UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

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

For the quarterly period ended ~~March 31,~~September 30, 2021

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

For the transition period from __________ to __________

Commission file number 1-44

ARCHER-DANIELS-MIDLAND COMPANY

(Exact name of registrant as specified in its charter)


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

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

(312) 634-8100

(Registrant’s telephone number, including area code)

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


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

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

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

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

Large Accelerated Filer

☒

Accelerated Filer

☐

Emerging Growth Company

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

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

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

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

Common Stock, no par value – ~~558,702,110~~559,441,260 shares

(~~April 27,~~October 25, 2021)

SAFE HARBOR STATEMENT

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

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Archer-Daniels-Midland Company

Consolidated Statements of Earnings

(Unaudited)


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

Revenues	Revenues	$	18,893	$	14,970		Revenues	$	20,340	$	15,126	$	62,159	$	46,377
Cost of products sold	Cost of products sold	17,345		14,019			Cost of products sold	19,014		14,084		57,822		43,276
Gross Profit	Gross Profit	1,548		951			Gross Profit	1,326		1,042		4,337		3,101

Selling, general, and administrative expenses	Selling, general, and administrative expenses	749		664			Selling, general, and administrative expenses	720		636		2,208		1,938
Asset impairment, exit, and restructuring costs	Asset impairment, exit, and restructuring costs	59		41			Asset impairment, exit, and restructuring costs	2		4		84		61
Interest expense		—		—
Equity in (earnings) losses of unconsolidated affiliates	Equity in (earnings) losses of unconsolidated affiliates	(125)		(140)			Equity in (earnings) losses of unconsolidated affiliates	(110)		(160)		(398)		(403)
Interest income		(13)		(40)
Investment income							Investment income	(20)		(20)		(83)		(94)
Interest expense	Interest expense	87		83			Interest expense	61		100		188		270
Other (income) expense – net	Other (income) expense – net	(33)		(32)			Other (income) expense – net	20		282		36		202
Earnings Before Income Taxes	Earnings Before Income Taxes	824		375			Earnings Before Income Taxes	653		200		2,302		1,127

Income tax (benefit) expense		131		(16)
Income tax expense (benefit)							Income tax expense (benefit)	120		(26)		364		38
Net Earnings Including Noncontrolling Interests	Net Earnings Including Noncontrolling Interests	693		391			Net Earnings Including Noncontrolling Interests	533		226		1,938		1,089

Less: Net earnings attributable to noncontrolling interests	Less: Net earnings attributable to noncontrolling interests	4		0			Less: Net earnings attributable to noncontrolling interests	7		1		11		4

Net Earnings Attributable to Controlling Interests	Net Earnings Attributable to Controlling Interests	$	689	$	391		Net Earnings Attributable to Controlling Interests	$	526	$	225	$	1,927	$	1,085

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

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

Basic earnings per common share	Basic earnings per common share	$	1.22	$	0.69		Basic earnings per common share	$	0.93	$	0.40	$	3.42	$	1.93

Diluted earnings per common share	Diluted earnings per common share	$	1.22	$	0.69		Diluted earnings per common share	$	0.93	$	0.40	$	3.41	$	1.93

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

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


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

Net earnings including noncontrolling interests	Net earnings including noncontrolling interests	$	693	$	391		Net earnings including noncontrolling interests	$	533	$	226	$	1,938	$	1,089
Other comprehensive income (loss):	Other comprehensive income (loss):						Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	294		(241)			Foreign currency translation adjustment	(24)		(154)		305		(429)
Tax effect	Tax effect	(56)		(42)			Tax effect	(30)		51		(78)		37
Net of tax amount	Net of tax amount	238		(283)			Net of tax amount	(54)		(103)		227		(392)

Pension and other postretirement benefit liabilities adjustment	Pension and other postretirement benefit liabilities adjustment	18		4			Pension and other postretirement benefit liabilities adjustment	13		(5)		102		—
Tax effect	Tax effect	(5)		(12)			Tax effect	5		3		(22)		(9)
Net of tax amount	Net of tax amount	13		(8)			Net of tax amount	18		(2)		80		(9)

Deferred gain (loss) on hedging activities	Deferred gain (loss) on hedging activities	101		(82)			Deferred gain (loss) on hedging activities	75		112		258		111
Tax effect	Tax effect	(25)		14			Tax effect	(1)		(22)		(41)		(23)
Net of tax amount	Net of tax amount	76		(68)			Net of tax amount	74		90		217		88

Unrealized gain (loss) on investments	Unrealized gain (loss) on investments	(1)		6			Unrealized gain (loss) on investments	6		(28)		4		(25)
Tax effect	Tax effect	0		(2)			Tax effect	—		—		(1)		(1)
Net of tax amount	Net of tax amount	(1)		4			Net of tax amount	6		(28)		3		(26)
Other comprehensive income (loss)	Other comprehensive income (loss)	326		(355)			Other comprehensive income (loss)	44		(43)		527		(339)
Comprehensive income (loss) including noncontrolling interests	Comprehensive income (loss) including noncontrolling interests	1,019		36			Comprehensive income (loss) including noncontrolling interests	577		183		2,465		750

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

Comprehensive income (loss) attributable to controlling interests	Comprehensive income (loss) attributable to controlling interests	$	1,015	$	32		Comprehensive income (loss) attributable to controlling interests	$	571	$	181	$	2,455	$	741

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Balance Sheets


(In millions)	(In millions)	March 31, 2021		December 31, 2020		(In millions)	September 30, 2021		December 31, 2020
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	694	$	666	Cash and cash equivalents	$	1,083	$	666

Segregated cash and investments	Segregated cash and investments	6,403		5,890		Segregated cash and investments	7,891		5,890
Trade receivables	Trade receivables	3,269		2,793		Trade receivables	3,797		2,793
Inventories	Inventories	12,764		11,713		Inventories	11,169		11,713

Current assets held for sale						Current assets held for sale	130		—
Other current assets	Other current assets	6,154		6,224		Other current assets	5,220		6,224
Total Current Assets	Total Current Assets	29,284		27,286		Total Current Assets	29,290		27,286

Investments and Other Assets	Investments and Other Assets					Investments and Other Assets
Investments in and advances to affiliates	Investments in and advances to affiliates	4,998		4,913		Investments in and advances to affiliates	5,148		4,913

Goodwill and other intangible assets	Goodwill and other intangible assets	5,249		5,413		Goodwill and other intangible assets	5,705		5,413
Right of use assets	Right of use assets	1,071		1,102		Right of use assets	1,005		1,102
Other assets	Other assets	1,077		1,054		Other assets	1,302		1,054
Total Investments and Other Assets	Total Investments and Other Assets	12,395		12,482		Total Investments and Other Assets	13,160		12,482

Property, Plant, and Equipment	Property, Plant, and Equipment					Property, Plant, and Equipment
Land and land improvements	Land and land improvements	534		545		Land and land improvements	523		545
Buildings	Buildings	5,500		5,522		Buildings	5,557		5,522
Machinery and equipment	Machinery and equipment	19,165		19,154		Machinery and equipment	18,955		19,154
Construction in progress	Construction in progress	1,097		1,118		Construction in progress	1,126		1,118
		26,296		26,339			26,161		26,339
Accumulated depreciation	Accumulated depreciation	(16,497)		(16,388)		Accumulated depreciation	(16,313)		(16,388)
Net Property, Plant, and Equipment	Net Property, Plant, and Equipment	9,799		9,951		Net Property, Plant, and Equipment	9,848		9,951

Total Assets	Total Assets	$	51,478	$	49,719	Total Assets	$	52,298	$	49,719

Liabilities, Temporary Equity, and Shareholders’ Equity	Liabilities, Temporary Equity, and Shareholders’ Equity					Liabilities, Temporary Equity, and Shareholders’ Equity
Current Liabilities	Current Liabilities					Current Liabilities
Short-term debt	Short-term debt	$	2,763	$	2,042	Short-term debt	$	314	$	2,042
Trade payables	Trade payables	4,011		4,474		Trade payables	4,617		4,474
Payables to brokerage customers	Payables to brokerage customers	7,028		6,460		Payables to brokerage customers	8,675		6,460
Accrued expenses and other payables	Accrued expenses and other payables	4,448		4,943		Accrued expenses and other payables	4,121		4,943
Current lease liabilities	Current lease liabilities	262		261		Current lease liabilities	268		261
Current maturities of long-term debt	Current maturities of long-term debt	0		2		Current maturities of long-term debt	581		2

Total Current Liabilities	Total Current Liabilities	18,512		18,182		Total Current Liabilities	18,576		18,182

Long-Term Liabilities	Long-Term Liabilities					Long-Term Liabilities
Long-term debt	Long-term debt	8,437		7,885		Long-term debt	8,039		7,885
Deferred income taxes	Deferred income taxes	1,385		1,302		Deferred income taxes	1,351		1,302
Non-current lease liabilities	Non-current lease liabilities	830		863		Non-current lease liabilities	759		863
Other	Other	1,371		1,391		Other	1,358		1,391
Total Long-Term Liabilities	Total Long-Term Liabilities	12,023		11,441		Total Long-Term Liabilities	11,507		11,441

Temporary Equity - Redeemable noncontrolling interest	Temporary Equity - Redeemable noncontrolling interest	82		74		Temporary Equity - Redeemable noncontrolling interest	225		74

Shareholders’ Equity	Shareholders’ Equity					Shareholders’ Equity
Common stock	Common stock	2,858		2,824		Common stock	2,964		2,824
Reinvested earnings	Reinvested earnings	20,261		19,780		Reinvested earnings	21,081		19,780
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(2,278)		(2,604)		Accumulated other comprehensive income (loss)	(2,076)		(2,604)
Noncontrolling interests	Noncontrolling interests	20		22		Noncontrolling interests	21		22
Total Shareholders’ Equity	Total Shareholders’ Equity	20,861		20,022		Total Shareholders’ Equity	21,990		20,022
Total Liabilities, Temporary Equity, and Shareholders’ Equity	Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	51,478	$	49,719	Total Liabilities, Temporary Equity, and Shareholders’ Equity	$	52,298	$	49,719

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Cash Flows

(Unaudited)


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

Operating Activities	Operating Activities					Operating Activities
Net earnings including noncontrolling interests	Net earnings including noncontrolling interests	$	693	$	391	Net earnings including noncontrolling interests	$	1,938	$	1,089
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities	Adjustments to reconcile net earnings to net cash provided by (used in) operating activities					Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	Depreciation and amortization	249		245		Depreciation and amortization	739		727
Asset impairment charges	Asset impairment charges	31		44		Asset impairment charges	54		50
Deferred income taxes	Deferred income taxes	(7)		64		Deferred income taxes	(95)		57
Equity in earnings of affiliates, net of dividends	Equity in earnings of affiliates, net of dividends	(81)		(115)		Equity in earnings of affiliates, net of dividends	(36)		(165)
Stock compensation expense	Stock compensation expense	76		51		Stock compensation expense	135		114

Loss on debt extinguishment						Loss on debt extinguishment	36		410
Deferred cash flow hedges	Deferred cash flow hedges	102		(82)		Deferred cash flow hedges	258		111
Gains on sales of assets and businesses		(11)		0
Gains on sales of assets and businesses/investment revaluation						Gains on sales of assets and businesses/investment revaluation	(95)		(132)
Other – net	Other – net	150		241		Other – net	156		34
Changes in operating assets and liabilities	Changes in operating assets and liabilities					Changes in operating assets and liabilities
Segregated investments	Segregated investments	666		17		Segregated investments	594		147
Trade receivables	Trade receivables	(515)		(251)		Trade receivables	(1,060)		(343)
Inventories	Inventories	(1,138)		182		Inventories	405		370
Deferred consideration in securitized receivables	Deferred consideration in securitized receivables	0		(2,045)		Deferred consideration in securitized receivables	—		(4,603)
Other current assets	Other current assets	413		(436)		Other current assets	1,187		(467)
Trade payables	Trade payables	(441)		(260)		Trade payables	170		(389)
Payables to brokerage customers	Payables to brokerage customers	561		811		Payables to brokerage customers	2,236		1,060
Accrued expenses and other payables	Accrued expenses and other payables	(450)		488		Accrued expenses and other payables	(769)		414
Total Operating Activities	Total Operating Activities	298		(655)		Total Operating Activities	5,853		(1,516)

Investing Activities	Investing Activities					Investing Activities
Purchases of property, plant, and equipment	Purchases of property, plant, and equipment	(174)		(194)		Purchases of property, plant, and equipment	(714)		(558)
Proceeds from sales of assets and businesses	Proceeds from sales of assets and businesses	14		7		Proceeds from sales of assets and businesses	73		708
Net assets of businesses acquired	Net assets of businesses acquired	0		(8)		Net assets of businesses acquired	(501)		(3)

Proceeds from sales of marketable securities		1		5

Investments in and advances to affiliates	Investments in and advances to affiliates	(4)		(3)		Investments in and advances to affiliates	(7)		(5)
Distributions from affiliates	Distributions from affiliates	5		0		Distributions from affiliates	5		—
Investments in retained interest in securitized receivables	Investments in retained interest in securitized receivables	0		(1,271)		Investments in retained interest in securitized receivables	—		(2,121)
Proceeds from retained interest in securitized receivables	Proceeds from retained interest in securitized receivables	0		3,316		Proceeds from retained interest in securitized receivables	—		6,724
Other – net	Other – net	(11)		1		Other – net	(143)		(17)
Total Investing Activities	Total Investing Activities	(169)		1,853		Total Investing Activities	(1,287)		4,728

Financing Activities	Financing Activities					Financing Activities
Long-term debt borrowings	Long-term debt borrowings	593		1,481		Long-term debt borrowings	1,330		1,790
Long-term debt payments	Long-term debt payments	0		(1)		Long-term debt payments	(533)		(2,032)
Net borrowings (payments) under lines of credit agreements	Net borrowings (payments) under lines of credit agreements	729		2,188		Net borrowings (payments) under lines of credit agreements	(1,726)		(993)

Share repurchases	Share repurchases	0		(112)		Share repurchases	—		(117)
Cash dividends	Cash dividends	(208)		(203)		Cash dividends	(626)		(607)

Other – net	Other – net	(37)		(11)		Other – net	1		16
Total Financing Activities	Total Financing Activities	1,077		3,342		Total Financing Activities	(1,554)		(1,943)

Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	1,206		4,540		Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	3,012		1,269
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	4,646		2,990		Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period	4,646		2,990

Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	5,852	$	7,530	Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period	$	7,658	$	4,259

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

Cash and cash equivalents	Cash and cash equivalents	$	694	$	4,734	Cash and cash equivalents	$	1,083	$	948
Restricted cash and restricted cash equivalents included in segregated cash and investments	Restricted cash and restricted cash equivalents included in segregated cash and investments	5,158		2,796		Restricted cash and restricted cash equivalents included in segregated cash and investments	6,575		3,311
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	5,852	$	7,530	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	7,658	$	4,259

Supplemental Disclosure of Noncash Investing Activity:	Supplemental Disclosure of Noncash Investing Activity:					Supplemental Disclosure of Noncash Investing Activity:
Retained interest in securitized receivables	Retained interest in securitized receivables	$	0	$	2,105	Retained interest in securitized receivables	$	—	$	4,656

See notes to consolidated financial statements.

Archer-Daniels-Midland-Company

Consolidated Statements of Shareholders’ Equity

(Unaudited)


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

Balance, December 31, 2020		556	$	2,824			$	19,780							$	(2,604)			$	22		$	20,022
Balance, June 30, 2021																				Balance, June 30, 2021	559			$	2,941		$	20,762		$	(2,121)		$	21		$	21,603
Comprehensive income	Comprehensive income																			Comprehensive income
Net earnings	Net earnings				689								4							Net earnings						526						7
Other comprehensive income (loss)	Other comprehensive income (loss)								326				0							Other comprehensive income (loss)									45			(1)
Total comprehensive income	Total comprehensive income																1,019			Total comprehensive income															577
Dividends paid - $0.37 per share	Dividends paid - $0.37 per share				(208)												(208)			Dividends paid - $0.37 per share						(209)									(209)

Stock compensation expense	Stock compensation expense	3	76														76			Stock compensation expense	—			21											21
Other																				Other	—			2		2			—			(6)			(2)
Balance, September 30, 2021																				Balance, September 30, 2021	559			$	2,964	$	21,081		$	(2,076)		$	21		$	21,990

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

Stock compensation expense																				Stock compensation expense	3			135											135

Other	Other	0	(42)		0				0				(6)				(48)			Other	—			5		—			0			(11)			(6)
Balance, March 31, 2021		559	$	2,858	$	20,261			$	(2,278)			$	20			$	20,861
Balance, September 30, 2021																				Balance, September 30, 2021	559			$	2,964	$	21,081		$	(2,076)		$	21		$	21,990

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

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

Balance, December 31, 2019	Balance, December 31, 2019	557	$	2,655	$	18,958			$	(2,405)			$	17			$	19,225		Balance, December 31, 2019	557			$	2,655	$	18,958		$	(2,405)		$	17		$	19,225
Impact of ASC 326 (see Note 1)	Impact of ASC 326 (see Note 1)				(8)												(8)			Impact of ASC 326 (see Note 1)						(8)									(8)
Balance, January 1, 2020	Balance, January 1, 2020	557	2,655		18,950				(2,405)				17				19,217			Balance, January 1, 2020	557			2,655		18,950			(2,405)			17			19,217
Comprehensive income	Comprehensive income																			Comprehensive income
Net earnings	Net earnings				391								0							Net earnings						1,085						4
Other comprehensive income (loss)	Other comprehensive income (loss)								(359)				4							Other comprehensive income (loss)									(344)			5
Total comprehensive income	Total comprehensive income																36			Total comprehensive income															750
Dividends paid - $0.36 per share					(203)												(203)
Dividends paid - $1.08 per share																				Dividends paid - $1.08 per share						(607)									(607)
Share repurchases	Share repurchases	(3)			(112)												(112)			Share repurchases	(3)					(117)									(117)
Stock compensation expense	Stock compensation expense	1	51														51			Stock compensation expense	2			114											114
Other	Other	0	(16)		0				0				3				(13)			Other	—			(9)		—			—			(7)			(16)
Balance, March 31, 2020		555	$	2,690	$	19,026			$	(2,764)			$	24			$	18,976
Balance, September 30, 2020																				Balance, September 30, 2020	556			$	2,760	$	19,311		$	(2,749)		$	19		$	19,341

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Basis of Presentation

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

Principles of Consolidation

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

Segregated Cash and Investments

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

Receivables

The Company records receivables at net realizable value in trade receivables, other current assets, and other assets. These amounts include allowances for estimated uncollectible accounts totaling ~~$98~~$82 million and $100 million at ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, to reflect any loss anticipated on the accounts receivable balances including any accrued interest receivables thereon. Long-term receivables recorded in other assets were not material to the Company’s overall receivables portfolio.

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

The Company recorded bad debt expense in selling, general, and administrative expenses of $4$1 million and ~~$11~~$9 million in the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and ~~2020, respectively.~~

$7 million and $32 million in the three and nine months ended September 30, 2020.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 1. Basis of Presentation (Continued)

Inventory Valuation

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

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

Reclassification

During the quarter and nine months ended September 30, 2021, the Company recorded revaluation gains on cost method investments of $9 million and $49 million, respectively, in connection with observable third-party transactions in investment income (previously interest income) in the consolidated statements of earnings. Revaluation gains previously recorded in other (income) expense - net of $4 million and $23 million in the quarter and nine months ended September 30, 2020, respectively, were reclassified to conform to the current presentation.

Note 2. New Accounting Standards

Effective January 1, 2021, the Company adopted 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 simplify and improve consistent application of other areas of Topic 740. The adoption of the amended guidance did not have a significant impact on the Company’s consolidated financial statements.

Note 3. Pending Accounting Standards

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Revenues

Revenue Recognition

The Company principally generates revenue from merchandising and transporting agricultural commodities, and ~~manufactured~~manufacturing products for use in food, beverages, feed, energy, and industrial applications, and ingredients and solutions for human and animal nutrition. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product or service to a customer. The majority of the Company’s contracts with customers have one performance obligation and a contract duration of one year or less. The Company applies the practical expedient in paragraph 10-50-14 of ASC 606, Revenue from Contracts with Customers (Topic 606) and does not disclose information about remaining performance obligations that have original expected durations of one year or less. For transportation service contracts, the Company recognizes revenue over time as the barge, ocean-going vessel, truck, rail, or container freight moves towards its destination in accordance with the transfer of control guidance of Topic 606. The Company recognized revenue from transportation service contracts of ~~$104~~$153 million and ~~$117~~$408 million for the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and $87 million and $310 million for the three and nine months ended September 30, 2020, respectively. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20).

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 4. Revenues (Continued)~~

Shipping and Handling Costs

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

Taxes Collected from Customers and Remitted to Governmental Authorities

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

Contract Liabilities

Contract liabilities relate to advance payments from customers for goods and services that the Company has yet to provide. Contract liabilities of ~~$555~~$374 million and $626 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheets. Contract liabilities recognized as revenues were $128 million and $697 million for the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and $121 million and $742 million for the three and nine months ended September 30, 2020, ~~were $282 million.~~respectively.

~~Disaggregation of Revenues~~

~~The following tables present revenue disaggregated by timing of recognition and major product lines for the three months ended March 31, 2021 and 2020.~~

Three Months Ended March 31, 2021
Topic 606 Revenue
Topic 815(1)
Total
Point in Time Over Time Total Revenue Revenues
(In millions)
Ag Services and Oilseeds
Ag Services $ 662 $ 104 $ 766 $ 9,380 $ 10,146
Crushing 124 — 124 2,618 2,742
Refined Products and Other 512 — 512 1,607 2,119
Total Ag Services and Oilseeds 1,298 104 1,402 13,605 15,007
Carbohydrate Solutions
Starches and Sweeteners 1,361 — 1,361 384 1,745
Vantage Corn Processors 478 — 478 — 478
Total Carbohydrate Solutions 1,839 — 1,839 384 2,223
Nutrition
Human Nutrition 754 — 754 — 754
Animal Nutrition 809 — 809 — 809
Total Nutrition 1,563 — 1,563 — 1,563
Other Business 100 — 100 — 100
Total Revenues $ 4,800 $ 104 $ 4,904 $ 13,989 $ 18,893

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Revenues (Continued)

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
Disaggregation of Revenues

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


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









Ag Services and Oilseeds
Ag Services	$	616	$	153	$	769	$	9,130	$	9,899
Crushing	119		—		119		2,723		2,842
Refined Products and Other	657		—		657		2,291		2,948
Total Ag Services and Oilseeds	1,392		153		1,545		14,144		15,689
Carbohydrate Solutions
Starches and Sweeteners	1,516		—		1,516		456		1,972
Vantage Corn Processors	894		—		894		—		894
Total Carbohydrate Solutions	2,410		—		2,410		456		2,866
Nutrition
Human Nutrition	808		—		808		—		808
Animal Nutrition	889		—		889		—		889
Total Nutrition	1,697		—		1,697		—		1,697

Other Business	88		—		88		—		88
Total Revenues	$	5,587	$	153	$	5,740	$	14,600	$	20,340

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Revenues (Continued)


	Nine Months Ended September 30, 2021
	Topic 606 Revenue						Topic 815(1)		Total
	Point in Time		Over Time		Total		Revenue		Revenues
	(In millions)
Ag Services and Oilseeds
Ag Services	$	2,080	$	408	$	2,488	$	30,372	$	32,860
Crushing	335		—		335		8,076		8,411
Refined Products and Other	1,828		—		1,828		5,868		7,696
Total Ag Services and Oilseeds	4,243		408		4,651		44,316		48,967
Carbohydrate Solutions
Starches and Sweeteners	4,326		—		4,326		1,237		5,563
Vantage Corn Processors	2,346		—		2,346		—		2,346
Total Carbohydrate Solutions	6,672		—		6,672		1,237		7,909
Nutrition
Human Nutrition	2,410		—		2,410		—		2,410
Animal Nutrition	2,583		—		2,583		—		2,583
Total Nutrition	4,993		—		4,993		—		4,993

Other Business	290		—		290		—		290
Total Revenues	$	16,198	$	408	$	16,606	$	45,553	$	62,159


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









Ag Services and Oilseeds
Ag Services	$	776	$	87	$	863	$	6,489	$	7,352
Crushing	113		—		113		2,204		2,317
Refined Products and Other	462		—		462		1,396		1,858
Total Ag Services and Oilseeds	1,351		87		1,438		10,089		11,527
Carbohydrate Solutions
Starches and Sweeteners	1,162		—		1,162		412		1,574
Vantage Corn Processors	490		—		490		—		490
Total Carbohydrate Solutions	1,652		—		1,652		412		2,064
Nutrition
Human Nutrition	719		—		719		—		719
Animal Nutrition	732		—		732		—		732
Total Nutrition	1,451		—		1,451		—		1,451

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Revenues (Continued)


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

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

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

Ag Services and Oilseeds

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

Carbohydrate Solutions

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

1113

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 4. Revenues (Continued)

Nutrition

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

Other Business

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

Note 5. Acquisitions

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


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


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

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

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

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5.6. Fair Value Measurements

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


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

Assets:	Assets:									Assets:
Inventories carried at market	Inventories carried at market	$	0	$	5,933	$	3,070	$	9,003	Inventories carried at market	$	—	$	4,912	$	2,502	$	7,414
Unrealized derivative gains:	Unrealized derivative gains:									Unrealized derivative gains:
Commodity contracts	Commodity contracts	0		1,590		684		2,274		Commodity contracts	—		963		485		1,448
Foreign currency contracts	Foreign currency contracts	0		215		0		215		Foreign currency contracts	—		337		—		337
Interest rate contracts	Interest rate contracts	0		130		0		130		Interest rate contracts	—		58		—		58

Cash equivalents	Cash equivalents	302		0		0		302		Cash equivalents	326		—		—		326

Segregated investments	Segregated investments	995		0		0		995		Segregated investments	1,099		—		—		1,099

Total Assets	Total Assets	$	1,297	$	7,868	$	3,754	$	12,919	Total Assets	$	1,425	$	6,270	$	2,987	$	10,682

Liabilities:	Liabilities:									Liabilities:
Unrealized derivative losses:	Unrealized derivative losses:									Unrealized derivative losses:
Commodity contracts	Commodity contracts	$	0	$	1,165	$	648	$	1,813	Commodity contracts	$	—	$	904	$	703	$	1,607
Foreign currency contracts	Foreign currency contracts	0		302		11		313		Foreign currency contracts	—		256		—		256
Interest rate contracts	Interest rate contracts	0		2		0		2		Interest rate contracts	—		1		—		1
Debt conversion option	Debt conversion option	0		0		54		54		Debt conversion option	—		—		17		17
Inventory-related payables	Inventory-related payables	0		1,151		21		1,172		Inventory-related payables	—		735		15		750

Total Liabilities	Total Liabilities	$	0	$	2,620	$	734	$	3,354	Total Liabilities	$	—	$	1,896	$	735	$	2,631

1215

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5.6. Fair Value Measurements (Continued)


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

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

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

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

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

1316

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5.6. Fair Value Measurements (Continued)

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

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

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

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

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,~~September 30, 2021.


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

Balance, December 31, 2020		$	2,183	$	859	$	3,042
Balance, June 30, 2021								Balance, June 30, 2021	$	2,824	$	551	$	3,375
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	730		243		973		Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	70		288		358
Purchases	Purchases	6,385		0		6,385		Purchases	7,351		—		7,351
Sales	Sales	(6,632)		0		(6,632)		Sales	(7,346)		—		(7,346)
Settlements	Settlements	0		(428)		(428)		Settlements	—		(311)		(311)
Transfers into Level 3	Transfers into Level 3	516		23		539		Transfers into Level 3	205		34		239
Transfers out of Level 3	Transfers out of Level 3	(112)		(13)		(125)		Transfers out of Level 3	(602)		(77)		(679)
Ending balance, March 31, 2021		$	3,070	$	684	$	3,754
Ending balance, September 30, 2021								Ending balance, September 30, 2021	$	2,502	$	485	$	2,987

* Includes increase in unrealized gains of ~~$847~~$435 million relating to Level 3 assets still held at ~~March 31,~~September 30, 2021.

1417

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5.6. Fair Value Measurements (Continued)

The following table presents a rollforward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended ~~March 31,~~September 30, 2021.


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

Balance, December 31, 2020		$	11	$	918	$	0	$	34	$	963
Balance, June 30, 2021												Balance, June 30, 2021	$	38	$	1,037	$	24	$	1,099
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	0		381		0		20		401		Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	3		310		(7)		306
Purchases	Purchases	12		0		0		0		12		Purchases	1		—		—		1
Sales	Sales	(2)		0		0		—		(2)		Sales	(27)		—		—		(27)
Settlements	Settlements	0		(566)		0		—		(566)		Settlements	—		(654)		—		(654)
Transfers into Level 3	Transfers into Level 3	0		54		11		—		65		Transfers into Level 3	—		60		—		60
Transfers out of Level 3	Transfers out of Level 3	0		(139)		0		—		(139)		Transfers out of Level 3	—		(50)		—		(50)
Ending balance, March 31, 2021		$	21	$	648	$	11	$	54	$	734
Ending balance, September 30, 2021												Ending balance, September 30, 2021	$	15	$	703	$	17	$	735

* Includes increase in unrealized losses of ~~$383~~$313 million relating to Level 3 liabilities still held at ~~March 31,~~September 30, 2021.


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

Balance, December 31, 2019		$	1,477	$	201	$	1,678
Balance, June 30, 2020								Balance, June 30, 2020	$	1,399	$	442	$	1,841
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	187		217		404		Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	258		286		544
Purchases	Purchases	3,407		0		3,407		Purchases	3,181		—		3,181
Sales	Sales	(3,510)		0		(3,510)		Sales	(2,703)		—		(2,703)
Settlements	Settlements	0		(45)		(45)		Settlements	—		(96)		(96)
Transfers into Level 3	Transfers into Level 3	441		21		462		Transfers into Level 3	290		13		303
Transfers out of Level 3	Transfers out of Level 3	(64)		(3)		(67)		Transfers out of Level 3	(333)		(65)		(398)
Ending balance, March 31, 2020		$	1,938	$	391	$	2,329
Ending balance, September 30, 2020								Ending balance, September 30, 2020	$	2,092	$	580	$	2,672

* Includes increase in unrealized gains of ~~$381~~$392 million relating to Level 3 assets still held at ~~March 31,~~September 30, 2020.

1518

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 5.6. Fair Value Measurements (Continued)


		Level 3 Fair Value Liability Measurements at							Level 3 Fair Value Liability Measurements at
		March 31, 2020							September 30, 2020
		Inventory- related Payables		Commodity Derivative Contracts Losses		Total Liabilities			Inventory- related Payables		Commodity Derivative Contracts Losses		Debt Conversion Option		Total Liabilities
		(In millions)							(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
Balance, June 30, 2020								Balance, June 30, 2020	$	14	$	363	$	—	$	377
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*								Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense*	(3)		618		15		630
Purchases	Purchases	6		0		6		Purchases	3		—		17		20
Sales	Sales	(16)		0		(16)		Sales	(7)		—		—		(7)
Settlements	Settlements	0		(122)		(122)		Settlements	—		(188)		—		(188)
Transfers into Level 3	Transfers into Level 3	0		36		36		Transfers into Level 3	—		24		—		24
Transfers out of Level 3	Transfers out of Level 3	0		(9)		(9)		Transfers out of Level 3	—		(21)		—		(21)
Ending balance, March 31, 2020		$	20	$	309	$	329
Ending balance, September 30, 2020								Ending balance, September 30, 2020	$	7	$	796	$	32	$	835

* Includes increase in unrealized losses of ~~$210~~$635 million relating to Level 3 liabilities still held at ~~March 31,~~September 30, 2020.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 6. Fair Value Measurements (Continued)

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


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

Balance, December 31, 2020	$	2,183	$	859	$	3,042
Total increase (decrease) in net realized/unrealized gains included in cost of products sold*	875		804		1,679
Purchases	20,899		—		20,899
Sales	(21,334)		—		(21,334)
Settlements	—		(1,134)		(1,134)
Transfers into Level 3	1,131		79		1,210
Transfers out of Level 3	(1,252)		(123)		(1,375)
Ending balance, September 30, 2021	$	2,502	$	485	$	2,987

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

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


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

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

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 6. Fair Value Measurements (Continued)

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


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

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

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

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


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

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

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

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 6. Fair Value Measurements (Continued)

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

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

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

The following table sets forth the weighted average percentage of the unobservable price components included in the Company’s Level 3 valuations as of ~~March 31,~~September 30, 2021 and December 31, 2020. 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,~~September 30, 2021 is a weighted average ~~29.2%~~33.3% of the total price for assets and ~~12.2%~~14.5% of the total price for liabilities.


		Weighted Average % of Total Price									Weighted Average % of Total Price
		March 31, 2021				December 31, 2020					September 30, 2021				December 31, 2020
Component Type	Component Type	Assets		Liabilities		Assets		Liabilities		Component Type	Assets		Liabilities		Assets		Liabilities
Inventories and Related Payables	Inventories and Related Payables									Inventories and Related Payables
Basis	Basis	29.2	%	12.2	%	4.3	%	13.7	%	Basis	33.3	%	14.5	%	4.3	%	13.7	%
Transportation cost	Transportation cost	11.1	%	0	%	10.6	%	0	%	Transportation cost	16.2	%	—	%	10.6	%	—	%

Commodity Derivative Contracts	Commodity Derivative Contracts									Commodity Derivative Contracts
Basis	Basis	30.1	%	37.7	%	28.3	%	0.7	%	Basis	25.6	%	33.5	%	28.3	%	0.7	%
Transportation cost	Transportation cost	1.1	%	0.5	%	1.9	%	1.3	%	Transportation cost	3.7	%	3.4	%	1.9	%	1.3	%

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

Note 6.7. Derivative Instruments and Hedging Activities

Derivatives Not Designated as Hedging Instruments

The majority of the Company’s derivative instruments have not been designated as hedging instruments. The Company uses exchange-traded futures and exchange-traded and OTC options contracts to manage its net position of merchandisable agricultural product inventories and forward cash purchase and sales contracts to reduce price risk caused by market fluctuations in agricultural commodities and foreign currencies. The Company also uses exchange-traded futures and exchange-traded and OTC options contracts as components of merchandising strategies designed to enhance margins. The results of these strategies can be significantly impacted by factors such as the correlation between the value of exchange-traded commodities futures contracts and the value of the underlying commodities, counterparty contract defaults, and volatility of freight markets. Derivatives, including exchange-traded contracts and physical purchase or sale contracts, and inventories of certain merchandisable agricultural 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.

1722

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 6.7. Derivative Instruments and Hedging Activities (Continued)

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


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

Foreign Currency Contracts	Foreign Currency Contracts	$	215	$	165	$	283	$	270	Foreign Currency Contracts	$	328	$	139	$	283	$	270

Commodity Contracts	Commodity Contracts	2,274		1,813		2,764		2,034		Commodity Contracts	1,448		1,607		2,764		2,034
Debt Conversion Option	Debt Conversion Option	0		54		0		34		Debt Conversion Option	—		17		—		34
Total	Total	$	2,489	$	2,032	$	3,047	$	2,338	Total	$	1,776	$	1,763	$	3,047	$	2,338

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


						Other expense (income) - net																				Other expense (income) - net
				Cost of				Interest												Cost of								Interest
(In millions)	(In millions)	Revenues		products sold				expense						(In millions)		Revenues				products sold								expense
Three Months Ended March 31, 2021
Three Months Ended September 30, 2021																	Three Months Ended September 30, 2021
Consolidated Statement of Earnings	Consolidated Statement of Earnings	$	18,893	$	17,345			$	(33)			$	87						Consolidated Statement of Earnings	$	20,340			$	19,014			$	20			$	61

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

Foreign Currency Contracts	Foreign Currency Contracts	$	30	$	(262)	$	120			$	—						Foreign Currency Contracts	$	13			$	(92)			$	62			$	—
Commodity Contracts	Commodity Contracts	—		(782)		0				—							Commodity Contracts	—				214				—				—
Debt Conversion Option	Debt Conversion Option	—		—		—				(20)							Debt Conversion Option	—				—				—				7
Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	30	$	(1,044)	$	120			$	(20)			$	(914)		Total gain (loss) recognized in earnings	$	13			$	122			$	62			$	7			$	204

Three Months Ended March 31, 2020
Three Months Ended September 30, 2020																	Three Months Ended September 30, 2020
Consolidated Statement of Earnings	Consolidated Statement of Earnings	$	14,970	$	14,019	$	(32)			$	83						Consolidated Statement of Earnings	$	15,126			$	14,084			$	282			$	100

Pre-tax gains (losses) on:	Pre-tax gains (losses) on:																Pre-tax gains (losses) on:
Foreign Currency Contracts	Foreign Currency Contracts	$	35	$	(585)	$	124			$	—						Foreign Currency Contracts	$	8			$	(77)			$	(85)			$	—
Commodity Contracts	Commodity Contracts	—		622		55				—							Commodity Contracts	—				(272)				—				—
Debt Conversion Option																	Debt Conversion Option	—				—				—				(15)
Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	35	$	37	$	179			$	—			$	251		Total gain (loss) recognized in earnings	$	8			$	(349)			$	(85)			$	(15)			$	(441)

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 7. Derivative Instruments and Hedging Activities (Continued)


					Other expense (income) - net
			Cost of				Interest
(In millions)	Revenues		products sold				expense
Nine Months Ended September 30, 2021
Consolidated Statement of Earnings	$	62,159	$	57,822	$	36	$	188

Pre-tax gains (losses) on:
Foreign Currency Contracts	$	—	$	(140)	$	137	$	—
Commodity Contracts	—		(1,241)		—		—
Debt Conversion Option	—		—		—		17
Total gain (loss) recognized in earnings	$	—	$	(1,381)	$	137	$	17	$	(1,227)

Nine Months Ended September 30, 2020
Consolidated Statement of Earnings	$	46,377	$	43,276	$	202	$	270

Pre-tax gains (losses) on:
Foreign Currency Contracts	$	54	$	(738)	$	(13)	$	—
Commodity Contracts	—		321		55		—
Debt Conversion Option	—		—		—		(15)
Total gain (loss) recognized in earnings	$	54	$	(417)	$	42	$	(15)	$	(336)

Changes in the market value of inventories of certain merchandisable agricultural product inventories, 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.

Derivatives Designated as Cash Flow and Net Investment Hedging Strategies

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

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

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

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

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

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had after-tax losses of ~~$116~~$82 million and $202 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’s structured trade finance programs use interest rate swaps designated as cash flow hedges to hedge the forecasted interest payments on certain letters of credit from banks. The terms of the interest rate swaps match the terms of the forecasted interest payments. The deferred gains and losses are recognized in revenues over the period in which the related interest payments are paid to the banks. The amounts are recorded in revenues as the ~~related results~~underlying commodity trade flows are also recorded in revenues. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had interest rate swaps maturing on various dates with aggregate notional amounts of ~~$1.7~~$0.2 billion and $3.3 billion, respectively.

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

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had after-tax gains of ~~$97~~$44 million and $31 million in AOCI, respectively, related to the interest rate swaps and the swap locks. The Company expects to recognize this amount in its consolidated statements of earnings during the life of the debt instruments.

For each of the hedge programs described below, the derivatives are designated as cash flow hedges. The changes in the market value of such derivative contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. Once the hedged item is recognized in earnings, the gains and losses arising from the hedge are reclassified from AOCI to either revenues or cost of products sold, as applicable. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had after-tax gains of ~~$140~~$371 million and ~~$119~~$164 million in AOCI, respectively, related to gains and losses from these programs. The Company expects to recognize ~~$140~~$371 million of the ~~March 31,~~September 30, 2021 after-tax gains in its consolidated statements 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 normally grind approximately 72 million bushels of corn per month. ~~Due~~From April 2020 to March 2021, the Company temporarily idled dry mill assets ~~the Company~~and was grinding approximately 56 million bushels of corn per month. ~~During the past 12 months, the Company hedged between 21% and 38% of its monthly grind.~~ In April 2021, the Company resumed ethanol production at its two corn dry mill facilities. During the past 12 months, the Company hedged between 23% and 34% of its monthly grind. At ~~March 31,~~September 30, 2021, the Company had designated hedges representing between 1%3% and ~~33%~~31% of its anticipated monthly grind of corn for the next 12 months.

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

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

The Company, from time to time, also uses futures, options, and swaps to hedge the sales price of certain ethanol sales contracts. The Company has established hedging programs for ethanol sales contracts that are indexed to unleaded gasoline prices and to various exchange-traded ethanol contracts. The objective of these hedging programs is to reduce the variability of cash flows associated with the Company’s sales of ethanol. During the past 12 months and as of September 30, 2021, the Company ~~hedged between 0 and 1 million gallons of ethanol sales per month under these programs. The Company~~ had 0no hedges related to ethanol sales ~~as of March 31, 2021.~~under these programs.

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

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 7. Derivative Instruments and Hedging Activities (Continued)

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


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

Foreign Currency Contracts	Foreign Currency Contracts	$	0	$	148	$	0	$	265	Foreign Currency Contracts	$	9	$	117	$	—	$	265
Interest Rate Contracts	Interest Rate Contracts	130		2		61		15		Interest Rate Contracts	58		1		61		15
Total	Total	$	130	$	150	$	61	$	280	Total	$	67	$	118	$	61	$	280

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

Cost of products sold Interest expense Other expense (income) - net
(In millions) Revenues
Three Months Ended March 31, 2021
Consolidated Statement of Earnings $ 18,893 $ 17,345 $ 87 $ (33)
Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Commodity Contracts $ 0 $ 89 $ — $ 0
Interest Contracts (14) — 0 —
Total gain (loss) recognized in earnings $ (14) $ 89 $ 0 $ 0 $ 75
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) $ — $ 0
Interest Contracts (25) — 0 —
Total gain (loss) recognized in earnings $ (20) $ (24) $ 0 $ 0 $ (44)


			Cost of products sold
(In millions)	Revenues
Three Months Ended September 30, 2021
Consolidated Statement of Earnings	$	20,340	$	19,014

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

Commodity Contracts	$	—	$	122

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

Three Months Ended September 30, 2020
Consolidated Statement of Earnings	$	15,126	$	14,084

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

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



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

2026

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 6.7. Derivative Instruments and Hedging Activities (Continued)


			Cost of products sold		Interest expense
(In millions)	Revenues
Nine Months Ended September 30, 2021
Consolidated Statement of Earnings	$	62,159	$	57,822	$	188

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

Commodity Contracts	$	—	$	450	$	—
Interest Contracts	(15)		—		—
Total gain (loss) recognized in earnings	$	(15)	$	450	$	—	$	435

Nine Months Ended September 30, 2020
Consolidated Statement of Earnings	$	46,377	$	43,276	$	270

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

Commodity Contracts	$	9	$	19	$	—
Interest Contracts	(55)		—		(8)



Total gain (loss) recognized in earnings	$	(46)	$	19	$	(8)	$	(35)

Other Net Investment Hedging Strategies

The Company has designated ~~€2.8~~€1.8 billion and €1.5 billion of its outstanding long-term debt and commercial paper borrowings at ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, as hedges of its net investment in a foreign subsidiary. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the Company had after-tax gains of $11 million and losses of ~~$1 million and~~ $87 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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 7.8. Other Current Assets

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


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

Unrealized gains on derivative contracts	Unrealized gains on derivative contracts	$	2,619	$	3,108	Unrealized gains on derivative contracts	$	1,843	$	3,108

Margin deposits and grain accounts	Margin deposits and grain accounts	624		500		Margin deposits and grain accounts	580		500
Customer omnibus receivable	Customer omnibus receivable	924		860		Customer omnibus receivable	1,075		860
Financing receivables - net (1)	Financing receivables - net (1)	215		297		Financing receivables - net (1)	154		297
Insurance premiums receivable	Insurance premiums receivable	21		35		Insurance premiums receivable	17		35
Prepaid expenses	Prepaid expenses	370		290		Prepaid expenses	325		290
Biodiesel tax credit	Biodiesel tax credit	118		101		Biodiesel tax credit	40		101
Tax receivables	Tax receivables	637		680		Tax receivables	765		680
Non-trade receivables (2)	Non-trade receivables (2)	450		218		Non-trade receivables (2)	270		218
Other current assets	Other current assets	176		135		Other current assets	151		135
		$	6,154	$	6,224		$	5,220	$	6,224

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

(2) Non-trade receivables included ~~$38~~$28 million and $40 million of reinsurance recoverables as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

2128

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 8.9. Accrued Expenses and Other Payables

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

March 31, December 31,
2021 2020
(In millions)
Unrealized losses on derivative contracts $ 2,128 $ 2,584
Accrued compensation 338 396
Income tax payable 137 41
Other taxes payable 140 127
Biodiesel tax credit payable 5 5
Insurance claims payable 246 238
Contract liability 555 626
Other accruals and payables(1)
899 926
$ 4,448 $ 4,943

~~(1)~~ As of March 31, 2021, the Company had accrued a total of $45 million related to a settlement of a legal matter involving its subsidiary, Golden Peanut, which includes the $7 million previously accrued at December 31, 2020.


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

Unrealized losses on derivative contracts	$	1,881	$	2,584
Accrued compensation	421		396
Income tax payable	132		41
Other taxes payable	154		127


Insurance claims payable	207		238
Contract liability	374		626


Other accruals and payables	952		931
	$	4,121	$	4,943

Note 9.10. Debt and Financing Arrangements

On September 10, 2021, the Company issued $750 million aggregate principal amount of 2.700% Notes due September 15, 2051 (the “Notes”). Net proceeds before expenses were $732 million.

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

On March 25, 2021, the Company issued, in a private placement transaction, €500 million aggregate principal amount of Fixed-to-Floating Rate Senior Notes due September 25, 2022.

At ~~March 31,~~September 30, 2021, the fair value of the Company’s long-term debt exceeded the carrying value by ~~$1.5~~$1.7 billion, as estimated using quoted market prices (a Level 2 measurement under applicable accounting standards).

At ~~March 31,~~September 30, 2021, the Company had lines of credit, including the accounts receivable securitization programs described below, totaling ~~$11.5~~$12.4 billion, of which ~~$7.0~~$10.5 billion was unused. Of the Company’s total lines of credit, $6.5 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was ~~$1.6 billion~~no commercial paper outstanding at ~~March 31,~~September 30, 2021.

The Company has accounts receivable securitization programs (the “Programs”). The Programs provide the Company with up to ~~$2.0~~$2.1 billion in funding resulting from the sale of accounts receivable ~~of which $0.3~~with $0.6 billion ~~was~~ unused capacity as of ~~March 31,~~September 30, 2021 (see Note 1516 for more information about the Programs).

2229

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~10.~~11. Income Taxes

The Company’s effective tax ~~rate was 15.9%~~rates for the three and nine months ended ~~March 31,~~September 30, 2021 were 18.4% and 15.8%, respectively, compared to a ~~tax~~ benefit of ~~4.3%~~13.0% and an expense of 3.4% for the three and nine months ended ~~March 31, 2020.~~ September 30, 2020, respectively. The low rate in the three months September 30, 2020 included the effects of the significant early debt retirement, the sale of a portion of the Company’s shares in Wilmar and changes in the forecasted geographical mix of pretax earnings on the 2020 annual effective tax rate in that period. The favorable ~~2020~~ tax rate in the nine months ended September 30, 2020 was ~~primarily~~ due to the impact of U.S. tax credits signed into law in December 2019, including a $73 million discrete tax benefit related to 45G railroad maintenance ~~expenses.~~expenses, and changes in the forecasted geographical mix of pretax earnings.

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

The Company’s subsidiary in Argentina, ADM Agro SRL (formerly ADM Argentina SA and Alfred C. Toepfer Argentina SRL), received tax assessments challenging transfer prices used to price grain exports for the tax years 1999 through 2011. As of ~~March 31,~~September 30, 2021, these assessments totaled $9 million in tax and $39 million in interest (adjusted for variation in currency exchange rates). The Argentine tax authorities conducted a review of income and other taxes paid by large exporters and processors of cereals and other agricultural commodities resulting in allegations of income tax evasion. The Company believes that it has complied with all Argentine tax laws. To date, the Company has not received assessments for closed years subsequent to 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 years subsequent to 2013, and estimates that these potential assessments could be approximately ~~$66~~$62 million in tax and ~~$28~~$35 million in interest (adjusted for variation in currency exchange rates as of ~~March 31,~~September 30, 2021). In the second quarter of 2021, Argentine tax authorities initiated criminal tax proceedings related to the Argentine tax matters. The Company believes that it has appropriately evaluated the transactions underlying these assessments, and has concluded, based on Argentine tax law, that its tax position would be sustained, and accordingly, has not recorded a tax liability for these assessments. In accordance with the accounting requirements for uncertain tax positions, the Company has not recorded an uncertain tax liability for this assessment because it has concluded that it is more likely than not to prevail on the matter based upon its technical merits and because the taxing jurisdiction’s process does not provide a mechanism for settling at less than the full amount of the assessment. The Company intends to vigorously defend its position against the current assessments and any similar assessments that may be issued for years subsequent to 2013.

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,~~September 30, 2021, this assessment was ~~$95~~$94 million in tax and ~~$34~~$33 million in interest (adjusted for variation in currency exchange rates). In September 2019, the Company received an interim decision on its appeal which directed the parties to work toward a settlement. On April 23, 2020, the court issued an unfavorable ruling and in October 2020, assigned a third party expert to establish a valuation by early 2021. During the ~~first~~second quarter of 2021, the third party expert issued a ~~preliminary valuation that is likely~~final valuation. The Company expects the court to ~~be finalized by~~issue a ruling on this matter in the ~~second~~first quarter of ~~this year, after which the court will review the valuation and issue a ruling.~~2022. Subsequent appeals may take an extended period of time and could result in additional financial impacts of up to the entire amount of the assessment. The Company has carefully reviewed the ~~preliminary~~ valuation and evaluated the underlying transactions and has concluded that the amount of gain recognized on the reorganization for tax purposes was appropriate. As of ~~March 31,~~September 30, 2021, the Company has accrued its best estimate of what it believes will be the likely outcome of the litigation and will vigorously defend its position against the assessment.

2330

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~11.~~12. Accumulated Other Comprehensive Income

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


													Three months ended September 30, 2021
													Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total
													(In millions)
Balance at June 30, 2021												Balance at June 30, 2021	$	(2,143)	$	328	$	(303)	$	(3)	$	(2,121)
Other comprehensive income (loss) before reclassifications												Other comprehensive income (loss) before reclassifications	(149)		197		5		6		59
Gain (loss) on net investment hedges												Gain (loss) on net investment hedges	126		—		—		—		126
Amounts reclassified from AOCI												Amounts reclassified from AOCI	—		(122)		8		—		(114)
Tax effect												Tax effect	(30)		(1)		5		—		(26)
Net of tax amount												Net of tax amount	(53)		74		18		6		45
Balance at September 30, 2021												Balance at September 30, 2021	$	(2,196)	$	402	$	(285)	$	3	$	(2,076)

		Three months ended March 31, 2021											Nine months ended September 30, 2021
		Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total			Foreign Currency Translation Adjustment		Deferred Gain (Loss) on Hedging Activities		Pension Liability Adjustment		Unrealized Gain (Loss) on Investments		Total
		(In millions)											(In millions)
Balance at December 31, 2020	Balance at December 31, 2020	$	(2,424)	$	185	$	(365)	$	0	$	(2,604)	Balance at December 31, 2020	$	(2,424)	$	185	$	(365)	$	—	$	(2,604)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	64		176		8		(1)		247		Other comprehensive income (loss) before reclassifications	14		693		12		4		723
Gain (loss) on net investment hedges	Gain (loss) on net investment hedges	230		—		—		—		230		Gain (loss) on net investment hedges	292		—		—		—		292
Amounts reclassified from AOCI	Amounts reclassified from AOCI	0		(75)		10		0		(65)		Amounts reclassified from AOCI	—		(435)		90		—		(345)
Tax effect	Tax effect	(56)		(25)		(5)		0		(86)		Tax effect	(78)		(41)		(22)		(1)		(142)
Net of tax amount	Net of tax amount	238		76		13		(1)		326		Net of tax amount	228		217		80		3		528
Balance at March 31, 2021		$	(2,186)	$	261	$	(352)	$	(1)	$	(2,278)

Balance at September 30, 2021												Balance at September 30, 2021	$	(2,196)	$	402	$	(285)	$	3	$	(2,076)

Amount reclassified from AOCI
Three months ended March 31, Affected line item in the consolidated statements of earnings
Details about AOCI components 2021 2020
(In millions)
Deferred loss (gain) on hedging activities
$ 14 $ 20 Revenues
(89) 24 Cost of products sold
(75) 44 Total before tax
21 (5) Tax
$ (54) $ 39 Net of tax
Pension liability adjustment
Amortization of defined benefit pension items:
Prior service credit $ (6) $ (8) Other (income) expense-net
Actuarial losses 16 8 Other (income) expense-net
10 0 Total before tax
(4) (11) Tax
$ 6 $ (11) Net of tax

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note 12. Accumulated Other Comprehensive Income (Continued)


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





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

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

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

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

~~Archer-Daniels-Midland Company~~

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

~~(Unaudited)~~

Note ~~12.~~13. Other (Income) Expense - Net

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


		Three Months Ended
		March 31,					Three Months Ended				Nine Months Ended
		2021		2020					September 30,				September 30,
		(In millions)				2021	2020		2021		2020
									(In millions)
Gains on sales of assets	Gains on sales of assets	$	(11)	$	0			Gains on sales of assets	$	(7)	$	(68)	$	(46)	$	(132)

Debt extinguishment charges								Debt extinguishment charges	36		396		36		410
Pension settlement								Pension settlement	1		—		83		—

Other – net	Other – net	(22)		(32)				Other – net	(10)		(46)		(37)		(76)
Other (Income) Expense - Net	Other (Income) Expense - Net	$	(33)	$	(32)			Other (Income) Expense - Net	$	20	$	282	$	36	$	202

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

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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

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

Other - net in the three and nine months ended ~~March 31,~~September 30, 2021 included the non-service components of net pension benefit income of $6$1 million and $12 million, respectively, foreign exchange gains, and other ~~income.~~expense. Other - net in the three and nine months ended ~~March 31,~~September 30, 2020 included the non-service components of net pension benefit income of ~~$13~~$7 million ~~foreign exchange gains,~~and $28 million, respectively, and other ~~income, partially offset by~~income. Other - net in the nine months ended September 30, 2020 also included loss provisions related to the Company’s futures commission and brokerage ~~business.~~business and foreign exchange gains.

Note ~~13.~~14. Segment Information

The Company’s operations are organized, managed, and classified into 3 reportable business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Each of these segments is organized based upon the nature of products and services offered. The Company’s remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified as Other Business.

The Ag Services and 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 segment include ingredients for food, feed, energy, and industrial customers. Crude vegetable oils produced by the segment’s crushing activities are sold “as is” to manufacturers of renewable green diesel and other customers 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. The Ag Services and Oilseeds segment is also a major supplier of peanuts and peanut-derived ingredients to both the U.S. and export markets. In North America, 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. Structured trade finance’s activities include programs under which ADM prepays financial institutions, on a discounted basis, U.S. dollar-denominated letters of credit based on underlying commodity trade flows. This segment also includes the 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 Sarl, and SoyVen joint ventures.

A~~rcher-Daniels-Midland Company~~

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

~~(Unaudited)~~

~~Note 13. Segment Information (Continued)~~

The Carbohydrate Solutions segment is engaged in corn and wheat wet and dry milling and other activities. The Carbohydrate Solutions segment converts corn and wheat into products and ingredients used in the food and beverage industry including sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose. Dextrose and starch are used by the Carbohydrate Solutions segment as feedstocks in other downstream processes. 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 in products such as hand sanitizers, 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., Red Star Yeast Company, LLC, and Aston Foods and Food Ingredients.

The Nutrition segment serves various end markets including food, beverages, nutritional supplements, and feed and premix for livestock, aquaculture, and pet food. The segment engages in the manufacturing, sale, and distribution of a wide array of ingredients and solutions including plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, enzymes, botanical extracts, and other specialty food and feed ingredients. The Nutrition segment includes the activities related to the procurement, processing, and distribution of edible beans. The 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.

~~Other Business includes the Company’s financial business units related to futures commission and insurance activities.~~

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

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

2633

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~13.~~14. Segment Information (Continued)


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

Ag Services and Oilseeds	Ag Services and Oilseeds	$	15,939	$	12,350		Ag Services and Oilseeds	$	16,410	$	13,415	$	51,148	$	40,196
Carbohydrate Solutions	Carbohydrate Solutions	2,634		2,554			Carbohydrate Solutions	3,227		2,335		9,132		7,102
Nutrition	Nutrition	1,624		1,516			Nutrition	1,755		1,481		5,172		4,471
Other Business	Other Business	100		104			Other Business	88		84		290		277
Intersegment elimination	Intersegment elimination	(1,404)		(1,554)			Intersegment elimination	(1,140)		(2,189)		(3,583)		(5,669)
Total gross revenues	Total gross revenues	$	18,893	$	14,970		Total gross revenues	$	20,340	$	15,126	$	62,159	$	46,377

Intersegment sales	Intersegment sales						Intersegment sales

Ag Services and Oilseeds	Ag Services and Oilseeds	$	932	$	1,271		Ag Services and Oilseeds	$	721	$	1,888	$	2,181	$	4,849
Carbohydrate Solutions	Carbohydrate Solutions	411		238			Carbohydrate Solutions	361		271		1,223		708
Nutrition	Nutrition	61		45			Nutrition	58		30		179		112

Total intersegment sales	Total intersegment sales	$	1,404	$	1,554		Total intersegment sales	$	1,140	$	2,189	$	3,583	$	5,669

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

Ag Services and Oilseeds	Ag Services and Oilseeds						Ag Services and Oilseeds
Ag Services	Ag Services	$	10,146	$	6,926		Ag Services	$	9,899	$	7,352	$	32,860	$	22,930
Crushing	Crushing	2,742		2,313			Crushing	2,842		2,317		8,411		7,035
Refined Products and Other	Refined Products and Other	2,119		1,840			Refined Products and Other	2,948		1,858		7,696		5,382
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	15,007		11,079			Total Ag Services and Oilseeds	15,689		11,527		48,967		35,347
Carbohydrate Solutions	Carbohydrate Solutions						Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	1,745		1,650			Starches and Sweeteners	1,972		1,574		5,563		4,769
Vantage Corn Processors	Vantage Corn Processors	478		666			Vantage Corn Processors	894		490		2,346		1,625
Total Carbohydrate Solutions	Total Carbohydrate Solutions	2,223		2,316			Total Carbohydrate Solutions	2,866		2,064		7,909		6,394
Nutrition	Nutrition						Nutrition
Human Nutrition	Human Nutrition	754		719			Human Nutrition	808		719		2,410		2,161
Animal Nutrition	Animal Nutrition	809		752			Animal Nutrition	889		732		2,583		2,198
Total Nutrition	Total Nutrition	1,563		1,471			Total Nutrition	1,697		1,451		4,993		4,359

Other Business	Other Business	100		104			Other Business	88		84		290		277

Total revenues from external customers	Total revenues from external customers	$	18,893	$	14,970		Total revenues from external customers	$	20,340	$	15,126	$	62,159	$	46,377

2734

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~13.~~14. Segment Information (Continued)

Three Months Ended
March 31,
(In millions) 2021 2020
Segment operating profit
Ag Services and Oilseeds $ 777 $ 422
Carbohydrate Solutions 259 68
Nutrition 154 142
Other Business 9 11
Specified Items:
Impairment, restructuring, and settlement charges(1)
(94) (44)
Total segment operating profit 1,105 599
Corporate (281) (224)
Earnings before income taxes $ 824 $ 375


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


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

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

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

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

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

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

Asset impairment, exit, and restructuring costs in the three months ended ~~March 31,~~September 30, 2021 consisted of ~~$31~~$2 million of restructuring charges, presented as specified items within segment operating profit. Asset impairment, exit, and restructuring costs in the nine months ended September 30, 2021 consisted of $54 million of impairments related to certain long-lived assets and ~~$23~~$26 million of restructuring charges, presented as specified items within segment operating profit, and $5$4 million of restructuring charges in Corporate.

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

Asset impairment, exit, and restructuring costs in the three months ended ~~March 31,~~September 30, 2020 consisted of ~~$41 million related primarily to~~individually insignificant long-lived asset impairments of $3 million and restructuring charges of $1 million. Asset impairment, exit, and restructuring costs in the nine months ended September 30, 2020 consisted of $50 million of impairments related to certain intangible and other long-lived assets ~~presented as specified items within segment operating profit.~~

and $11 million of restructuring charges.

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

The Company has an accounts receivable securitization program (the “First Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the “First Purchasers”). Under the First Program, certain U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Receivables, LLC (“ADM Receivables”). Prior to October 1, 2020, ADM Receivables transferred such purchased accounts receivable in their entirety to the First Purchasers pursuant to a receivables purchase agreement. In exchange for the transfer of the accounts receivable, ADM Receivables received a cash payment up to a certain amount and an additional amount upon the collection of the accounts receivable (deferred consideration). On October 1, 2020, the Company restructured the First Program from a deferred purchase price to a pledge structure. Under the new structure, ADM Receivables transfers certain of the purchased accounts receivable to each of the First Purchasers together with a security interest in all of its right, title, and interest in the remaining purchased accounts receivable. In exchange, ADM Receivables receives a cash payment of up to ~~$1.4~~$1.5 billion, an increase from $1.2 billion as of December 31, 2020, for the accounts receivable transferred. The First Program terminates on May 18, ~~2021,~~2022, unless extended.

2835

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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

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

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

As of ~~March 31,~~September 30, 2021 and December 31, 2020, the fair value of trade receivables transferred to the Purchasers under the Programs and derecognized from the Company’s consolidated balance sheets was ~~$1.7~~$1.5 billion and $1.6 billion, respectively. Total receivables sold were ~~$12.1~~$36.7 billion and ~~$8.7~~$24.9 billion for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, respectively. Cash collections from customers on receivables sold were ~~$10.5~~$34.2 billion and ~~$8.5~~$24.2 billion for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, respectively. Of ~~this~~the amount ~~$3.3~~in the nine months ended September 30, 2020, $6.7 billion were cash collections on the deferred receivables consideration reflected as cash inflows from investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. As of ~~March 31,~~September 30, 2021 and December 31, 2020, receivables pledged as collateral to the Purchasers were ~~$0.6~~$1.1 billion and $0.4 billion, respectively.

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

Transfers of receivables under the Programs resulted in an expense for the loss on sale of $4$2 million and $2$8 million for the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and $2 million and $7 million for the three and nine months ended September 30, 2020, respectively, which is classified as selling, general, and administrative expenses in the consolidated statements of earnings.

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

2936

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Note ~~16.~~17. Subsequent Events

~~The~~In October 2021, the Company ~~amended the ADM Retirement Plan~~executed acquisition and ~~the ADM Pension Plan for Hourly-Wage Employees (the “Plans”) and on March 26, 2021, entered into two binding~~investment agreements ~~to purchase: (1)~~with a group annuity contract from Principal Life Insurance Company (“Principal”) and (2) two group annuity contracts, separately from American General Life Insurance Company (“AGL”) and from AGL’s affiliate, The United States Life Insurance Company in the Citytotal aggregate consideration of New York (“USL”), irrevocably transferring the future benefit obligations and annuity administration for approximately 6,000 retirees and terminated vested participants from the Plans to Principal, AGL, and USL. The purchase of the group annuity contracts, which was funded directly by the Plans’ assets, was settled on April 1, 2021 and reduced the Company’s pension obligations by approximately $0.7 billion. ~~As a result of the transactions,~~In addition, the Company ~~expects~~executed an agreement to ~~recognize~~sell its ethanol production complex in Peoria, Illinois with a ~~non-cash pretax pension settlement charge~~book value of approximately ~~$80 million in~~$0.1 billion, which will have an immaterial impact on operating results. These transactions are expected to close before December 31, 2021, subject to the ~~second quarter~~satisfaction of ~~2021.~~

~~On April 1, 2021, the Company announced the resumption of ethanol production at its corn dry mill facilities in Cedar Rapids, Iowa and Columbus, Nebraska based upon improvement in current market~~customary closing conditions and demand outlook, with initial ethanol deliveries for customers beginning in April 2021 and ramping up to full rates by late spring. The ethanol production in these facilities was temporarily idled in April 2020.regulatory approval.

3037

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

Company Overview

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

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

The Company’s operations are organized, managed, and classified into three reportable business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Each of these segments is organized based upon the nature of products and services offered. The Company’s remaining operations are not reportable business segments, as defined by the applicable accounting standard, and are classified as Other Business. Financial information with respect to the Company’s reportable business segments is set forth in Note 1314 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements”.

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

•the announcement onin March ~~23,~~ 2021 of a new ADM policy to protect forests, biodiversity and communities, furthering the Company’s commitment to sustainable, ethical, and responsible production; ~~and~~

•the announcement onin April 1, 2021 of the resumption of dry mill ethanol ~~production.~~production;

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

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

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

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

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

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

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

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

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

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

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

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

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

•the announcement in October 2021 of a memorandum of understanding with Gevo, Inc., a pioneer in transforming renewable energy into low carbon, energy-dense liquid hydrocarbons, to support the production of up to 500 million gallons of sustainable aviation fuel and other low carbon-footprint hydrocarbon fuels.

The ~~Company executes its~~next phase of the Company’s strategic ~~vision through three~~transformation is focused on two strategic pillars: ~~Optimize~~Productivity and Innovation.

The Productivity pillar includes (1) advancing the ~~Core, Drive Efficiencies,~~roles of the Company’s Centers of Excellence in procurement, supply chain, and ~~Expand Strategically, all supported by its Readiness effort. The Company launched Readiness~~operations to ~~drive new~~deliver additional efficiencies across the enterprise; (2) continued roll out of the 1ADM business transformation program and ~~improve~~implementation of improved standardized business processes; and (3) increased use of technology, analytics, and automation at production facilities, in offices, and with customers.

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

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

Environmental and Social Responsibility

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

In 2020, ADM announced new environmental goals, collectively called “Strive 35” – an ambitious plan to, by 2035, reduce absolute greenhouse gas emissions by 25 percent, reduce energy intensity by 15 percent, reduce water intensity by 10 percent, and achieve a 90 percent landfill diversion rate, as part of an aggressive plan to continue to reduce the Company’s environmental footprint.

Operating Performance Indicators

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

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

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

selling prices move in relationship to changes in prices of the commodity-based agricultural raw materials. As a result, changes in agricultural commodity prices have relatively equal impacts on both revenues and cost of products sold. Therefore, changes in revenues of these businesses do not necessarily correspond to ~~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.

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

The Company has consolidated subsidiaries in more than 70 countries. For the majority of the Company’s subsidiaries located outside the United States, the local currency is the functional currency except certain significant subsidiaries in Switzerland where Euro is the functional currency, and Brazil and Argentina where U.S. dollar is the functional currency. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the weighted average exchange rates for the applicable periods. For the majority of the Company’s business activities in Brazil and Argentina, the functional currency is the U.S. dollar; however, certain transactions, including taxes, occur in local currency and require remeasurement to the functional currency. Changes in revenues are expected to be correlated to changes in expenses reported by the Company caused by fluctuations in the exchange rates of foreign currencies, primarily the Euro, British pound, Canadian dollar, and Brazilian real, as compared to the U.S. dollar.

The Company measures its performance using key financial metrics including net earnings, gross margins, segment operating profit, return on invested capital, EBITDA, economic value added, manufacturing expenses, and selling, general, and administrative expenses. The Company’s financial results can vary significantly due to changes in factors such as fluctuations in energy prices, weather conditions, crop plantings, government programs and policies, trade policies, changes in global demand, general global economic conditions, changes in standards of living, and global production of similar and competitive crops. Due to these unpredictable factors, the Company undertakes no responsibility for updating any forward-looking information contained within “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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

The Company is subject to a variety of market factors which affect the Company's operating results. In Ag Services and Oilseeds, North ~~American~~America origination ~~volumes benefited from strong~~was impacted by widening elevation margins and Hurricane Ida impacting export ~~demand while~~execution. South American origination volumes were negatively impacted by low farmer selling ~~activity~~activity. Ocean freight rates remain high due to increased global demand and ~~a slightly delayed harvest.~~supply chain bottlenecks. Crushing margins benefited from strong demand and tight soybean and canola/rapeseed stocks. ~~Demand for refined oils was strong,~~Refined oil margins were driven by ~~the regional lifting of COVID-19 restrictions in the U.S.~~strong demand, declining global oil stocks, and ~~new demand for renewable green diesel. Biodiesel margins were negatively impacted by high vegetable oil values.~~increased biofuels consumption. In Carbohydrate Solutions, margins in starches and sweeteners were ~~solid despite softer sweetener~~negatively impacted by higher corn basis cost while demand ~~due to continued COVID-19 restrictions. Starch demand continues to be robust. Co-product prices increased during the quarter.~~remained steady. Ethanol demand and margins ~~showed signs of improvement throughout~~were negatively impacted early in the quarter asdue to the limited availability of affordable corn but improved when the North American corn harvest started. Increased corn prices drove ethanol industry production volumes lower causing stocks ~~declined.~~on hand to decline. Domestic ethanol demand remained steady in the quarter, but slightly below pre-pandemic levels. Nutrition benefited from overall strong demand in various product categories. In ~~human nutrition,~~Human Nutrition, demand for flavors, flavor systems, specialty proteins, bioactives, and fibers were strong. In ~~animal nutrition,~~Animal Nutrition, weak demand and higher input costs as a result of COVID-19 in South America were partially offset by the growing demand in complete food for ~~petfood and livestock.~~petfood. Amino acids pricing and margins improved due to a tighter global supply environment.

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

Net earnings attributable to controlling interests increased $301 million from $225 million to $526 million. Segment operating profit increased $96 million from $904 million to $1.0 billion. Included in segment operating profit in the current quarter were restructuring charges of $2 million. Included in segment operating profit in the prior year quarter was net income of $55 million consisting of gains related to the sale of a portion of the Company’s shares in Wilmar and certain other assets of $57 million, partially offset by asset impairment, restructuring, and settlement charges of $2 million. Adjusted segment operating profit increased $153 million to $1.0 billion due primarily to higher results in Crushing, Refined Products and Other, Vantage Corn Processors, and Human and Animal Nutrition, partially offset by lower results in Ag Services, Starches and Sweeteners, and Other Business, and lower equity earnings from the Wilmar investment. Corporate results were a net charge of $347 million in the current quarter compared to a net charge of $704 million in the prior year quarter. Corporate results in the current quarter included early debt retirement charges of $36 million, a mark-to-market gain of $7 million on the conversion option of the exchangeable bonds issued in August 2020, expenses related to an acquisition of $3 million, and a pension settlement charge of $1 million. Corporate results in the prior year quarter included early debt retirement charges of $396 million, a mark-to-market loss of $15 million on the conversion option of the exchangeable bonds issued in August 2020, and an impairment charge of $6 million.

3240

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

~~Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020~~

Net earnings attributable to controlling interests increased $298 million from $391 million to $689 million. Segment operating profit increased $506 million from $599 million to $1.1 billion. Included in segment operating profit in the current quarter was $94 million of asset impairment, restructuring, and legal settlement charges. Included in segment operating profit in the prior year quarter were asset impairment charges of $44 million. Adjusted segment operating profit increased $556 million to $1.2 billion due primarily to higher results in Ag Services, Crushing, Refined Products and Other, Carbohydrate Solutions, and Human Nutrition, partially offset by lower results in Animal Nutrition and Other Business, and lower equity earnings from the Wilmar investment. Corporate results were a net charge of $281 million in the current quarter compared to a net charge of $224 million in the prior year quarter. Corporate results in the current quarter included a mark-to-market loss of $20 million on the conversion option of the exchangeable bonds issued in August 2020 and a restructuring charge of $5 million. Corporate results in the prior year quarter included a credit of $91 million from the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020.

Income tax expense increased ~~$147~~$146 million to ~~$131~~$120 million. The Company’s effective tax rate for the quarter ended ~~March 31,~~September 30, 2021 was ~~15.9%~~an expense of 18.4% compared to a ~~tax~~ benefit of ~~4.3%~~13.0% for the quarter ended ~~March 31,~~September 30, 2020. The ~~favorable~~low prior year quarter rate included the effects of the significant early debt retirement, the sale of a portion of the Company’s shares in Wilmar, and changes in the forecasted geographical mix of pretax earnings on the 2020 annual effective tax rate ~~was due primarily to the impact of U.S. tax credits signed into law~~ in ~~December 2019, including a $73 million discrete tax benefit related to 45G railroad maintenance expenses.~~that period.

Analysis of Statements of Earnings

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

Three Months Ended
March 31,
(In thousands) 2021 2020 Change
Oilseeds 8,960 9,163 (203)
Corn 3,650 5,534 (1,884)
Total 12,610 14,697 (2,087)


	Three Months Ended
	September 30,
(In thousands)	2021	2020	Change
Oilseeds	8,509	8,970	(461)
Corn	5,051	4,084	967
Total	13,560	13,054	506

The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. The overall decrease in oilseeds processed volumes is primarily related to ~~weather-related impacts~~scheduled downtime at multiple facilities in North America ~~and harvest delays in South America.~~during the quarter. The ~~decrease~~overall increase in corn is primarily related to the idling of two dry mill facilities in ~~Cedar Rapids, Iowa and Columbus, Nebraska during~~ the second quarter of 2020 in response to ~~low ethanol demand.~~the challenging operating environment. The Company restarted these idled facilities in April 2021.

Revenues by segment for the quarter are as follows:


	Three Months Ended
	September 30,
	2021		2020		Change
	(In millions)












Ag Services and Oilseeds
Ag Services	$	9,899	$	7,352	$	2,547
Crushing	2,842		2,317		525
Refined Products and Other	2,948		1,858		1,090
Total Ag Services and Oilseeds	15,689		11,527		4,162

Carbohydrate Solutions
Starches and Sweeteners	1,972		1,574		398
Vantage Corn Processors	894		490		404
Total Carbohydrate Solutions	2,866		2,064		802

Nutrition
Human Nutrition	808		719		89
Animal Nutrition	889		732		157
Total Nutrition	1,697		1,451		246

Other Business	88		84		4

Total	$	20,340	$	15,126	$	5,214

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

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

Three Months Ended
March 31,
2021 2020 Change
(In millions)
Ag Services and Oilseeds
Ag Services $ 10,146 $ 6,926 $ 3,220
Crushing 2,742 2,313 429
Refined Products and Other 2,119 1,840 279
Total Ag Services and Oilseeds 15,007 11,079 3,928
Carbohydrate Solutions
Starches and Sweeteners 1,745 1,650 95
Vantage Corn Processors 478 666 (188)
Total Carbohydrate Solutions 2,223 2,316 (93)
Nutrition
Human Nutrition 754 719 35
Animal Nutrition 809 752 57
Total Nutrition 1,563 1,471 92
Other Business 100 104 (4)
Total $ 18,893 $ 14,970 $ 3,923

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

Revenues increased ~~$3.9~~$5.2 billion to ~~$18.9~~$20.3 billion due to higher sales prices ($~~3.7~~5.6 billion) and sales volumes ($0.2 billion). The increase in sales prices was due principally to higher prices of alcohol, meals, oils, corn, soybeans, wheat, and animal feeds. The increase in sales volumes was due principally to higher volumes of corn and soybeans, partially offset by lower sales volumes ($0.4 billion). Higher sales prices of animal feeds, alcohol, biodiesel, meal, oils, corn, soybeans, and wheat, and higher volumes of ~~alcohol~~wheat and ~~oils.~~cotton, were partially offset by lower sales volumes of soybeans. Ag Services and Oilseeds revenues increased ~~35%~~36% to ~~$15.0~~$15.7 billion due to higher sales prices ($~~3.2~~4.8 billion) partially offset by lower sales volumes ($0.6 billion). Carbohydrate Solutions revenues increased 39% to $2.9 billion due to higher sales prices ($0.7 billion) and higher sales volumes ($~~0.7 billion). Carbohydrate Solutions revenues decreased 4% to $2.2 billion due to lower sales volumes ($0.4 billion), partially offset by higher sales prices ($0.3~~0.1 billion). Nutrition revenues increased 6%17% to ~~$1.6~~$1.7 billion due to higher sales prices ($0.1 billion) and ~~better product mix ($0.2 billion), partially offset by lower~~higher sales volumes ($0.1 billion).

Cost of products sold increased ~~$3.3~~$4.9 billion to ~~$17.3~~$19.0 billion due principally to higher average commodity costs. Included in cost of products sold in the prior year 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. Manufacturing expenses ~~decreased $70 million~~increased $0.2 billion to ~~$1.4 billion. Manufacturing expenses in the prior year quarter included railroad~~$1.6 billion due principally to higher energy costs, maintenance, ~~expenses of $73 million.~~operating supplies, storage and warehousing, and salaries and benefits.

Foreign currency translation increased revenues and cost of products sold by ~~$0.3~~$0.2 billion.

Gross profit increased ~~$0.6~~$0.3 billion or ~~63%~~27%, to ~~$1.5~~$1.3 billion due principally to higher results in Crushing ($223 million), Refined Products and Other ($103 million), and Nutrition ($56 million), partially offset by lower results in Ag Services ~~and Oilseeds~~ ($~~395~~53 million), Carbohydrate Solutions ($~~195~~35 million), and ~~Nutrition~~Other ($377 million). These factors are explained in the segment operating profit discussion on page ~~37.~~44.

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

Selling, general, and administrative expenses increased ~~$85~~$84 million to ~~$749~~$720 million due primarily to ~~the continued investments in~~higher salaries and benefits and IT ~~and business transformation and an additional $38 million provision for a legal settlement.~~expenses.

Asset impairment, exit, and restructuring costs ~~increased $18~~decreased $2 million to ~~$59~~$2 million. Charges in the current quarter consisted of ~~$31 million of impairments related to certain long-lived assets and $23~~$2 million of restructuring charges, presented as specified items within segment operating ~~profit, and $5 million of restructuring charges in Corporate.~~profit. Charges in the prior year quarter consisted of ~~$41~~individually insignificant long-lived asset impairments of $3 million ~~related~~and restructuring charges of $1 million.

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

Investment income of ~~certain intangible and other long-lived assets presented as specified items within segment operating profit.~~$20 million was comparable to the prior period.

Interest expense ~~increased $4~~decreased $39 million to ~~$87~~$61 million due to lower interest rates and the favorable liability management actions taken in the prior year. Interest expense in the current quarter also included a $7 million mark-to-market ~~loss~~gain adjustment related to the conversion option of the exchangeable bonds issued in August 2020 ~~partially offset by lower interest rates and the favorable liability management actions taken~~compared to a $15 million mark-to-market loss adjustment in the prior ~~year.~~

~~Equity in earnings of unconsolidated affiliates decreased $15 million to $125 million due primarily to lower earnings from the Company’s investment in Wilmar.~~

~~Interest income decreased $27 million to $13 million due principally to lower interest rates on segregated funds in the Company’s futures commission and brokerage business.~~year quarter.

Other ~~income~~expense - net ~~increased $1~~decreased $262 million to ~~$33~~$20 million. ~~Income~~Expense in the current quarter included charges of $36 million related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025 and other expense, partially offset by gains on the sale of certain assets and disposals of individually insignificant assets in the ordinary course of business, the non-service components of net pension benefit income, and foreign exchange ~~gains, and other income. Income~~gains. Expense in the prior year quarter included ~~foreign exchange~~charges of $396 million related to multiple early debt redemptions, partially offset by a $58 million gain on the sale of a portion of the Company’s shares in Wilmar, gains on the sales of certain other assets, the non-service components of net pension benefit income, and other ~~income, partially offset by loss provisions related to the Company’s futures commission and brokerage business.~~income.

3542

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

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


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

Ag Services and Oilseeds	Ag Services and Oilseeds							Ag Services and Oilseeds
Ag Services	Ag Services	$	209	$	164	$	45	Ag Services	$	36	$	147	$	(111)
Crushing	Crushing	382		70		312		Crushing	280		66		214
Refined Products and Other	Refined Products and Other	101		81		20		Refined Products and Other	236		127		109
Wilmar	Wilmar	85		107		(22)		Wilmar	66		96		(30)
Total Ag Services and Oilseeds	Total Ag Services and Oilseeds	777		422		355		Total Ag Services and Oilseeds	618		436		182

Carbohydrate Solutions	Carbohydrate Solutions							Carbohydrate Solutions
Starches and Sweeteners	Starches and Sweeteners	222		99		123		Starches and Sweeteners	178		257		(79)
Vantage Corn Processors	Vantage Corn Processors	37		(31)		68		Vantage Corn Processors	35		(11)		46
Total Carbohydrate Solutions	Total Carbohydrate Solutions	259		68		191		Total Carbohydrate Solutions	213		246		(33)

Nutrition	Nutrition							Nutrition
Human Nutrition	Human Nutrition	128		113		15		Human Nutrition	139		128		11
Animal Nutrition	Animal Nutrition	26		29		(3)		Animal Nutrition	37		19		18
Total Nutrition	Total Nutrition	154		142		12		Total Nutrition	176		147		29

Other Business	Other Business	9		11		(2)		Other Business	(5)		20		(25)

Specified Items:	Specified Items:							Specified Items:

Asset impairment, restructuring, and settlement charges		(94)		(44)		(50)
Gains (losses) on sales of assets and businesses								Gains (losses) on sales of assets and businesses	—		57		(57)
Asset impairment and restructuring charges								Asset impairment and restructuring charges	(2)		(2)		—

Total Specified Items	Total Specified Items	(94)		(44)		(50)		Total Specified Items	(2)		55		(57)

Total Segment Operating Profit	Total Segment Operating Profit	$	1,105	$	599	$	506	Total Segment Operating Profit	$	1,000	$	904	$	96

Adjusted Segment Operating Profit(1)	Adjusted Segment Operating Profit(1)	$	1,199	$	643	$	556	Adjusted Segment Operating Profit(1)	$	1,002	$	849	$	153

Segment Operating Profit	Segment Operating Profit	$	1,105	$	599	$	506	Segment Operating Profit	$	1,000	$	904	$	96
Corporate	Corporate	(281)		(224)		(57)		Corporate	(347)		(704)		357
Earnings Before Income Taxes	Earnings Before Income Taxes	$	824	$	375	$	449	Earnings Before Income Taxes	$	653	$	200	$	453

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

3643

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

Ag Services and Oilseeds operating profit increased ~~84%~~42%. Ag Services ~~results were significantly higher versus the first quarter of 2020. In North America, great execution helped capitalize on strong Chinese demand, resulting~~executed well in ~~outstanding results. South American origination~~a challenging environment, including a rapid return to operation after Hurricane Ida. Overall results were significantly lower ~~due to decreased farmer selling activity~~ versus the ~~prior year~~prior-year quarter driven by net negative timing effects that should reverse in coming quarters and a $54 million insurance settlement recorded in the prior-year quarter and lower export volumes caused by Hurricane Ida. Global trade continued its strong performance. Crushing had substantially higher year-over-year results. The business executed well, delivering stronger margins ~~including the effects from the slightly delayed harvest and higher freight costs. Global Trade results~~in a dynamic environment that included strong demand for vegetable oil to support existing food customers as well as increasing production of renewable diesel. Results were ~~impacted~~also driven by ~~negative~~net positive timing effects ~~related to ocean freight positions which will reverse~~ in the coming quarters. Crushing results were higher, as the business leveraged its diversified global footprint to capture strong execution margins in both soybean and canola crushing, driven by robust vegetable oil demand and tight soybean stocks.current quarter. Refined Products and Other results were significantly higher ~~year-over-year. While overall volumes were down due~~than the prior-year period, driven by positive timing effects that are expected to ~~pandemic impacts, margins were stronger~~reverse in ~~North America and~~future quarters, along with strong execution in Europe, Middle East, ~~Asia,~~ and ~~India (EMEAI) refined oils. Global~~Africa (EMEA) and North American biodiesel ~~results were lower year-over-year.~~and strong refining premiums due to demand for renewable diesel and foodservice recovery in North America. Equity earnings from Wilmar were lower versus the ~~prior year period.~~third quarter of 2020.

Carbohydrate Solutions operating profit ~~increased 281%~~decreased 13%. Starches and Sweeteners, ~~results,~~ including ethanol production from the wet mills, ~~were significantly higher. The business~~ managed ~~risk well, capitalizing on rising prices in~~through dynamic market conditions, optimizing mix between sweeteners and ethanol production through the ~~ethanol complex and favorable co-product values in an industry environment of improving margins and falling inventories. Corn oil~~quarter. Year-over-year results were significantly lower primarily due to higher than the prior year quarter, which had been impacted by significant mark to market effects. In general, though demand for sweeteners and flour by the foodservice sector remained below the prior year, there were signs of acceleration in the latter part of the quarter.input costs. Vantage Corn Processors results were ~~substantially~~much higher ~~driven~~versus the third quarter of 2020, supported by ~~improved margins on~~ the ~~distribution~~resumption of production at the two dry mills and improved fuel ethanol ~~and strong performance~~margins, particularly late in ~~USP-grade alcohol.~~the quarter.

Nutrition operating profit increased 8%20%. Human Nutrition results were ~~significantly~~ higher than the prior-year quarter. ~~Flavors~~Higher volume and improved product mix, with particular strength in beverage, drove support strong flavor results in EMEA and North America, partially offset by lower results in Asia Pacific (APAC). Specialty ingredients continued to benefit from strong demand for alternative proteins, offset by some higher costs. Health and wellness results were ~~up, driven by strong~~higher on robust sales across various market segments, especially beverages. Favorable product mix in North America, improved margins in EMEAI, and accelerated income from a customer agreement also contributed to results. Specialty Ingredients results were lower, primarily driven by demand impacts, including the effect of pantry loading in the prior year quarter and COVID-related shifts in demand for texturants. Health and Wellness results were strong, with robust demand driving higher resultsgrowth in bioactives and ~~fibers.~~fiber. Animal Nutrition results were ~~lower versus the first quarter of 2020,~~higher year-over-year, driven primarily by ~~lower demand~~strength in amino acids as well as feed additives and ~~higher input costs as a result of pandemic effects in South America,~~ingredients, partially offset by ~~favorable results~~higher costs in ~~amino acids, driven by improved product mix.~~Latin America and slower demand recovery in APAC.

Other Business operating profit decreased ~~18%~~125% driven primarily ~~due to lower underwriting results from the~~by captive insurance ~~operations partially~~underwriting losses, most of which were offset by ~~higher results from the Company’s futures commission and brokerage business.~~corresponding recoveries in other business segments.

Corporate results for the quarter are as follows:


		Three Months Ended							Three Months Ended
		March 31,							September 30,
		2021		2020		Change			2021		2020		Change
		(In millions)							(In millions)
LIFO adjustment		$	—	$	91	$	(91)

Interest expense-net	Interest expense-net	(64)		(77)		13		Interest expense-net	$	(66)	$	(83)	$	17
Unallocated corporate costs	Unallocated corporate costs	(202)		(189)		(13)		Unallocated corporate costs	(231)		(196)		(35)

Loss on debt conversion option		(20)		—		(20)
Restructuring (charges) adjustment		(5)		3		(8)
Expenses related to acquisitions								Expenses related to acquisitions	(3)		—		(3)
Debt extinguishment charges								Debt extinguishment charges	(36)		(396)		360
Gain (loss) on debt conversion option								Gain (loss) on debt conversion option	7		(15)		22
Asset impairment, restructuring, and settlement charges								Asset impairment, restructuring, and settlement charges	(1)		(6)		5
Other income (charges)	Other income (charges)	10		(52)		62		Other income (charges)	(17)		(8)		(9)
Total Corporate	Total Corporate	$	(281)	$	(224)	$	(57)	Total Corporate	$	(347)	$	(704)	$	357

3744

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

Corporate results were a net charge of ~~$281~~$347 million in the current quarter compared to a net charge of ~~$224 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~~$704 million in the prior year quarter. Interest expense-net decreased ~~$13~~$17 million due to lower interest rates and the favorable liability management actions taken in the prior year. Unallocated corporate costs increased ~~$13~~$35 million due primarily to higher IT operating and project-related costs and the continued ~~investments~~cost centralization in ~~IT and business transformation and transfers of costs from business segments into the centralized centers of expertise in~~procurement, supply chain, and operations. ~~Loss~~Acquisition expenses were related to the P4 acquisition. Debt extinguishment charges in the current quarter were related to the early redemption of $500 million aggregate principal amount of 2.750% notes due in March 2025. Debt extinguishment charges in the prior year quarter were related to multiple early debt redemptions. Gain (loss) on debt conversion option was related to the mark-to-market adjustment of the conversion option of the exchangeable bonds issued in August 2020. Other ~~income~~charges in the current quarter included railroad repairs and maintenance expenses of $31 million, partially offset by an investment revaluation gain of $9 million, the non-service components of net pension benefit income of $6$1 million, and ~~foreign exchange gains.~~other income. Other charges in the prior year quarter included railroad maintenance expenses of ~~$73~~$28 million, partially offset by an investment revaluation gain of $4 million, the non-service components of net pension benefit income of ~~$13~~$7 million, and ~~foreign exchange gains.~~other income.

Non-GAAP Financial Measures

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

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

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.

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

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


		Three months ended March 31,									Three months ended September 30,
		2021				2020					2021				2020
		In millions		Per share		In millions		Per share			In millions		Per share		In millions		Per share
Average number of shares outstanding - diluted	Average number of shares outstanding - diluted	564				564				Average number of shares outstanding - diluted	566				562

Net earnings and reported EPS (fully diluted)	Net earnings and reported EPS (fully diluted)	$	689	$	1.22	$	391	$	0.69	Net earnings and reported EPS (fully diluted)	$	526	$	0.93	$	225	$	0.40
Adjustments:	Adjustments:									Adjustments:
LIFO adjustment - net of tax of $22 million (1)		—		—		(69)		(0.12)

Loss on debt conversion option - net of tax of $0 (2)		20		0.04		—		—
Asset impairment, restructuring, and settlement charges - net of tax of $25 million in 2021 and $9 million in 2020 (2)		74		0.13		32		0.06
(Gains) losses on sales of assets and businesses - net of tax of $3 million in 2020 (1)										(Gains) losses on sales of assets and businesses - net of tax of $3 million in 2020 (1)	—		—		(54)		(0.10)
Debt extinguishment charges - net of tax of $9 million in 2021 and $96 million in 2020 (1)										Debt extinguishment charges - net of tax of $9 million in 2021 and $96 million in 2020 (1)	27		0.05		300		0.53
(Gain) loss on debt conversion option - net of tax of $0 (1)										(Gain) loss on debt conversion option - net of tax of $0 (1)	(7)		(0.01)		15		0.03
Asset impairment, restructuring, and settlement charges - net of tax of $0 million in 2021 and $3 million in 2020 (1)										Asset impairment, restructuring, and settlement charges - net of tax of $0 million in 2021 and $3 million in 2020 (1)	3		0.01		5		0.01
Expenses related to acquisitions - net of tax of $1 million in 2021										Expenses related to acquisitions - net of tax of $1 million in 2021	2		—		—		—
Certain discrete tax adjustments	Certain discrete tax adjustments	—		—		7		0.01		Certain discrete tax adjustments	(3)		(0.01)		8		0.02
Total adjustments	Total adjustments	94		0.17		(30)		(0.05)		Total adjustments	22		0.04		274		0.49
Adjusted net earnings and adjusted EPS	Adjusted net earnings and adjusted EPS	$	783	$	1.39	$	361	$	0.64	Adjusted net earnings and adjusted EPS	$	548	$	0.97	$	499	$	0.89

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

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


	Three months ended
	September 30,
(In millions)	2021		2020		Change
Earnings before income taxes	$	653	$	200	$	453
Interest expense	61		100		(39)
Depreciation and amortization	247		238		9
(Gains) losses on sales of assets and businesses	—		(57)		57
Debt extinguishment charges	36		396		(360)
Expenses related to acquisitions	3		—		3
Railroad maintenance expenses	31		28		3
Asset impairment, restructuring, and settlement charges	3		8		(5)
Adjusted EBITDA	$	1,034	$	913	$	121


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


Ag Services and Oilseeds	$	711	$	527	$	184
Carbohydrate Solutions	297		323		(26)
Nutrition	230		201		29
Other Business	(3)		21		(24)
Corporate	(201)		(159)		(42)
Adjusted EBITDA	$	1,034	$	913	$	121

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

Market Factors Influencing Operations or Results in the Nine Months Ended September 30, 2021

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

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

Net earnings attributable to controlling interests increased $0.8 billion to $1.9 billion. Segment operating profit increased $0.9 billion to $3.3 billion. Included in segment operating profit in the current period was a net charge of $111 million consisting of asset impairment, restructuring, and settlement charges of $133 million, partially offset by gains on the sale of certain assets of $22 million. Included in segment operating profit in the prior period was net income of $20 million consisting of gains on the sale of a portion of the Company’s shares in Wilmar and certain other assets of $80 million, partially offset by asset impairment, restructuring, and settlement charges of $60 million. Adjusted segment operating profit increased $1.1 billion to $3.4 billion due primarily to higher results in Crushing, Refined Products and Other, Carbohydrate Solutions, and Human and Animal Nutrition, partially offset by lower results in Ag Services and Other Business, and lower equity earnings from the Wilmar investment. Corporate results were a net charge of $0.9 billion in the current period compared to $1.2 billion in the prior period. Corporate results in the current period included a pension settlement charge of $83 million, early debt retirement charges of $36 million, a mark-to-market gain of $17 million on the conversion option of the exchangeable bonds issued in August 2020, expenses related to an acquisition of $3 million, and a restructuring charge of $4 million. Corporate results in the prior period included a credit of $91 million from the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020 and early debt retirement charges of $410 million, a mark-to-market loss of $15 million on the conversion option of the exchangeable bonds issued in August 2020, and an impairment charge of $5 million.

Income taxes of $364 million increased $326 million. The Company’s effective tax rate for the nine months ended September 30, 2021 was 15.8% compared to 3.4% for the nine months ended September 30, 2020. The favorable 2020 tax rate was due to the impact of U.S. tax credits signed into law in December 2019, including a $73 million discrete tax benefit related to 45G railroad tax credits recognized in the quarter ended March 31, 2020, and changes in the forecasted geographical mix of pretax earnings. The 45G railroad tax credits have an offsetting impact in cost of products sold.

Analysis of Statements of Earnings

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


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

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

The Company generally operates its production facilities, on an overall basis, at or near capacity, adjusting facilities individually, as needed, to react to the current margin environment and seasonal local supply and demand conditions. The overall decrease in oilseeds processed volumes was due to cold weather and natural gas curtailments in North America and delays in soybean harvest in South America. The overall increase in corn processed volumes was primarily related to the idling of two dry mill facilities in the second quarter of 2020. The Company restarted these idled facilities in April 2021.

Revenues by segment for the nine months are as follows:


	Nine Months Ended
	September 30,
	2021		2020		Change
	(In millions)












Ag Services and Oilseeds
Ag Services	$	32,860	$	22,930	$	9,930
Crushing	8,411		7,035		1,376
Refined Products and Other	7,696		5,382		2,314
Total Ag Services and Oilseeds	48,967		35,347		13,620

Carbohydrate Solutions
Starches and Sweeteners	5,563		4,769		794
Vantage Corn Processors	2,346		1,625		721
Total Carbohydrate Solutions	7,909		6,394		1,515

Nutrition
Human Nutrition	2,410		2,161		249
Animal Nutrition	2,583		2,198		385
Total Nutrition	4,993		4,359		634

Other Business	290		277		13
Total	$	62,159	$	46,377	$	15,782

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

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

Cost of products sold increased $14.5 billion to $57.8 billion due principally to higher average commodity costs. Included in cost of products sold in the prior period was a credit of $91 million from the effect of the elimination of the LIFO reserve in connection with the accounting change effective January 1, 2020. Manufacturing expenses increased $0.3 billion to $4.5 billion due principally to higher energy costs, maintenance, storage and warehousing, operating supplies, salaries and benefits, and contracted labor, partially offset by lower railroad maintenance expenses.

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

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

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

Asset impairment, exit, and restructuring costs increased $23 million to $84 million. Charges in the current period consisted of $54 million of impairments related to certain long-lived assets and $26 million of restructuring charges, presented as specified items within segment operating profit, and $4 million of restructuring charges in Corporate. Charges in the prior period consisted of $50 million of impairments related to certain intangible and other long-lived assets and $11 million of restructuring charges.

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

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

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

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

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

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


	Nine Months Ended
	September 30,
Segment Operating Profit (Loss)	2021		2020		Change
	(In millions)











Ag Services and Oilseeds
Ag Services	$	435	$	482	$	(47)
Crushing	812		249		563
Refined Products and Other	467		286		181
Wilmar	251		254		(3)
Total Ag Services and Oilseeds	1,965		1,271		694

Carbohydrate Solutions
Starches and Sweeteners	706		533		173
Vantage Corn Processors	149		(24)		173
Total Carbohydrate Solutions	855		509		346

Nutrition
Human Nutrition	429		372		57
Animal Nutrition	102		75		27
Total Nutrition	531		447		84

Other Business	10		69		(59)

Specified Items:
Gains (losses) on sales of assets and businesses	22		80		(58)
Asset impairment, restructuring, and settlement charges	(133)		(60)		(73)

Total Specified Items	(111)		20		(131)

Total Segment Operating Profit	$	3,250	$	2,316	$	934

Adjusted Segment Operating Profit(1)	$	3,361	$	2,296	$	1,065

Segment Operating Profit	$	3,250	$	2,316	$	934
Corporate	(948)		(1,189)		241
Earnings Before Income Taxes	$	2,302	$	1,127	$	1,175

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

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

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

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

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

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

Corporate results for the nine months are as follows:


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

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

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

Non-GAAP Financial Measures

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

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

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

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


	Nine months ended September 30,
	2021				2020
	In millions		Per share		In millions		Per share
Average number of shares outstanding - diluted	566				563

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

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

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

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

The tables below provide a reconciliation of earnings before income taxes to adjusted EBITDA and adjusted EBITDA by segment for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020.

Three months ended
March 31,
(In millions) 2021 2020 Change
Earnings before income taxes $ 824 $ 375 $ 449
Interest expense 87 83 4
Depreciation and amortization 249 245 4
LIFO — (91) 91
Railroad maintenance expenses — 73 (73)
Asset impairment, restructuring, and settlement charges 99 41 58
Adjusted EBITDA $ 1,259 $ 726 $ 533
Three months ended
March 31,
(In millions) 2021 2020 Change
Ag Services and Oilseeds $ 871 $ 514 $ 357
Carbohydrate Solutions 342 148 194
Nutrition 209 199 10
Other Business 11 15 (4)
Corporate (174) (150) (24)
Adjusted EBITDA $ 1,259 $ 726 $ 533


	Nine months ended
	September 30,
(In millions)	2021		2020		Change
Earnings before income taxes	$	2,302	$	1,127	$	1,175
Interest expense	188		270		(82)
Depreciation and amortization	739		727		12
LIFO	—		(91)		91
(Gains) losses on sales of assets and businesses	(22)		(80)		58
Debt extinguishment charges	36		410		(374)
Expenses related to acquisitions	3		—		3
Railroad maintenance expenses	34		101		(67)
Asset impairment, restructuring, and settlement charges	220		65		155
Adjusted EBITDA	$	3,500	$	2,529	$	971









	Nine months ended
	September 30,
(In millions)	2021		2020		Change













Ag Services and Oilseeds	$	2,243	$	1,543	$	700
Carbohydrate Solutions	1,106		745		361






Nutrition	692		617		75






Other Business	15		75		(60)





Corporate	(556)		(451)		(105)









Adjusted EBITDA	$	3,500	$	2,529	$	971

3954

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

Liquidity and Capital Resources

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

Cash provided by operating activities was ~~$0.3~~$5.9 billion for the ~~three~~nine months ended September 30, 2021 compared to a use of ~~$0.7~~$1.5 billion for the same period last year. Working capital changes as described below ~~decreased~~increased cash by ~~$0.9~~$2.8 billion for the ~~three~~nine months ended September 30, 2021 compared to ~~$1.5~~a decrease of $3.8 billion for the same period last year which included the impact of deferred consideration. During 2020, the Company restructured its accounts receivable securitization programs from a deferred purchase price to a pledge structure. As a result, operating cash flows in the current period no longer include the impact of deferred consideration which decreased operating cash flows in previous years.

Inventories ~~increased~~ decreased approximately ~~$1.1~~$0.4 billion due to lower inventory volumes partially offset by higher inventory ~~prices and quantities.~~prices. Brokerage payables increased approximately $2.2 billion due to increased customer segregated trading activity. Trade payables ~~declined~~increased approximately ~~$0.4~~$0.2 billion principally reflecting seasonal cash payments for North American harvest-related grain purchases.

Deferred consideration in securitized receivables of ~~$2.0~~$4.6 billion for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 was offset by the same amount of net consideration received for beneficial interest obtained for selling trade receivables.

Cash used in investing activities was ~~$0.2~~$1.3 billion for the ~~three~~nine months ended September 30, 2021 compared to cash provided of ~~$1.9~~$4.7 billion for the same period last year. Capital expenditures for the ~~three~~nine months ~~of $0.2~~ended September 30, 2021 were $0.7 billion ~~were comparable~~compared to $0.6 billion for the same period last year. ~~There were no acquisitions for the three months compared to net~~Net assets of businesses acquired ~~of $8~~were $0.5 billion for the nine months ended September 30, 2021 compared to $3 million for the same period last ~~year.~~year primarily due to the P4 acquisition in September 2021. Proceeds from sales of business and assets for the ~~three~~nine months ~~of $14 million~~ended September 30, 2021 were $0.1 billion compared to $0.7 billion for the same period last year which related to the sale of a portion of the Company’s shares in Wilmar and certain other ~~assets compared to $7 million for the same period last year.~~assets. Net consideration received for beneficial interest obtained ~~for~~related to selling trade receivables was ~~$2.0~~$4.6 billion for the ~~three~~nine months ended ~~March 31,~~September 30, 2020.

Cash ~~provided by~~used in financing activities was ~~$1.1~~$1.6 billion for the ~~three~~nine months ended September 30, 2021 compared to ~~$3.3~~$1.9 billion for the same period last year. Long-term debt borrowings for the ~~three~~nine months ended September 30, 2021 of ~~$0.6~~$1.3 billion consisted of the $750 million aggregate principal amount of 2.700% Notes due 2051 issued on September 10, 2021 and the €0.5 billion aggregate principal amount of Fixed-to-Floating Rate Senior Notes due 2022 issued in a private placement on March 25, 2021, compared to long-term debt borrowings for the same period last year of ~~$1.5~~$1.8 billion which consisted of the $0.5 billion and $1.0 billion aggregate principal amounts of 2.75% Notes due in 2025 and 3.25% Notes due in 2030, respectively, issued on March 27, ~~2020. Commercial paper net borrowings for~~2020 and the ~~three months were $0.7~~$0.3 billion ~~compared to $2.2 billion for the same period last year.~~aggregate principal amount of zero coupon exchangeable bonds due in 2023 issued on August 26, 2020. Proceeds from the borrowings in ~~both periods~~the current period were used to redeem debt and for general corporate purposes. Proceeds from the borrowings in the prior ~~year~~period were ~~also~~ used to reduce short-term debt. Commercial paper net payments for the nine months ended September 30, 2021 were $1.7 billion compared to $1.0 billion for the same period last year. Long-term debt payments of $0.5 billion for the nine months ended September 30, 2021 consisted of the early redemption of the $500 million aggregate principal amount of 2.750% notes due 2025 in September 2021, compared to $2.0 billion for the same period last year which consisted of the early redemption of the $0.5 billion and $0.4 billion aggregate principal amounts of 4.479% debentures due in 2021 and 3.375% debentures due in 2022, respectively, the repurchase of $0.7 billion aggregate principal amount of debentures, and the redemption of $0.1 billion aggregate principal amount of private placement notes due in 2021 and 2024. Share repurchases for the ~~three~~nine months ended September 30, 2021 were insignificant compared to $0.1 billion for the same period last year. Dividends of ~~$0.2~~$0.6 billion for the ~~three~~nine months ~~were~~ended September 30, 2021were comparable to the same period last year.

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

At ~~March 31,~~September 30, 2021, the Company had ~~$0.7~~$1.1 billion of cash and cash equivalents ~~and short-term marketable securities~~ and a current ratio, defined as current assets divided by current liabilities, of 1.6 to 1. Included in working capital was ~~$9.0~~$7.4 billion of readily marketable commodity inventories. At ~~March 31,~~September 30, 2021, the Company’s capital resources included shareholders’ equity of ~~$20.9~~$22.0 billion and lines of credit, including the accounts receivable securitization programs described below, totaling ~~$11.5~~$12.4 billion, of which ~~$7.0~~$10.5 billion was unused. The Company’s ratio of long-term debt to total capital (the sum of the Company’s long-term debt and shareholders’ equity) was ~~29%~~27% and 28% at ~~March 31,~~September 30, 2021 and December 31, 2020, 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 ~~33%~~26% and 32% at ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. Of the Company’s total lines of credit, $6.5 billion supported the combined U.S. and European commercial paper borrowing programs, against which there was ~~$1.6 billion~~no commercial paper outstanding at ~~March 31,~~September 30, 2021.

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

As of ~~March 31,~~September 30, 2021, the Company had ~~$0.7~~$1.1 billion of cash and cash equivalents, ~~$0.3~~$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 ~~$5.9~~$8.1 billion, the Company has asserted that these funds are indefinitely reinvested outside the U.S.

The Company has accounts receivable securitization programs (the “Programs”) with certain commercial paper conduit purchasers and committed purchasers. The Programs provide the Company with up to ~~$2.0~~$2.1 billion, an increase from $1.8 billion as of December 31, 2020, in funding against accounts receivable transferred into the Programs and expands the Company’s access to liquidity through efficient use of its balance sheet assets (see Note 1516 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,~~September 30, 2021, the Company utilized ~~$1.7~~$1.5 billion of its facility under the Programs.

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

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

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

Contractual Obligations and Commercial Commitments

The Company’s purchase obligations as of ~~March 31,~~September 30, 2021 and December 31, 2020 were ~~$18.0~~$16.9 billion and $19.7 billion, respectively. The decrease is primarily related to obligations to purchase lower quantities of agricultural commodity inventories. As of ~~March 31,~~September 30, 2021, the Company expects to make payments related to purchase obligations of ~~$16.7~~$12.9 billion within the next twelve months. There were no other material changes in the Company’s contractual obligations during the quarter ended ~~March 31,~~September 30, 2021.

Off Balance Sheet Arrangements

On ~~February~~September 24, 2021, the Company amended the First Program and increased the facility from ~~$1.2~~$1.4 billion as of March 31, 2021 to ~~$1.4~~$1.5 billion. See Note 1516 of “Notes to Consolidated Financial Statements” included in Item 1 herein, “Financial Statements” for more information about the First Program. There were no other material changes in the Company’s off balance sheet arrangements during the quarter ended ~~March 31,~~September 30, 2021.

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

Critical Accounting Policies

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk inherent in the Company’s market risk sensitive instruments and positions is the potential loss arising from adverse changes in: commodity market prices as they relate to the Company’s net commodity position, foreign currency exchange rates, and interest rates. Significant changes in market risk sensitive instruments and positions for the quarter ended ~~March 31,~~September 30, 2021 are described below. There were no material changes during the period in the Company’s potential loss arising from changes in foreign currency exchange rates and interest rates.

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

Commodities

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

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

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


		Three months ended				Year ended					Nine months ended				Year ended
		March 31, 2021				December 31, 2020					September 30, 2021				December 31, 2020
Long/(Short) (In millions)	Long/(Short) (In millions)	Fair Value		Market Risk		Fair Value		Market Risk		Long/(Short) (In millions)	Fair Value		Market Risk		Fair Value		Market Risk
Highest position	Highest position	$	1,426	$	143	$	966	$	97	Highest position	$	1,426	$	143	$	966	$	97
Lowest position	Lowest position	826		83		(842)		(84)		Lowest position	(98)		(10)		(842)		(84)
Average position	Average position	1,197		120		111		11		Average position	710		71		111		11

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

ITEM 4. CONTROLS AND PROCEDURES

As of ~~March 31,~~September 30, 2021, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure. There was no change in the Company’s internal controls over financial reporting during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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

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

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is routinely involved in a number of actual or threatened legal actions, including those involving alleged personal injuries, employment law, product liability, intellectual property, environmental issues, alleged tax liability (see Note 1011 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. 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.

ITEM 1. LEGAL PROCEEDINGS (Continued)

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

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, Birdsong, conspired to fix the price they paid to farmers for raw peanuts. Plaintiffs subsequently added a third peanut shelling company, Olam, to the case. In the fourth quarter of 2020, Olam and Birdsong settled with the plaintiff class for approximately $8 million and $50 million, respectively.In February 2021, Golden Peanut settled for $45 million with the plaintiff class. The court approved the Olam and Birdsong settlements on April 5, 2021, and preliminarily approved the ADM settlement on April 23, 2021. These settlements will, if finally approved, resolve all of class plaintiffs’ claims in this matter.

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

ITEM 1A. RISK FACTORS

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

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

Issuer Purchases of Equity Securities

Period
Total Number of Shares Purchased(1)
Average Price Paid per Share
Total Number of Shares Purchased as Part of a Publicly Announced Program(2)
Number of Shares Remaining that May be Purchased Under the Program(2)
January 1, 2021 to
January 31, 2021 4,592 $ 40.588 178 104,506,834
February 1, 2021 to
February 28, 2021 1,016,237 55.684 85 104,506,749
March 1, 2021 to
March 31, 2021 1,325 57.458 244 104,506,505
Total 1,022,154 $ 55.618 507 104,506,505


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program(2)	Number of Shares Remaining that May be Purchased Under the Program(2)
July 1, 2021 to
July 31, 2021	804	$	59.498	191	104,505,894

August 1, 2021 to
August 31, 2021	6,748	60.602		85	104,505,809

September 1, 2021 to
September 30, 2021	4,308	60.424		106	104,505,703
Total	11,860	$	60.462	382	104,505,703

(1)Total shares purchased represents those shares purchased in the open market as part of the Company’s publicly announced share repurchase program described below, shares received as payment for the exercise price of stock option exercises, and shares received as payment for the withholding taxes on vested restricted stock awards. During the three-month period ended ~~March 31,~~September 30, 2021, there were ~~1,021,647~~11,478 shares received as payments for the minimum withholding taxes on vested restricted stock awards and for the exercise price of stock option exercises.

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

4459

ITEM 6. EXHIBITS


(3)(i)						Composite Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2001~~)2001).

(3)(ii)						Bylaws, as amended through May 1, 2019 (incorporated by reference to Exhibit 3(ii) to the Company’s ~~Current~~Current Report on Form 8-K filed on May 7, ~~2019~~2019).

(4.1)						)Form of 2.700% Notes due 2051 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 10, 2021).

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

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

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

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

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

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

4560

SIGNATURES

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


			ARCHER-DANIELS-MIDLAND COMPANY



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



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

Dated: ~~April 28,~~October 26, 2021

4661