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 March 31, ~~2019~~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

(~~312) 634-8100~~

(Registrant’s telephone number, including area code)

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.

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.

See notes to consolidated financial statements.

Common Stock
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling
Interests

Total
Shareholders’
Equity
Shares Amount
(In millions)

Balance, December 31, 2017 557
$ 2,398
$ 17,552
$ (1,637 ) $ 9
$ 18,322
Comprehensive income

Net earnings
393

3

Other comprehensive income (loss)

186
—

Total comprehensive income

582
Dividends paid - $0.335 per share

(190 )

(190 )
Stock compensation expense 2
29

29
Other —
1
—
—
(7 ) (6 )
Balance, March 31, 2018 559
$ 2,428
$ 17,755
$ (1,451 ) $ 5
$ 18,737

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



	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

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 three months ended March 31, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019~~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, ~~2018~~2019.

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.

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.

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 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 Oilseeds.

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

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

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 historical write-offs adjusted, as needed, for regional, economic, and other forward-looking factors. The Company minimizes credit risk due to the large and diversified nature of its worldwide customer base. ADM manages its exposure to counter-party credit risk through credit analysis and approvals, credit limits, and monitoring procedures.

The Company recorded bad debt expense in selling, general, and administrative expenses of $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.

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

The Company concluded that the accounting change does 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.

Effective January 1, ~~2019,~~2020, the Company adopted the ~~new~~amended guidance of ~~ASC~~ Topic ~~842,~~ ~~Leases~~ ~~(Topic 842),~~326, which ~~superseded ASC Topic 840,~~ ~~Leases. Topic 842~~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 ~~lessees to recognize~~the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and ~~liabilities for all leases.~~reasonable and supportable forecasts. The Company ~~adopted Topic 842 using~~was required to adopt the ~~optional transition method~~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 ~~allows entities to forgo~~includes the ~~comparative reporting requirements~~qualitative and forecasting aspects of the “expected loss” model under the modified retrospective transition method. In addition, the Company elected to apply the package of practical expedients that allows entities to forego reassessing at the transition date: (1) whether any expired or existing contracts are or contain leases; (2) lease classification for any expired or existing leases; and (3) whether unamortized initial direct costs for existing leases meet the definition of initial direct costs under the newamended guidance. The Company ~~also elected~~finalized its assessment of the impact of the amended guidance and recorded a $8 million cumulative effect adjustment to ~~use the practical expedient that allows the combination of lease and non-lease~~contract components in all of its underlying asset categories, as well as the optional transition practical expedient that permits entities to continue applying current accounting policy for land easements that existed as of or expired before January 1, 2019. The adoption of Topic 842 resulted in the recording of right-of-use assets and lease liabilities of $793 million and $795 million, respectively,retained earnings at January 1, ~~2019. The new guidance did not have a material impact on the Company’s consolidated statement of earnings and had no impact on the consolidated statement of cash flows.~~2020. For more information about the ~~adoption of Topic 842,~~Company’s receivables, see Note ~~12.~~1.

Effective January 1, ~~2019,~~2020, the Company adopted the amended guidance of ASC Topic ~~220,~~820, ~~Income Statement - Reporting Comprehensive Income~~ Fair Value Measurement~~(Topic 220)~~, which ~~allows~~modifies the ~~reclassification from accumulated other comprehensive income (AOCI) to retained earnings for stranded tax effects resulting from~~disclosure requirements on fair value measurements. The adoption of this amended guidance did not impact the ~~Tax Cuts and Jobs Act (the “Act”), eliminating the stranded tax effects resulting from the Act and improving the usefulness of information reported to~~Company’s financial ~~statement users. In addition, the~~results.

Archer-Daniels-Midland Company is required to disclose: (1) a description of its accounting policy for releasing income tax effects from accumulated other comprehensive income; (2) whether it elects to reclassify the stranded income tax effects from the Act; and (3) information about other income tax effects related to the application of the Act that are reclassified from AOCI to retained earnings, if any. The Company has made a policy election to not release income tax effects from accumulated comprehensive income, including the stranded income tax effects resulting from the Act.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

~~Effective January 1, 2020, the Company will be required to adopt the amended guidance of ASC Topic 326,~~ ~~Financial Instruments - Credit Losses~~, 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 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 is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating its current accounting policy of recording allowance for doubtful accounts for compliance with the amended guidance. Based on that evaluation, the Company does not expect the adoption of this amended guidance to have a significant impact on the Company’s financial results.

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

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

~~Notes~~Through December 31, 2022, the Company has the option to ~~Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

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

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 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)~~(“Topic 606”) and does not disclose information about remaining performance obligations that have original expected durations of one year or less. For transportation service contracts, the Company recognizes revenue over time as the barge, ocean-going vessel, truck, rail, or container freight moves towards its destination in accordance with the transfer of control guidance of Topic 606. The Company recognized revenue from transportation service contracts of $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 ~~610-20)~~610-20”).

Contract liabilities relate to advance payments from customers for goods and services that the 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 March 31, 2020 and 2019 were $282 million and $166 million, respectively.

The following tables present revenue disaggregated by timing of recognition and major product lines for the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019.

Three Months Ended March 31, 2019
Topic 606 Revenue
Topic 815⁽¹⁾
Total
Point in Time Over Time Total Revenue Revenues
(In millions)
Origination
Merchandising and Handling $ 592
$ 49
$ 641
$ 5,417
$ 6,058
Transportation —
66
66
—
66
Total Origination 592
115
707
5,417
6,124
Oilseeds
Crushing and Origination 171
—
171
3,085
3,256
Refining, Packaging, Biodiesel, and Other 512
—
512
1,646
2,158
Total Oilseeds 683
—
683
4,731
5,414
Carbohydrate Solutions
Starches and Sweeteners 1,199
—
1,199
423
1,622
Bioproducts 781
—
781
—
781
Total Carbohydrate Solutions 1,980
—
1,980
423
2,403
Nutrition
Wild Flavors and Specialty Ingredients 674
—
674
—
674
Animal Nutrition 608
—
608
—
608
Total Nutrition 1,282
—
1,282
—
1,282

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



	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

Three Months Ended March 31, 2018
Topic 606 Revenue
Topic 815⁽¹⁾
Total
Point in Time Over Time Total Revenue Revenues
(In millions)
Origination
Merchandising and Handling $ 671
$ 62
$ 733
$ 5,479
$ 6,212
Transportation —
55
55
—
55
Total Origination 671
117
788
5,479
6,267
Oilseeds
Crushing and Origination 186
—
186
3,099
3,285
Refining, Packaging, Biodiesel, and Other 527
—
527
1,790
2,317
Total Oilseeds 713
—
713
4,889
5,602
Carbohydrate Solutions
Starches and Sweeteners 1,157
—
1,157
481
1,638
Bioproducts 963
—
963
—
963
Total Carbohydrate Solutions 2,120
—
2,120
481
2,601
Nutrition
Wild Flavors and Specialty Ingredients 636
—
636
—
636
Animal Nutrition 314
—
314
—
314
Total Nutrition 950
—
950
—
950

Other 106
—
106
—
106
Total Revenues $ 4,560
$ 117
$ 4,677
$ 10,849
$ 15,526



	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.

The ~~Origination~~Ag Services and Oilseeds segment generates revenue from the sale of commodities, ~~and~~ from service fees for the transportation of ~~goods.~~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, ~~in Transportation,~~ 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. 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.

The Oilseeds segment generates revenue primarily from the sale of products manufactured in its global processing facilities. The segment also generates revenue from the sale of raw commodities in its South American grain origination business and from the sale of peanuts, tree nuts, and peanut-derived ingredients. Revenue is recognized when a performance obligation is satisfied by transferring control over a product. 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.

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.

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 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.

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 March 31, ~~2019~~2020 and December 31, ~~2018~~2019.


	Fair Value Measurements at December 31, 2018								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		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	$	—	$	3,032	$	1,515	$	4,547	$	—	$	3,227	$	1,477	$	4,704
Unrealized derivative gains:
Commodity contracts	—		306		155		461		—		277		201		478
Foreign currency contracts	—		175		—		175		—		138		—		138
Interest rate contracts									—		3		—		3
Cash equivalents	1,288		—		—		1,288		505		—		—		505
Marketable securities	12		1		—		13		5		—		—		5
Segregated investments	1,044		—		—		1,044		628		—		—		628
Deferred receivables consideration	—		379		—		379		—		446		—		446
Total Assets	$	2,344	$	3,893	$	1,670	$	7,907	$	1,138	$	4,091	$	1,678	$	6,907

Liabilities:
Unrealized derivative losses:
Commodity contracts	$	—	$	344	$	245	$	589	$	—	$	375	$	199	$	574
Foreign currency contracts	—		152		—		152		—		125		—		125
Interest rate contracts	—		20		—		20		—		43		—		43
Inventory-related payables	—		579		18		597		—		702		27		729
Total Liabilities	$	—	$	1,095	$	263	$	1,358	$	—	$	1,245	$	226	$	1,471

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.

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 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 U.S. Treasury securities and corporate debt securities. U.S. Treasury securities are valued using quoted market prices and are classified in Level 1. Corporate 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 debt 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 has deferred consideration under its accounts receivable securitization programs (the “Programs”) which represents notes receivable from the purchasers under the Programs (see Note 1716 for more information). This amount is reflected in other current assets on the consolidated balance sheet (see Note 87 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.

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

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

The following table presents a rollforward of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2019.

* Includes increase in unrealized gains of ~~$210~~$210 million relating to Level 3 assets still held at March 31, 2019.

The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2019.

~~For all periods presented, the Company had no transfers between Level 1 and 2.~~ Transfers into Level 3 of assets and liabilities previously classified in Level 2 were due to the relative value of unobservable inputs to the total fair value measurement of certain products and derivative contracts rising above the 10% threshold. Transfers out of Level 3 were primarily due to the relative value of unobservable inputs to the total fair value measurement of certain products and derivative contracts falling below the 10% threshold and thus permitting reclassification to Level 2.

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

The following table sets forth the weighted average percentage of the unobservable price components included in the Company’s Level 3 valuations as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019. The Company’s Level 3 measurements may include basis only, transportation cost only, or both price components. As an example, for Level 3 inventories with basis, the unobservable component as of March 31, ~~2019~~2020 is a weighted average ~~200.1%~~14.9% of the total price for assets and ~~13.0%~~11.5% of the total price for liabilities.


	Weighted Average % of Total Price								Weighted Average % of Total Price
	March 31, 2019				December 31, 2018				March 31, 2020				December 31, 2019
Component Type	Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Inventories and Related Payables
Basis	200.1	%	13.0	%	18.5	%	125.0	%	14.9	%	11.5	%	28.2	%	14.7	%
Transportation cost	24.8	%	55.0	%	25.9	%	39.4	%	14.2	%	—	%	24.7	%	—	%

Commodity Derivative Contracts
Basis	26.3	%	20.6	%	21.6	%	19.1	%	16.0	%	21.1	%	16.0	%	20.2	%
Transportation cost	30.9	%	35.2	%	29.5	%	35.1	%	11.9	%	8.1	%	9.7	%	3.1	%

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

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

The following table sets forth the fair value of derivatives not designated as hedging instruments as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019.

The following ~~table sets~~tables set forth the pre-tax gains (losses) on derivatives not designated as hedging instruments that have been included in the consolidated statements of earnings for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019.

Changes in the market value of inventories of certain merchandisable agricultural ~~commodities,~~product inventories, forward cash purchase and sales contracts, exchange-traded futures and exchange-traded and OTC options contracts are recognized in earnings immediately as a component of cost of products sold.

As of March 31, ~~2019~~2020 and December 31, ~~2018~~2019, the Company had certain derivatives designated as cash flow, ~~and~~ fair value, and net investment hedges.

For derivative instruments that are designated and qualify as fair value hedges, changes in the fair value of the hedging instrument and changes in the fair value of the hedged item are recognized in the consolidated statement of earnings during the period.

The Company uses interest rate swaps designated as fair value hedges to protect the fair value of $496 million in fixed-rate debt due to changes in interest rates. The terms of the interest rate swaps match the terms of the underlying debt. At March 31, 2020 and December 31, 2019, the Company had $8 million and $3 million in other current assets, respectively, representing the fair value of the interest rate swaps and a corresponding increase in the underlying debt for the same amount with no net impact to earnings.

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

The Company uses cross-currency swaps and foreign exchange forwards designated as net investment hedges to protect the Company’s investment in a foreign subsidiary against changes in foreign currency exchange rates. The Company executed USD-fixed to Euro-fixed cross-currency swaps with an aggregate notional amount of $1.2 billion as of March 31, 2020 and December 31, 2019 and foreign exchange forwards with an aggregate notional amount of $282 million as of March 31, 2020.

As of March 31, 2020 and December 31, 2019, the Company had after-tax gains of $75 million and $6 million in AOCI, respectively, related to foreign exchange gains and losses from these net investment hedge transactions. The amount is deferred in AOCI until the underlying investment is divested.

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

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~


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

The Company uses interest rate swaps designated as fair value hedges to protect the fair value of $496 million in fixed-rate debt due to changes in interest rates. The changes in the fair value of the interest rate swaps and the underlying fixed-rate debt are recorded in other (income) expense - net. The terms of the interest rate swaps match the terms of the underlying debt. At ~~March 31, 2019~~, the Company had $1 million in other current liabilities representing the fair value of the interest rate swaps and a corresponding decrease in the underlying debt for the same amount with no net impact to earnings.

The Company uses interest rate swaps designated as cash flow hedges to hedge the forecasted interest payments on certain letters of credit from banks. The terms of the interest rate swaps match the terms of the forecasted interest payments. The deferred gains and losses are recognized in other (income) expense - net over the period in which the related interest payments are paid to the banks. At

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

As of March 31, 2020 and December 31, 2019, the Company had ~~$31 million of~~ after-tax losses of $50 million and $43 million in AOCI, respectively, related to ~~these~~the interest rate ~~swaps.~~swaps and the swap locks. The Company expects to recognize this amount in its consolidated statement of earnings during the ~~next 12 months.~~life of the instruments.

For each of the ~~commodity~~ hedge programs described below, the derivatives are designated as cash flow hedges. ~~Assuming normal market conditions, the~~The changes in the market value of such derivative contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. Once the hedged item is recognized in earnings, the ~~gains/~~gains and losses arising from the hedge are reclassified from AOCI to either revenues or cost of products sold, as applicable. As of March 31, 2020 and December 31, 2019, the Company had ~~$10 million of~~ after-tax losses of $50 million and $5 million in AOCI, respectively, related to gains and losses from ~~commodity cash flow hedge transactions.~~these programs. The Company expects to recognize ~~$10~~$50 million of ~~these~~the March 31, 2020 after-tax losses in its consolidated statement of earnings during the next 12 months.

The Company uses futures or options contracts to hedge the purchase price of anticipated volumes of corn to be purchased and processed in a future month. The objective of this hedging program is to reduce the variability of cash flows associated with the Company’s forecasted purchases of corn. The Company’s corn processing plants currently grind approximately 72 million bushels of corn per month. During the past 12 months, the Company hedged between ~~19%~~20% and ~~95%~~60% of its monthly anticipated grind. At March 31, ~~2019~~2020, the Company had designated hedges representing between 1% and ~~50%~~28% of its anticipated monthly grind of corn for the next 12 months.

The Company, from time to time, also uses futures, options, and swaps to hedge the sales price of certain ethanol sales contracts. The Company has established hedging programs for ethanol sales contracts that are indexed to unleaded gasoline prices and to various exchange-traded ethanol contracts. The objective of these hedging programs is to reduce the variability of cash flows associated with the Company’s sales of ethanol. During the past 12 months, the Company hedged between 20 million and ~~121~~91 million gallons of ethanol sales per month under these programs. At March 31, ~~2019,~~2020, the Company had designated hedges representing ~~between~~ 1 ~~million~~ ~~and~~ 42 million gallons of ethanol sales per month over the next 3 months.

The Company uses futures and options contracts to hedge the purchase price of anticipated volumes of soybeans to be purchased and processed in a future month for certain of its U.S. soybean crush facilities. The Company also uses futures or options contracts to hedge the sales prices of anticipated soybean meal and soybean oil sales proportionate to the soybean crushing process at these facilities. During the past 12 months, the Company hedged between ~~99%~~79% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities. ~~The~~At March 31, 2020, the Company ~~has~~had designated hedges representing between 0%1% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities over the next 12 months.

The following table sets forth the fair value of derivatives designated as hedging instruments as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019.

The following table sets forth the pre-tax gains (losses) on derivatives designated as hedging instruments that have been included in the consolidated statements of earnings for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019.


				Cost of products sold		Interest expense		Other expense (income) - net										Cost of products sold			Interest expense			Other expense (income) - net
(In millions)	Revenues										Revenues
Three Months Ended March 31, 2020
Consolidated Statement of Earnings															$	14,970		$	14,019		$	83		$	(32	)

Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Commodity Contracts															5			(24		)	—			—
Interest Contracts															—			—			—			(25		)
Total gain (loss) recognized in earnings															$	5		$	(24	)	$	—		$	(25	)		$	(44	)

Three Months Ended March 31, 2019
Consolidated Statement of Earnings	$	15,304		$	14,376	$	101		$	(8	)					$	15,304		$	14,376		$	101		$	(8	)

Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Commodity Contracts	$	(13	)	$	5	$	—	$	—						$	(13	)	$	5		$	—		$	—
Total gain (loss) recognized in earnings	$	(13	)	$	5	$	—	$	—			$	(8	)	$	(13	)	$	5		$	—		$	—			$	(8	)

Three Months Ended March 31, 2018
Consolidated Statement of Earnings	$	15,526		$	14,637	$	91	$	(15	)

Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Commodity Contracts	$	2		$	6	$	—	$	—
Total gain (loss) recognized in earnings	$	2		$	6	$	—	$	—			$	8

The Company issued €500 million aggregate principal amount of Floating Rate Notes and €600 million aggregate principal amount of 1.75% Notes on June 24, 2015 and €650 million aggregate principal amount of 1.0% Notes on September 12, 2018 (collectively, the “Notes”). The Company has designated ~~€1.75~~€1.4 billion and €1.7 billion of ~~the Notes~~its outstanding long-term debt and commercial paper borrowings at March 31, 2020 and December 31, 2019, respectively, as ~~a hedge~~hedges of its net investment in a foreign subsidiary. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company had after-tax gains of $3$55 million and ~~after-tax losses of $26~~$7 million ~~respectively,~~ in AOCI, respectively, related to foreign exchange gains and losses from ~~the~~these net investment hedge ~~transaction.~~transactions. The amount is deferred in AOCI until the underlying investment is divested.

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


	March 31,		December 31,
	2019		2018		March 31,		December 31,
	(In millions)				2020		2019
					(In millions)
Unrealized gains on derivative contracts	$	660	$	636	$	1,326	$	619
Deferred receivables consideration	430		379		496		446
Customer omnibus receivable	686		450		997		1,014
Financing receivables - net ⁽¹⁾	430		424		458		395
Insurance premiums receivable	27		35		21		41
Prepaid expenses	263		184		302		318
Biodiesel tax credit					75		541
Tax receivables	527		379		576		579
Non-trade receivables ⁽²⁾	430		323		401		369
Other current assets	172		223		395		278
	$	3,625	$	3,033	$	5,047	$	4,600

⁽¹⁾ The Company provides financing to certain suppliers, primarily Brazilian farmers, to finance a portion of the suppliers’ production costs. The amounts are reported net of allowances of $5 million and $3 million at March 31, ~~2019~~2020 and December 31, ~~2018.~~2019, respectively. Interest earned on financing receivables of $8 million ~~and $7 million~~ for the three months ended March 31, ~~2019~~2020 and ~~2018, respectively,~~2019, is included in interest income in the consolidated statements of earnings.

⁽²⁾Non-trade receivables included ~~$82~~$78 million and ~~$84~~$81 million of reinsurance recoverables as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

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

On March 27, 2020, the Company issued $0.5 billion and $1.0 billion aggregate principal amounts of 2.75% Notes due in 2025 and 3.25% Notes due in 2030, respectively. Net proceeds before expenses for the 2.75% and 3.25% Notes were $492 million and $988 million, respectively.

At March 31, ~~2019,~~2020, the fair value of the Company’s long-term debt exceeded the carrying value by ~~$1.1~~$1.6 billion, as estimated using quoted market prices (a Level 2 measurement under applicable accounting standards).

At March 31, ~~2019,~~2020, the Company had lines of credit, including the accounts receivable securitization programs described below, totaling ~~$9.0~~$10.7 billion, of which ~~$6.2~~$5.9 billion was unused. Of the Company’s total lines of credit, $5.0 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was ~~$1.3~~$2.2 billion of ~~U.S.~~ commercial paper outstanding at March 31, ~~2019. There was no commercial paper outstanding under the European program at March 31, 2019.~~2020.

The Company has accounts receivable securitization programs (the “Programs”). The Programs ~~as amended,~~ provide the Company with up to $~~1.8~~1.9 billion in funding resulting from the sale of accounts receivable, of which ~~$0.4~~$0.5 billion was unused as of March 31, ~~2019~~2020 (see Note 1716 for more information about the Programs).

The Company’s effective tax rate for the three months ended March 31, ~~2019~~2020 was ~~25.7%~~a benefit of 4.3% compared to ~~14.7%~~an expense of 25.7% for the three months ended March 31, ~~2018.~~2019. The ~~higher~~change in the rate ~~for the current year quarter~~ was primarily due to the ~~absence~~impact of ~~the 2017 biodiesel~~U.S. tax ~~credit recorded~~credits signed into law in December 2019, including a $73 million discrete tax benefit related to 45G railroad credits recognized in the ~~first~~ quarter ~~of 2018 and an~~ended March 31, 2020, which are now reflected in the 2020 projected effective tax rate. The prior quarter rate also included unfavorable ~~change in~~ discrete tax items primarily related to U.S. tax reform transition tax adjustments.

In March 2020, the Coronavirus Aid Relief and Economic Security Act (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.

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

The Company’s wholly-owned subsidiary, ADM do Brasil Ltda. ~~(ADM~~(“ADM do ~~Brasil)~~Brasil”), has received ~~three~~3 separate tax assessments from the Brazilian Federal Revenue Service ~~(BFRS)~~(“BFRS”) challenging the tax deductibility of commodity hedging losses and related expenses for the tax years 2004, 2006, and 2007. These assessments totaled approximately ~~$108~~$81 million in tax and ~~$309~~$239 million in interest and penalties as of March 31, ~~2019~~2020 (adjusted for variation in currency exchange rates). The statute of limitations for tax years 2005 and ~~2008 to 2011~~2008-2011 has expired. The Company does not expect to receive any additional tax assessments with respect to this issue.

ADM do Brasil enters into commodity hedging transactions that can result in gains, which are included in ADM do Brasil’s calculation of taxable income in Brazil, and losses, which ADM do Brasil deducts from its taxable income in Brazil. The Company has evaluated its tax position regarding these hedging transactions and concluded, based upon advice from Brazilian legal counsel, that it was appropriate to recognize both gains and losses resulting from hedging transactions when determining its Brazilian income tax expense. Therefore, the Company has continued to recognize the tax benefit from hedging losses in its financial statements and has not recorded any tax liability for the amounts assessed by the BFRS.

ADM do Brasil filed an administrative appeal for each of the assessments. ~~The~~In January 2020, the second-level administrative appeal panel found in favor of ~~the BFRS on these assessments and~~ ADM do Brasil ~~filed a second level administrative appeal. The second administrative appeal panel continues to conduct customary procedural activities, including ongoing dialogue with~~and cancelled the assessments. While it is unclear if the BFRS ~~auditor. If ADM do Brasil continues to be unsuccessful in the administrative appellate process,~~will appeal, the Company intends to ~~file appeals~~vigorously defend its position against any appeal which could be made to the administrative panel or to a superior tax chamber. The Company expects to know if the ruling will be appealed during the first half of 2020. Based upon the view of external counsel, it is unlikely that the BFRS will be successful in appealing the ~~Brazilian federal courts.~~matter. While the Company believes its consolidated financial statements properly reflect the tax deductibility of these hedging losses, the ultimate resolution of this matter could result in the future recognition of additional payments of, and expense for, income tax and the associated interest and penalties. ~~The Company intends to vigorously defend its position against the current assessments.~~

~~In 2012, the~~The Company’s subsidiary in Argentina, ADM Agro SRL (formerly ADM Argentina SA and Alfred C. Toepfer Argentina SRL), received tax assessments challenging transfer prices used to price grain exports for the tax years ~~2004~~1999 through ~~2010.~~2011. As of March 31, ~~2019,~~2020, these assessments totaled ~~$15~~$13 million in tax and ~~$55~~$51 million in interest ~~and penalties~~ (adjusted for variation in currency exchange rates). The Argentine tax authorities conducted a review of income and other taxes paid by large exporters and processors of cereals and other agricultural commodities resulting in allegations of income tax evasion. The Company strongly believes that it has complied with all Argentine tax laws. To date, the Company has not received assessments for closed years subsequent to ~~2010. However, it~~2011. While the statute of limitations has expired for tax years 2012 and 2013, the Company cannot rule out receiving additional assessments challenging transfer prices used to price grain exports for ~~these~~ years subsequent to 2013, and estimates that these potential assessments could be approximately ~~$52~~$40 million in tax and ~~$58~~$23 million in interest (adjusted for variation in currency exchange rates as of March 31, ~~2019)~~2020). The Company believes that it has appropriately evaluated the transactions underlying these assessments, and has concluded, based on Argentine tax law, that its tax position would be sustained, and accordingly, has not recorded a tax liability for these assessments. The Company intends to vigorously defend its position against the current assessments and any similar assessments that may be issued for years subsequent to ~~2010.~~2013.

In accordance with the accounting requirements for uncertain tax positions, the Company has not recorded an uncertain tax liability for these assessments because it has concluded that it is more likely than not to prevail on the Brazil and Argentina matters based upon their technical merits and because the taxing jurisdictions’ processes do not provide a mechanism for settling at less than the full amount of the assessment. The Company’s consideration of these tax assessments requires judgments about the application of income tax regulations to specific facts and circumstances. The final outcome of these matters cannot reliably be predicted, may take many years to resolve, and could result in financial impacts of up to the entire amount of these assessments.

In 2014, the Company’s wholly-owned subsidiary in the Netherlands, ADM Europe B.V., received a tax assessment from the Netherlands tax authority challenging the transfer pricing aspects of a 2009 business reorganization, which involved two of its subsidiary companies in the Netherlands. As of March 31, ~~2019,~~2020, this assessment was ~~$91~~$89 million in tax and ~~$31~~$34 million in interest (adjusted for variation in currency exchange rates). ~~The~~In September 2019, the Company ~~has appealed~~received an interim decision on its appeal which directed the ~~assessment~~parties to work toward a settlement. As of March 31, 2020, no agreement was reached. On April 23, 2020, the court issued an unfavorable ruling and directed the parties to explore the possibility of settling, noting that any unresolved valuation questions may be assigned to a ~~hearing was held in the first quarter of 2019. The Company expects~~third party expert to ~~receive~~establish a ~~decision in the second quarter of 2019. Further~~valuation. Subsequent appeals may take an extended period of time and could result in additional financial impacts of up to the entire amount of the assessment. The Company has carefully evaluated the underlying transactions and has concluded that the amount of ~~the~~ gain recognized on the reorganization for tax purposes was appropriate. ~~The~~As of March 31, 2020, the Company has accrued ~~an amount~~its best estimate of what it believes will be the likely outcome of the litigation and will vigorously defend its position against the assessment.

The Company leases certain transportation equipment, plant equipment, office equipment, land, buildings, and storage facilities. Most leases include options to renew, with renewal terms that can extend the lease term from 1 month to 49 years. Certain leases also include index and non-index escalation clauses and options to purchase the leased property. Leases accounted for as finance leases were immaterial at March 31, ~~2019.~~2020.

As an accounting policy election, the Company does not apply the recognition requirements of Topic 842 to short-term leases in all of its underlying asset categories. The Company recognizes short-term lease payments in earnings on a straight-line basis over the lease term, and variable lease payments in the period in which the obligation for those payments is incurred.

The following table sets forth the amounts relating to the Company’s total lease cost and other information.

As of March 31, 2020 and December 31, 2019, the Company had ~~$797 million of~~ right-of-use assets included in Other assets ~~$195~~of $965 million ofand $971 million, respectively, current lease liabilities included in Accrued expenses and other payables of $218 million and ~~$622~~$215 million, ofrespectively, and non-current lease liabilities included in Other long-term liabilities of $769 million and $781 million, respectively, in its consolidated balance ~~sheet.~~

The following tables set forth the changes in AOCI by component for the three months ended March 31, ~~2019~~2020 and the reclassifications out of AOCI for the three months ended March 31, ~~2019~~2020 and ~~2018:~~2019:

Three months ended March 31, 2019
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, 2018 $ (1,962 ) $ 61
$ (220 ) $ 15
$ (2,106 )
Other comprehensive income (loss) before reclassifications (78 ) (85 ) 10
(2 ) (155 )
Amounts reclassified from AOCI (1 ) 8
(3 ) —
4
Tax effect (10 ) 12
13
—
15
Net of tax amount (89 ) (65 ) 20
(2 ) (136 )
Balance at March 31, 2019 $ (2,051 ) $ (4 ) $ (200 ) $ 13
$ (2,242 )

Amount reclassified from AOCI
Three months ended March 31, Affected line item in the
Details about AOCI components 2019 2018 consolidated statement of earnings
(In millions)
Deferred loss (gain) on hedging activities
$ (5 ) $ (6 ) Cost of products sold
13
(2 ) Revenues
8
(8 ) Total before tax
(2 ) 2
Tax
$ 6
$ (6 ) Net of tax
Pension liability adjustment
Amortization of defined benefit pension items:
Prior service credit $ (4 ) $ (8 ) Other (income) expense - net
Actuarial losses 1
16
Other (income) expense - net
(3 ) 8
Total before tax
14
(4 ) Tax
$ 11
$ 4
Net of tax



	Three months ended March 31, 2020
	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, 2019	$	(2,152	)	$	(12	)	$	(268	)	$	27		$	(2,405	)
Other comprehensive income (loss) before reclassifications	(245		)	(126		)	4			6			(361		)
Amounts reclassified from AOCI	—			44			—			—			44
Tax effect	(42		)	14			(12		)	(2		)	(42		)
Net of tax amount	(287		)	(68		)	(8		)	4			(359		)
Balance at March 31, 2020	$	(2,439	)	$	(80	)	$	(276	)	$	31		$	(2,764	)



	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

Gains on sales of assets in the three months ended March 31, 2019 included gains on the sale of certain assets and step-up gains on equity investments. ~~Gains on sales of assets~~

Other - net in the three months ended March 31, ~~2018~~2020 included foreign exchange gains, ~~on disposals~~the non-service components of ~~individually insignificant assets in~~net pension benefit income of $13 million, and other income, partially offset by loss provisions related to the ~~ordinary course of~~Company’s futures commission and brokerage business.

~~The Company is principally engaged~~As discussed in ~~procuring, transporting, storing, processing, and merchandising agricultural commodities, products, and ingredients.~~ 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: ~~Origination,~~Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Each of these segments is organized based upon the nature of products and services offered. The Company’s remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified as ~~Other.~~Other Business.

The ~~Origination segment utilizes its extensive global grain elevator~~Ag Services 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 Origination segment includes international agricultural commodities merchandising and handling activities managed through a global trade desk based in Rolle, Switzerland. The Origination segment’s grain sourcing, handling, and transportation network provides reliable and efficient services to the Company’s customers and agricultural processing operations. The Origination segment’s transportation network capabilities include barge, ocean-going vessel, truck, rail, and container freight services. The Origination segment also includes the activities related to structured trade finance, the import and distribution of agricultural feed products, and the Company’s share of the results of its Pacificor joint venture. In February 2019, the Company purchased the remaining 50% interest owned by Invivo in the Gleadell Agriculture Ltd. joint venture.

~~The~~ Oilseeds 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 South America, the~~The Ag Services and Oilseeds 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 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 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 Sarl (Olenex)~~SoyVen joint ventures.

The ~~Company’s~~ 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 ~~sweeteners, corn~~products and ~~wheat starches, wheat flour, and bioproducts. Its products include~~ ingredients used in the food and beverage industry including sweeteners, ~~starch,~~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 for industrial use as ethanol or as beverage grade. Ethanol, in 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 equity investments in Hungrana Ltd., Almidones Mexicanos S.A., ~~and~~ Red Star Yeast Company, ~~LLC.~~LLC, and Aston Foods and Food Ingredients.

The Nutrition segment serves customer needs for food, beverages, health and wellness, and more. The segment engages in the manufacturing, 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 Nutrition segment 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 ~~2019,~~2020, ADM acquired Yerbalatina, a natural plant-based extracts and ingredients manufacturer.

Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on net sales less identifiable operating expenses. Also included in operating profit for each segment is equity in earnings of affiliates based on the equity method of accounting. Specified items included in total segment operating profit and certain corporate items are not allocated to the Company’s individual business segments because operating performance of each business segment is evaluated by management exclusive of these items. Corporate results principally include the impact of LIFO-related adjustments, unallocated corporate expenses, 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).

A~~rcher-Daniels-Midland Company~~

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

~~(Unaudited)~~


~~Note 15.~~	~~Segment Information (Continued)~~


	Three Months Ended						Three Months Ended
	March 31,						March 31,
(In millions)	2019			2018			2020			2019
Gross revenues
Origination	$	6,975		$	7,179
Oilseeds	6,409			6,835
Ag Services and Oilseeds							$	12,350		$	12,873
Carbohydrate Solutions	2,576			2,812			2,554			2,576
Nutrition	1,300			958			1,516			1,300
Other	81			106
Other Business							104			81
Intersegment elimination	(2,037		)	(2,364		)	(1,554		)	(1,526		)
Total gross revenues	$	15,304		$	15,526		$	14,970		$	15,304

Intersegment sales
Origination	$	851		$	912
Oilseeds	995			1,233
Ag Services and Oilseeds							$	1,271		$	1,335
Carbohydrate Solutions	173			211			238			173
Nutrition	18			8			45			18
Total intersegment sales	$	2,037		$	2,364		$	1,554		$	1,526

Revenues from external customers
Origination
Merchandising and Handling	$	6,058		$	6,212
Transportation	66			55
Total Origination	6,124			6,267
Oilseeds
Crushing and Origination	3,256			3,285
Refining, Packaging, Biodiesel, and Other	2,158			2,317
Total Oilseeds	5,414			5,602
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	1,622			1,638			1,650			1,598
Bioproducts	781			963
Vantage Corn Processors							666			805
Total Carbohydrate Solutions	2,403			2,601			2,316			2,403
Nutrition
Wild Flavors and Specialty Ingredients	674			636
Human Nutrition							719			674
Animal Nutrition	608			314			752			608
Total Nutrition	1,282			950			1,471			1,282

Other	81			106
Other Business							104			81
Total revenues from external customers	$	15,304		$	15,526		$	14,970		$	15,304


	Three Months Ended						Three Months Ended
	March 31,						March 31,
(In millions)	2019			2018			2020			2019
Segment operating profit
Origination	$	76		$	46
Oilseeds	341			349
Ag Services and Oilseeds							$	422		$	417
Carbohydrate Solutions	96			213			68			96
Nutrition	81			96			142			81
Other	14			13
Other Business							11			14
Specified Items:
Gains (losses) on sales of assets and businesses⁽¹⁾	12			—			—			12
Impairment, restructuring, and settlement charges⁽²⁾	(9		)	(13		)
Asset impairment charges⁽²⁾							(44		)	(9		)
Total segment operating profit	611			704			599			611
Corporate	(296		)	(240		)	(224		)	(296		)
Earnings before income taxes	$	315		$	464		$	375		$	315

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 three months ended March 31, 2019 consisted of $9 million of impairments related to certain long-lived assets presented as specified items within segment operating profit and $2 million of individually insignificant restructuring charges in Corporate. Asset impairment, exit, and restructuring costs in the three months ended March 31, 2018 consisted of $12 million of an equity investment impairment and $1 million of individually insignificant restructuring charges presented as specified items within segment operating profit, and $3 million of individually insignificant restructuring charges in Corporate.

~~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 “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 ~~20, 2019,~~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 $0.6 billion (€0.5 billion) and an additional amount upon the collection of the accounts receivable (deferred consideration). The Second Program terminates on March ~~13, 2020,~~12, 2021, unless extended.

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.

As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the fair value of trade receivables transferred to the Purchasers under the Programs and derecognized from the Company’s consolidated balance sheet was $~~1.8~~1.9 billion ~~and $1.9 billion, respectively.~~. In exchange for the transfers as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company received cash of $1.4 billion ~~and $1.5 billion, respectively,~~, and recorded a receivable for deferred consideration included in other current assets of $~~430~~496 million and ~~$379~~$446 million, respectively. Cash collections from customers on receivables sold were $~~8.4~~8.5 billion and $~~8.9~~8.4 billion for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019, respectively. Of this amount, ~~$3.1~~$3.3 billion and ~~$3.7~~$3.1 billion were cash collections on the deferred receivables consideration reflected as cash inflows from investing activities for the three months ended March 31, ~~2019~~2020 and ~~2018~~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 Programs.

The Company’s risk of loss following the transfer of accounts receivable under the 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 $8$2 million and $4$8 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, which is classified as selling, general, and administrative expenses in the consolidated statements of earnings.

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

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.

~~The~~On April 23, 2020, the Company ~~recently~~ announced a series of actions to enhance agility, accelerate growth, and strengthen customer service. These actions encompass organizational changes to centralize and standardize business activities and processes, and enhance productivity and effectiveness; accelerating the capture of planned synergies from recent acquisitions; and offering enhanced early retirement for some colleagues in the U.S. and Canada. Relatedthat due to the ~~enhanced early retirement offer,~~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 ~~expects~~has also reduced the ethanol grind at its corn wet mill plants and rebalanced grind to ~~recognize an estimated pension remeasurement charge of $55 million to $75 million in~~produce more industrial alcohol for the ~~second quarter of 2019. Colleagues electing to retire early may also choose to receive their benefit in~~sanitizer market and industrial starches for the form of a lump sum payment. Dependent upon the final number of colleagues that elect to retire early and also receive their benefit in the form of a lump sum payment, it is possible that a pension settlement charge of up to $50 million may also be triggered in the second half of 2019 or first half of 2020. The impact of the other actions on the Company's financial statements cannot be estimated at this time.

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 other products ~~and ingredients.~~made from nature. The Company uses its significant global asset base to originate and transport agricultural commodities, connecting to markets in more than ~~170~~190 countries. The Company also processes corn, oilseeds, and wheat into products for food, animal feed, chemical and energy uses. ~~In addition, the~~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.

The Company’s operations are organized, managed, and classified into ~~four~~three reportable business segments: ~~Origination,~~Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Each of these segments is organized based upon the nature of products and services offered. The Company’s remaining operations are not reportable business segments, as defined by the applicable accounting standard, and are classified as ~~Other.~~Other Business. Financial information with respect to the Company’s reportable business segments is set forth in Note 1514 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements”.

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 existing businesses through a combination of data analytics, process simplification and standardization, and behavioral and cultural change, building upon its earlier 1ADM and operational excellence programs. Readiness ~~will~~ also ~~support~~supports the execution of the Company’s growth strategies across its five key growth platforms: Taste, Nutrition, Animal Nutrition, Health and Wellness, and Carbohydrates.

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, ~~2018.~~2019.

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

selling prices move in relationship to changes in prices of the commodity-based agricultural raw materials. ~~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.

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

The Company has consolidated subsidiaries in more than 8070 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 remeasurement to the functional currency. Changes in revenues are expected to ~~correlate~~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.”

~~As an agricultural commodity-based business, the~~The Company is subject to a variety of market factors which affect the Company's operating results. In ~~Origination, sales volumes~~Ag Services and Oilseeds, North American origination margins were impacted by ~~severe weather conditions in the U.S. and the continuing global trade tensions with China. In Oilseeds, continued good global meal~~low export demand ~~resulted in strong global~~while crushing ~~volumes and stable margins.~~margins were compressed due to slow farmer selling. South American origination volumes ~~were lower due to softer Chinese demand and slower farming~~benefited from strong farmer selling ~~caused~~in Brazil driven by ~~a weak U.S. dollar. Global demand~~the devaluation of the Real. Demand and margins for refined ~~oil~~oils and biodiesel ~~remained solid. Excess global peanut supply resulted~~ in ~~weak peanut margins.~~EMEAI were challenging. In Carbohydrate Solutions, ~~operations were adversely impacted by severe weather conditions in North America. Demand~~demand and prices for ~~sweeteners~~starches and ~~starches~~sweeteners remained solid in North America while co-product prices were stable. ~~Although ethanol demand remained steady in North America,~~Ethanol margins were significantly pressured ~~for most of the quarter~~ as U.S. industry ethanol production exceeded demand and ~~stocks~~inventories remained athigh. In addition, the effects of COVID-19 depressed ethanol demand resulting in record high ~~levels.~~industry stock levels towards the end of the quarter. Nutrition benefited from ~~strong~~growing demand for ~~flavor ingredients, flavor~~flavors, flavors systems, minerals, premix, pet food, livestock, plant-based proteins, and ~~certain non-flavor food ingredients.~~probiotics, and saw shifting demand from foodservice to other retail channels.

Three Months Ended March 31, ~~2019~~2020 Compared to Three Months Ended March 31, ~~2018~~2019

Net earnings attributable to controlling interests ~~decreased $160~~increased $158 million to ~~$233~~$391 million. Segment operating profit decreased ~~$93~~$12 million to ~~$611~~$599 million. Included in segment operating profit in the current quarter were asset impairment charges of $44 million. Included in segment operating profit in the prior year quarter was a net gain of $3 million consisting of asset impairment charges, ~~a gain~~gains on the sale of certain assets, and a step-up gain on an equity investment. ~~Included in segment operating profit in the prior year quarter was a charge of $13 million related to asset impairment and restructuring.~~ Adjusted segment operating profit ~~decreased $109~~increased $35 million to ~~$608~~$643 million due primarily to ~~the absence of the 2017 biodiesel tax credit recorded in the first quarter of 2018, lower margins in Carbohydrate Solutions, lower~~higher results in ~~the Animal~~ Nutrition ~~business,~~ and ~~lower~~Ag Services, and higher equity earnings from the Wilmar investment, partially offset by ~~higher margins~~lower results in Crushing and ~~Origination, Merchandising~~Starches and ~~Handling, and Wild Flavors and Specialty Ingredients.~~Sweeteners. Corporate results were a net charge of ~~$296~~$224 million in the current quarter compared to ~~$240~~$296 million in the prior year quarter. Corporate results in the current quarter included a ~~charge~~credit of $1$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 in the prior year quarter from changes in agricultural commodity prices on LIFO inventory valuation ~~reserves, compared to a credit of $8 million in the prior year quarter.~~reserves.

Income ~~taxes~~tax expense decreased $97 million to a benefit of ~~$81 million increased $13~~$16 million due to a ~~higher~~lower effective tax rate. The Company’s effective tax rate for the quarter ended March 31, ~~2019~~2020 was ~~25.7%~~a benefit of 4.3% compared to ~~14.7%~~an expense of 25.7% for the quarter ended March 31, ~~2018.~~2019. The ~~higher~~change in the rate ~~for the current year quarter~~ was primarily due to the ~~absence~~impact of ~~the 2017 biodiesel~~U.S. tax ~~credit recorded~~credits signed into law in December 2019, including a $73 million discrete tax benefit related to 45G railroad credits recognized in the ~~first~~ quarter ~~of 2018 and an~~ended March 31, 2020, which are now reflected in the 2020 projected effective tax rate. The prior quarter rate also included unfavorable ~~change in~~ discrete tax items primarily related to U.S. tax reform transition tax adjustments.

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.

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

The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. ~~Processed volumes of oilseeds increased due to increasing global demand for oilseed products.~~ The overall ~~decrease~~increase in corn is primarily related to lower production in the prior year caused by adverse weather conditions and production issues in the Decatur, Illinois corn complex.

Revenues by segment for the quarter are as follows:

Three Months Ended
March 31,
2019 2018 Change
(In millions)
Origination
Merchandising and Handling $ 6,058
$ 6,212
$ (154 )
Transportation 66
55
11
Total Origination 6,124
6,267
(143 )

Oilseeds

Crushing and Origination 3,256
3,285
(29 )
Refining, Packaging, Biodiesel, and Other 2,158
2,317
(159 )
Total Oilseeds 5,414
5,602
(188 )

Carbohydrate Solutions

Starches and Sweeteners 1,622
1,638
(16 )
Bioproducts 781
963
(182 )
Total Carbohydrate Solutions 2,403
2,601
(198 )

Nutrition
Wild Flavors and Specialty Ingredients 674
636
38
Animal Nutrition 608
314
294
Total Nutrition 1,282
950
332

Other 81
106
(25 )
Total $ 15,304
$ 15,526
$ (222 )


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



	Three Months Ended
	March 31,
	2020		2019		Change
	(In millions)
Ag Services and Oilseeds
Ag Services	$	6,926	$	7,377	$	(451	)
Crushing	2,313		2,349		(36		)
Refined Products and Other	1,840		1,812		28
Total Ag Services and Oilseeds	11,079		11,538		(459		)

Carbohydrate Solutions
Starches and Sweeteners	1,650		1,598		52
Vantage Corn Processors	666		805		(139		)
Total Carbohydrate Solutions	2,316		2,403		(87		)

Nutrition
Human Nutrition	719		674		45
Animal Nutrition	752		608		144
Total Nutrition	1,471		1,282		189

Other Business	104		81		23
Total	$	14,970	$	15,304	$	(334	)

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

Revenues decreased ~~$0.2~~$0.3 billion to ~~$15.3~~$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 ~~soybeans, oils,~~wheat, flours, sweeteners, and ~~meal, partially offset by wheat. Origination~~oils. Ag Services and Oilseeds revenues decreased 2%4% to ~~$6.1~~$11.1 billion due to lower sales volumes ($~~226 million), partially offset by higher sales prices ($83 million)~~0.4 billion). ~~Oilseeds~~Carbohydrate Solutions revenues decreased 3%4% to ~~$5.4~~$2.3 billion due to lower sales prices ($264 million), partially offset by higher sales volumes ($76 million). Carbohydrate Solutions revenues decreased 8% to $2.4 billion due to lower sales volumes ($216 million), partially offset by higher sales prices ($18 million)0.1 billion). Nutrition revenues increased ~~35%~~15% to ~~$1.3~~$1.5 billion due to higher sales volumes ($~~390 million) primarily related to acquisitions, partially offset by lower sales prices ($58 million)~~0.2 billion).

Cost of products sold ~~of $14.4~~decreased $0.4 billion ~~decreased $261 million~~to $14.0 billion due ~~principally~~ to overall lower ~~prices of commodities.~~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 ~~compared to a credit of $8 million~~ in the prior year quarter. Manufacturing expenses increased ~~$96~~$63 million to ~~$1.4~~$1.5 billion due principally to ~~individually insignificant increases in certain expense categories.~~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 ~~$0.3~~$0.1 billion.

Gross profit ~~of $0.9 billion was comparable~~increased $23 million or 2%, to ~~the prior year quarter.~~$1.0 billion. Higher results in ~~Crushing and Origination~~Nutrition ($~~175 million) and Merchandising and Handling ($46~~75 million) were ~~partially~~ offset by lower results in ~~Refining, Packaging, Biodiesel,~~Ag Services and ~~Other~~Oilseeds ($9462 million) and ~~Bioproducts~~Carbohydrate Solutions ($7336 million). These factors are explained in the segment operating profit discussion on page 37. The ~~effect~~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 had a negative impact on gross profit of $1 million in the current quarter compared to a positive impact of $8 million in the prior year quarter.~~reserves.

Selling, general, and administrative expenses increased ~~$146~~$5 million to ~~$659~~$664 million due principally to ~~new acquisitions,~~ higher variable performance-related and stock compensation expense accruals and IT expenses, partially offset by lower salaries and ~~higher spending in IT and growth-related projects.~~wages.

Asset impairment, exit, and restructuring costs ~~decreased $5~~increased $30 million to ~~$11~~$41 million. ~~Current period charges~~Charges in the current quarter consisted primarily of impairments related to certain intangible and other long-lived assets presented as 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 and $2 million of individually insignificant restructuring charges in Corporate. Prior period charges consisted of $12 million of an equity investment impairment and $1 million of individually insignificant restructuring charges presented as specified items within segment operating profit, and $3 million of individually insignificant restructuring charges in Corporate.

Interest expense ~~increased $10~~decreased $18 million to ~~$101~~$83 million due principally to ~~higher borrowings to fund acquisitions.~~lower interest rates and interest savings from cross currency swaps.

Equity in earnings of unconsolidated affiliates ~~decreased $46~~increased $39 million to ~~$101~~$140 million ~~primarily~~ due to ~~lower~~higher earnings from the Company’s investment in Wilmar, partially offset by ~~improved results in~~lower earnings from the Company’s ~~investments~~investment in Olenex and the sale of the CIP ~~and Olenex.~~investment in December 2019.

Other income - net ~~decreased $7~~increased $24 million to $8$32 million. ~~Current period~~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, ~~and~~ step-up gains on equity investments, ~~partially offset by foreign exchange losses and other income. Prior period~~the non-service components of net pension benefit income, ~~included gains on disposals of individually insignificant assets in the ordinary course of business~~ and other income, partially offset by foreign exchange losses.

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

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

~~Origination~~Ag Services and Oilseeds operating profit increased ~~65%~~1%. ~~Merchandising and Handling~~Ag Services results ~~were higher~~more than doubled compared to the first quarter of ~~2018,~~2019, which had been impacted negatively by significant mark-to-market timing effects. Good execution that drove solid margins in North American grain, a strong performance in structured trade finance, and the reversal of some timing impacts from the fourth quarter of 2018, all helped to offset a softer performance in global trade, which was impacted by normalized South American soybean and soybean meal margins versus the first quarter of 2018. Results in the current quarter were ~~also~~ negatively impacted by high water conditions ~~which limited grain movement and sales~~ in North America. ~~Transportation~~Strong performance in global trade was driven by strong results ~~were up due to~~in destination marketing and structured trade finance. Robust farmer selling in Brazil drove higher ~~freight rates~~origination volumes and ~~improved northbound movements,~~margins, which were partially offset by ~~lower overall average barge volumes caused by unfavorable river conditions.~~

~~Oilseeds operating profit decreased 2%.~~weaker results in North America. Crushing and Origination results were up significantly compared to the first quarter of 2018, which included significant negative timing effects. Higher executed crush margins around the globe and favorable timing effects from hedges entered in the prior year drove improved results, partially offset by the impacts of slow farmer selling and lower Chinese demand on South American origination. Refining, Packaging, Biodiesel, and Other 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 ~~2018,~~2019, which ~~included the 2017 biodiesel tax credit. Increased contributions~~benefited from the ~~Olenex joint venture as well as improved~~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 ~~North American~~both biodiesel and refined oils ~~and European specialty food oils contributed to the current quarter results. Asia was down due to~~in North America, partially offset by lower ~~earnings~~biodiesel margins in EMEAI. Peanut shelling results significantly improved from the ~~Company’s investment in Wilmar.~~prior year quarter. Wilmar results were significantly higher year-over-year.

Carbohydrate Solutions operating profit decreased ~~55%~~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 ~~pressured sweetener industry volumes~~better operating performance at the Decatur facility, strong results in wheat milling, and ~~margins~~improved conditions in ~~European markets, impacts~~EMEAI. VCP results were slightly higher versus the prior year quarter. Effective risk management and the lack of severe weather impacts seen in ~~North America, higher manufacturing costs at~~ the ~~Decatur, IL complex, and weaker margins in flour milling. Bioproducts results~~first quarter of 2019, were ~~down due to significantly lower~~partially offset by weak industry ethanol margins ~~amid a continued weak industry environment and production volumes that were affected~~caused by ~~severe weather.~~significantly decreased demand.

Nutrition operating profit ~~decreased 16%~~increased 75%. ~~Wild Flavors~~Human Nutrition, which includes businesses in flavors, specialty ingredients, and ~~Specialty Ingredients results were 21% higher~~health and wellness, delivered strong performance and growth across ~~all businesses due to increased~~its broad portfolio. Increased revenues in North America and EMEAI flavors, continued sales growth in alternative proteins, and anadditional bioactives income, drove improved ~~product mix.~~results. Animal Nutrition results ~~were lower than the first quarter of 2018, which benefited~~improved year-over-year driven by strong performance from ~~temporary industry effects on vitamin additives. Additional upfront costs related to inventory revaluation of newly-acquired~~ Neovia, ~~weaker lysine sales~~good volumes and ~~higher costs also contributed to~~margins in feed additives, and solid sales in pet care. Amino acids were negatively impacted by a decline in the ~~current quarter results.~~global pricing environment.

Other Business operating profit ~~increased 8% due~~decreased 21%. Loss provisions related to ~~improved results from~~ the Company’s futures commission and brokerage business were partially offset by ~~unfavorable underwriting results from its~~improvements in the captive insurance ~~business.~~operations.

Three Months Ended
March 31,
2019 2018 Change
(In millions)
LIFO credit (charge) $ (1 ) $ 8
$ (9 )
Interest expense - net (90 ) (83 ) (7 )
Unallocated corporate costs (183 ) (146 ) (37 )
Acquisition-related expenses (14 ) —
(14 )
Restructuring charges (2 ) (3 ) 1
Other charges (6 ) (16 ) 10
Total Corporate $ (296 ) $ (240 ) $ (56 )



	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 ~~$296~~$224 million in the current quarter compared to ~~$240~~$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 ~~resulted in a charge of $1 million in the current quarter compared to a credit of $8 million~~ in the prior ~~year~~ quarter. Interest ~~expense - net increased $7~~expense-net decreased $13 million due principally to ~~higher borrowings to fund acquisitions.~~lower interest rates and interest savings from cross currency swaps. Unallocated corporate costs increased ~~$37~~$6 million due principally to ~~centralization of certain activities from the business units, resulting in a transfer-in of costs;~~ higher variable performance-related and stock compensation ~~expenses,~~expense accruals and ~~higher spending in~~ IT ~~and growth-related projects. Acquisition expenses~~expenses. Expenses related to acquisitions in the ~~current~~prior quarter related to the Neovia acquisition. Other charges ~~decreased $10~~in the current quarter included railroad maintenance expenses of $73 million ~~primarily due to improved results~~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.~~CIP which was sold in December 2019.

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 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 March 31, ~~2019~~2020 and ~~2018.~~2019.

⁽¹⁾Tax effected using the Company’s U.S. tax rate.

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

The tables below provide a reconciliation of earnings before income taxes to adjusted EBITDA and adjusted EBITDA by segment for the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019.

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

Cash used in operating activities was ~~$2.0~~$0.7 billion for the three months compared to ~~$3.6~~$2.0 billion for the same period last year. Working capital changes, including the increase in deferred consideration, decreased cash by ~~$2.5~~$1.5 billion for the three months compared to ~~$4.1~~$2.5 billion for the same period last year. Inventories decreased approximately $0.2 billion primarily due to lower ~~quantities partially offset by higher~~ inventory ~~prices.~~quantities. Trade payables declined approximately $0.3 billion principally reflecting seasonal cash payments for North American harvest-related grain purchases.

Increase in deferred consideration in securitized receivables of ~~$1.8~~$2.0 billion and ~~$2.5~~$1.8 billion for the three months and the same period last year, respectively, was offset by ~~$1.8~~$2.0 billion and ~~$2.4~~$1.8 billion of net consideration received for beneficial interest obtained for selling trade receivables for the three months and the same period last year, respectively.

Cash ~~used in~~provided by investing activities was ~~$0.3~~$1.9 billion for the three months compared to ~~cash provided~~a use of ~~$2.2~~$0.3 billion for the same period last year. Capital expenditures ~~and net~~for the three months of $0.2 billion were comparable to the same period last year. Net assets of businesses acquired were ~~$2.1 billion~~$8 million for the three months compared to ~~$0.2~~$1.9 billion for the same period last ~~year.~~year due to the Neovia acquisition. Net consideration received for beneficial interest obtained for selling trade receivables was ~~$1.8~~$2.0 billion for the three months compared to ~~$2.4~~$1.8 billion the same period last year.

Cash provided by financing activities was ~~$1.1~~$3.3 billion for the three months compared to ~~$1.3~~$1.1 billion for the same period last year. Long-term debt borrowings for the three months of $1.5 billion consisted of the $0.5 billion and $1.0 billion aggregate principal amounts of 2.75% Notes due in 2025 and 3.25% Notes due in 2030, respectively, issued on March 27, 2020. There were no long-term borrowings in the same period last year. Commercial paper borrowings for the three months were ~~$1.3~~$2.2 billion compared to ~~commercial paper borrowings of $1.5~~$1.3 billion for the same period last year. ~~There were no significant share~~Proceeds from the borrowings in the current period will be used for general corporate purposes, including the reduction of short-term debt. Share repurchases for the three months ~~and~~were $0.1 billion compared to an insignificant amount for the same period last year. Dividends of $0.2 billion for the three months were comparable to the same period last year.

At March 31, ~~2019,~~2020, the Company had ~~$0.9~~$4.7 billion of cash, cash equivalents, and short-term marketable securities and a current ratio, defined as current assets divided by current liabilities, of 1.5 to 1. Included in working capital was ~~$5.5~~$5.6 billion of readily marketable commodity inventories. At March 31, ~~2019,~~2020, the Company’s capital resources included shareholders’ equity of ~~$19~~$19.0 billion and lines of credit, including the accounts receivable securitization programs described below, totaling ~~$9.0~~$10.7 billion, of which ~~$6.2~~$5.9 billion was unused. The Company’s ratio of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was 31% and 29% at March 31, ~~2019~~2020 and December 31, ~~2018.~~2019, respectively. The Company uses this ratio as a measure of the Company’s long-term indebtedness and an indicator of financial flexibility. The Company’s ratio of net debt (the sum of short-term debt, current maturities of long-term debt, and long-term debt less the sum of cash and cash equivalents and short-term marketable securities) to capital (the sum of net debt and shareholders’ equity) was ~~32%~~29% at March 31, ~~2019~~2020 and ~~25% at~~ December 31, ~~2018.~~2019. Of the Company’s total lines of credit, $5.0 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was ~~$1.3~~$2.2 billion of U.S. and European commercial paper outstanding at March 31, ~~2019. There was no~~2020.

COVID-19 has not significantly impacted ADM’s capital and financial resources and pricing on its revolving credit facility remains unchanged. However, in line with the overall markets, COVID-19 has created dislocations in the credit markets causing corporate credit spreads to rise, partially offset by a corresponding drop in benchmark yields. The Company has utilized its diversified sources of liquidity, including its inventory financing and bilateral bank facilities, to ensure it has ample cash and is prepared for possible unexpected credit market disruptions. Additionally, ADM has been accepted into the Federal Reserve’s Commercial Paper Financing Facility to ensure uninterrupted access to the commercial paper ~~outstanding under~~markets. To date, the ~~European program at March 31, 2019.~~Company has not utilized this facility.

As of March 31, ~~2019,~~2020, the Company had ~~$0.9~~$4.7 billion of cash and cash equivalents, ~~$0.4~~$0.5 billion of which was cash held by foreign subsidiaries whose undistributed earnings are considered indefinitely reinvested. Based on the Company’s historical ability to generate sufficient cash flows from its U.S. operations and unused and available U.S. credit capacity of $3.8 billion, the Company has asserted that these funds are indefinitely reinvested outside the U.S.

The Company has accounts receivable securitization programs (the “Programs”) with certain commercial paper conduit purchasers and committed purchasers. The Programs ~~as amended,~~ provide the Company with up to ~~$1.8~~$1.9 billion in funding against accounts receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 1716 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information and disclosures on the Programs). As of March 31, ~~2019,~~2020, the Company utilized $1.4 billion of its facility under the Programs.

The Company expects capital expenditures of approximately $0.8 billion, ~~to $0.9~~dividends of $0.8 billion, and ~~additional cash outlays~~share repurchases of ~~approximately $0.8~~$0.1 billion ~~in dividends~~ during ~~2019.~~2020.

The Company’s purchase obligations as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 were ~~$12.7~~$13.5 billion and ~~$11.8~~$12.2 billion, respectively. The increase is primarily related to obligations to purchase higher quantities of agricultural commodity ~~inventories, obligations from new acquisitions, and other commitments.~~inventories. As of March 31, ~~2019~~,2020, the Company expects to make payments related to purchase obligations of ~~$11.8~~$12.6 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended March 31, ~~2019~~2020.

There were no material changes in the Company’s critical accounting policies during the quarter ended March 31, ~~2019.~~2020.

The market risk inherent in the Company’s market risk sensitive instruments and positions is the potential loss arising from adverse changes in: commodity market prices as they relate to the Company’s net commodity position, foreign currency exchange rates, and interest rates. Significant changes in market risk sensitive instruments and positions for the quarter ended March 31, ~~2019~~2020 are described below. There were no material changes during the period in the Company’s potential loss arising from changes in foreign currency exchange rates and interest rates.

For detailed information regarding the Company’s market risk sensitive instruments and positions, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019.

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

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

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

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

As of March 31, ~~2019~~2020, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure. There was no change in the Company’s internal controls over financial reporting during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

During 2018, the Company launched Readiness to drive new efficiencies and improve the customer experience in the Company’s existing businesses through a combination of data analytics, process simplification and standardization, and behavioral and cultural change, building upon its earlier 1ADM and operational excellence programs. As part of this transformation, the Company is implementing a new enterprise resource planning ~~(ERP)~~(“ERP”) system on a worldwide basis, which is expected to occur in phases over the next several years. The Company continues to consider these changes in its design of and testing for effectiveness of internal controls over financial reporting and concluded, as part of the evaluation described in the above paragraph, that the implementation of the new ERP in these circumstances has not materially affected its internal control over financial reporting.

In January 2019, the Company completed the acquisition of Neovia. As a result of the acquisition, the Company is in the process of reviewing its internal control structure and, if necessary, will make appropriate changes as the Company incorporates its controls and procedures into the acquired business. In addition, during the quarter, the Company added certain controls related to the adoption of Topic 842 with no material effect to its internal control over financial reporting.

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 has 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. In December 2017, the Company and Syngenta reached a confidential settlement of this action. Second, Syngenta brought third-party claims against the Company in 2015 in a federal multidistrict litigation ~~(MDL)~~(“MDL”) in Kansas City, Kansas, aconsolidated state court ~~MDL~~litigation in Minneapolis, Minnesota, and other courts, seeking contribution in the event Syngenta is held liable in class actions by farmers and other parties. In the December 2017 settlement, Syngenta agreed to dismiss all of these third-party claims against the Company. Third, farmers and other parties have sued the Company and other grain companies in numerous individual and purported class action suits 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. OnAll of these claims were dismissed, subject to appeal, in several orders entered on August 17, 2016 by the federal court in Minneapolis on January 4, 2017 aby the federal court in the Southern District of Illinois, ~~dismissed, subject to appeal, all~~and on August 18, 2017 by a state court in Illinois. Subsequently in 2019, a number of ~~the pending federal complaints~~additional plaintiffs filed substantially similar claims against the Company and ~~thus~~other grain companies in the ~~Company remains a defendant only in certain~~same Illinois state court. On January 30, 2020, the Illinois state court ~~actions by farmers and other parties, which actions~~judge held that its August 18, 2017 dismissal order would also be applied to these more recently filed claims. Thus, subject to appeals, the Company ~~has moved to dismiss as well.~~will not be a defendant in 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.

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.

~~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~~ ~~March 31, 2019. 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, ~~2018~~2019. Except as presented below, there were no other significant changes in the Company’s risk factors during the quarter ended March 31, 2020.

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.

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, 2019 to
January 31, 2019 702
$ 41.069
22
12,063,392

February 1, 2019 to

February 28, 2019 538,643
41.828
63
12,063,329

March 1, 2019 to

March 31, 2019 6,882
42.910
37
12,063,292
Total 546,227
$ 41.841
122
12,063,292



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



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



~~Large accelerated filer~~ x	~~Accelerated filer~~ o
~~Non-accelerated filer~~ o Large Accelerated Filer	~~Smaller reporting company~~ o ☒	Accelerated Filer	☐	Emerging Growth Company	☐
~~Emerging growth company~~ o Non-accelerated Filer	☐	Smaller Reporting Company	☐


(In millions)	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
Assets
Current Assets
Cash and cash equivalents	$	926		$	1,997		$	4,734		$	852
Short-term marketable securities	9			6
Segregated cash and investments	4,241			4,506			5,098			4,458
Trade receivables	2,515			2,233			2,437			2,267
Inventories	8,946			8,813			8,830			9,170
Other current assets	3,625			3,033			5,047			4,600
Total Current Assets	20,262			20,588			26,146			21,347

Investments and Other Assets
Investments in and advances to affiliates	5,332			5,317			5,143			5,132
Long-term marketable securities	22			7
Goodwill and other intangible assets	5,459			4,041			5,194			5,476
Other assets	1,777			927			2,029			1,936
Total Investments and Other Assets	12,590			10,292			12,366			12,544

Property, Plant, and Equipment
Land and land improvements	586			545			585			592
Buildings	5,404			5,171			5,339			5,381
Machinery and equipment	18,534			18,399			18,934			19,005
Construction in progress	1,121			987			951			1,021
	25,645			25,102			25,809			25,999
Accumulated depreciation	(15,346		)	(15,149		)	(15,926		)	(15,893		)
Net Property, Plant, and Equipment	10,299			9,953			9,883			10,106
Total Assets	$	43,151		$	40,833		$	48,395		$	43,997

Liabilities, Temporary Equity, and Shareholders’ Equity
Current Liabilities
Short-term debt	$	1,595		$	108		$	3,382		$	1,202
Trade payables	3,538			3,545			3,440			3,746
Payables to brokerage customers	4,616			4,628			5,778			5,022
Accrued expenses and other payables	2,998			2,913			4,209			3,757
Current maturities of long-term debt	614			582			508			7
Total Current Liabilities	13,361			11,776			17,317			13,734

Long-Term Liabilities
Long-term debt	7,675			7,698			8,613			7,672
Deferred income taxes	1,250			1,067			1,347			1,194
Other	1,906			1,247			2,071			2,114
Total Long-Term Liabilities	10,831			10,012			12,031			10,980

Temporary Equity - Redeemable noncontrolling interest	49			49			71			58

Shareholders’ Equity
Common stock	2,584			2,560			2,690			2,655
Reinvested earnings	18,553			18,527			19,026			18,958
Accumulated other comprehensive income (loss)	(2,242		)	(2,106		)	(2,764		)	(2,405		)
Noncontrolling interests	15			15			24			17
Total Shareholders’ Equity	18,910			18,996			18,976			19,225
Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	43,151		$	40,833		$	48,395		$	43,997


(In millions)	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
Operating Activities
Net earnings including noncontrolling interests	$	234		$	396		$	391		$	234
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	245			235			245			245
Asset impairment charges	9			12			44			9
Deferred income taxes	39			(21		)	64			39
Equity in earnings of affiliates, net of dividends	(4		)	(105		)	(115		)	(4		)
Stock compensation expense	43			29			51			43
Deferred cash flow hedges	(77		)	(25		)	(82		)	(77		)
Gains on sales of assets and businesses	(15		)	(6		)	—			(15		)
Other – net	(8		)	38			241			(8		)
Changes in operating assets and liabilities
Segregated investments	28			308			17			28
Trade receivables	34			(185		)	(251		)	34
Inventories	166			(600		)	182			166
Deferred consideration in securitized receivables	(1,778		)	(2,450		)	(2,045		)	(1,778		)
Other current assets	(495		)	(432		)	(436		)	(495		)
Trade payables	(260		)	(567		)	(260		)	(260		)
Payables to brokerage customers	(27		)	(432		)	811			(27		)
Accrued expenses and other payables	(169		)	231			488			(169		)
Total Operating Activities	(2,035		)	(3,574		)	(655		)	(2,035		)

Investing Activities
Purchases of property, plant, and equipment	(198		)	(196		)	(194		)	(198		)
Proceeds from sales of business and assets	18			14			7			18
Net assets of businesses acquired	(1,876		)	—			(8		)	(1,876		)
Proceeds from sales of marketable securities	50			—			5			50
Investments in and advances to affiliates	(9		)	—			(3		)	(9		)
Investments in retained interest in securitized receivables	(1,313		)	(1,298		)	(1,271		)	(1,313		)
Proceeds from retained interest in securitized receivables	3,091			3,656			3,316			3,091
Other – net	(34		)	4			1			(34		)
Total Investing Activities	(271		)	2,180			1,853			(271		)

Financing Activities
Long-term debt borrowings							1,481			—
Long-term debt payments	(4		)	(1		)	(1		)	(4		)
Net borrowings (payments) under lines of credit agreements	1,309			1,474			2,188			1,309
Share repurchases							(112		)	—
Cash dividends	(198		)	(190		)	(203		)	(198		)
Other – net	(42		)	(6		)	(11		)	(42		)
Total Financing Activities	1,065			1,277			3,342			1,065

Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	(1,241		)	(117		)	4,540			(1,241		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	3,843			1,858			2,990			3,843
Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	2,602		$	1,741		$	7,530		$	2,602

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

Cash and cash equivalents	$	926		$	797		$	4,734		$	926
Restricted cash and restricted cash equivalents included in segregated cash and investments	1,676			944			2,796			1,676
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	2,602		$	1,741		$	7,530		$	2,602

Supplemental Disclosure of Noncash Investing Activity:
Retained interest in securitized receivables	$	1,831		$	2,368		$	2,105		$	1,831



	Useful Life	Neovia		FCC		Total
	(In years)	(In millions)
Trademarks/brands	5 to 13	$	166	$	7	$	173
Customer lists	10 to 20	289		12		301
Developed technology	6 to 11	128		4		132
Total other intangible assets acquired		$	583	$	23	$	606



In millions	Neovia			FCC		Gleadell			Total
Working capital	$	102		$	40	$	(6	)	$	136
Property, plant, and equipment	409			17		13			439
Goodwill	784			90		10			884
Other intangible assets	583			23		—			606
Other long-term assets	87			—		—			87
Long-term liabilities	(274		)	—		(2		)	(276		)
Aggregate cash consideration, net of cash acquired, plus acquisition-date fair value of previously held equity interest	$	1,691		$	170	$	15		$	1,876


	Fair Value Measurements at March 31, 2019								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	$	—	$	3,000	$	1,511	$	4,511	$	—	$	3,642	$	1,938	$	5,580
Unrealized derivative gains:
Commodity contracts	—		257		212		469		—		482		391		873
Foreign currency contracts	—		191		—		191		—		439		—		439
Interest rate contracts									—		14		—		14
Cash equivalents	432		—		—		432		3,381		—		—		3,381
Marketable securities	30		1		—		31		2		—		—		2
Segregated investments	1,073		—		—		1,073		765		—		—		765
Deferred receivables consideration	—		430		—		430		—		496		—		496
Total Assets	$	1,535	$	3,879	$	1,723	$	7,137	$	4,148	$	5,073	$	2,329	$	11,550

Liabilities:
Unrealized derivative losses:
Commodity contracts	$	—	$	291	$	143	$	434	$	—	$	480	$	309	$	789
Foreign currency contracts	—		155		—		155		—		624		—		624
Interest rate contracts	—		32		—		32		—		56		—		56
Inventory-related payables	—		1,123		16		1,139		—		1,151		20		1,171
Total Liabilities	$	—	$	1,601	$	159	$	1,760	$	—	$	2,311	$	329	$	2,640



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

Balance, December 31, 2019	$	1,477		$	201		$	1,678
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	187			217			404
Purchases	3,407			—			3,407
Sales	(3,510		)	—			(3,510		)
Settlements	—			(45		)	(45		)
Transfers into Level 3	441			21			462
Transfers out of Level 3	(64		)	(3		)	(67		)
Ending balance, March 31, 2020	$	1,938		$	391		$	2,329



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

Balance, December 31, 2019	$	27		$	199		$	226
Total increase (decrease) in net realized/unrealized losses included in cost of products sold*	3			205			208
Purchases	6			—			6
Sales	(16		)	—			(16		)
Settlements	—			(122		)	(122		)
Transfers into Level 3	—			36			36
Transfers out of Level 3	—			(9		)	(9		)
Ending balance, March 31, 2020	$	20		$	309		$	329



	Level 3 Fair Value Asset Measurements at
	March 31, 2018
	Inventories Carried at Market			Commodity Derivative Contracts Gains			Total Assets
	(In millions)

Balance, December 31, 2017	$	1,486		$	111		$	1,597
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	173			47			220
Purchases	2,239			—			2,239
Sales	(2,150		)	—			(2,150		)
Settlements	—			(66		)	(66		)
Transfers into Level 3	187			28			215
Transfers out of Level 3	(106		)	(4		)	(110		)
Ending balance, March 31, 2018	$	1,829		$	116		$	1,945


Note 7.6.	Derivative Instruments and Hedging Activities (Continued)


Note 6.	Derivative Instruments and Hedging Activities (Continued)



	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		%



	Three Months Ended March 31, 2019
	(Amounts in millions)
Lease cost:
Operating lease cost	$	73
Short-term lease cost	23
Total lease cost	$	96

Other information:
Operating lease liability principal payments	$	40
Right-of-use assets obtained in exchange for new operating lease liabilities	$	61
Weighted-average remaining lease term - operating leases (in years)	7
Weighted average discount rate - operating leases	4.6		%


Remainder of 2019	$	173
2020	181
			Undiscounted
			Cash Flows
			(In millions)
Remainder of 2020			$	195
2021	150		230
2022	121		199
2023	86		154
2024	48		96
2025			55
Thereafter	224		233
Total	983		1,162

Less interest ⁽¹⁾	166		(175		)
Lease liability	$	817	$	987


ITEM 1.	FINANCIAL STATEMENTS


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


~~Note 5.~~	~~Acquisitions~~


~~Note 5.~~	~~Acquisitions (Continued)~~



	Amount reclassified from AOCI
	Three months ended March 31,						Affected line item in the
Details about AOCI components	2019			2018			consolidated statement of earnings
	(In millions)
Deferred loss (gain) on hedging activities
	$	(5	)	$	(6	)	Cost of products sold
	13			(2		)	Revenues
	8			(8		)	Total before tax
	(2		)	2			Tax
	$	6		$	(6	)	Net of tax
Pension liability adjustment
Amortization of defined benefit pension items:
Prior service credit	$	(4	)	$	(8	)	Other (income) expense - net
Actuarial losses	1			16			Other (income) expense - net
	(3		)	8			Total before tax
	14			(4		)	Tax
	$	11		$	4		Net of tax


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


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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


	Three months ended				Year ended				Three months ended						Year ended
	March 31, 2019				December 31, 2018				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	$	348	$	35	$	434	$	43	$	400		$	40		$	576		$	58
Lowest position	39		4		25		2		(232		)	(23		)	(83		)	(8		)
Average position	198		20		237		24		109			11			280			28


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



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program ⁽²⁾	Number of Shares Remaining that May be Purchased Under the Program ⁽²⁾
January 1, 2019 to
January 31, 2019	702	$	41.069	22	12,063,392

February 1, 2019 to
February 28, 2019	538,643	41.828		63	12,063,329

March 1, 2019 to
March 31, 2019	6,882	42.910		37	12,063,292
Total	546,227	$	41.841	122	12,063,292


(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.



(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.

18		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)



	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