	1,175		—		1,175		423		1,598
Vantage Corn Processors	805		—		805		—		805
Total Carbohydrate Solutions	1,980		—		1,980		423		2,403
Nutrition
Human Nutrition	674		—		674		—		674
Animal Nutrition	608		—		608		—		608
Total Nutrition	1,282		—		1,282		—		1,282

Other Business	81		—		81		—		81
Total Revenues	$	4,618	$	115	$	4,733	$	10,571	$	15,304

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

Carbohydrate Solutions

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Note 4.	Revenues (Continued)

Nutrition

The Nutrition segment sells specialty products including natural flavor ingredients, flavor systems, natural colors, animal nutrition products, and other specialty food and feed ingredients. Revenue is recognized when control over products is transferred to the customer. The amount of revenue recognized follows the contracted price or the mutually agreed price of the product. Freight and shipping are recognized as a component of revenue at the same time control transfers to the customer.

Other Business

Other Business includes the Company’s futures commission business whose primary sources of revenue are commissions and brokerage income generated from executing orders and clearing futures contracts and options on futures contracts on behalf of its customers. Commissions and brokerage revenue are recognized on the date the transaction is executed. Other 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.	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, 2017~~March 31, 2020 and December 31, ~~2016~~2019.


	Fair Value Measurements at September 30, 2017								Fair Value Measurements at March 31, 2020
	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:
Inventories carried at market	$	—	$	3,361	$	1,094	$	4,455	$	—	$	3,642	$	1,938	$	5,580
Unrealized derivative gains:
Commodity contracts	—		240		120		360		—		482		391		873
Foreign currency contracts	—		81		—		81		—		439		—		439
Interest rate contracts	—		2		—		2		—		14		—		14
Cash equivalents	49		—		—		49		3,381		—		—		3,381
Marketable securities	376		92		—		468		2		—		—		2
Segregated investments	1,827		—		—		1,827		765		—		—		765
Deferred receivables consideration	—		399		—		399		—		496		—		496
Total Assets	$	2,252	$	4,175	$	1,214	$	7,641	$	4,148	$	5,073	$	2,329	$	11,550

Liabilities:
Unrealized derivative losses:
Commodity contracts	$	—	$	300	$	145	$	445	$	—	$	480	$	309	$	789
Foreign currency contracts	—		119		—		119		—		624		—		624
Interest rate contracts									—		56		—		56
Inventory-related payables	—		493		20		513		—		1,151		20		1,171
Total Liabilities	$	—	$	912	$	165	$	1,077	$	—	$	2,311	$	329	$	2,640

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Note 5.	Fair Value Measurements (Continued)



	Fair Value Measurements at December 31, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In millions)

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

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

Fair Value Measurements at December 31, 2016

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

Significant
Other
Observable
Inputs
(Level 2)

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

Assets:
Inventories carried at market $ —
$ 3,102
$ 1,322
$ 4,424
Unrealized derivative gains:
Commodity contracts —
371
140
511
Foreign exchange contracts —
102
—
102
Interest rate contracts —
11
—
11
Cash equivalents 286
—
—
286
Marketable securities 408
69
—
477
Segregated investments 1,613
—
—
1,613
Deferred receivables consideration —
540
—
540
Total Assets $ 2,307
$ 4,195
$ 1,462
$ 7,964

Liabilities:
Unrealized derivative losses:
Commodity contracts $ —
$ 419
$ 142
$ 561
Foreign exchange contracts —
90
—
90
Inventory-related payables —
491
30
521
Total Liabilities $ —
$ 1,000
$ 172
$ 1,172

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Note 5.	Fair Value Measurements (Continued)

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. ~~These differences~~Market valuations for the Company’s forward commodity purchase and sale contracts are adjusted for location (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis adjustments are generally determined using inputs from broker or dealer quotations or market transactions in either the listed or OTC ~~markets.~~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~~statement 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~~statement of earnings as a component of revenues, cost of products sold, or other (income) expense - net, depending upon the purpose of the contract. The ~~effective portions of~~ changes in the fair value of derivatives designated as effective cash flow hedges are recognized in the consolidated balance ~~sheets~~sheet as a component of accumulated other comprehensive income (loss) (AOCI) until the hedged items are recorded in earnings or it is probable the hedged transaction will no longer occur.

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

The Company’s marketable securities are comprised of equity investments, U.S. Treasury securities, corporate debt securities, and other debt securities. Publicly traded equity investments and U.S. Treasury securities are valued using quoted market prices and are classified in Level 1. Corporate debt and other debt securities are valued using third-party pricing services and substantially all are classified in Level 2. Unrealized changes in the fair value of available-for-sale marketable securities are recognized in the consolidated balance sheets as a component of AOCI unless a decline in value is deemed to be other-than-temporary at which point the decline is recorded in earnings.

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

The Company has deferred consideration under its accounts receivable securitization programs (the “Programs”) which represents notes receivable from the purchasers under the Programs (see Note ~~16)~~16 for more information). This amount is reflected in other current assets on the consolidated balance sheet (see Note 8)7 for more information). The Company carries the deferred receivables consideration at fair value determined by calculating the expected amount of cash to be received. The fair value is principally based on observable inputs (a Level 2 measurement) 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 is not subject to significant risks other than delinquencies and credit losses on accounts receivable transferred under the Programs, which have historically been insignificant.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Note 5.	Fair Value Measurements (Continued)

The following table presents a ~~reconciliation~~rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended ~~September 30, 2017~~March 31, 2020.


	Level 3 Fair Value Asset Measurements at									Level 3 Fair Value Asset Measurements at
	September 30, 2017									March 31, 2020
	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, 2017	$	1,000		$	106		$	1,106
Balance, December 31, 2019										$	1,477		$	201		$	1,678
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	15			54			69			187			217			404
Purchases	2,792			—			2,792			3,407			—			3,407
Sales	(2,655		)	—			(2,655		)	(3,510		)	—			(3,510		)
Settlements	—			(82		)	(82		)	—			(45		)	(45		)
Transfers into Level 3	37			45			82			441			21			462
Transfers out of Level 3	(95		)	(3		)	(98		)	(64		)	(3		)	(67		)
Ending balance, September 30, 2017	$	1,094		$	120		$	1,214
Ending balance, March 31, 2020										$	1,938		$	391		$	2,329

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~


Note 13.	Other (Income) Expense - Net

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



	Three Months Ended
	March 31,
	2020			2019
	(In millions)

Gains on sales of assets	$	—		$	(15	)
Other – net	(32		)	7
Other (Income) Expense - Net	$	(32	)	$	(8	)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In millions)
(Gains) losses on sales of assets and businesses $ (15 ) $ 7
$ (66 ) $ (117 )
Loss on debt extinguishment 11
—
11
—
Other – net —
(11 ) 42
(21 )
Other (Income) Expense - Net $ (4 ) $ (4 ) $ (13 ) $ (138 )

Gains on sales of assets ~~for~~in the three months ended ~~September 30, 2017 included disposals of individually insignificant assets in the ordinary course of business. Gains on sales of assets and businesses for the nine months ended September 30, 2017~~March 31, 2019 included gains ~~related to~~on the sale of ~~the crop risk services business~~certain assets and ~~disposals of other individually insignificant assets~~step-up gains on equity investments.

Other - net in ~~the ordinary course of business, partially offset by an adjustment of the proceeds of the 2015 sale of the cocoa business. Losses on sale of assets for~~ the three months ended ~~September 30, 2016 related principally to a~~March 31, 2020 included foreign exchange gains, the non-service components of net pension benefit income of $13 million, and other income, partially offset by loss ~~on the sale of an investment. Gains on sales of assets and businesses for the nine months ended September 30, 2016 included realized additional consideration~~provisions related to the ~~sale of the~~ Company’s ~~equity investment in Gruma S.A.B. de C.V. in December 2012, recovery of loss provisions~~futures commission and gain related to the sale of the Company’s Brazilian sugar ethanol facilities, and gain related to the revaluation of the remaining interest to settlement value in conjunction with the acquisition of the remaining interest in Amazon Flavors.

~~Loss on debt extinguishment for the three and nine months ended September 30, 2017 related to the early redemption of the Company’s $559 million notes due on March 15, 2018.~~

brokerage business. Other - net ~~for~~in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 included foreign exchange losses, ~~and changes in contingent settlement provisions. Other -~~partially offset by the non-service components of net ~~for the three and nine months ended September 30, 2016 included foreign exchange gains~~pension benefit income of $2 million and other income.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 14. Segment Information

~~The Company is principally engaged~~As discussed in ~~procuring, transporting, storing, processing, and merchandising agricultural commodities and products.~~ Note 1, prior period results have been reclassified to conform to the current period segment presentation.

The Company’s operations are organized, managed, and classified into ~~four~~3 reportable business segments: ~~Agricultural~~Ag Services ~~Corn Processing,~~and Oilseeds, ~~Processing,~~Carbohydrate Solutions, and ~~Wild Flavors and Specialty Ingredients.~~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.~~Other Business.

The ~~Agricultural~~Ag Services ~~segment utilizes its extensive global grain elevator~~ and transportation networks, and port operations to buy, store, clean, and transport agricultural commodities, such as oilseeds, corn, wheat, milo, oats, rice, and barley, and resells these commodities primarily as food and feed ingredients and as raw materials for the agricultural processing industry. The Agricultural Services segment includes international agricultural commodities merchandising and handling activities managed through a global trade desk based in Rolle, Switzerland. Agricultural Services’ grain sourcing, handling, and transportation network provides reliable and efficient services to the Company’s customers and agricultural processing operations. Agricultural Services’ transportation network capabilities include barge, ocean-going vessel, truck, rail, and container freight services. The Agricultural Services segment also includes the activities related to structured trade finance, the processing of wheat into wheat flour, and the Company’s share of the results of its Pacificor (formerly Kalama Export Company LLC) joint venture. The Agricultural Services segment also included returns associated with the Company’s 19.8% investment in GrainCorp until its sale in December 2016. In July 2017, the Company completed the acquisition of a 51% controlling interest in Industries Centers, an Israeli company specializing in the import and distribution of agricultural feed products, which is now known as ADM Israel.

A~~rcher-Daniels-Midland Company~~

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

~~(Unaudited)~~


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

The Company’s Corn Processing segment is engaged in corn wet milling and dry milling activities, utilizing its asset base primarily located in the central part of the United States with additional facilities in China, Bulgaria, France, Morocco, Spain, and Turkey. The Corn Processing segment converts corn into sweeteners, starches, and bioproducts. Its products include ingredients used in the food and beverage industry including sweeteners, starch, syrup, glucose, and dextrose. Dextrose and starch are used by the Corn Processing segment as feedstocks for its bioproducts operations. By fermentation of dextrose, the Corn Processing segment produces alcohol, amino acids, and other food and animal feed ingredients. Ethyl alcohol is produced by the Company for industrial use as ethanol or as beverage grade. Ethanol, in gasoline, increases octane and is used as an extender and oxygenate. Bioproducts also include essential amino acids such as lysine and threonine used in swine and poultry diets to optimize performance. Corn gluten feed and meal, as well as distillers’ grains, are produced for use as animal feed ingredients. Corn germ, a by-product of the wet milling process, is further processed into vegetable oil and protein meal. The Corn Processing segment also includes activities related to the processing and distribution of formula feeds and animal health and nutrition products. Other Corn Processing products include citric acids and glycols, all of which are used in various food and industrial products. The Corn Processing segment also included the activities of the Company’s Brazilian sugarcane ethanol plant and related operations until the Company completed the sale of these operations in May 2016. This segment also includes the Company’s share of the results of its equity investments in Almidones Mexicanos S.A. and Red Star Yeast Company LLC. In February 2017, the Company acquired Crosswind Industries, Inc., an industry leader in the manufacture of contract and private label pet treats and foods, as well as specialty ingredients, and an 89% controlling interest in Biopolis SL, a leading provider of microbial technology with a strong portfolio of novel food ingredients. In June 2017, the Company completed the acquisition of Chamtor SA, a French producer of wheat-based sweeteners and starches.

~~The~~ Oilseeds ~~Processing~~ segment includes global activities related to the origination, merchandising, transportation, and storage of agricultural raw materials, and the crushing and further processing of oilseeds such as soybeans and soft seeds (cottonseed, sunflower seed, canola, rapeseed, and flaxseed) into vegetable oils and protein meals. Oilseeds products produced and marketed by the ~~Company~~segment include ingredients for ~~the~~ food, feed, energy, and industrial ~~products industries.~~customers. Crude vegetable oils produced by the segment’s crushing activities are sold “as is” or are further processed by refining, blending, bleaching, and deodorizing into salad oils. Salad oils are sold “as is” or are further processed by hydrogenating and/or interesterifying into margarine, shortening, and other food products. Partially refined oils are used to produce biodiesel and glycols or are sold to other manufacturers for use in chemicals, paints, and other industrial products. Oilseed protein meals are principally sold to third parties to be used as ingredients in commercial livestock and poultry feeds. ~~In Europe~~The Ag Services and ~~South America, the~~ Oilseeds Processing segment includes origination and merchandising activities as adjuncts to its oilseeds processing assets. These activities include a network of grain elevators, port facilities, and transportation assets used to buy, store, clean, and transport grains and oilseeds. The Oilseeds Processing segment is also a major supplier of peanuts, tree nuts, and peanut-derived ingredients to both the U.S. and export markets. In North America, ~~cottonseed flour is produced and sold primarily to the pharmaceutical industry and~~ cotton cellulose pulp is manufactured and sold to the chemical, paper, and other industrial markets. The Ag Services and Oilseeds ~~Processing~~segment's grain sourcing, handling, and transportation network (including barge, ocean-going vessel, truck, rail, and container freight services) provides reliable and efficient services to the Company's customers and agricultural processing operations. The Ag Services and Oilseeds segment also includes agricultural commodity and feed product import, export, and global distribution, and structured trade finance activities. This segment also includes the ~~Company’s~~Company's share of the results of its equity investment in Wilmar International Limited (Wilmar) and its share of the results of its Pacificor, Stratas Foods LLC, Edible Oils Limited, Olenex, and ~~Olenex~~SoyVen joint ventures. ~~During~~

The Carbohydrate Solutions segment is engaged in corn and wheat wet and dry milling and other activities. The Carbohydrate Solutions segment converts corn and wheat into products and ingredients used in the ~~nine months ended September 30, 2017,~~food and beverage industry including sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose. Dextrose and starch are used by the Carbohydrate Solutions segment as feedstocks for its bioproducts operations. By fermentation of dextrose, the Carbohydrate Solutions segment produces alcohol and other food and animal feed ingredients. Ethyl alcohol is produced by the Company ~~acquired additional shares~~for industrial use as ethanol or as beverage grade. Ethanol, in ~~Wilmar, increasing~~gasoline, increases octane and is used as an extender and oxygenate. Corn gluten feed and meal, as well as distillers’ grains, are produced for use as animal feed ingredients. Corn germ, a by-product of the wet milling process, is further processed into vegetable oil and protein meal. Other Carbohydrate Solutions products include citric acids which are used in various food and industrial products. This segment also includes the Company’s share of the results of its ~~ownership interest from 23.2% to 24.9% as of September 30, 2017.~~equity investments in Hungrana Ltd., Almidones Mexicanos S.A., Red Star Yeast Company, LLC, and Aston Foods and Food Ingredients.

The ~~Wild Flavors~~Nutrition segment serves customer needs for food, beverages, health and ~~Specialty Ingredients (WFSI)~~wellness, and more. The segment engages in the manufacturing, ~~sales,~~sale, and distribution of ~~specialty~~a wide array of products from nature including plant-based proteins, natural flavor ingredients, flavor systems, natural colors, ~~proteins,~~ emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products including probiotics, prebiotics, enzymes, and botanical extracts, and other specialty food and feed ingredients. The ~~WFSI~~Nutrition segment ~~also~~ includes the activities related to the procurement, processing, and distribution of edible beans. The Nutrition segment also includes activities related to the processing and distribution of formula feeds and animal health and nutrition products and the manufacture of contract and private label pet treats and foods. In January 2020, ADM acquired Yerbalatina, a natural plant-based extracts and ingredients manufacturer.

Other Business includes the Company’s ~~remaining operations, primarily its~~ financial business units related to futures commission and insurance activities. ~~On May 1, 2017, the~~

Archer-Daniels-Midland Company ~~completed the sale of its crop risk services business~~

Notes to ~~Validus Holdings, a global group of insurance and reinsurance companies.~~Consolidated Financial Statements (Continued)

(Unaudited)


Note 14.	Segment Information (Continued)

Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on net sales less identifiable operating ~~expenses and specified items.~~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, interest cost net of investment income, and the Company’s share of the results of its equity investment in Compagnie Industrialle et Financiere des Produits Amylaces SA (Luxembourg) (CIP)., which was sold in December 2019.



	Three Months Ended
	March 31,
(In millions)	2020			2019
Gross revenues
Ag Services and Oilseeds	$	12,350		$	12,873
Carbohydrate Solutions	2,554			2,576
Nutrition	1,516			1,300
Other Business	104			81
Intersegment elimination	(1,554		)	(1,526		)
Total gross revenues	$	14,970		$	15,304

Intersegment sales
Ag Services and Oilseeds	$	1,271		$	1,335
Carbohydrate Solutions	238			173
Nutrition	45			18
Total intersegment sales	$	1,554		$	1,526

Revenues from external customers
Ag Services and Oilseeds
Ag Services	$	6,926		$	7,377
Crushing	2,313			2,349
Refined Products and Other	1,840			1,812
Total Ag Services and Oilseeds	11,079			11,538
Carbohydrate Solutions
Starches and Sweeteners	1,650			1,598
Vantage Corn Processors	666			805
Total Carbohydrate Solutions	2,316			2,403
Nutrition
Human Nutrition	719			674
Animal Nutrition	752			608
Total Nutrition	1,471			1,282

Other Business	104			81
Total revenues from external customers	$	14,970		$	15,304

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Note 14.	Segment Information (Continued)



	Three Months Ended
	March 31,
(In millions)	2020			2019
Segment operating profit
Ag Services and Oilseeds	$	422		$	417
Carbohydrate Solutions	68			96
Nutrition	142			81
Other Business	11			14
Specified Items:
Gains (losses) on sales of assets and businesses⁽¹⁾	—			12
Asset impairment charges⁽²⁾	(44		)	(9		)
Total segment operating profit	599			611
Corporate	(224		)	(296		)
Earnings before income taxes	$	375		$	315

Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2017 2016 2017 2016
Gross revenues
Agricultural Services $ 7,022
$ 7,953
$ 21,351
$ 22,486
Corn Processing 2,517
2,630
7,318
7,570
Oilseeds Processing 6,797
6,498
20,109
19,418
Wild Flavors and Specialty Ingredients 586
614
1,809
1,893
Other 98
95
293
314
Intersegment elimination (2,193 ) (1,958 ) (6,122 ) (5,836 )
Total gross revenues $ 14,827
$ 15,832
$ 44,758
$ 45,845

Intersegment sales

Agricultural Services $ 947
$ 993
$ 2,622
$ 2,659
Corn Processing 192
239
475
620
Oilseeds Processing 1,045
723
3,003
2,547
Wild Flavors and Specialty Ingredients 9
3
22
10
Total intersegment sales $ 2,193
$ 1,958
$ 6,122
$ 5,836

Revenues from external customers

Agricultural Services
Merchandising and Handling $ 5,265
$ 6,146
$ 16,434
$ 17,331
Milling and Other 757
754
2,141
2,325
Transportation 53
60
154
171
Total Agricultural Services 6,075
6,960
18,729
19,827
Corn Processing
Sweeteners and Starches 1,087
1,057
3,192
3,061
Bioproducts 1,238
1,334
3,651
3,889
Total Corn Processing 2,325
2,391
6,843
6,950
Oilseeds Processing
Crushing and Origination 3,665
3,660
10,850
10,799
Refining, Packaging, Biodiesel, and Other 2,025
2,042
6,064
5,852
Asia 62
73
192
220
Total Oilseeds Processing 5,752
5,775
17,106
16,871

Wild Flavors and Specialty Ingredients 577
611
1,787
1,883
Total Wild Flavors and Specialty Ingredients 577
611
1,787
1,883

Other - Financial 98
95
293
314
Total Other 98
95
293
314
Total revenues from external customers $ 14,827
$ 15,832
$ 44,758
$ 45,845

A~~rcher-Daniels-Midland Company~~

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

~~(Unaudited)~~


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

Three Months Ended Nine Months Ended
September 30, September 30,
(In millions) 2017 2016 2017 2016
Segment operating profit
Agricultural Services $ 87
$ 195
284
328
Corn Processing 253
214
648
506
Oilseeds Processing 119
145
639
641
Wild Flavors and Specialty Ingredients 61
73
228
237
Other 21
23
78
84
Specified Items:
Gains (losses) on sales of assets and businesses⁽¹⁾
12
(4 ) 20
114
Impairment, restructuring, settlement charges⁽²⁾
(63 ) (4 ) (98 ) (16 )
Hedge timing effects⁽³⁾
(5 ) 3
4
4
Total segment operating profit 485
645
1,803
1,898
Corporate (260 ) (165 ) (737 ) (705 )
Earnings before income taxes $ 225
$ 480
$ 1,066
$ 1,193

⁽¹⁾ Current quarter gain related to disposals of individually insignificant assets in the ordinary course of business Current year to date gain related to the sale of the crop risk services business and disposals of other individually insignificant assets in the ordinary course of business, partially offset by an adjustment of the proceeds of the 2015 sale of the cocoa business. Prior quarter ~~loss related principally to~~gains consisted of a ~~loss~~gain on the sale of certain assets and a step up gain on an equity investment. ~~Prior year to date gain primarily~~

⁽²⁾ Current and prior quarter charges related to ~~recovery of loss provisions and gain related to~~ the sale of the Company’s Brazilian sugar ethanol facilities, realized contingent consideration on the December 2012 sale of the Company’s equity investment in Gruma S.A. de C.V., and revaluation of the remaining interest to settlement value in conjunction with the acquisition of the remaining interest in Amazon Flavors.

⁽²⁾ Current quarter and year to date charges consisted of asset impairments related to the reconfiguration of the Company’s Peoria, Illinois ethanol complex in the Corn processing segment and several individually insignificant asset impairments and restructuring charges. Prior quarter and YTD charges primarily related to impairment of certain long-lived ~~assets and restructuring charges.~~assets.

⁽³⁾ ~~Hedge timing effects relate to hedge ineffectiveness associated with documented hedge programs.~~

Note 15. Asset Impairment, Exit, and Restructuring Costs

Asset impairment, exit, and restructuring costs of $41 million in the three months ended March 31, 2020 consisted primarily of impairments related to certain intangible and other long-lived assets presented as specified items within segment operating profit. Asset impairment, exit, and restructuring costs in the ~~quarter~~three months ended ~~September 30, 2017~~March 31, 2019 consisted of ~~$107 million included $63~~$9 million of ~~asset~~ impairments ~~principally in the Corn Processing segment~~ related to ~~the reconfiguration of the Peoria, Illinois ethanol complex due to the Company’s decision to focus on the more profitable high grade industrial~~certain long-lived assets presented as specified items within segment operating profit and ~~beverage alcohol as well as export fuel. The impaired assets were determined to have no alternative use with zero net salvage value. Other costs in the current quarter included $44~~$2 million of restructuring charges related to the reduction of certain positions within the Company’s global workforce. Asset impairment, exit, and restructuring costs in the nine months ended September 30, 2017 of $140 million consisted of $63 million of asset impairments in the Corn processing segment primarily related to the reconfiguration of the Company’s Peoria, Illinois ethanol complex, $47 million ofindividually insignificant restructuring charges in Corporate primarily related to the reduction of certain positions within the Company’s global workforce, and $30 million of several individually insignificant asset impairments and restructuring charges.Corporate.

Asset impairment, exit, and restructuring costs in the quarter ended September 30, 2016 consisted of $6 million of other-than-temporary impairment charges on available for sale equity security investments in Corporate and $5 million of several individually insignificant asset impairments and restructuring charges. Asset impairment, exit, and restructuring costs in the nine months ended September 30, 2016 consisted of $17 million of software impairment and other-than-temporary impairment charges on available for sale equity security investments in Corporate, $5 million of asset impairments in the Corn Processing segment, and $14 million of other individually insignificant asset impairments and restructuring charges.

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

Note 16. Sale of Accounts Receivable

~~Since March 2012, the~~The Company has ~~had~~ an accounts receivable securitization program (the “Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the ~~“Purchasers”~~“First Purchasers”). Under the Program, certain U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Receivables, LLC (“ADM Receivables”). ADM Receivables in turn transfers such purchased accounts receivable in their entirety to the First Purchasers pursuant to a receivables purchase agreement. In exchange for the transfer of the accounts receivable, ADM Receivables receives a cash payment of up to $~~1.2~~1.3 billion and an additional amount upon the collection of the accounts receivable (deferred consideration). The Program terminates on June ~~22, 2018,~~18, 2020, unless extended.

~~In March 2014, the~~The Company ~~entered into a second~~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”). ADM Ireland Receivables in turn transfers 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 receives a cash payment of up to ~~$0.5~~$0.6 billion ~~as amended,~~(€0.5 billion) and an additional amount upon the collection of the accounts receivable (deferred consideration). The Second Program terminates on March ~~16, 2018,~~12, 2021, unless extended.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 16. Sale of Accounts Receivable (Continued)

Under the Program and Second Program (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 to finance the purchase of receivables from the Company and the ADM subsidiaries originating the receivables.

The Company accounts for these transfers as sales. The Company has no retained interests in the transferred receivables, other than collection and administrative responsibilities and its right to the deferred consideration. At ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019, 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 cost of servicing the receivables sold.

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the fair value of trade receivables transferred to the ~~Purchasers and Second~~ Purchasers under the Programs and derecognized from the Company’s consolidated balance sheet was $~~1.8~~1.9 billion ~~and $1.6 billion, respectively.~~. In exchange for the ~~transfer~~transfers as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the Company received cash of $1.4 billion ~~and $1.0 billion~~, and recorded a receivable for deferred consideration included in other current assets of $~~399~~496 million and ~~$540~~$446 million, respectively. Cash collections from customers on receivables sold were $~~24.3~~8.5 billion and $~~24.4~~8.4 billion for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019, respectively. Of this amount, ~~$24.3~~$3.3 billion and ~~$23.9~~$3.1 billion ~~pertain to~~were cash collections on the deferred receivables consideration reflected as cash inflows from investing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019, respectively. Deferred receivables consideration is paid to the Company in cash on behalf of the Purchasers as receivables are collected; however, as this is a revolving facility, cash collected from the Company’s customers is reinvested by the Purchasers daily in new receivable purchases under the ~~Program.~~Programs.

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

Transfers of receivables under the Programs resulted in an expense for the loss on sale of $2 million ~~during~~and $8 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, and $7 million and $4 million for the nine months ended September 30, 2017 and 2016,~~2019, respectively, which is classified as selling, general, and administrative expenses in the consolidated statements of earnings.

~~The~~In accordance with the amended guidance of Topic 230, the Company reflects ~~all~~ cash flows related to the deferred receivables consideration of the Programs as ~~operating~~investing activities in its consolidated ~~statement~~statements of cash flows. All other cash flows ~~for the nine months ended September 30, 2017 and~~ ~~2016~~are classified as operating activities because the cash received from ~~the Purchasers and Second~~ Purchasers upon both the sale and collection of the receivables is not subject to ~~significantly different risks~~significant interest rate risk given the short-term nature of the Company’s trade receivables.

On April 1, 2020, the Company restructured the Second Program from a deferred purchase price to a pledge structure. Under the new structure, ADM Ireland Receivables transfers a portion of the purchased accounts receivable together with an equally proportional interest in all of its right, title and interest in the remaining purchased accounts receivable to each of the Second Purchasers. In exchange, ADM Ireland Receivables receives a cash payment for the accounts receivables transferred.

Note 17. Subsequent Event

On April 23, 2020, the Company announced that due to the challenging operating environment, it is currently managing ethanol production throughout its U.S. corn processing network to focus on cash flows and to divert corn grind to other products that are in higher demand, such as alcohol for hand sanitizer. As part of this process, ADM is temporarily idling ethanol production at its corn dry mill facilities in Cedar Rapids, Iowa, and Columbus, Nebraska, for a period of four months subject to market conditions. To better align production with current demand, the Company has also reduced the ethanol grind at its corn wet mill plants and rebalanced grind to produce more industrial alcohol for the sanitizer market and industrial starches for the container board market.


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.

~~The Company~~ADM is ~~principally engaged~~a global leader in ~~procuring, transporting, storing,~~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 ~~merchandising agricultural commodities~~animal nutrition, and ~~products.~~other products made from nature. The Company uses its significant global asset base to originate and transport agricultural commodities, connecting to markets in ~~163~~more than 190 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 ~~its~~our shareholders, principally from margins earned on these activities.

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

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

The Company’s operations are organized, managed, and classified into ~~four~~three reportable business segments: ~~Agricultural~~Ag Services ~~Corn Processing,~~and Oilseeds, ~~Processing,~~Carbohydrate Solutions, and ~~Wild Flavors and Specialty Ingredients.~~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. See~~Other Business. Financial information with respect to the Company’s reportable business segments is set forth in Note 14 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” ~~for more information about~~.

The Company executes its strategic vision through three pillars: Optimize the Core, Drive Efficiencies, and Expand Strategically, all supported by its Readiness effort. During 2018, the Company launched Readiness to drive new efficiencies and improve the customer experience in the Company’s ~~business segments.~~

~~The Company’s recent significant portfolio actions~~existing businesses through a combination of data analytics, process simplification and ~~announcements include:~~

standardization, and behavioral and cultural change, building upon its earlier 1ADM and operational excellence programs. Readiness also supports the ~~acquisition in February 2017 of Crosswind Industries, Inc., an industry leader in the manufacture of contract and private label pet treats and foods, as well as specialty ingredients;~~

~~the acquisition in February 2017 of an 89% controlling interest in Biopolis SL, a leading provider of microbial technology with a strong portfolio of novel food ingredients;~~

~~the construction of a new feed-premix facility in Xiangtan, China, which is expected to be completed in 2019;~~

~~the sale in May 2017 of the Company's crop risk services business to Validus Holdings, a global group of insurance and reinsurance companies;~~

~~the completion in May 2017 of a series of major enhancements at the Company’s export terminal in Santos, in the Brazilian state of Sao Paulo;~~

~~the construction of a new flour mill in Mendota, Illinois, which is expected to be completed in 2019;~~

~~the expansion of a Golden Peanut and Tree Nuts production facility in Blakely, Georgia, which is expected to be completed in 2018;~~

~~the completion of a new silo located on the Danube River in Silistra, Bulgaria;~~

~~the acquisition in June 2017 of Chamtor, a French producer of wheat-based sweeteners and starches;~~

the acquisition in July 2017 of a 51% controlling interest in Industries Centers, an Israeli company specializing in the import and distribution of agricultural feed products, which will now be known as ADM Israel; and

~~the modernization of the flour mill in Enid, Oklahoma, which is expected to be completed in 2018.~~

~~As part of the implementation~~execution of the Company’s ~~strategic plan, the Company continues to evaluate the capital intensity of~~growth strategies across its ~~operations~~five key growth platforms: Taste, Nutrition, Animal Nutrition, Health and ~~portfolio, seeking ways to reduce~~Wellness, and ~~redeploy capital in its efforts to drive long-term returns.~~Carbohydrates.

Operating Performance Indicators

The Company is exposed to certain risks inherent to an agricultural-based commodity business. These risks are further described in Item 1A, “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

The Company’s ~~agricultural services~~Ag Services and ~~oilseeds processing~~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. ~~Therefore,~~As a result, changes in agricultural commodity prices have relatively equal impacts on both revenues and cost of products sold. ~~Thus,~~Therefore, changes in revenues of these businesses do not necessarily correspond to the changes in margins or gross profit. Thus, gross margins per volume or metric ton are more meaningful than gross margins as percentage of revenues.


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

The Company’s ~~corn processing~~Carbohydrate Solutions operations and ~~Wild Flavors and Specialty Ingredients~~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 ~~equal~~correlate to changes in cost of products sold. ~~Thus,~~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 76more than 70 countries. For the majority of the Company’s subsidiaries located outside the United States, the local currency is the functional currency except 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 ~~conversion~~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.

The Company measures its performance using key financial metrics including net earnings, gross margins, segment operating profit, return on invested capital, EBITDA, economic value added, manufacturing expenses, and selling, general, and administrative expenses. 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. 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.”

Market Factors Influencing Operations or Results in the Three Months Ended ~~September 30, 2017~~March 31, 2020

~~As an agricultural commodity-based business, the~~The Company is subject to a variety of market factors which affect the Company's operating results. ~~Agricultural~~In Ag Services ~~was~~and Oilseeds, North American origination margins were impacted by ~~weak U.S. grain~~low export ~~competitiveness. Overall low market prices and price volatility continued~~demand while crushing margins were compressed due to ~~a surplus~~slow farmer selling. South American origination volumes benefited from strong farmer selling in Brazil driven by the devaluation of ~~grains~~the Real. Demand and ~~oilseeds~~margins for refined oils and biodiesel in ~~the global market.~~EMEAI were challenging. In ~~Corn Processing,~~Carbohydrate Solutions, demand and prices for ~~sweeteners~~starches and ~~starches~~sweeteners remained solid in North America while co-product prices were stable. Ethanol continues to face a challenging environment. Although ethanol demand remained strong both in North America and export markets due to favorable gasoline blending economics and ethanol's continuing statusmargins were significantly pressured as ~~a competitive octane enhancer,~~ U.S. industry ethanol production also remained at high levels, limiting margins. Global oilseeds processing volumes remained strong but competition from Argentine exports significantly decreased margins, especially in Europe. Slow selling by farmers in Brazil lowered volumes and pressured grain origination and soy crushing margins. Whileexceeded demand and ~~margins for refined oil~~inventories remained ~~solid across all regions,~~high. In addition, the ~~uncertainty surrounding~~effects of COVID-19 depressed ethanol demand resulting in record high industry stock levels towards the ~~biodiesel tax credit has negatively impacted biodiesel margins. Wild Flavors and Specialty Ingredients~~end of the quarter. Nutrition benefited from ~~strong~~growing demand for ~~flavor ingredients~~flavors, flavors systems, minerals, premix, pet food, livestock, plant-based proteins, and ~~flavor systems, but continued~~probiotics, and saw shifting demand from foodservice to ~~be adversely affected by start-up costs and margin pressure in certain non-flavor food ingredient markets.~~other retail channels.

Three Months Ended ~~September 30, 2017~~March 31, 2020 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2019

Net earnings attributable to controlling interests ~~was $192~~increased $158 million ~~in the third quarter of 2017 compared~~ to ~~$341 million in the third quarter of 2016.~~$391 million. Segment operating profit ~~was $485~~decreased $12 million ~~in the third quarter of 2017 compared~~ to ~~$645 million in the third quarter of 2016.~~$599 million. Included in segment operating profit in the current quarter ~~was a net charge~~were asset impairment charges of ~~$56 million consisting of a net gain on sales of assets, impairment and restructuring charges, and corn hedge timing effects.~~$44 million. Included in segment operating profit in the prior year quarter was a net ~~charge~~gain of $5$3 million consisting of ~~a loss~~asset impairment charges, gains on the sale of certain assets, and a step-up gain on an ~~investment, impairment and restructuring charges, and corn hedge timing effects.~~equity investment. Adjusted segment operating profit ~~decreased $109~~increased $35 million to ~~$541~~$643 million due primarily to higher results in Nutrition and Ag Services, and higher equity earnings from the ~~lack of competitiveness of U.S. grains~~Wilmar investment, partially offset by lower results in ~~the global markets, compressed global crush margins, risk management losses,~~Crushing and ~~start-up costs.~~Starches and Sweeteners. Corporate results were a net charge of ~~$260~~$224 million ~~this~~in the current quarter compared to ~~$165~~$296 million in ~~last year’s~~the prior year quarter. Corporate results ~~this~~in the current quarter included ~~an immaterial charge~~a credit of $91 million from the effect of ~~changing~~the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020, compared to a charge of $1 million in the prior year quarter from changes in agricultural commodity prices on LIFO inventory valuation ~~reserves, compared~~reserves.

Income tax expense decreased $97 million to a ~~credit~~benefit of ~~$85 million in the third quarter of 2016.~~

~~Income taxes decreased $106 million to $30~~$16 million due to ~~lower earnings before income taxes and~~ a lower effective tax rate. The Company’s effective tax rate for the quarter ended ~~September 30, 2017 decreased to 13.3%~~March 31, 2020 was a benefit of 4.3% compared to ~~28.3%~~an expense of 25.7% for the quarter ended ~~September 30, 2016,~~March 31, 2019. The change in the rate was primarily due to the impact of ~~changes~~U.S. tax credits signed into law in December 2019, including a $73 million discrete tax benefit related to 45G railroad credits recognized in the quarter ended March 31, 2020, which are now reflected in the 2020 projected effective tax rate. The prior quarter rate also included unfavorable discrete tax items ~~including the favorable resolution of an uncertain tax position~~primarily related to ~~a 2014 acquisition and return to provision in the current quarter, partially offset by changes in the forecasted geographic mix of pre-tax earnings and the expiration of~~ U.S. tax ~~credits, including the biodiesel credit, at the end of 2016.~~reform transition tax adjustments.


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

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

Analysis of Statements of Earnings

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


	Three Months Ended				Three Months Ended
	September 30,				March 31,
(In thousands)	2017	2016	Change		2020	2019	Change
Oilseeds	8,265	8,388	(123	)	9,163	9,167	(4	)
Corn	5,621	5,794	(173	)	5,534	5,132	402
Total	13,886	14,182	(296	)	14,697	14,299	398

Revenues decreased $1.0 billion to $14.8 billion due to lower sales volumes ($0.9 billion) and lower average selling prices ($0.1 billion). The decrease in sales volumes was due principally to a decrease in volumes of unprocessed commodities, in particular volumes of soybeans, corn, and rapeseed. Agricultural Services revenues decreased 13% to $6.1 billion due to lower sales volumes ($0.8 billion) and lower average selling prices ($0.1 billion). Corn Processing revenues decreased 3% to $2.3 billion due to lower sales volumes ($0.1 billion). Oilseeds Processing revenues of $5.8 billion and Wild Flavors and Specialty Ingredients revenues of $0.6 billion were in line with the prior year’s quarter.

Cost of products sold decreased $0.7 billion to $14.0 billion due principally to lower sales volumes. Included in cost of products sold during this quarter was an immaterial charge from the effect of changing agricultural commodity prices on LIFO inventory valuation reserves compared to a credit of $85 million in the prior year’s quarter. Manufacturing expenses of $1.3 billion in the current quarter was in line with the prior year’s quarter.

Gross profit decreased $0.3 billion to $0.8 billion. The decrease in gross profit consisted principally of lower results in merchandising and handling ($72 million), soybean and canola processing ($64 million) and biodiesel ($51 million) in Oilseeds Processing, partially offset by higher results in sweeteners and starches ($18 million). These factors are explained in the segment operating profit discussion on page 38. Current period gross profit included an immaterial charge from the effect of changing agricultural commodity prices on LIFO inventory valuation reserves compared to a credit of $85 million during the same period last year.

Selling, general, and administrative expenses decreased $68 million to $478 million due principally to prior period expenses related to a settled legal matter and lower pension expense in the current quarter.

Asset impairment, exit, and restructuring charges increased $96 million to $107 million. Current period charges consisted of $63 million of asset impairments primarily related to the reconfiguration of the Company’s Peoria, Illinois ethanol complex in the Corn Processing segment and $44 million of restructuring charges related to the reduction of certain positions within the Company’s global workforce. Prior period charges included $6 million of other-than-temporary impairment charges on two available for sale equity security investments in Corporate and $5 million of several individually insignificant asset impairments and restructuring charges.

~~Interest expense increased $1 million to $79 million due principally to higher interest rates on short-term debt and the issuance of the $1 billion fixed-rate notes in August 2016.~~

Equity in earnings of unconsolidated affiliates increased from a loss of $2 million to income of $46 million primarily due to higher earnings from the Company’s investment in Wilmar resulting from the increased ownership stake in and higher results from Wilmar, partially offset by lower results from the Company’s equity investment in CIP.

Other income of $4 million was comparable to the prior period. Current period income included gains related to disposals of individually insignificant assets in the ordinary course of business, partially offset by a charge related to the early redemption of the Company’s $559 million notes due on March 15, 2018. Prior period income included foreign exchange gains and other income partially offset by a loss on the sale of an investment.


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

~~Segment operating~~Revenues decreased $0.3 billion to $15.0 billion due to overall lower sales volumes and lower sales prices. Lower sales volumes of soybeans were partially offset by higher sales volumes of wheat and animal nutrition products. The decrease in sales prices was due principally to wheat, flours, sweeteners, and oils. Ag Services and Oilseeds revenues decreased 4% to $11.1 billion due to lower sales volumes ($0.4 billion). Carbohydrate Solutions revenues decreased 4% to $2.3 billion due to lower sales prices ($0.1 billion). Nutrition revenues increased 15% to $1.5 billion due to higher sales volumes ($0.2 billion).

Cost of products sold decreased $0.4 billion to $14.0 billion due to overall lower sales volumes. Included in cost of products sold in the current quarter 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 compared to a charge of $1 million from the effect of changes in agricultural commodity prices on LIFO inventory valuation reserves in the prior year quarter. Manufacturing expenses increased $63 million to $1.5 billion due principally to railroad maintenance expenses and the acquisition of Neovia, partially offset by lower energy costs and maintenance expenses.

Foreign currency translation impacts decreased both revenues and cost of products sold by $0.1 billion.

Gross profit ~~adjusted~~increased $23 million or 2%, to $1.0 billion. Higher results in Nutrition ($75 million) were offset by lower results in Ag Services and Oilseeds ($62 million) and Carbohydrate Solutions ($36 million). These factors are explained in the segment operating profit ~~(a non-GAAP measure),~~discussion on page 37. 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 current quarter compared to a negative impact of $1 million in the prior year quarter from changes in agricultural commodity prices on LIFO inventory valuation reserves.

Selling, general, and ~~earnings before income taxes for~~administrative expenses increased $5 million to $664 million due principally to higher variable performance-related and stock compensation expense accruals and IT expenses, partially offset by lower salaries and wages.

Asset impairment, exit, and restructuring costs increased $30 million to $41 million. Charges in the current quarter ~~are~~consisted primarily of impairments related to certain intangible and other long-lived assets presented as ~~follows:~~

Three Months Ended
September 30,
Segment Operating Profit 2017 2016 Change
(In millions)
Agricultural Services
Merchandising and Handling $ 20
$ 92
$ (72 )
Milling and Other 53
60
(7 )
Transportation 14
43
(29 )
Total Agricultural Services 87
195
(108 )

Corn Processing

Sweeteners and Starches 202
176
26
Bioproducts 51
38
13
Total Corn Processing 253
214
39

Oilseeds Processing

Crushing and Origination 39
76
(37 )
Refining, Packaging, Biodiesel, and Other 66
119
(53 )
Asia 14
(50 ) 64
Total Oilseeds Processing 119
145
(26 )

Wild Flavors and Specialty Ingredients 61
73
(12 )
Total Wild Flavors and Specialty Ingredients 61
73
(12 )

Other - Financial 21
23
(2 )
Total Other 21
23
(2 )

Specified Items:
Gains (losses) on sales of assets and businesses 12
(4 ) 16
Impairment and restructuring charges (63 ) (4 ) (59 )
Hedge timing effects (5 ) 3
(8 )
Total Specified Items (56 ) (5 ) (51 )

Total Segment Operating Profit $ 485
$ 645
$ (160 )

Adjusted Segment Operating Profit⁽¹⁾
$ 541
$ 650
$ (109 )

Segment Operating Profit $ 485
$ 645
$ (160 )
Corporate (260 ) (165 ) (95 )
Earnings Before Income Taxes $ 225
$ 480
$ (255 )

⁽¹⁾ ~~Adjusted~~specified items within segment operating profit. Charges in the prior year quarter consisted of $9 million of impairments related to certain long-lived assets presented as specified items within the segment operating profit ~~is segment operating profit excluding~~and $2 million of individually insignificant restructuring charges in Corporate.

Interest expense decreased $18 million to $83 million due principally to lower interest rates and interest savings from cross currency swaps.

Equity in earnings of unconsolidated affiliates increased $39 million to $140 million due to higher earnings from the ~~above specified items.~~Company’s investment in Wilmar, partially offset by lower earnings from the Company’s investment in Olenex and the sale of the CIP investment in December 2019.

Other income - net increased $24 million to $32 million. Income in the current quarter included foreign exchange gains, the non-service components of net pension benefit income, and other income, partially offset by loss provisions related to the Company’s futures commission and brokerage business. Income in the prior year quarter included gains on the sale of certain assets, step-up gains on equity investments, the non-service components of net pension benefit income, and other income, partially offset by foreign exchange losses.


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

~~Agricultural Services~~Segment operating profit decreased 55%. Merchandising and Handling operating results decreased due to the lack of competitiveness of U.S. grains in the global markets resulting in a significant decrease in margins and lower U.S. grain export volumes. Global Trade generated good results from international origination and destination marketing businesses partially offset by some hedge position losses. Milling and Other results declined due to decreased volumes, mainly in the U.S.(loss), while maintaining steady product margins. Transportation results decreased primarily due to low U.S. grain exports and a slower start to harvest in North America resulting in lower barge freight volumes and margins.

~~Corn Processing~~adjusted segment operating profit ~~increased 18%. Sweeteners~~(a non-GAAP measure), and Starches operating profit increased due to strong margins in North America while international operations continued to provide solid contributions to overall results. Bioproducts results increased with better ethanol margins.

Oilseeds Processing operating profit decreased 18%. Crushing and Origination operating profit decreased due to compressed global crush margins amid ample meal supplies, weak canola margins due in part to higher seed costs, increased competition from Argentine meal exports, and weak South America origination margins resulting from continued low commodity prices that reduced the pace of farmer selling forcing higher basis costs. Refining, Packaging, Biodiesel, and Other operating profit declined due to the uncertainty surrounding the biodiesel tax credit that has negatively impacted biodiesel margins. Asia results increased on higher earnings ~~from the Company’s investment in Wilmar due to the increased ownership stake in and higher results from Wilmar.~~

Wild Flavors and Specialty Ingredients operating profit decreased 16%. Weaker results in specialty ingredients, due in part to operational start-up costs, were partially offset by the continuing strong demand for flavor ingredients and flavor systems in Africa and Asia.

~~Other - Financial operating profit decreased 9% primarily due to lower results from the captive insurance operations.~~

~~Corporate results~~before income taxes for the quarter are as follows:

Three Months Ended
September 30,
2017 2016 Change
(In millions)
LIFO credit (charge) $ —
$ 85
$ (85 )
Interest expense - net (72 ) (74 ) 2
Unallocated corporate costs (109 ) (106 ) (3 )
Other charges (55 ) (74 ) 19
Minority interest and other (24 ) 4
(28 )
Total Corporate $ (260 ) $ (165 ) $ (95 )



	Three Months Ended
	March 31,
Segment Operating Profit (Loss)	2020			2019			Change
	(In millions)
Ag Services and Oilseeds
Ag Services	$	164		$	75		$	89
Crushing	70			216			(146		)
Refined Products and Other	81			72			9
Wilmar	107			54			53
Total Ag Services and Oilseeds	422			417			5

Carbohydrate Solutions
Starches and Sweeteners	99			135			(36		)
Vantage Corn Processors	(31		)	(39		)	8
Total Carbohydrate Solutions	68			96			(28		)

Nutrition
Human Nutrition	113			88			25
Animal Nutrition	29			(7		)	36
Total Nutrition	142			81			61

Other Business	11			14			(3		)

Specified Items:
Gains (losses) on sales of assets and businesses	—			12			(12		)
Asset impairment charges	(44		)	(9		)	(35		)
Total Specified Items	(44		)	3			(47		)

Total Segment Operating Profit	$	599		$	611		$	(12	)

Adjusted Segment Operating Profit⁽¹⁾	$	643		$	608		$	35

Segment Operating Profit	$	599		$	611		$	(12	)
Corporate	(224		)	(296		)	72
Earnings Before Income Taxes	$	375		$	315		$	60

Corporate results were a net charge of $260 million this quarter compared to $165 million in last year’s quarter. The effect of changing agricultural commodity prices on LIFO inventory valuation reserves resulted in an immaterial charge this quarter compared to a credit of $85 million in⁽¹⁾ Adjusted segment operating profit is segment operating profit excluding the prior year quarter. Other charges in the current period included a charge related to the early redemption of the Company’s $559 million notes due on March 15, 2018 and restructuring charges related to the reduction of certain positions within the Company’s global workforce. Other charges in the prior period included legal settlement costs and legal fees, other-than-temporary impairment charges on available for sale equity security investments, a loss on the sale of an investment, and restructuring charges. Minority interest and other expense increased $28 million due principally to lower results from the Company’s equity investment in CIP.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 1%. Ag Services results more than doubled compared to the first quarter of 2019, which were negatively impacted by high water conditions in North America. Strong performance in global trade was driven by strong results in destination marketing and structured trade finance. Robust farmer selling in Brazil drove higher origination volumes and margins, which were partially offset by weaker results in North America. Crushing results were lower than the prior year quarter. Volumes were strong and execution margins were solid although below the high realized margins in the first quarter of 2019, which benefited from the short crop in Argentina. The prior year quarter also benefited from positive timing effects. Refined Products and Other results were higher due to margins in both biodiesel and refined oils in North America, partially offset by lower biodiesel margins in EMEAI. Peanut shelling results significantly improved from the prior year quarter. Wilmar results were significantly higher year-over-year.

Carbohydrate Solutions operating profit decreased 29%. Starches and Sweeteners results, which includes the wet mill ethanol results, were down driven largely by negative mark-to-market timing effects on forward sales of certain co-products. Absent those impacts, results were higher due to better operating performance at the Decatur facility, strong results in wheat milling, and improved conditions in EMEAI. VCP results were slightly higher versus the prior year quarter. Effective risk management and the lack of severe weather impacts seen in the first quarter of 2019, were partially offset by weak industry ethanol margins caused by significantly decreased demand.

Nutrition operating profit increased 75%. Human Nutrition, which includes businesses in flavors, specialty ingredients, and health and wellness, delivered strong performance and growth across its broad portfolio. Increased revenues in North America and EMEAI flavors, continued sales growth in alternative proteins, and additional bioactives income, drove improved results. Animal Nutrition results improved year-over-year driven by strong performance from Neovia, good volumes and margins in feed additives, and solid sales in pet care. Amino acids were negatively impacted by a decline in the global pricing environment.

Other Business operating profit decreased 21%. Loss provisions related to the Company’s futures commission and brokerage business were partially offset by improvements in the captive insurance operations.

Corporate results for the quarter are as follows:



	Three Months Ended
	March 31,
	2020			2019			Change
	(In millions)
LIFO adjustment	$	91		$	(1	)	$	92
Interest expense-net	(77		)	(90		)	13
Unallocated corporate costs	(189		)	(183		)	(6		)
Expenses related to acquisitions	—			(14		)	14
Restructuring adjustments (charges)	3			(2		)	5
Other charges	(52		)	(6		)	(46		)
Total Corporate	$	(224	)	$	(296	)	$	72

Corporate results were a net charge of $224 million in the current quarter compared to $296 million in the prior year quarter. The elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020 resulted in a credit of $91 million in the current quarter compared to a charge of $1 million from the effect of changes in agricultural commodity prices on LIFO inventory valuation reserves in the prior quarter. Interest expense-net decreased $13 million due principally to lower interest rates and interest savings from cross currency swaps. Unallocated corporate costs increased $6 million due principally to higher variable performance-related and stock compensation expense accruals and IT expenses. Expenses related to acquisitions in the prior quarter related to the Neovia acquisition. Other charges in the current quarter included railroad maintenance expenses of $73 million that had an offsetting benefit in income tax expense, partially offset by the non-service components of net pension benefit income of $13 million and foreign exchange gains. Other charges in the prior quarter included foreign exchange losses, partially offset by earnings from the Company’s equity investment in CIP which was sold in December 2019.


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

Non-GAAP Financial Measures

The Company uses adjusted earnings per share ~~(EPS)~~(“EPS”), adjusted earnings before taxes, interest, and depreciation and amortization ~~(EBITDA)~~(“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 ~~certain~~ specified items. Adjusted EBITDA is defined as earnings before taxes, interest, and 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.

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.

The table below provides a reconciliation of diluted EPS to adjusted EPS for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019.


	Three months ended September 30,												Three months ended March 31,
	2017						2016						2020						2019
	In millions			Per share			In millions			Per share			In millions			Per share			In millions			Per share
Average number of shares outstanding - diluted	569						589						564						566

Net earnings and reported EPS (fully diluted)	$	192		$	0.34		$	341		$	0.58		$	391		$	0.69		$	233		$	0.41
Adjustments:
LIFO charge (credit) - net of tax of $32 million⁽¹⁾	—			—			(53		)	(0.09		)
(Gains) losses on sales of assets and businesses - net of tax of $2 million in 2017 and at 0% in 2016 ⁽²⁾	(10		)	(0.02		)	9			0.02
Asset impairment, restructuring, and settlement charges - net of tax of $38 million in 2017 and $25 million in 2016⁽²⁾	69			0.12			48			0.08
Loss on debt extinguishment - net of tax of $4 million⁽¹⁾	7			0.01			—			—
LIFO adjustment - net of tax of $22 million in 2020 and $0 million in 2019 ⁽¹⁾													(69		)	(0.12		)	1			—
(Gains) losses on sales of assets and businesses - net of tax of $3 million in 2019 ⁽²⁾													—			—			(9		)	(0.02		)
Asset impairment and restructuring charges - net of tax of $9 million in 2020 and $1 million in 2019⁽²⁾													32			0.06			10			0.02
Expenses related to acquisitions - net of tax of $5 million in 2019 ⁽²⁾													—			—			9			0.02
Certain discrete tax adjustments													7			0.01			17			0.03
Total adjustments	66			0.11			4			0.01			(30		)	(0.05		)	28			0.05
Adjusted net earnings and adjusted EPS	$	258		$	0.45		$	345		$	0.59		$	361		$	0.64		$	261		$	0.46

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 1110 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 business, and at any given time, the Company has matters at various stages of ~~resolution with the applicable government authorities.~~resolution. The outcomes of these matters are not within our 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.

The Company ishas been a party to numerous lawsuits pending in various U.S. state and federal courts arising out of Syngenta Corporation’s ~~(Syngenta)~~(“Syngenta”) marketing and distribution of genetically modified corn products ~~Agrisure Viptera and Agrisure Duracade,~~ in the U.S. First, the Company brought a state court action in Louisiana against Syngenta in 2014, alleging Syngenta was negligent in commercializing its products before the products were approved in China. ~~Second,~~In December 2017, the Company isand Syngenta reached a ~~party in a number~~confidential settlement of ~~purported class actions filed beginning in 2013 by farmers and other parties against~~this action. Second, Syngenta in federal and state courts, again alleging that Syngenta was negligent in commercializing its products. The federal actions have been consolidated for pretrial proceedings in a multidistrict litigation (MDL) proceeding in federal court in Kansas City, Kansas, and some state actions have been consolidated for pretrial proceedings in MDL in Minnesota state court. In the fourth quarter of 2015, Syngenta filedbrought third-party claims against the Company in 2015 in a federal multidistrict litigation (“MDL”) in Kansas City, Kansas, consolidated state court litigation in Minneapolis, Minnesota, and other ~~grain companies in these MDLs~~courts, seeking contribution in the event Syngenta is held liable in ~~these lawsuits.~~class actions by farmers and other parties. In ~~September~~the December 2017 settlement, Syngenta ~~filed similar~~agreed to dismiss all of these third-party claims against the ~~Company in Iowa state court. The federal court in the Kansas MDL dismissed all claims against the Company on April 4, 2016,~~Company. Third, farmers and the state court in the Minnesota MDL dismissed all claims against the Company on September 6, 2016. Therefore, the Company is no longer a third-party defendant in the federal or state MDL. The Company also intends to move to dismiss the third-party claims in Iowa state court. In September 2017, Syngenta and the farmer plaintiffs announced a tentative settlement, subject to court approval, of all claims by those plaintiffs. Third,other parties have sued the Company and other grain companies ~~have been named as defendants~~ in numerous individual and purported class action suits ~~filed by farmers and other parties~~ in Illinois state and federal courts beginning in the fourth quarter of 2015, alleging the Company and other grain companies were negligent in failing to screen for genetically modified corn. ~~As noted,~~All of these claims were dismissed, subject to appeal, in several orders entered on ~~September 6,~~August 17, 2016 by the federal court in ~~the Minnesota state MDL dismissed all claims against the Company, and~~Minneapolis on January 4, 2017 aby the federal court in the Southern District of Illinois, ~~similarly dismissed all~~and on August 18, 2017 by a state court in Illinois. Subsequently in 2019, a number of ~~the pending complaints~~additional plaintiffs filed substantially similar claims against the Company and other grain companies in ~~Southern Illinois. Some parties are expected~~the same Illinois state court. On January 30, 2020, the Illinois state court judge held that its August 18, 2017 dismissal order would also be applied to ~~appeal some or all of~~ these ~~dismissals. Currently,~~more recently filed claims. Thus, subject to appeals, the Company ~~remains~~will not be a defendant in ~~only certain state court actions by farmers and other parties pending in Illinois state court, which the Company has moved to dismiss as well.~~any remaining actions. The Company denies liability in all of the actions in which it has been named as a defendant or third-party defendant ~~or defendant~~ and iswill vigorously ~~defending~~defend itself on appeal in these cases. ~~All of these actions are in pretrial proceedings.~~ At this time, the Company is unable to predict the final outcome of this matter 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.

On September 4, 2019, AOT Holding AG (“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. AOT alleges that members of the putative class suffered “hundreds of millions of dollars in damages” as a result of the Company’s alleged actions. The Company filed a motion to dismiss this suit in November 2019, and that motion is awaiting decision by the court. The Company denies liability, and is vigorously defending itself, in this action. As this action is 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.

On September 5, 2019, D&M Farms, Mark Hasty, and Dustin Land filed a putative class action on behalf of a purported class of peanut farmers under the U.S. federal antitrust laws in federal court in Norfolk, Virginia, alleging that the Company’s subsidiary, Golden Peanut, and another peanut shelling company, conspired to fix the price they paid to farmers for raw peanuts. The Company filed a motion to dismiss this suit in October 2019, and that motion is awaiting decision by the court. The Company denies liability, and is vigorously defending itself, in this action. As this action is 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.


ITEM 1.	LEGAL PROCEEDINGS (Continued)

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, 2017. For further information about the Company’s risk factors, refer to~~in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019. Except as presented below, there were no other significant changes in the Company’s risk factors during the quarter ended March 31, 2020.

The Company faces risks related to health epidemics, pandemics, and similar outbreaks.

ADM is monitoring the global outbreak of the novel coronavirus (COVID-19) and taking steps to mitigate the potential risks posed by its spread, including working with its customers, employees, suppliers, local communities, and other stakeholders. COVID-19 or other health epidemics, pandemics, or similar outbreaks could impact the Company’s operations if significant portions of its workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures, or other restrictions. In such circumstances, ADM may be unable to perform fully on its contracts, supply chain may be affected, and costs may increase. These cost increases may not be fully recoverable or adequately covered by insurance. In addition, a prolonged outbreak of COVID-19 or a resurgence of the virus in the future may have a material impact on demand for certain products that ADM produces, particularly biofuels and ingredients that go into food and beverages that service the food services channels. The Company cannot at this time predict the impact of the COVID-19 pandemic on its future financial or operational results, but the impact could potentially be material over time.


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, 2017 to
July 31, 2017 475,697
$ 41.000
475,697
19,123,029

August 1, 2017 to

August 31, 2017 1,959,118
41.835
1,959,118
17,163,911

September 1, 2017 to

September 30, 2017 1,494,187
42.433
1,494,187
15,669,724
Total 3,929,002
$ 41.961
3,929,002
15,669,724



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, 2020 to
January 31, 2020	252	$	45.561	252	108,314,669

February 1, 2020 to
February 29, 2020	468,174	44.770		40	108,314,629

March 1, 2020 to
March 31, 2020	3,355,364	33.472		3,352,579	104,962,050
Total	3,823,790	$	34.856	3,352,871	104,962,050

(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, 2017,~~March 31, 2020, there were no470,919 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 ~~November 5, 2014,~~August 7, 2019, the Company’s Board of Directors approved athe extension of the stock repurchase program ~~authorizing~~through December 31, 2024 and the ~~Company to~~ repurchase of up to an additional 100,000,000 shares ofunder the ~~Company’s common stock during the period commencing January 1, 2015 and ending December 31, 2019.~~extended program.


ITEM 6.	EXHIBITS



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

(3)(ii)		Bylaws, as amended, through ~~February 9, 2017~~May 1, 2019 (incorporated by reference to Exhibit 3(ii) to the Company’s Form 8-K filed on ~~February 13, 2017~~May 7, 2019 (File No. 1-44)).

(4.1)		The registrant hereby agrees that it will, upon request of the Securities and Exchange Commission, furnish a copy of each instrument with respect to long-term debt.

~~(12)~~18		~~Calculation of Ratio of Earnings to Fixed Charges~~Letter from independent registered public accounting firm regarding change in accounting principle.

(31.1)		Certification of Chief Executive Officer pursuant to Rule 13a–14(a) and Rule 15d–14(a) of the Securities Exchange Act, 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, 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)		Interactive Data File

(104)		Cover Page Interactive Data File (formatted as Inline XBRL and incorporated by reference to Exhibit 101)

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



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

Dated: ~~October 31, 2017~~May 1, 2020

5446



	Weighted Average % of Total Price
	March 31, 2020				December 31, 2019
Component Type	Assets		Liabilities		Assets		Liabilities
Inventories and Related Payables
Basis	14.9	%	11.5	%	28.2	%	14.7	%
Transportation cost	14.2	%	—	%	24.7	%	—	%

Commodity Derivative Contracts
Basis	16.0	%	21.1	%	16.0	%	20.2	%
Transportation cost	11.9	%	8.1	%	9.7	%	3.1	%



	Weighted Average % of Total Price
	September 30, 2017				December 31, 2016
Component Type	Assets		Liabilities		Assets		Liabilities
Inventories and Related Payables
Basis	16.2	%	62.7	%	16.5	%	67.1	%
Transportation cost	18.2	%	—	%	8.3	%	—

Commodity Derivative Contracts
Basis	22.3	%	21.3	%	16.9	%	27.0	%
Transportation cost	12.9	%	12.3	%	11.6	%	13.4	%



	(In millions)
Working capital	$	16
Property, plant, and equipment	111
Goodwill	34
Other intangible assets	50
Other long-term assets	6
Long-term liabilities	(19		)
Noncontrolling interest	(11		)
Aggregate cash purchase price, net of cash acquired	$	187


	Level 3 Fair Value Liability Measurements at									Level 3 Fair Value Liability Measurements at
	September 30, 2017									March 31, 2020
	Inventory- related Payables			Commodity Derivative Contracts Losses			Total Liabilities			Inventory- related Payables			Commodity Derivative Contracts Losses			Total Liabilities
	(In millions)									(In millions)

Balance, June 30, 2017	$	32		$	154		$	186
Balance, December 31, 2019										$	27		$	199		$	226
Total increase (decrease) in net realized/unrealized losses included in cost of products sold*	(9		)	82			73			3			205			208
Purchases	2			—			2			6			—			6
Sales	(5		)	—			(5		)	(16		)	—			(16		)
Settlements	—			(123		)	(123		)	—			(122		)	(122		)
Transfers into Level 3	—			35			35			—			36			36
Transfers out of Level 3	—			(3		)	(3		)	—			(9		)	(9		)
Ending balance, September 30, 2017	$	20		$	145		$	165
Ending balance, March 31, 2020										$	20		$	309		$	329


	Level 3 Fair Value Asset Measurements at									Level 3 Fair Value Asset Measurements at
	September 30, 2016									March 31, 2019
	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, 2016	$	1,099		$	153		$	1,252
Balance, December 31, 2018										$	1,515		$	155		$	1,670
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	(97		)	76			(21		)	(27		)	144			117
Purchases	2,523			—			2,523			2,689			—			2,689
Sales	(2,529		)	—			(2,529		)	(2,824		)	—			(2,824		)
Settlements	—			(85		)	(85		)	—			(103		)	(103		)
Transfers into Level 3	206			66			272			297			23			320
Transfers out of Level 3	(38		)	(6		)	(44		)	(139		)	(7		)	(146		)
Ending balance, September 30, 2016	$	1,164		$	204		$	1,368
Ending balance, March 31, 2019										$	1,511		$	212		$	1,723


Note 6.	Derivative Instruments and Hedging Activities (Continued)



						Other expense (income) - net
			Cost of products sold
(In millions)	Revenues		Cost of products sold
Three Months Ended March 31, 2020
Consolidated Statement of Earnings	$	14,970	$	14,019		$	(32	)

Pre-tax gains (losses) on:
Foreign Currency Contracts	$	35	$	(585	)	$	124
Commodity Contracts	—		622			55
Total gain (loss) recognized in earnings	$	35	$	37		$	179		$	251

Three Months Ended March 31, 2019
Consolidated Statement of Earnings	$	15,304	$	14,376		$	(8	)

Pre-tax gains (losses) on:
Foreign Currency Contracts	$	8	$	—		$	(30	)
Commodity Contracts	—		120			—
Total gain (loss) recognized in earnings	$	8	$	120		$	(30	)	$	98



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



	Nine months ended September 30,
	2017			2016
	(In millions)
Foreign Currency Contracts
Revenues	$	(16	)	$	(32	)
Cost of products sold	82			263
Other income (expense) – net	186			(108		)

Commodity Contracts
Cost of products sold	$	294		$	(266	)
Total gain (loss) recognized in earnings	$	546		$	(143	)



		Nine months ended
	Consolidated Statement of Earnings Locations	September 30,
	Consolidated Statement of Earnings Locations	2017			2016
		(In millions)
Effective amounts recognized in earnings
Foreign Currency Contracts	Other income/expense – net	$	(2	)	$	(25	)
Interest Contracts	Interest expense	—			(2		)
Commodity Contracts	Revenues	—			(14		)
	Cost of products sold	(20		)	(61		)
Ineffective amount recognized in earnings
Commodity Contracts	Revenues	4			—
	Cost of products sold	5			5
Total amount recognized in earnings		$	(13	)	$	(97	)



	Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(In millions)

September 30, 2017
United States government obligations
Maturity less than 1 year	$	259	$	—	$	—	$	259
Maturity 1 to 5 years	117		—		—		117
Corporate debt securities
Maturity less than 1 year	2		—		—		2
Maturity 1 to 5 years	90		—		—		90
	$	468	$	—	$	—	$	468



	March 31,		December 31,
	2020		2019
	(In millions)
Unrealized gains on derivative contracts	$	1,326	$	619
Deferred receivables consideration	496		446
Customer omnibus receivable	997		1,014
Financing receivables - net ⁽¹⁾	458		395
Insurance premiums receivable	21		41
Prepaid expenses	302		318
Biodiesel tax credit	75		541
Tax receivables	576		579
Non-trade receivables ⁽²⁾	401		369
Other current assets	395		278
	$	5,047	$	4,600



	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
	(In millions)
Lease cost:
Operating lease cost	$	72		$	73
Short-term lease cost	29			23
Total lease cost	$	101		$	96

Other information:
Operating lease liability principal payments	$	70		$	40
Right-of-use assets obtained in exchange for new operating lease liabilities	$	25		$	61

	March 31, 2020			March 31, 2019
Weighted-average remaining lease term - operating leases (in years)	7			7
Weighted average discount rate - operating leases	4.5		%	4.6		%



	Undiscounted
	Cash Flows
	(In millions)
Remainder of 2020	$	195
2021	230
2022	199
2023	154
2024	96
2025	55
Thereafter	233
Total	1,162

Less interest ⁽¹⁾	(175		)
Lease liability	$	987



	Three months ended September 30, 2017
	Foreign Currency Translation Adjustment			Deferred Gain (Loss) on Hedging Activities			Pension Liability Adjustment			Unrealized Gain (Loss) on Investments		Total
	(In millions)

Balance at June 30, 2017	$	(1,684	)	$	39		$	(510	)	$	14	$	(2,141	)
Other comprehensive income (loss) before reclassifications	244			(41		)	160			6		369
Amounts reclassified from AOCI	—			15			14			—		29
Tax effect	(40		)	6			(66		)	—		(100		)
Net current period other comprehensive income	204			(20		)	108			6		298
Balance at September 30, 2017	$	(1,480	)	$	19		$	(402	)	$	20	$	(1,843	)

	Nine months ended September 30, 2017
	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, 2016	$	(2,102	)	$	6		$	(521	)	$	19	$	(2,598	)
Other comprehensive income before reclassifications	626			(10		)	151			1		768
Amounts reclassified from AOCI	—			22			42			—		64
Tax effect	(4		)	1			(74		)	—		(77		)
Net current period other comprehensive income	622			13			119			1		755
Balance at September 30, 2017	$	(1,480	)	$	19		$	(402	)	$	20	$	(1,843	)



	Amount reclassified from AOCI
	Three months ended March 31,						Affected line item in the consolidated statement of earnings
Details about AOCI components	2020			2019
	(In millions)
Deferred loss (gain) on hedging activities
	$	(5	)	$	13		Revenues
	24			(5		)	Cost of products sold
	25			—			Other (income) expense-net
	44			8			Total before tax
	(5		)	(2		)	Tax
	$	39		$	6		Net of tax

Pension liability adjustment
Amortization of defined benefit pension items:
Prior service credit	$	(8	)	$	(4	)	Other (income) expense-net
Actuarial losses	8			1			Other (income) expense-net
	—			(3		)	Total before tax
	(11		)	14			Tax
	$	(11	)	$	11		Net of tax


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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


	Nine months ended						Year ended						Three months ended						Year ended
	September 30, 2017						December 31, 2016						March 31, 2020						December 31, 2019
Long/(Short) (In millions)	Fair Value			Market Risk			Fair Value			Market Risk			Fair Value			Market Risk			Fair Value			Market Risk
Highest position	$	455		$	46		$	876		$	88		$	400		$	40		$	576		$	58
Lowest position	(82		)	(8		)	(529		)	(53		)	(232		)	(23		)	(83		)	(8		)
Average position	215			21			27			3			109			11			280			28



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, 2017 to
July 31, 2017	475,697	$	41.000	475,697	19,123,029

August 1, 2017 to
August 31, 2017	1,959,118	41.835		1,959,118	17,163,911

September 1, 2017 to
September 30, 2017	1,494,187	42.433		1,494,187	15,669,724
Total	3,929,002	$	41.961	3,929,002	15,669,724