Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements												Page No.
Consolidated Statements of Earnings												44
Consolidated Statements of Comprehensive Income (Loss)												45
Consolidated Balance Sheets												46
Consolidated Statements of Cash Flows												47
Consolidated Statements of Shareholders’ Equity												48
Notes to Consolidated Financial Statements												49
Reports of Independent Registered Public Accounting Firm			PCAOB ID:			42						102

Archer-Daniels-Midland Company

Consolidated Statements of Earnings

			Year Ended
(In millions, except per share amounts)			December 31
			2021						2020						2019
Revenues			$	85,249					$	64,355					$	64,656
Cost of products sold			79,262						59,902						60,509
Gross Profit			5,987						4,453						4,147
Selling, general and administrative expenses			2,994						2,687						2,493
Asset impairment, exit, and restructuring costs			164						80						303
Interest expense			265						339						402
Equity in earnings of unconsolidated affiliates			(595)						(579)						(454)
Loss on debt extinguishment			36						409						—
Investment income			(96)						(111)						(196)
Other (income) expense - net			(94)						(255)						11
Earnings Before Income Taxes			3,313						1,883						1,588
Income tax expense			578						101						209
Net Earnings Including Noncontrolling Interests			2,735						1,782						1,379
Less: Net earnings (losses) attributable to noncontrolling interests			26						10						—
Net Earnings Attributable to Controlling Interests			$	2,709					$	1,772					$	1,379
Average number of shares outstanding – basic			564						561						563
Average number of shares outstanding – diluted			566						565						565
Basic earnings per common share			$	4.80					$	3.16					$	2.45
Diluted earnings per common share			$	4.79					$	3.15					$	2.44

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Comprehensive Income (Loss)

			Year Ended
(In millions)			December 31
			2021						2020						2019
Net earnings including noncontrolling interests			$	2,735					$	1,782					$	1,379
Other comprehensive income (loss):
Foreign currency translation adjustment			279						(362)						(176)
Tax effect			(103)						97						(12)
Net of tax amount			176						(265)						(188)
Pension and other postretirement benefit liabilities adjustment			289						(113)						(98)
Tax effect			(71)						16						50
Net of tax amount			218						(97)						(48)
Deferred gain (loss) on hedging activities			33						254						(91)
Tax effect			7						(57)						18
Net of tax effect			40						197						(73)
Unrealized gain (loss) on investments			(2)						(27)						13
Tax effect			—						—						(1)
Net of tax effect			(2)						(27)						12
Other comprehensive income (loss)			432						(192)						(297)
Comprehensive income (loss)			3,167						1,590						1,082
Less: Comprehensive income (loss) attributable to noncontrolling interests			26						17						2
Comprehensive income (loss) attributable to controlling interests			$	3,141					$	1,573					$	1,080

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Balance Sheets

(In millions)			December 31, 2021						December 31, 2020
Assets
Current Assets
Cash and cash equivalents			$	943					$	666
Segregated cash and investments			8,016						5,890
Trade receivables - net			3,311						2,793
Inventories			14,481						11,713
Other current assets			5,158						6,224
Total Current Assets			31,909						27,286
Investments and Other Assets
Investments in and advances to affiliates			5,285						4,913
Goodwill and other intangible assets			6,747						5,585
Right-of-use assets			1,023						1,102
Other assets			1,369						1,054
Total Investments and Other Assets			14,424						12,654
Property, Plant, and Equipment
Land and land improvements			554						545
Buildings			5,597						5,522
Machinery and equipment			19,112						19,154
Construction in progress			960						946
			26,223						26,167
Accumulated depreciation			(16,420)						(16,388)
Net Property, Plant, and Equipment			9,803						9,779
Total Assets			$	56,136					$	49,719
Liabilities, Temporary Equity, and Shareholders’ Equity
Current Liabilities
Short-term debt			$	958					$	2,042
Trade payables			6,388						4,474
Payables to brokerage customers			8,965						6,460
Current lease liabilities			277						261
Accrued expenses and other payables			4,790						4,943
Current maturities of long-term debt			570						2
Total Current Liabilities			21,948						18,182
Long-Term Liabilities
Long-term debt			8,011						7,885
Deferred income taxes			1,412						1,302
Non-current lease liabilities			765						863
Other			1,233						1,391
Total Long-Term Liabilities			11,421						11,441
Temporary Equity - Redeemable noncontrolling interest			259						74
Shareholders’ Equity
Common stock			2,994						2,824
Reinvested earnings			21,655						19,780
Accumulated other comprehensive income (loss)			(2,172)						(2,604)
Noncontrolling interests			31						22
Total Shareholders’ Equity			22,508						20,022
Total Liabilities, Temporary Equity, and Shareholders’ Equity			$	56,136					$	49,719

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Cash Flows

(In millions)			Year Ended December 31
			2021						2020						2019
Operating Activities
Net earnings including noncontrolling interests			$	2,735					$	1,782					$	1,379
Adjustments to reconcile net earnings to net cash provided by (used in) operating results
Depreciation and amortization			996						976						993
Asset impairment charges			125						54						142
Deferred income taxes			(129)						75						21
Equity in earnings of affiliates, net of dividends			(177)						(298)						(213)
Stock compensation expense			161						151						89
Deferred cash flow hedges			34						254						(91)
Loss on debt extinguishment			36						409						—
(Gain) loss on sales of assets and businesses/investment revaluation			(149)						(161)						39
Other – net			309						(113)						(73)
Changes in operating assets and liabilities, net of acquisitions and dispositions
Segregated investments			400						408						278
Trade receivables			(578)						(149)						287
Inventories			(2,839)						(2,426)						(21)
Deferred consideration in securitized receivables			—						(4,603)						(7,681)
Other current assets			1,298						(2,126)						(1,449)
Trade payables			1,919						694						(64)
Payables to brokerage customers			2,527						1,400						347
Accrued expenses and other payables			(73)						1,287						565
Total Operating Activities			6,595						(2,386)						(5,452)
Investing Activities
Capital expenditures			(1,169)						(823)						(828)
Net assets of businesses acquired			(1,564)						(15)						(1,946)
Proceeds from sales of assets and businesses			245						728						293
Investments in and advances to affiliates			(34)						(5)						(13)
Investments in retained interest in securitized receivables			—						(2,121)						(5,398)
Proceeds from retained interest in securitized receivables			—						6,724						13,079
Purchases of marketable securities			—						(2)						(27)
Proceeds from sales of marketable securities			1						6						104
Other – net			(148)						(27)						(5)
Total Investing Activities			(2,669)						4,465						5,259
Financing Activities
Long-term debt borrowings			1,329						1,791						8
Long-term debt payments			(534)						(2,136)						(626)
Net borrowings (payments) under lines of credit agreements			(1,085)						837						919
Share repurchases			—						(133)						(150)
Cash dividends			(834)						(809)						(789)
Other – net			6						27						(22)
Total Financing Activities			(1,118)						(423)						(660)
Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents			2,808						1,656						(853)
Cash, cash equivalents, restricted cash, and restricted cash equivalents – beginning of year			4,646						2,990						3,843
Cash, cash equivalents, restricted cash, and restricted cash equivalents – end of year			$	7,454					$	4,646					$	2,990
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated balance sheets
Cash and cash equivalents			$	943					$	666					$	852
Restricted cash and restricted cash equivalents included in segregated cash and investments			6,511						3,980						2,138
Total cash, cash equivalents, restricted cash, and restricted cash equivalents			$	7,454					$	4,646					$	2,990
Cash paid for interest and income taxes were as follows:
Interest			$	276					$	345					$	388
Income taxes			$	553					$	195					$	268
Supplemental Disclosure of Noncash Investing Activity:
Retained interest in securitized receivables			$	—					$	4,656					$	7,751

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Consolidated Statements of Shareholders’ Equity

																					Accumulated Other												Total
			Common Stock												Reinvested						Comprehensive						Noncontrolling						Shareholders’
			Shares						Amount						Earnings						Income (Loss)						Interests						Equity
			(In millions)
Balance, December 31, 2018			559						$	2,560					$	18,527					$	(2,106)					$	15					$	18,996
Comprehensive income
Net earnings															1,379												—
Other comprehensive income (loss)																					(299)						2
Total comprehensive income																																	1,082
Cash dividends paid-$1.40 per share															(789)																		(789)
Share repurchases			(4)												(150)																		(150)
Stock compensation expense			2						89																								89
Other			—						6						(9)												—						(3)
Balance, December 31, 2019			557						$	2,655					$	18,958					$	(2,405)					$	17					$	19,225
Impact of ASC 326 (see Note 1)															(8)																		(8)
Balance, January 1, 2020			557						$	2,655					$	18,950					$	(2,405)					$	17					$	19,217
Comprehensive income
Net earnings															1,772												10
Other comprehensive income (loss)																					(199)						7
Total comprehensive income																																	1,590
Cash dividends paid-$1.44 per share															(809)																		(809)
Share repurchases			(4)												(133)																		(133)
Stock compensation expense			2						151																								151
Other			1						18						—												(12)						6
Balance, December 31, 2020			556						$	2,824					$	19,780					$	(2,604)					$	22					$	20,022
Comprehensive income
Net earnings															2,709												26
Other comprehensive income (loss)																					432						—
Total comprehensive income																																	3,167
Cash dividends paid-$1.48 per share															(834)																		(834)
Stock compensation expense			3						161																								161
Other			1						9						—												(17)						(8)
Balance, December 31, 2021			560						$	2,994					$	21,655					$	(2,172)					$	31					$	22,508

See notes to consolidated financial statements.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Nature of Business

ADM unlocks the power of nature to provide access to nutrition worldwide. The Company is a global leader in human and animal nutrition and the world’s premier agricultural origination and processing company. ADM’s breadth, depth, insights, facilities and logistical expertise give the Company unparalleled capabilities to meet needs for food, beverages, health and wellness, and more. From the seed of the idea to the outcome of the solution, ADM enriches the quality of life the world over.

The Company transforms natural products into staple foods, sustainable, renewable industrial products, and an expansive pantry of food and beverage ingredients and solutions for foods and beverages, supplements, nutrition for pets and livestock and more. And with an array of unparalleled capabilities across every part of the global food chain, ADM gives its customers an edge in solving global challenges of today and tomorrow. At ADM, sustainable practices and a focus on environmental responsibility are not separate from its primary business: they are integral to the work the Company does every day to serve customers and create value for shareholders. The Company is one of the world’s leading producers of ingredients for human and animal nutrition, and other products made from nature.

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.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect amounts reported in its consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassifications

During the year ended December 31, 2021, the Company recorded revaluation gains on cost method investments of $49 million 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 $23 million and $4 million in the years ended December 31, 2020 and 2019, respectively, were reclassified to conform to the current presentation.

Effective December 31, 2021, the Company reported $87 million of intangible assets in process in goodwill and other intangible assets in the consolidated balance sheets. Intangible assets in process previously reported in construction in progress in property, plant, and equipment of $172 million as of December 31, 2020 were reclassified to conform to the current presentation.

Cash Equivalents

The Company considers all non-segregated, highly-liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

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 statement of cash flows.

Receivables

The Company records accounts receivable at net realizable value. This value includes an allowance for estimated uncollectible accounts of $122 million and $100 million at December 31, 2021 and 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 $32 million, $47 million, and $23 million in the years ended December 31, 2021, 2020, and 2019, respectively.

Inventories

Inventories of certain merchandisable agricultural commodities, which include inventories acquired under deferred pricing contracts, are stated at market value. In addition, the Company values certain inventories using the first-in, first-out (FIFO) method at the lower of cost or net realizable value. Prior to January 1, 2020, the Company also valued certain of its agricultural commodity inventories using the last-in, first-out (LIFO) method at the lower of cost or net realizable value.

Effective January 1, 2020, the Company changed the method of accounting for certain of its agricultural commodity inventories from the LIFO method to market value in the Ag Services and Oilseeds segment. 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 year ended December 31, 2020 with no impact to the statement of cash flows. The change did not have a material impact on the Company’s results for the year ended December 31, 2020.

If the Company had not made the accounting change, the effect of LIFO valuation on ADM’s operating results would have been an increase in cost of goods sold of $147 million ($113 million after tax, equal to $0.20 per diluted share) in the year ended December 31, 2020, with no impact to the consolidated statement of cash flows.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

The following table sets forth the Company’s inventories as of December 31, 2021 and 2020.

			December 31, 2021						December 31, 2020
			(In millions)
FIFO inventories			$	4,260					$	3,310
Market inventories			9,769						7,941
Supplies and other inventories			452						462
Total inventories			$	14,481					$	11,713

Fair Value Measurements

The Company determines fair value based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the market approach valuation technique to measure the majority of its assets and liabilities carried at fair value. Three levels are established within the fair value hierarchy that may be used to report fair value: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Observable inputs, including Level 1 prices that have been adjusted; quoted prices for similar assets or liabilities; quoted prices in markets that are less active than traded exchanges; and other inputs that are observable or can be substantially corroborated by observable market data. Level 3: Unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. In evaluating the significance of fair value inputs, the Company generally classifies assets or liabilities as Level 3 when their fair value is determined using unobservable inputs that individually or when aggregated with other unobservable inputs, represent more than 10% of the fair value of the assets or liabilities. Judgment is required in evaluating both quantitative and qualitative factors in the determination of significance for purposes of fair value level classification. Level 3 amounts can include assets and liabilities whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as assets and liabilities for which the determination of fair value requires significant management judgment or estimation.

Based on historical experience with the Company’s suppliers and customers, the Company’s own credit risk and knowledge of current market conditions, the Company does not view nonperformance risk to be a significant input to fair value for the majority of its forward commodity purchase and sale contracts. However, in certain cases, if the Company believes the nonperformance risk to be a significant input, the Company records estimated fair value adjustments, and classifies the measurement in Level 3.

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of input that is a significant component of the fair value measurement determines the placement of the entire fair value measurement in the hierarchy. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels.

The Company’s policy regarding the timing of transfers between levels, including both transfers into and transfers out of Level 3, is to measure and record the transfers at the end of the reporting period.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

Derivatives

The Company recognizes all of its derivative instruments as either assets or liabilities at fair value in its consolidated balance sheet. Unrealized gains are reported as other current assets and unrealized losses are reported as accrued expenses and other payables. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. The majority of the Company’s derivatives have not been designated as hedging instruments, and as such, changes in fair value of these derivatives are recognized in earnings immediately. For those derivative instruments that are designated and qualify as hedging instruments, the Company designates the hedging instrument, based upon the exposure being hedged, as a cash flow hedge or a net investment hedge.

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 flows 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) 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.

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.

Cost Method Investments

Cost method investments of $297 million and $178 million as of December 31, 2021 and 2020, respectively, are included in Other Assets in the Company’s consolidated balance sheets. Revaluation gains of $49 million, $23 million, and $4 million for the years ended December 31, 2021, 2020, and 2019, respectively, in connection with observable third-party transactions, are recorded in investment income in the Company's consolidated statements of earnings.

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Repair and maintenance costs are expensed as incurred. The Company generally uses the straight-line method in computing depreciation for financial reporting purposes and generally uses accelerated methods for income tax purposes. The annual provisions for depreciation have been computed principally in accordance with the following ranges of asset lives: buildings - 15 to 40 years; machinery and equipment - 3 to 40 years. The Company capitalized interest on major construction projects in progress of $17 million, $14 million, and $15 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Income Taxes

The Company accounts for income taxes in accordance with the liability method. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and reported amounts in the consolidated financial statements using statutory rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in the results of operations in the period that includes the enactment date under the law. Applicable accounting standards prescribe a minimum threshold a tax position is required to meet before being recognized in the consolidated financial statements. The Company recognizes in its consolidated financial statements tax positions determined more likely than not to be sustained upon examination, based on the technical merits of the position.

The Company classifies interest on income tax-related balances as interest expense and classifies tax-related penalties as selling, general, and administrative expenses.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

Goodwill and other intangible assets

Goodwill and other intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. Definite-lived intangible assets, including capitalized expenses related to the Company’s 1ADM program such as third-party configuration costs and internal labor, are amortized over their estimated useful lives of 1 to 50 years and are reviewed for impairment whenever there are indicators that the carrying value of the assets may not be fully recoverable. The Company’s accounting policy is to evaluate goodwill and other intangible assets with indefinite lives for impairment on October 1 of each fiscal year or whenever there are indicators that the carrying value of the assets may not be fully recoverable. The Company recorded impairment charges totaling $52 million related to goodwill and other intangibles, $26 million related to customer lists, and $11 million related goodwill and other intangibles during the years ended December 31, 2021, 2020, and 2019, respectively (see Note 9 for additional information).

Asset Abandonments and Write-Downs

The Company evaluates long-lived assets for impairment whenever indicators of impairment exist. In addition, assets are written down to fair value after consideration of the Company’s ability to utilize the assets for their intended purpose, employ the assets in alternative uses, or sell the assets to recover the carrying value. Fair value is generally based on discounted cash flow analysis which relies on management’s estimate of market participant assumptions or estimated selling price for assets considered held for sale (a Level 3 measurement under applicable accounting standards). During 2020, the Company temporarily idled certain of its corn processing assets where ethanol is produced and performed a quantitative impairment assessment of those assets, resulting in no impairment charges. The Company restarted these idled facilities in April 2021. The total carrying value of the temporarily idled assets as of December 31, 2020 was immaterial. During the years ended December 31, 2021, 2020, and 2019, asset abandonment and impairment charges were $73 million, $28 million, and $131 million, respectively.

Payables to Brokerage Customers

Payables to brokerage customers represent the total of customer accounts at the Company’s futures commission merchant with credit or positive balances. Customer accounts are used primarily in connection with commodity transactions and include gains and losses on open commodity trades as well as securities and other deposits made for margins or other purposes as required by the Company or the exchange-clearing organizations or counterparties. Payables to brokerage customers have a corresponding balance in segregated cash and investments and customer omnibus receivable in other current assets.

Revenues

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. 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 ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”). For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“Topic 610-20”).

Stock Compensation

The Company recognizes expense for its stock compensation based on the fair value of the awards that are granted. The Company’s stock compensation plans provide for the granting of restricted stock, restricted stock units, performance stock units, and stock options. The fair values of stock options and performance stock units are estimated at the date of grant using the Black-Scholes option valuation model and a lattice valuation model, respectively. These valuation models require the input of subjective assumptions. Measured compensation cost, net of forfeitures, is recognized ratably over the vesting period of the related stock compensation award.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

Research and Development

Costs associated with research and development are expensed as incurred. Such costs incurred, net of expenditures subsequently reimbursed by government grants, were $171 million, $160 million, and $154 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Per Share Data

Basic earnings per common share are determined by dividing net earnings attributable to controlling interests by the weighted average number of common shares outstanding. In computing diluted earnings per share, average number of common shares outstanding is increased by common stock options outstanding with exercise prices lower than the average market price of common shares using the treasury share method.

Business Combinations

The Company’s acquisitions are accounted for in accordance with ASC Topic 805, Business Combinations, as amended*.* The consideration transferred is allocated to various assets acquired and liabilities assumed at their estimated fair values as of the acquisition date with the residual allocated to goodwill. Fair values allocated to assets acquired and liabilities assumed in business combinations require management to make significant judgments, estimates, and assumptions, especially with respect to intangible assets. Management makes estimates of fair values based upon assumptions it believes to be reasonable. These estimates are based upon historical experience and information obtained from the management of the acquired companies and are inherently uncertain. The estimated fair values related to intangible assets primarily consist of customer relationships, trademarks, and developed technology which are determined primarily using discounted cash flow models. Estimates in the discounted cash flow models include, but are not limited to, certain assumptions that form the basis of the forecasted results (e.g. revenue growth rates, customer attrition rates, and royalty rates). These significant assumptions are forward looking and could be affected by future economic and market conditions. During the measurement period, which may take up to one year from the acquisition date, adjustments due to changes in the estimated fair value of assets acquired and liabilities assumed may be recorded as adjustments to the consideration transferred and the related allocations. Upon the conclusion of the measurement period or the final determination of the values of assets acquired and liabilities assumed, whichever comes first, any such adjustments are charged to the consolidated statements of earnings. The Company accounts for any redeemable noncontrolling interest in temporary equity - redeemable noncontrolling interest at redemption value with periodic changes recorded in retained earnings.

Adoption of 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.

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 and does not expect the adoption of the amended guidance to have an impact on the consolidated financial statements.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 1. Summary of Significant Accounting Policies (Continued)

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

Note 2. Revenues

Revenue Recognition

The Company principally generates revenue from merchandising and transporting agricultural commodities, and manufacturing products for use in food, beverages, feed, energy, and industrial applications, and ingredients and solutions for human and animal nutrition. Revenue is measured based on the consideration specified in the contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product or service to a customer. The majority of the Company’s contracts with customers have one performance obligation and a contract duration of one year or less. The Company applies the practical expedient in paragraph 10-50-14 of 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 $606 million, $423 million, and $515 million for the years ended December 31, 2021, 2020, and 2019, respectively. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by ASC 610-20.

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 $581 million and $626 million as of December 31, 2021 and 2020, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheet. Contract liabilities recognized as revenues for the years ended December 31, 2021 and 2020 were $626 million and $604 million, respectively.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 2. Revenues (Continued)

Disaggregation of Revenues

The following tables present revenue disaggregated by timing of recognition and major product lines for the years ended December 31, 2021, 2020, and 2019.

			Year Ended December 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			$	2,831		$	606		$	3,437		$	41,580		$	45,017
Crushing			441			—			441			10,927			11,368
Refined Products and Other			2,458			—			2,458			8,204			10,662
Total Ag Services and Oilseeds			5,730			606			6,336			60,711			67,047
Carbohydrate Solutions
Starches and Sweeteners			5,866			—			5,866			1,745			7,611
Vantage Corn Processors			3,499			—			3,499			—			3,499
Total Carbohydrate Solutions			9,365			—			9,365			1,745			11,110
Nutrition
Human Nutrition			3,189			—			3,189			—			3,189
Animal Nutrition			3,523			—			3,523			—			3,523
Total Nutrition			6,712			—			6,712			—			6,712
Other Business			380			—			380			—			380
Total Revenues			$	22,187		$	606		$	22,793		$	62,456		$	85,249

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 2. Revenues (Continued)

			Year Ended December 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			$	3,108		$	423		$	3,531		$	29,195		$	32,726
Crushing			467			—			467			9,126			9,593
Refined Products and Other			2,095			—			2,095			5,302			7,397
Total Ag Services and Oilseeds			5,670			423			6,093			43,623			49,716
Carbohydrate Solutions
Starches and Sweeteners			4,756			—			4,756			1,631			6,387
Vantage Corn Processors			2,085			—			2,085			—			2,085
Total Carbohydrate Solutions			6,841			—			6,841			1,631			8,472
Nutrition
Human Nutrition			2,812			—			2,812			—			2,812
Animal Nutrition			2,988			—			2,988			—			2,988
Total Nutrition			5,800			—			5,800			—			5,800
Other Business			367			—			367			—			367
Total Revenues			$	18,678		$	423		$	19,101		$	45,254		$	64,355

			Year Ended December 31, 2019
			Topic 606 Revenue									Topic 815**(1)**			Total
			Point in Time			Over Time			Total			Revenue			Revenues
			(In millions)
Ag Services and Oilseeds
Ag Services			$	4,693		$	515		$	5,208		$	26,497		$	31,705
Crushing			736			—			736			8,743			9,479
Refined Products and Other			2,230			—			2,230			5,327			7,557
Total Ag Services and Oilseeds			7,659			515			8,174			40,567			48,741
Carbohydrate Solutions
Starches and Sweeteners			5,154			—			5,154			1,700			6,854
Vantage Corn Processors			3,032			—			3,032			—			3,032
Total Carbohydrate Solutions			8,186			—			8,186			1,700			9,886
Nutrition
Human Nutrition			2,745			—			2,745			—			2,745
Animal Nutrition			2,932			—			2,932			—			2,932
Total Nutrition			5,677			—			5,677			—			5,677
Other Business			352			—			352			—			352
Total Revenues			$	21,874		$	515		$	22,389		$	42,267		$	64,656

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 2. Revenues (Continued)

Ag Services and Oilseeds

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

Nutrition

The Nutrition segment sells 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 3. Acquisitions

Operating results of acquisitions are included in the Company’s financial statements from the date of acquisition and were not significant for the year ended December 31, 2021. Goodwill allocated in connection with the acquisitions is primarily attributable to synergies expected to arise after the Company’s acquisition of the businesses.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 3. Acquisitions (Continued)

Fiscal year 2021 acquisitions

During the year ended December 31, 2021, the Company’s Nutrition segment acquired five businesses including, a 75% majority stake in U.S.-based PetDine, Pedigree Ovens, The Pound Bakery, and NutraDine (collectively, “P4”), premier providers of private label pet treats and supplements; Deerland Probiotics & Enzymes (“Deerland”), a leader in probiotic, prebiotic, and enzyme technology; and Sojaprotein, a leading European provider of non-GMO soy ingredients, for an aggregate consideration of $1.6 billion using cash on hand. The aggregate cash consideration of these acquisitions, net of $21 million in cash acquired, was preliminarily allocated as follows. The Company expects these purchase price allocations to change once valuations and measurement period adjustments are final.

(In millions)			P4			Deerland			Sojaprotein			Others			Total
Working capital			$	11		$	28		$	71		$	6		$	116
Property, plant, and equipment			73			48			83			8			212
Goodwill			313			353			153			41			860
Other intangible assets			249			258			51			11			569
Other long-term assets			—			—			—			2			2
Long-term liabilities			—			(43)			(2)			—			(45)
Temporary equity - redeemable noncontrolling interest			(150)			—			—			—			(150)
Aggregate cash consideration			$	496		$	644		$	356		$	68		$	1,564

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.

Of the $860 million allocated to goodwill, $313 million is expected to be deductible for tax purposes.

The 2021 acquisitions advance ADM’s growth strategy by expanding the Company’s capabilities in pet treat and supplements and the fast-growing global demand for plant-based proteins as well as capabilities in the high-value flavor segment and the fast growing demand for food, beverages, and supplements. The post-acquisition financial results of these acquisitions are reported in the Nutrition segment.

The following table sets forth the fair values and the useful lives of the other intangible assets acquired.

			Useful Lives									P4			Deerland			Sojaprotein			Others			Total
			(In years)									(In millions)
Intangible assets with finite lives:
Trademarks/brands			7			to			15			$	9		$	49		$	6		$	3		$	67
Customer lists			15			to			20			224			174			45			5			448
Recipes			7									16			—			—			—			16
Other intellectual property			7			to			10			—			35			—			3			38
Total other intangible assets acquired												$	249		$	258		$	51		$	11		$	569

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 3. Acquisitions (Continued)

Fiscal year 2020 acquisitions

During the year ended December 31, 2020, the Company acquired Yerbalatina and the remaining 70% interest in Anco Animal Nutrition Competence GmbH (“Anco”) for an aggregate cash consideration of $15 million. The aggregate cash consideration of these acquisitions plus the $3 million acquisition-date value of the Company’s previously held equity interest in Anco, were allocated as follows:

			(In millions)
Working capital			$	16
Property, plant, and equipment			1
Goodwill			2
Long-term liabilities			(1)
Aggregate cash consideration plus acquisition-date fair value of previously held equity interest			$	18

The Company recognized a pre-tax gain of $2 million on the Anco transaction, representing the difference between the carrying value and acquisition-date fair value of the Company’s previously held equity interest. The acquisition-date fair value was determined based on a discounted cash flow analysis using market participant assumptions (a Level 3 measurement under applicable accounting standards).

Fiscal year 2019 acquisitions

During the year ended December 31, 2019, the Company acquired Neovia SAS (“Neovia”), Florida Chemical Company (“FCC”), The Ziegler Group (“Ziegler”), and the remaining 50% interest in Gleadell Agriculture Ltd (“Gleadell”), for an aggregate cash consideration of $2.0 billion. The aggregate cash consideration of these acquisitions, net of $95 million in cash acquired, plus the $15 million acquisition-date value of the Company’s previously held equity interest in Gleadell, was allocated as follows:

(In millions)			Neovia			FCC			Ziegler			Gleadell			Total
Working capital			$	108		$	31		$	18		$	(6)		$	151
Property, plant, and equipment			384			17			3			13			417
Goodwill			773			94			23			10			900
Other intangible assets			669			29			35			—			733
Other long-term assets			83			—			—			9			92
Long-term liabilities			(325)			(1)			(10)			(11)			(347)
Aggregate cash consideration, net of cash acquired, plus acquisition-date fair value of previously held equity interest			$	1,692		$	170		$	69		$	15		$	1,946

Of the $900 million allocated to goodwill, $94 million is expected to be deductible for tax purposes.

The Company recognized a pre-tax gain of $4 million on the Gleadell transaction, representing the difference between the carrying value and acquisition-date fair value of the Company’s previously held equity interest. The acquisition-date fair value was determined based on a discounted cash flow analysis using market participant assumptions (a Level 3 measurement under applicable accounting standards).

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 3. Acquisitions (Continued)

The following table sets forth the fair values and the useful lives of the other intangible assets acquired.

			Useful Lives									Neovia			FCC			Ziegler			Total
			(In years)									(In millions)
Intangible assets with indefinite lives:
Trademarks/brands												$	194		$	—		$	—		$	194
Intangible assets with finite lives:
Trademarks/brands			5			to			15			12			—			4			16
Customer lists			10			to			20			304			15			5			324
Other intellectual property			6			to			10			159			14			26			199
Total other intangible assets acquired												$	669		$	29		$	35		$	733

The Neovia, FCC, and Ziegler acquisitions are in line with the Company’s strategy to become one of the world’s leading nutrition companies. The post-acquisition financial results of these acquisitions are reported in the Nutrition segment.

.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 4. Fair Value Measurements

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

			Fair Value Measurements at December 31, 2021
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
									(In millions)
Assets:
Inventories carried at market			$	—					$	6,765					$	3,004					$	9,769
Unrealized derivative gains:
Commodity contracts			—						902						460						1,362
Foreign exchange contracts			—						238						—						238
Interest rate contracts			—						46						—						46
Cash equivalents			448						—						—						448
Segregated investments			1,338						—						—						1,338
Total Assets			$	1,786					$	7,951					$	3,464					$	13,201
Liabilities:
Unrealized derivative losses:
Commodity contracts			$	—					$	944					$	815					$	1,759
Foreign exchange contracts			—						191						—						191
Debt conversion option			—						—						15						15
Inventory-related payables			—						859						106						965
Total Liabilities			$	—					$	1,994					$	936					$	2,930

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 4. Fair Value Measurements (Continued)

			Fair Value Measurements at December 31, 2020
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
									(In millions)
Assets:
Inventories carried at market			$	—					$	5,758					$	2,183					$	7,941
Unrealized derivative gains:
Commodity contracts			—						1,905						859						2,764
Foreign currency contracts			—						283						—						283
Interest rate contracts			—						61						—						61
Cash equivalents			297						—						—						297
Marketable securities			1						—						—						1
Segregated investments			1,067						—						—						1,067
Total Assets			$	1,365					$	8,007					$	3,042					$	12,414
Liabilities:
Unrealized derivative losses:
Commodity contracts			$	—					$	1,116					$	918					$	2,034
Foreign currency contracts			—						535						—						535
Interest rate contracts			—						15						—						15
Debt conversion option			—						—						34						34
Inventory-related payables			—						498						11						509
Total Liabilities			$	—					$	2,164					$	963					$	3,127

Estimated fair values for inventories and inventory-related payables carried at market are based on exchange-quoted prices, adjusted for differences in local markets and quality, referred to as basis. Market valuations for the Company’s inventories are adjusted for location and quality (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis adjustments are generally determined using inputs from competitor and broker quotations or market transactions in either the listed or over the counter (OTC) markets and are considered observable. In some cases, the basis adjustments are unobservable because they are supported by little to no market activity. When unobservable inputs have a significant impact (more than 10%) on the measurement of fair value, the inventory is classified in Level 3. Changes in the fair value of inventories are recognized in the consolidated statements of earnings as a component of cost of products sold.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 4. Fair Value Measurements (Continued)

Derivative contracts include exchange-traded commodity futures and options contracts, forward commodity purchase and sale contracts, and OTC instruments related primarily to agricultural commodities, energy, interest rates, and foreign currencies. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified in Level 1. The majority of the Company’s exchange-traded futures and options contracts are cash-settled on a daily basis and, therefore, are not included in these tables. Fair value for forward commodity purchase and sale contracts is estimated based on exchange-quoted prices adjusted for differences in local markets. Market valuations for the Company’s forward commodity purchase and sale contracts are adjusted for location (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis adjustments are generally determined using inputs from competitor and broker 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, and other (income) expense - net, depending upon the purpose of the contract. The changes in the fair value of derivatives designated as effective cash flow hedges are recognized in the consolidated balance sheets as a component of accumulated other comprehensive income (loss) (AOCI) until the hedged items are recorded in earnings or it is probable the hedged transaction will no longer occur.

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

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

The debt conversion option is the equity linked embedded derivative related to the exchangeable bonds described in Note 10. 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).

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 4. Fair Value Measurements (Continued)

The following tables present a rollforward of the activity of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2021 and 2020.

			Level 3 Fair Value Assets Measurements at December 31, 2021
			Inventories Carried at Market						Commodity Derivative Contracts Gains						Total
			(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			1,131						1,071						2,202
Purchases			30,357						—						30,357
Sales			(30,471)						—						(30,471)
Settlements			—						(1,437)						(1,437)
Transfers into Level 3			1,200						103						1,303
Transfers out of Level 3			(1,396)						(136)						(1,532)
Ending balance, December 31, 2021 (1)			$	3,004					$	460					$	3,464

(1) Includes increase in unrealized gains of $2.2 billion relating to Level 3 assets still held at December 31, 2021.

			Level 3 Fair Value Liabilities Measurements at December 31, 2021
			Inventory- related Payables						Commodity Derivative Contracts Losses						Debt Conversion Option						Total
			(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			2						1,992						(19)						1,975
Purchases			123						—						—						123
Sales			(30)						—						—						(30)
Settlements			—						(2,191)						—						(2,191)
Transfers into Level 3			—						324						—						324
Transfers out of Level 3			—						(228)						—						(228)
Ending balance, December 31, 2021 (1)			$	106					$	815					$	15					$	936

(1) Includes increase in unrealized losses of $0.8 billion relating to Level 3 liabilities still held at December 31, 2021.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 4. Fair Value Measurements (Continued)

			Level 3 Fair Value Assets Measurements at December 31, 2020
			Inventories Carried at Market						Commodity Derivative Contracts Gains						Total
			(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			146						938						1,084
Purchases			14,185						—						14,185
Sales			(13,852)						—						(13,852)
Settlements			—						(257)						(257)
Transfers into Level 3			290						70						360
Transfers out of Level 3			(63)						(93)						(156)
Ending balance, December 31, 2020 (1)			$	2,183					$	859					$	3,042

(1) Includes increase in unrealized gains of $1.7 billion relating to Level 3 assets still held at December 31, 2020.

			Level 3 Fair Value Liabilities Measurements at December 31, 2020
			Inventory- related Payables						Commodity Derivative Contracts Losses						Debt Conversion Option						Total
			(In millions)
Balance, December 31, 2019			$	27					$	199					$	—					$	226
Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense			—						1,729						17						1,746
Purchases/Issuance of debt conversion option			20						—						17						37
Sales			(36)						—						—						(36)
Settlements			—						(1,059)						—						(1,059)
Transfers into Level 3			—						112						—						112
Transfers out of Level 3			—						(63)						—						(63)
Ending balance, December 31, 2020 (1)			$	11					$	918					$	34					$	963

(1) Includes increase in unrealized losses of $0.9 billion relating to Level 3 liabilities still held at December 31, 2020.

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 4. 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 impacted by specific local supply and demand characteristics at each facility and the overall market. Factors such as substitute products, weather, fuel costs, contract terms, and futures prices also impact the movement of these unobservable price components.

The following table sets forth the weighted average percentage of the unobservable price components included in the Company’s Level 3 valuations as of December 31, 2021 and 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 December 31, 2021 is a weighted average 28.7% of the total price for assets and 13.1% of the total price for liabilities.

						Weighted Average % of Total Price
						December 31, 2021												December 31, 2020
Component Type						Assets						Liabilities						Assets						Liabilities
Inventories and Related Payables
Basis						28.7%						13.1%						4.3%						13.7%
Transportation cost						13.0%						—%						10.6%						—%
Commodity Derivative Contracts
Basis						30.0%						27.1%						28.3%						0.7%
Transportation cost						8.1%						0.7%						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 5. Derivative Instruments & 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 forward commodity purchase or sale contracts, and inventories of certain merchandisable agricultural products, which include amounts acquired under deferred pricing contracts, are stated at fair value or market value. Inventory is not a derivative and therefore fair values of and changes in fair values of inventories are not included in the tables below.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 5. Derivative Instruments & Hedging Activities (Continued)

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

			December 31, 2021												December 31, 2020
			Assets						Liabilities						Assets						Liabilities
			(In millions)
Foreign Currency Contracts			$	217					$	116					$	283					$	270
Commodity Contracts			1,276						1,759						2,764						2,034
Debt Conversion Option			—						15						—						34
Total			$	1,493					$	1,890					$	3,047					$	2,338

The following table sets 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 years ended December 31, 2021, 2020, and 2019.

									Cost of						Other expense (income) - net
									products									Interest
(In millions)			Revenues						sold									Expense
For the Year Ended December 31, 2021
Consolidated Statement of Earnings			$	85,249					$	79,262					$	(94)					$	265
Pre-tax gains (losses) on:
Foreign Currency Contracts			$	3					$	(140)					$	189					$	—
Commodity Contracts			—						(1,606)						—
Debt Conversion Option			—						—						—						19
Total gain (loss) recognized in earnings			$	3					$	(1,746)					$	189					$	19					$	(1,535)
For the Year Ended December 31, 2020
Consolidated Statement of Earnings			$	64,355					$	59,902					$	(255)					$	339
Pre-tax gains (losses) on:
Foreign Currency Contracts			$	28					$	(496)					$	(153)					$	—
Commodity Contracts			—						(68)						—						—
Debt Conversion Option			—						—						—						(17)
Total gain (loss) recognized in earnings			$	28					$	(564)					$	(153)					$	(17)					$	(706)
For the Year Ended December 31, 2019
Consolidated Statement of Earnings			$	64,656					$	60,509					$	11					$	402
Pre-tax gains (losses) on:
Foreign Currency Contracts			$	9					$	32					$	(21)					$	—
Commodity Contracts			—						24						—						—
Total gain (loss) recognized in earnings			$	9					$	56					$	(21)					$	—					$	44

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 5. Derivative Instruments & Hedging Activities (Continued)

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

Changes in the fair value of foreign currency-related derivatives are recognized in the consolidated statements of earnings as a component of revenues, cost of products sold, and other (income) expense - net depending on the purpose of the contract.

Derivatives Designated as Cash Flow or Net Investment Hedging Strategies

The Company had certain derivatives designated as cash flow and net investment hedges as of December 31, 2021 and 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.

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

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

For derivative instruments that are designated and qualify as highly-effective cash flow hedges (i.e., hedging the exposure to variability in expected future cash flow that is attributable to a particular risk), the gain or loss on the derivative instrument is reported as a component of AOCI and as an operating activity in the statement of cash flows and 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.

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 are also recorded in revenues. As of December 31, 2021 and 2020, the Company had interest rate swaps maturing on various dates with aggregate notional amounts of $1.0 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 December 31, 2021 and 2020, the Company executed swap locks maturing on various dates with an aggregate notional amount of $400 million and $550 million, respectively.

At December 31, 2021 and 2020, the Company had after-tax gains of $35 million and $31 million in AOCI, respectively, related to the interest rate swaps and swap locks. The Company expects to recognize amounts deferred in AOCI in its consolidated statement of earnings during the life of the instruments.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 5. Derivative Instruments & Hedging Activities (Continued)

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 December 31, 2021 and 2020, the Company had after-tax gains of $161 million and $133 million in AOCI, respectively, related to gains and losses from these programs. The Company expects to recognize $161 million of the 2021 after-tax gains in its consolidated statement of earnings during the next 12 months.

The Company uses futures or options contracts to hedge the purchase price of anticipated volumes of corn to be purchased and processed in a future month. The objective of this hedging program is to reduce the variability of cash flows associated with the Company’s forecasted purchases of corn. Prior to April 2020, the Company’s corn processing plants were grinding approximately 72 million bushels of corn per month. From April 2020 to March 2021, the Company temporarily idled dry mill assets and as a result, was grinding approximately 56 million bushels of corn per month. In April 2021, the Company resumed ethanol production at its two corn dry mill facilities. In November 2021, the Company sold its ethanol production complex in Peoria, Illinois, which reduced normal grinding at its corn processing plants to approximately 65 million bushels per month. During the past 12 months, the Company hedged between 23% and 33% of its monthly grind. At December 31, 2021, the Company had designated hedges representing between 11% to 26% of its anticipated monthly grind of corn for the next 12 months.

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

The Company uses futures and options contracts to hedge the purchase price of anticipated volumes of soybeans to be purchased and processed in a future month for certain of its U.S. soybean crush facilities, subject to certain program limits. The Company also uses futures or options contracts to hedge the sales prices of anticipated soybean meal and soybean oil sales proportionate to the soybean crushing process at these facilities, subject to certain program limits. During the past 12 months, the Company hedged between 57% and 100% of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities. At December 31, 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 23% and 96% of the anticipated monthly natural gas consumption at the designated facilities. At December 31, 2021, the Company had designated hedges representing between 21% and 100% of the anticipated monthly natural gas consumption over the next 12 months.

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

			December 31, 2021												December 31, 2020
			Assets						Liabilities						Assets						Liabilities
			(In millions)
Foreign Currency Contracts			$	21					$	75					$	—					$	265
Commodity Contracts			86						—						—						—
Interest Rate Contracts			46						—						61						15
Total			$	153					$	75					$	61					$	280

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 5. Derivative Instruments & Hedging Activities (Continued)

The following table sets forth the pre-tax gains (losses) on derivatives designated as hedging instruments that have been included in the consolidated statement of earnings for the years ended December 31, 2021, 2020, and 2019.

									Cost of products sold						Interest expense						Other expense (income) - net
(In millions)			Revenues
For the Year Ended December 31, 2021
Consolidated Statement of Earnings			$	85,249					$	79,262					$	265					$	(94)
Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Interest Contracts			$	(16)					$	—					$	—					$	—
Commodity Contracts			—						490						—						—
Total gain (loss) recognized in earnings			$	(16)					$	490					$	—					$	—					$	474
For the Year Ended December 31, 2020
Consolidated Statement of Earnings			$	64,355					$	59,902					339						$	(255)
Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Interest Rate Contracts			$	(75)					$	—					$	(2)					$	—
Commodity Contracts			7						27						—						(2)
Total gain (loss) recognized in earnings			$	(68)					$	27					$	(2)					$	(2)					$	(45)
For the Year Ended December 31, 2019
Consolidated Statement of Earnings			$	64,656					$	60,509					$	402					$	11
Effective amounts recognized in earnings
Pre-tax gains (losses) on:
Interest Rate Contracts			$	(46)					$	—					$	1					$	—
Commodity Contracts			(44)						(11)						—						—
Total gain (loss) recognized in earnings			$	(90)					$	(11)					$	1					$	—					$	(100)

Other Net Investment Hedging Strategies

The Company has designated €1.8 billion and €1.5 billion of its outstanding long-term debt and commercial paper borrowings at December 31, 2021 and 2020, respectively, as hedges of its net investment in a foreign subsidiary. As of December 31, 2021 and 2020, the Company had after-tax gains of $55 million and after-tax losses of $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)

Note 6. Other Current Assets

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

			December 31, 2021						December 31, 2020
			(In millions)
Unrealized gains on derivative contracts			$	1,646					$	3,108
Margin deposits and grain accounts			600						500
Customer omnibus receivable			1,179						860
Financing receivables - net (1)			189						297
Insurance premiums receivable			20						35
Prepaid expenses			370						290
Biodiesel tax credit			79						101
Tax receivables			708						680
Non-trade receivables (2)			285						218
Other current assets			82						135
			$	5,158					$	6,224

(1) The Company provides financing to suppliers, primarily Brazilian farmers, to finance a portion of the suppliers’ production costs. The amounts are reported net of allowances of $4 million at December 31, 2021 and 2020. Interest earned on financing receivables of $11 million, $20 million, and $27 million for the years ended December 31, 2021, 2020, and 2019, respectively, is included in interest income in the consolidated statements of earnings.

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

Note 7. Accrued Expenses and Other Payables

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

			December 31, 2021						December 31, 2020
			(In millions)
Unrealized losses on derivative contracts			$	1,950					$	2,584
Accrued compensation			445						396
Income tax payable			132						41
Other taxes payable			168						127
Insurance claims payable			220						238
Contract liability			581						626
Other accruals and payables			1,294						931
			$	4,790					$	4,943

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 8. Investments in and Advances to Affiliates

The Company applies the equity method of accounting for investments in investees over which ADM has the ability to exercise significant influence, including the Company’s 22.3% and 22.2% share ownership in Wilmar as of December 31, 2021 and 2020, respectively. As of December 31, 2021, the Company also holds equity method investments in Pacificor (32.2%), Stratas Foods LLC (50.0%), Edible Oils Limited (50.0%), Olenex (37.5%), SoyVen (50.0%), Hungrana Ltd (50.0%), Almidones Mexicanos S.A. (50.0%), Red Star Yeast Company, LLC (40.0%), and Aston Foods and Food Ingredients (50.0%). The Company had 63 and 60 unconsolidated domestic and foreign affiliates as of December 31, 2021 and 2020, respectively. The following table summarizes the combined balance sheets as of December 31, 2021 and 2020, and the combined statements of earnings of the Company’s unconsolidated affiliates for the years ended December 31, 2021, 2020, and 2019.

			December 31
(In millions)			2021						2020
Current assets			$	34,955					$	29,508
Non-current assets			27,938						23,853
Current liabilities			(30,002)						(25,969)
Non-current liabilities			(8,362)						(7,191)
Noncontrolling interests			(2,630)						(1,075)
Net assets			$	21,899					$	19,126

			Year Ended December 31
(In millions)			2021						2020						2019
Revenues			$	87,528					$	59,195					$	50,596
Gross profit			7,719						5,070						5,334
Net income			2,315						2,093						1,455

The Company’s share of the undistributed earnings of its unconsolidated affiliates as of December 31, 2021 is $2.8 billion. The Company’s investment in Wilmar has a carrying value of $4.0 billion as of December 31, 2021, and a market value of $4.3 billion based on quoted market price converted to U.S. dollars at the applicable exchange rate at December 31, 2021.

The Company provides credit facilities totaling $106 million to five unconsolidated affiliates. Two facilities that bear interest between 0.00% and 2.67% have a total outstanding balance of $32 million. The other three facilities have no outstanding balance as of December 31, 2021. The outstanding balance is included in other current assets in the accompanying consolidated balance sheet.

Net sales to unconsolidated affiliates during the years ended December 31, 2021, 2020, and 2019 were $6.6 billion, $4.7 billion, and $4.9 billion, respectively.

Accounts receivable due from unconsolidated affiliates as of December 31, 2021 and 2020 was $274 million and $197 million, respectively.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 9. Goodwill and Other Intangible Assets

Goodwill balances attributable to consolidated businesses, by segment, are set forth in the following table.

			December 31, 2021						December 31, 2020
			(In millions)
Ag Services and Oilseeds			$	204					$	212
Carbohydrate Solutions			240						263
Nutrition			3,734						2,972
Other Business			4						4
Total			$	4,182					$	3,451

The changes in goodwill during the year ended December 31, 2021 were primarily related to acquisitions (see Note 3) and foreign currency translation losses of $122 million.

The following table sets forth the other intangible assets:

															December 31, 2021																		December 31, 2020
			Useful												Gross						Accumulated												Gross						Accumulated
			Life												Amount						Amortization						Net						Amount						Amortization						Net
			(In years)												(In millions)
Intangible assets with indefinite lives:
Trademarks/brands															$	409					$	—					$	409					$	429					$	—					$	429
Other															—						—						—						1						—						1
Intangible assets with definite lives:
Trademarks/brands			5			to			20						105						(20)						85						39						(16)						23
Customer lists			5			to			30						1,580						(454)						1,126						1,196						(390)						806
Capitalized software and related costs			1			to			8						714						(383)						331						464						(354)						110
Land rights			2			to			50						122						(28)						94						177						(35)						142
Other intellectual property			6			to			20						276						(100)						176						241						(79)						162
Recipes and other			3			to			35						487						(230)						257						489						(200)						289
Intangible assets in process															87						—						87						172						—						172
Total															$	3,780					$	(1,215)					$	2,565					$	3,208					$	(1,074)					$	2,134

The changes in the gross amounts during the year ended December 31, 2021 were related to acquisitions (see Note 3), foreign currency translation losses of $116 million, and impairments. The changes in accumulated amortization during the year ended December 31, 2021 were related to amortization expense, foreign currency translation losses of $34 million, and impairments. Aggregate amortization expense was $177 million, $173 million, and $165 million for the years ended December 31, 2021, 2020, and 2019, respectively. The estimated future aggregate amortization expense for the next five years is $225 million, $232 million, $223 million, $202 million, and $194 million, respectively.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 10. Debt Financing Arrangements

The Company’s long-term debt consisted of the following:

Debt Instrument
Interest Rate			Face Amount						Due Date			December 31, 2021						December 31, 2020
												(In millions)
2.5% Notes			$1 billion						2026			$	996					$	995
3.25% Notes			$1 billion						2030			988						987
1% Notes			€650 million						2025			735						789
2.700% Notes			$750 million						2051			730						—
1.75% Notes			€600 million						2023			681						731
4.5% Notes			$600 million						2049			588						588
Fixed to Floating Rate Notes			€500 million						2022			569						—
5.375% Debentures			$432 million						2035			425						424
3.75% Notes			$408 million						2047			402						402
5.935% Debentures			$336 million						2032			333						333
0% Bonds			$300 million						2023			310						330
5.765% Debentures			$297 million						2041			297						297
4.535% Debentures			$383 million						2042			283						281
4.016% Debentures			$371 million						2043			258						255
7% Debentures			$160 million						2031			159						159
6.95% Debentures			$157 million						2097			154						154
7.5% Debentures			$147 million						2027			147						146
6.625% Debentures			$144 million						2029			144						144
6.75% Debentures			$103 million						2027			103						103
6.45% Debentures			$103 million						2038			102						102
2.75% Notes			$500 million						2025			—						493
Other												177						174
Total long-term debt including current maturities												8,581						7,887
Current maturities												(570)						(2)
Total long-term debt												$	8,011					$	7,885

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 year ended December 31, 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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 10. Debt Financing Arrangements (Continued)

On August 26, 2020, ADM Ag issued $300 million aggregate principal amount of zero coupon exchangeable bonds (the “Bonds”) due in 2023 to non-U.S. persons outside of the U.S. Subject to and upon compliance with the terms and conditions of the Bonds and any conditions, procedures, and certifications prescribed thereunder, the Bonds will be exchangeable for ordinary shares of Wilmar International Limited (“Wilmar”) currently held by the Company’s consolidated subsidiaries. Effective September 7, 2021, holders of the Bonds will be entitled to receive 52,840.6571 Wilmar shares (the “Exchange Property per Bond”) for each $200,000 principal amount of the Bonds, on the exercise of their exchange rights, subject to dividend adjustments. Effective February 26, 2022, ADM Ag has the option to call the outstanding Bonds at their principal amount if the value of the Exchange Property per Bond exceeds 120% of the principal amount for 20 consecutive trading days. The Company accounts for the Bond’s exchange feature as an equity-linked embedded derivative that is not clearly and closely related to the host debt instrument since it is indexed to Wilmar’s stock. The Company unconditionally and irrevocably guarantees the payment of all sums payable and the performance of all of ADM Ag’s other obligations under the Bonds. In contemplation of the issuance of the Bonds, Archer Daniels Midland Asia-Pacific Limited, the Company’s wholly-owned subsidiary that holds shares in Wilmar, entered into a stock borrowing and lending agreement with a financial institution.

Discount amortization expense, net of premium amortization, of $10 million, $13 million, and $12 million for the years ended December 31, 2021, 2020, and 2019, respectively, are included in interest expense related to the Company’s long-term debt.

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

The aggregate maturities of long-term debt for the five years after December 31, 2021, are $570 million, $992 million, $1 million, $736 million, and $997 million, respectively.

At December 31, 2021, the Company had lines of credit, including the accounts receivable securitization programs described below, totaling $11.2 billion, of which $8.1 billion was unused. The weighted average interest rates on short-term borrowings outstanding at December 31, 2021 and 2020, were 1.23% and 0.45%, respectively. Of the Company’s total lines of credit, $5.0 billion supported the commercial paper borrowing programs, against which there was $0.8 billion of commercial paper outstanding at December 31, 2021.

The Company’s credit facilities and certain debentures require the Company to comply with specified financial and non-financial covenants including maintenance of minimum tangible net worth as well as limitations related to incurring liens, secured debt, and certain other financing arrangements. The Company is in compliance with these covenants as of December 31, 2021.

The Company had outstanding standby letters of credit and surety bonds at December 31, 2021 and 2020, totaling $1.2 billion.

The Company has accounts receivable securitization programs (the “Programs”). The Programs provide the Company with up to $2.3 billion in funding resulting from the sale of accounts receivable. As of December 31, 2021, the Company utilized $2.2 billion of its facility under the Programs (see Note 19 for more information on the Programs).

Note 11. Stock Compensation

The Company’s employee stock compensation plans provide for the granting of options to employees to purchase common stock of the Company pursuant to the Company’s 2020 Incentive Compensation Plan. These options are issued at market value on the date of grant, vest incrementally over one year to five years, and expire ten years after the date of grant.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 11. Stock Compensation (Continued)

The fair value of each option grant is estimated as of the date of grant using the Black-Scholes single option pricing model. The volatility assumption used in the Black-Scholes single option pricing model is based on the historical volatility of the Company’s stock. The volatility of the Company’s stock was calculated based upon the monthly closing price of the Company’s stock for the period immediately prior to the date of grant corresponding to the average expected life of the grant. The average expected life represents the period of time that option grants are expected to be outstanding. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of option grants. The assumptions used in the Black-Scholes single option pricing model for 2019 were as follows. No options were granted in 2021 and 2020.

			Year Ended December 31
			2021						2020						2019
Dividend yield			—%						—%						3%
Risk-free interest rate			—%						—%						2%
Stock volatility			—%						—%						22%
Average expected life (years)			0						0						6

A summary of option activity during 2021 is presented below:

			Shares						Weighted-Average Exercise Price
			(In thousands, except per share amounts)
Shares under option at December 31, 2020			6,269						$37.40
Granted			—						0.00
Exercised			(1,683)						37.98
Forfeited or expired			(2)						27.65
Shares under option at December 31, 2021			4,584						$37.20
Exercisable at December 31, 2021			4,584						$37.20

The weighted-average remaining contractual term of options outstanding and exercisable at December 31, 2021, is 3 years and 3 years, respectively. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2021, is $126 million and $126 million, respectively. The weighted-average grant-date fair values of options granted during the year ended December 31, 2019 was $7.88. The total intrinsic values of options exercised during the years ended December 31, 2021, 2020, and 2019, were $37 million, $32 million, and $15 million, respectively. Cash proceeds received from options exercised during the years ended December 31, 2021, 2020, and 2019, were $64 million, $49 million, and $27 million, respectively.

At December 31, 2021, unrecognized compensation expense related to option grants to be recognized as compensation expense during the next year was immaterial.

The Company’s 2020 Incentive Compensation Plan provides for the granting of restricted stock and restricted stock units (Restricted Stock Awards) at no cost to certain officers and key employees. In addition, the Company’s 2020 Incentive Compensation Plan also provides for the granting of performance stock units (PSUs) at no cost to certain officers and key employees. Restricted Stock Awards are made in common stock or stock units with equivalent rights and vest at the end of a restriction period of three years. The awards for PSUs are made in common stock units and vest at the end of a vesting period of three years subject to the attainment of certain future service and performance criteria based on the Company’s adjusted return on invested capital (ROIC), adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and total shareholder return (TSR). During the years ended December 31, 2021, 2020, and 2019, 2.7 million, 2.7 million, and 2.6 million common stock or stock units, respectively, were granted as Restricted Stock Awards and PSUs. At December 31, 2021, there were 16.8 million shares available for future grants pursuant to the 2020 plan.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 11. Stock Compensation (Continued)

The fair value of Restricted Stock Awards is determined based on the market value of the Company’s shares on the grant date. The fair value of PSUs is based on the weighted-average values of adjusted ROIC, adjusted EBITDA, and TSR. The adjusted ROIC and adjusted EBITDA fair value is determined based on the market value of the Company’s shares on the grant date while the TSR fair value is determined using the Monte Carlo simulation. The weighted-average grant-date fair values of awards granted during the years ended December 31, 2021, 2020, and 2019 were $53.28, $45.59, and $42.11, respectively.

A summary of Restricted Stock Awards and PSUs activity during 2021 is presented below:

			Restricted Stock Awards and PSUs						Weighted Average Grant-Date Fair Value
			(In thousands, except per share amounts)
Non-vested at December 31, 2020			7,372						$43.56
Granted			2,730						53.28
Vested			(2,798)						43.09
Forfeited			(169)						52.17
Non-vested at December 31, 2021			7,135						$47.27

At December 31, 2021, there was $99 million of total unrecognized compensation expense related to Restricted Stock Awards and PSUs. Amounts to be recognized as compensation expense during the next three years are $65 million, $31 million, and $3 million, respectively. The total grant-date fair value of Restricted Stock Awards that vested during the year ended December 31, 2021 was $121 million.

Compensation expense for option grants, Restricted Stock Awards, and PSUs granted to employees is generally recognized on a straight-line basis during the service period of the respective grant. Certain of the Company’s option grants, Restricted Stock Awards, and PSUs continue to vest upon the recipient’s retirement from the Company and compensation expense related to option grants and Restricted Stock Awards granted to retirement-eligible employees is recognized in earnings on the date of grant. Compensation expense for PSUs is based on the probability of meeting the performance criteria. The Company recognizes forfeitures as they occur.

Total compensation expense for option grants, Restricted Stock Awards, and PSUs recognized during the years ended December 31, 2021, 2020, and 2019 was $161 million, $151 million, and $89 million, respectively. Changes in incentive compensation expense are primarily caused by the level of attainment of the PSU performance criteria described above.

Note 12. Other (Income) Expense – Net

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

(In millions)			Year Ended December 31
			2021						2020						2019
(Gain) loss on sales of assets and businesses			$	(100)					$	(138)					$	39
Pension settlement			83						—						—
Other – net			(77)						(117)						(28)
			$	(94)					$	(255)					$	11

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 12. Other (Income) Expense – Net (Continued)

Individually significant items included in the table above are:

Gains on sales of assets for the year ended December 31, 2021 consisted of gains on the sale of the Company’s ethanol production complex in Peoria, Illinois of $22 million, the sale of certain other assets, and disposals of individually insignificant assets in the ordinary course of business. Gain on sales of assets for the year ended December 31, 2020 included a gain on the sale of a portion of the Company’s shares in Wilmar and net gains on the sale of certain other assets and disposals of individually insignificant assets in the ordinary course of business. Gain (loss) on sales of assets for the year ended December 31, 2019 included a loss on the sale of the Company’s equity investment in CIP, partially offset by gains on the sale of certain other assets, and step-up gains on equity investments.

Pension settlement for the year ended December 31, 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.

Realized gains and losses on sales of available-for-sale marketable securities were immaterial for all periods presented.

Other - net for the year ended December 31, 2021 included the non-service components of net pension benefit income of $16 million, foreign exchange gains, and other income. Other - net for the year ended December 31, 2020 included the non-service components of net pension benefit income of $33 million, foreign exchange gains, and other income. Other - net for the year ended December 31, 2019 included the non-service components of net pension benefit income of $15 million and other income, partially offset by foreign exchange losses.

Note 13. Income Taxes

The following table sets forth the geographic split of earnings before income taxes:

			Year Ended
(In millions)			December 31
			2021						2020						2019
United States			$	2,140					$	442					$	756
Foreign			1,173						1,441						832
			$	3,313					$	1,883					$	1,588

Significant components of income taxes are as follows:

(In millions)			Year Ended December 31
			2021						2020						2019
Current
Federal			$	404					$	(164)					$	37
State			79						4						11
Foreign			224						186						181
Deferred
Federal			(59)						41						47
State			(12)						(10)						1
Foreign			(58)						44						(68)
			$	578					$	101					$	209

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 13. Income Taxes (Continued)

Significant components of deferred tax liabilities and assets are as follows:

			December 31, 2021						December 31, 2020
			(In millions)
Deferred tax liabilities
Property, plant, and equipment			$	875					$	903
Intangibles			403						334
Right of use assets			214						223
Equity in earnings of affiliates			153						64
Inventory reserves			29						25
Debt exchange			53						53
Reserves and other accruals			65						195
Other			185						173
			$	1,977					$	1,970
Deferred tax assets
Pension and postretirement benefits			$	137					$	163
Lease liabilities			220						227
Stock compensation			53						80
Foreign tax loss carryforwards			465						470
Capital loss carryforwards			74						70
State tax attributes			21						79
Reserves and other accruals			158						42
Other			44						136
Gross deferred tax assets			1,172						1,267
Valuation allowances			(281)						(339)
Net deferred tax assets			$	891					$	928
Net deferred tax liabilities			$	1,086					$	1,042
The net deferred tax liabilities are classified as follows:
Noncurrent assets			$	27					$	—
Noncurrent assets (foreign)			299						260
Noncurrent liabilities			(1,079)						(957)
Noncurrent liabilities (foreign)			(333)						(345)
			$	(1,086)					$	(1,042)

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 13. Income Taxes (Continued)

Reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on earnings is as follows:

			Year Ended
			December 31
			2021						2020						2019
Statutory rate			21.0		%				21.0		%				21.0		%
State income taxes, net of federal tax benefit			1.5						(0.3)						0.6
Foreign earnings taxed at rates other than the U.S. statutory rate			(3.9)						(4.5)						(0.9)
Foreign currency effects/remeasurement			—						(1.1)						0.7
Income tax adjustment to filed returns			0.7						(0.4)						0.2
Tax benefit on U.S. biodiesel credits			(1.9)						(3.3)						(7.5)
Tax benefit on U.S. railroad credits			(2.0)						(8.0)						(3.6)
Tax on Global Intangible Low Taxed Income (GILTI)			1.1						2.9						1.4
Tax benefit on Foreign Derived Intangible Income Deduction (FDII)			(0.5)						(0.1)						—
Valuation allowances			0.7						—						—
Other			0.7						(0.8)						1.3
Effective income tax rate			17.4		%				5.4		%				13.2		%

The effective tax rates for 2021, 2020, and 2019 were impacted by the geographic mix of earnings and U.S. tax credits, including the biodiesel tax credit and the railroad maintenance tax credit.

The foreign rate differential was primarily due to lower tax rates from the Company’s operations in Switzerland, Asia, and the Caribbean. The Company’s foreign earnings, which were taxed at rates lower than the U.S. rate and generated from these jurisdictions, were 64%, 59%, and 61% of its foreign earnings before taxes in fiscal years 2021, 2020, and 2019, respectively.

Undistributed earnings of the Company’s foreign subsidiaries and corporate joint ventures were approximately $12.7 billion at December 31, 2021. Because these undistributed earnings continue to be indefinitely reinvested in foreign operations, no income taxes, other than the transition tax, the U.S. tax on undistributed Subpart F, and the minimum tax on GILTI, have been provided after the Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. It is not practicable to determine the amount of unrecognized deferred tax liability related to any remaining undistributed earnings of foreign subsidiaries and corporate joint ventures not subject to the transition tax.

The Company has elected to pay the one-time transition tax on accumulated foreign earnings over eight years. As of December 31, 2021, the Company’s remaining transition tax liability was $140 million, which will be paid in installments through 2025.

The Company incurred U.S. taxable income of $244 million, $259 million, and $105 million related to GILTI and deducted $87 million, $12 million, and $1 million related to FDII in fiscal years 2021, 2020, and 2019 respectively. The Company made an accounting policy election to treat GILTI as a period cost. The Company has recorded and will continue to record the impact of tax reform items as U.S. tax authorities issue Treasury Regulations and other guidance addressing tax reform-related changes. The additional guidance, along with the potential for additional global tax legislation changes, may affect significant deductions and income inclusions and could have a material adverse effect on the Company’s net income or cash flow.

The Company had $465 million and $470 million of tax assets related to net operating loss carry-forwards of certain international subsidiaries at December 31, 2021 and 2020, respectively. As of December 31, 2021, approximately $359 million of these assets have no expiration date, and the remaining $106 million expire at various times through fiscal 2031. The annual usage of certain of these assets is limited to a percentage of taxable income of the respective foreign subsidiary for the year. The Company has recorded a valuation allowance of $200 million and $197 million against these tax assets at December 31, 2021 and 2020, respectively, due to the uncertainty of their realization.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 13. Income Taxes (Continued)

The Company had $74 million and $70 million of tax assets related to foreign capital loss carryforwards at December 31, 2021 and 2020, respectively. The Company has recorded a valuation allowance of $74 million and $70 million against these tax assets at December 31, 2021 and 2020, respectively.

The Company had $21 million and $79 million of tax assets related to state income tax attributes (incentive credits and net operating loss carryforwards), net of federal tax benefit, at December 31, 2021 and 2020, the majority of which will expire between 2022 and 2026. Due to the uncertainty of realization, the Company recorded a valuation allowance of $13 million and $72 million related to state income tax assets net of federal tax benefit as of December 31, 2021 and 2020, respectively. The change in the valuation allowance was related to the expiration of certain state income tax attributes which were fully reserved in prior years.

The Company remains subject to federal examination in the U.S. for the calendar tax years 2016 through 2021.

The following table sets forth a rollforward of activity of unrecognized tax benefits for the year ended December 31, 2021 and 2020 as follows:

			Unrecognized Tax Benefits
			December 31, 2021						December 31, 2020
			(In millions)
Beginning balance			$	151					$	130
Additions related to current year’s tax positions			7						2
Additions related to prior years’ tax positions			15						37
Additions (adjustments) related to acquisitions			—						(1)
Reductions related to prior years’ tax positions			—						(3)
Reductions related to lapse of statute of limitations			(9)						(9)
Settlements with tax authorities			(7)						(5)
Ending balance			$	157					$	151

The additions and reductions in unrecognized tax benefits shown in the table included effects related to net income and shareholders’ equity. The changes in unrecognized tax benefits did not have a material effect on the Company’s net income or cash flow. At December 31, 2021 and 2020, the Company had accrued interest and penalties on unrecognized tax benefits of $39 million and $33 million, respectively.

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 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. If the total amount of unrecognized tax benefits were recognized by the Company at one time, there would be a reduction of $157 million on the tax expense for that period.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 13. Income Taxes (Continued)

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 and 2014. As of December 31, 2021, these assessments totaled $8 million in tax and up to $38 million in interest (adjusted for variation in currency exchange rates). The Argentine tax authorities conducted a review of income and other taxes paid by large exporters and processors of cereals and other agricultural commodities resulting in allegations of income tax evasion. The Company strongly believes that it has complied with all Argentine tax laws. To date, the Company has not received assessments for closed years subsequent to 2014. While the statute of limitations has expired for tax years 2012 and 2013, the Company cannot rule out receiving additional assessments challenging transfer prices used to price grain exports for years subsequent to 2013, and estimates that these potential assessments could be approximately $60 million in tax and $40 million in interest (adjusted for variation in currency exchange rates as of December 31, 2021). 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 unrecognized 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 December 31, 2021, this assessment was $92 million in tax and $33 million in interest (adjusted for variation in currency exchange rates). On April 23, 2020, the court issued an unfavorable ruling and in October 2020, assigned a third party expert to establish a valuation by early 2021. During the second quarter of 2021, the third party expert issued a final valuation. The Company expects the court to issue a ruling on this matter in the second quarter of 2022. Subsequent appeals may take an extended period of time and could result in additional financial impacts of up to the entire amount of the assessment. The Company has carefully evaluated the underlying transactions and has concluded that the amount of gain recognized on the reorganization for tax purposes was appropriate. As of December 31, 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.

Note 14. Leases

Lessee Accounting

The Company leases certain transportation equipment, plant equipment, office equipment, land, buildings, and storage facilities. Most leases include options to renew, with renewal terms that can extend the lease term from 1 month to 49 years. The renewal options are not included in the measurement of the right of use assets and lease liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Certain leases also include index and non-index escalation clauses and options to purchase the leased property. Leases accounted for as finance leases were immaterial at December 31, 2021.

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 14. Leases (Continued)

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

			Year Ended
			December 31, 2021			December 31, 2020
			(In millions)
Lease cost:
Operating lease cost			$	336		$	315
Short-term lease cost			117			101
Total lease cost			$	453		$	416
Other information:
Operating lease liability principal payments			$	325		$	302
Right-of-use assets obtained in exchange for new operating lease liabilities			$	197		$	314
			December 31, 2021			December 31, 2020
Weighted-average remaining lease term - operating leases (in years)			6			7
Weighted average discount rate - operating leases			3.8		%	4.2		%

Below is a tabular disclosure of the future annual undiscounted cash flows for operating lease liabilities as of December 31, 2021.

			Undiscounted
			Cash Flows
			(In millions)
2022			$	310
2023			259
2024			194
2025			126
2026			68
Thereafter			225
Total			1,182
Less interest (1)			(140)
Lease liability			$	1,042

(1) Calculated using the implicit rate of the lease, if available, or the incremental borrowing rate that is appropriate for the tenor and geography of the lease.

Note 15. Employee Benefit Plans

The Company provides substantially all U.S. employees and employees at certain foreign subsidiaries with retirement benefits including defined benefit pension plans and defined contribution plans. The Company provides certain eligible U.S. employees who retire under qualifying conditions with subsidized postretirement health care coverage or Health Care Reimbursement Accounts.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 15. Employee Benefit Plans (Continued)

In 2021, the Company amended the ADM Retirement Plan and the ADM Pension Plan for Hourly-Wage Employees (collectively, the “Plans”) and entered into two binding agreements to purchase: (1) 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 City 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 was funded directly by the Plans’ assets and reduced the Company’s pension obligations by approximately $0.7 billion. As a result of the transactions, the Company recognized a non-cash pretax pension settlement charge of $83 million for the year ended December 31, 2021.

In April 2019, the Company announced an enhanced early retirement program for some eligible employees in the U.S. and Canada. As a result, the Company recognized a pension remeasurement charge of $48 million in the second quarter of 2019. Employees electing to retire early were also given the option to receive their benefit in the form of a lump sum payment which resulted in a pension settlement charge of $51 million during the second half of 2019.

On July 31, 2017, the Company announced that all participants in the Company’s U.S. salaried pension plan and the Supplemental Executive Retirement Plan (SERP) will begin accruing benefits under the cash balance formula effective January 1, 2022. Benefits for participants who were accruing under the final average pay formula were frozen as of December 31, 2021, including pay and service through that date.

The Company maintains 401(k) plans covering substantially all U.S. employees. The Company contributes cash to the plans to match qualifying employee contributions, and also provides a non-matching employer contribution of 1% of pay to eligible participants. Under an employee stock ownership component of the 401(k) plans, employees may choose to invest in the Company’s stock as part of their own investment elections. The employer contributions are expensed when paid. Assets of the Company’s 401(k) plans consist primarily of listed common stocks and pooled funds. The Company’s 401(k) plans held 6.5 million shares of Company common stock at December 31, 2021, with a market value of $441 million. Cash dividends received on shares of Company common stock by these plans during the year ended December 31, 2021 were $10 million.

The following table sets forth the components of retirement plan expense for the years ended December 31, 2021, 2020, and 2019:

			Pension Benefits												Postretirement Benefits
(In millions)			Year Ended December 31												Year Ended December 31
			2021			2020			2019						2021			2020			2019
Retirement plan expense
Defined benefit plans:
Service cost (benefits earned during the period)			$	64		$	61		$	58					$	1		$	1		$	2
Interest cost			48			70			82						2			4			5
Expected return on plan assets			(95)			(126)			(115)						—			—			—
Settlement charges			83			—			96						—			—			3
Amortization of actuarial loss			33			38			26						6			6			4
Amortization of prior service cost (credit)			(20)			(19)			(19)						(2)			(13)			(15)
Net periodic defined benefit plan expense			113			24			128						7			(2)			(1)
Defined contribution plans			61			54			58						—			—			—
Total retirement plan expense			$	174		$	78		$	186					$	7		$	(2)		$	(1)

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 15. Employee Benefit Plans (Continued)

The following tables set forth changes in the defined benefit obligation and the fair value of defined benefit plan assets for the years ended December 31, 2021 and 2020:

			Pension Benefits												Postretirement Benefits
			December 31 2021						December 31 2020						December 31 2021						December 31 2020
			(In millions)												(In millions)
Benefit obligation, beginning			$	3,014					$	2,650					$	173					$	167
Service cost			64						61						1						1
Interest cost			48						70						2						4
Actuarial loss (gain)			(152)						285						(5)						17
Employee contributions			2						2						—						—
Settlements			(715)						(17)						—						—
Benefits paid			(51)						(84)						(17)						(14)
Foreign currency effects			(32)						47						—						(2)
Benefit obligation, ending			$	2,178					$	3,014					$	154					$	173
Fair value of plan assets, beginning			$	2,337					$	2,018					$	—					$	—
Actual return on plan assets			146						317						—						—
Employer contributions			30						85						17						14
Employee contributions			2						2						—						—
Settlements			(715)						(18)						—						—
Benefits paid			(51)						(84)						(17)						(14)
Foreign currency effects			(7)						17						—						—
Fair value of plan assets, ending			$	1,742					$	2,337					$	—					$	—
Funded status			$	(436)					$	(677)					$	(154)					$	(173)
Prepaid benefit cost			$	121					$	29					$	—					$	—
Accrued benefit liability – current			(18)						(19)						(15)						(16)
Accrued benefit liability – long-term			(539)						(687)						(139)						(157)
Net amount recognized in the balance sheet			$	(436)					$	(677)					$	(154)					$	(173)

The actuarial gain in the pension plans in 2021 is primarily due to increases in the global bond yields while the actuarial loss in the pension plans in 2020 is primarily due to declines in the global bond yields.

The Company uses the corridor approach when amortizing actuarial losses. Under the corridor approach, net unrecognized actuarial losses in excess of 10% of the greater of the projected benefit obligation or the market related value of plan assets are amortized over future periods. For plans with little to no active participants, the amortization period is the remaining average life expectancy of the participants. For plans with active participants, the amortization period is the remaining average service period of the active participants. The amortization periods range from 2 to 28 years for the Company’s defined benefit pension plans and from 6 to 21 years for the Company’s postretirement benefit plans.

Included in AOCI for pension benefits at December 31, 2021, are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service credit of $94 million and unrecognized actuarial loss of $314 million.

Included in AOCI for postretirement benefits at December 31, 2021, are the following amounts that have not yet been recognized in net periodic postretirement benefit cost: unrecognized prior service cost of $1 million and unrecognized actuarial loss of $46 million.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 15. Employee Benefit Plans (Continued)

The following table sets forth the principal assumptions used in developing net periodic benefit cost:

			Pension Benefits												Postretirement Benefits
			December 31 2021						December 31 2020						December 31 2021						December 31 2020
Discount rate			2.3%						2.9%						2.3%						3.2%
Expected return on plan assets			6.0%						6.6%						N/A						N/A
Rate of compensation increase			4.8%						4.9%						N/A						N/A
Interest crediting rate			2.0%						2.2%						N/A						N/A

The following table sets forth the principal assumptions used in developing the year-end actuarial present value of the projected benefit obligations:

			Pension Benefits												Postretirement Benefits
			December 31 2021						December 31 2020						December 31 2021						December 31 2020
Discount rate			2.5		%				2.3		%				2.7%						2.3%
Rate of compensation increase			4.2		%				4.8		%				N/A						N/A
Interest crediting rate			1.9		%				2.0		%				N/A						N/A

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with projected benefit obligations in excess of plan assets were $1.7 billion, $1.6 billion, and $1.2 billion, respectively, as of December 31, 2021, and $2.6 billion, $2.5 billion, and $1.9 billion, respectively, as of December 31, 2020. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $1.7 billion, $1.6 billion, and $1.2 billion, respectively, as of December 31, 2021 and $2.6 billion, $2.5 billion, and $1.9 billion, respectively, as of December 31, 2020. The accumulated benefit obligation for all pension plans as of December 31, 2021 and 2020, was $2.1 billion and $2.9 billion, respectively.

For postretirement benefit measurement purposes, a 6.1% annual rate of increase in the per capita cost of covered health care benefits was assumed for the year ended December 31, 2021. The rate was assumed to decrease gradually to 4.5% by 2031 and remain at that level thereafter.

Plan Assets

The Company’s employee benefit plan assets are principally comprised of the following types of investments:

Common stock:

Equity securities are valued based on quoted exchange prices and are classified within Level 1 of the valuation hierarchy.

Mutual funds:

Mutual funds are valued at the closing price reported on the active market on which they are traded and are classified within Level 1 of the valuation hierarchy.

Common collective trust (CCT) funds:

The fair values of the CCTs are valued using net asset value (NAV). The investments in CCTs are comprised of U.S. and international equity, fixed income, and other securities. The investments are valued at NAV provided by administrators of the funds.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 15. Employee Benefit Plans (Continued)

Corporate debt instruments:

Corporate debt instruments are valued using third-party pricing services and are classified within Level 2 of the valuation hierarchy.

U.S. Treasury instruments:

U.S. Treasury instruments are valued at the closing price reported on the active market on which they are traded and are classified within Level 1 of the valuation hierarchy.

U.S. government agency, state, and local government bonds:

U.S. government agency obligations and state and municipal debt securities are valued using third-party pricing services and are classified within Level 2 of the valuation hierarchy.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants’ methods, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables set forth, by level within the fair value hierarchy, the fair value of plan assets as of December 31, 2021 and 2020.

			Fair Value Measurements at December 31, 2021
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
			(In millions)
Common stock			$	135					$	—					$	—					$	135
Mutual funds			426						—						—						426
Corporate bonds			—						304						—						304
U.S. Treasury instruments			226						—						—						226
U.S. government agency, state and local government bonds			—						3						—						3
Other			—						8						—						8
Total assets			$	787					$	315					$	—					$	1,102
Common collective trust funds at NAV
U.S. equity																					34
International equity																					193
Fixed income																					285
Other																					128
Total assets at fair value																					$	1,742

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 15. Employee Benefit Plans (Continued)

			Fair Value Measurements at December 31, 2020
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
			(In millions)
Common stock			$	251					$	—					$	—					$	251
Mutual funds			666						—						—						666
Corporate bonds			—						328						—						328
U.S. Treasury instruments			345						—						—						345
U.S. government agency, state and local government bonds			—						4						—						4
Other			—						9						—						9
Total assets			$	1,262					$	341					$	—					$	1,603
Common collective trust funds at NAV
U.S. equity																					23
International equity																					316
Fixed income																					245
Other																					150
Total assets at fair value																					$	2,337

Level 3 Gains and Losses:

There are no Plan assets classified as Level 3 in the fair value hierarchy; therefore there are no gains or losses associated with Level 3 assets.

The following table sets forth the actual asset allocation for the Company’s global pension plan assets as of the measurement date:

			December 31 2021**(1)(2)**						December 31 2020**(2)**
Equity securities			47%						54%
Debt securities			44%						35%
Other			9%						11%
Total			100%						100%

(1)The Company’s U.S. pension plans contain approximately 64% of the Company’s global pension plan assets. The actual asset allocation for the Company’s U.S. pension plans as of the measurement date consists of 50% equity securities and 50% debt securities. The target asset allocation for the Company’s U.S. pension plans is approximately the same as the actual asset allocation. The actual asset allocation for the Company’s foreign pension plans as of the measurement date consists of 41% equity securities, 17% debt securities, and 42% other. The target asset allocation for the Company’s foreign pension plans is approximately the same as the actual asset allocation.

(2)The Company’s pension plans did not directly hold any shares of Company common stock as of the December 31, 2021 and 2020 measurement dates.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 15. Employee Benefit Plans (Continued)

Investment objectives for the Company’s plan assets are to:

• Optimize the long-term return on plan assets at an acceptable level of risk.

• Maintain a broad diversification across asset classes and among investment managers.

• Maintain careful control of the risk level within each asset class.

Asset allocation targets promote optimal expected return and volatility characteristics given the long-term time horizon for fulfilling the obligations of the pension plans. Selection of the targeted asset allocation for plan assets was based upon a review of the expected return and risk characteristics of each asset class, as well as the correlation of returns among asset classes. The U.S. pension plans target asset allocation is also based on an asset and liability study that is updated periodically.

Investment guidelines are established with each investment manager. These guidelines provide the parameters within which the investment managers agree to operate, including criteria that determine eligible and ineligible securities, diversification requirements, and credit quality standards, where applicable. In some countries, derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of underlying investments.

The Company uses external consultants to assist in monitoring the investment strategy and asset mix for the Company’s plan assets. To develop the Company’s expected long-term rate of return assumption on plan assets, the Company generally uses long-term historical return information for the targeted asset mix identified in asset and liability studies. Adjustments are made to the expected long-term rate of return assumption when deemed necessary based upon revised expectations of future investment performance of the overall investment markets.

Contributions and Expected Future Benefit Payments

Based on actuarial calculations, the Company expects to contribute $28 million to the pension plans and $15 million to the postretirement benefit plan during 2022. The Company may elect to make additional discretionary contributions during this period.

The following benefit payments, which reflect expected future service, are expected to be paid by the benefit plans:

			Pension Benefits						Postretirement Benefits
			(In millions)
2022			$	57					$	15
2023			62						14
2024			67						13
2025			73						13
2026			80						11
2027-2031			474						46

Note 16. Shareholders’ Equity

The Company has authorized one billion shares of common stock and 500,000 shares of preferred stock, each with zero par value. No preferred stock has been issued. At December 31, 2021 and 2020, the Company had approximately 156.6 million shares and 160.0 million shares, respectively, of its common shares in treasury. Treasury stock of $5.1 billion and $5.2 billion at December 31, 2021 and 2020, respectively, is recorded at cost as a reduction of common stock, and treasury stock of $0.3 billion at December 31, 2021 and 2020 is recorded at cost as a reduction of retained earnings.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 16. Shareholders’ Equity (Continued)

The following tables set forth the changes in AOCI by component and the reclassifications out of AOCI for the years ended December 31, 2021 and 2020:

			Foreign Currency Translation Adjustment						Deferred Gain (Loss) on Hedging Activities						Pension and Other Postretirement Benefit Liabilities Adjustment						Unrealized Gain (Loss) on Investments						Accumulated Other Comprehensive Income (Loss)
															(In millions)
Balance at December 31, 2019			$	(2,152)					$	(12)					$	(268)					$	27					$	(2,405)
Other comprehensive income before reclassifications			29						209						(120)						(27)						91
Gain (loss) on net investment hedges			(398)						—						—						—						(398)
Amounts reclassified from AOCI			—						45						7						—						52
Tax effect			97						(57)						16						—						56
Net of tax amount			(272)						197						(97)						(27)						(199)
Balance at December 31, 2020			$	(2,424)					$	185					$	(365)					$	—					$	(2,604)
Other comprehensive income before reclassifications			(119)						507						190						(2)						576
Gain (loss) on net investment hedges			398						—						—						—						398
Amounts reclassified from AOCI			—						(474)						99						—						(375)
Tax effect			(103)						7						(71)						—						(167)
Net of tax amount			176						40						218						(2)						432
Balance at December 31, 2021			$	(2,248)					$	225					$	(147)					$	(2)					$	(2,172)

The change in foreign currency translation adjustment in 2021 and 2020 is primarily due to net investment hedges as discussed in Note 5.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 16. Shareholders’ Equity (Continued)

			Amounts reclassified from AOCI Year Ended December 31									Affected line item in the consolidated statement of
Details about AOCI components			2021			2020			2019			earnings
			(In millions)
Foreign currency translation adjustment
			$	—		$	—		$	7		Other income/expense
			—			—			—			Tax
			$	—		$	—		$	7		Net of tax
Deferred loss (gain) on hedging activities
			$	(490)		$	(27)		$	11		Cost of products sold
			—			2			46			Other income/expense
			—			2			(1)			Interest expense
			16			68			44			Revenues
			(474)			45			100			Total before tax
			118			7			(13)			Tax on reclassifications
			$	(356)		$	52		$	87		Net of tax
Pension liability adjustment
Amortization of defined benefit pension items:
Prior service losses (credit)			$	(77)		$	(32)		$	(26)		Other (income) expense - net
Actuarial losses			176			39			17			Other (income) expense - net
			99			7			(9)			Total before tax
			(26)			(11)			18			Tax on reclassifications
			$	73		$	(4)		$	9		Net of tax
Unrealized loss (gain) on investments
			$	—		$	—		$	(1)		Other income/expense
			—			—			—			Tax on reclassifications
			$	—		$	—		$	(1)		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.

Note 17. Segment and Geographic Information

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 segments, as defined by the applicable accounting standard*,* and are classified as Other Business.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 17. Segment and Geographic Information (Continued)

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 and its share of the results of its Pacificor, Stratas Foods LLC, Edible Oils Limited, Olenex, and SoyVen joint ventures. In December 2021, the Company entered into a joint venture with Marathon Petroleum Corp. for the production of soybean oil to supply rapidly growing demand for renewable diesel fuel.

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 and ethanol for use in gasoline due to its ability to increase octane 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. The Carbohydrate Solutions segment has announced various memorandums of understanding with potential strategic partners leveraging our core production capabilities and carbon sequestration experience to facilitate the production of low carbon, bio-based products such as sustainable aviation fuel and innovative renewable chemicals. 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. In November 2021, the Company sold its ethanol production complex in Peoria, Illinois.

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. ADM acquired Golden Farm Production & Commerce Company Limited in April 2021, a 75% majority stake in PetDine, Pedigree Ovens, The Pound Bakery, and NutraDine (collectively, “P4”), premier providers of private label pet treats and supplements, in September 2021, U.S.-based Deerland Probiotics & Enzymes, a leader in probiotic, prebiotic, and enzyme technology, in November 2021, Sojaprotein, a leading European provider of non-GMO soy ingredients, in November 2021, and Flavor Infusion International, S.A., a full-range provider of flavor and specialty ingredient solutions for customers across Latin America and the Caribbean, in December 2021.

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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 17. Segment and Geographic Information (Continued)

Intersegment sales have been recorded at amounts approximating market. Operating profit for each segment is based on net sales less identifiable operating expenses. Also included in operating profit for each segment is equity in earnings of affiliates based on the equity method of accounting. Specified items included in total segment operating profit and certain corporate items are not allocated to the Company’s individual business segments because operating performance of each business segment is evaluated by management exclusive of these items. Corporate results principally include the impact of LIFO-related adjustments, unallocated corporate expenses, interest cost net of interest income, 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, and the Company’s share of the results of its equity investment in CIP, which was sold in December 2019.

Segment Information

			Year Ended
(In millions)			December 31
			2021						2020						2019
Gross revenues
Ag Services and Oilseeds			$	70,455					$	55,667					$	54,633
Carbohydrate Solutions			12,672						9,423						11,154
Nutrition			6,933						5,959						5,786
Other			380						367						352
Intersegment elimination			(5,191)						(7,061)						(7,269)
Total			$	85,249					$	64,355					$	64,656
Intersegment revenues
Ag Services and Oilseeds			$	3,408					$	5,951					$	5,892
Carbohydrate Solutions			1,562						951						1,268
Nutrition			221						159						109
Total			$	5,191					$	7,061					$	7,269
Revenues from external customers
Ag Services and Oilseeds
Ag Services			$	45,017					$	32,726					$	31,705
Crushing			11,368						9,593						9,479
Refined Products and Other			10,662						7,397						7,557
Total Ag Services and Oilseeds			67,047						49,716						48,741
Carbohydrate Solutions
Starches and Sweeteners			7,611						6,387						6,854
Vantage Corn Processors			3,499						2,085						3,032
Total Carbohydrate Solutions			11,110						8,472						9,886
Nutrition
Human Nutrition			3,189						2,812						2,745
Animal Nutrition			3,523						2,988						2,932
Total Nutrition			6,712						5,800						5,677
Other			380						367						352
Total			$	85,249					$	64,355					$	64,656

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 17. Segment and Geographic Information (Continued)

			Year Ended
(In millions)			December 31
			2021						2020						2019
Depreciation
Ag Services and Oilseeds			$	349					$	351					$	361
Carbohydrate Solutions			322						305						320
Nutrition			101						114						113
Other			8						6						6
Corporate			27						24						23
Total			$	807					$	800					$	823
Long-lived asset abandonments and write-downs(1)
Ag Services and Oilseeds			$	10					$	8					$	130
Carbohydrate Solutions			13						—						1
Nutrition			50						13						—
Corporate			—						7						—
Total			$	73					$	28					$	131
Investment income
Ag Services and Oilseeds			$	27					$	39					$	51
Nutrition			1						2						1
Other			16						40						125
Corporate			52						30						19
Total			$	96					$	111					$	196
Equity in earnings of affiliates
Ag Services and Oilseeds			$	500					$	475					$	378
Carbohydrate Solutions			70						81						60
Nutrition			24						22						17
Corporate			1						1						(1)
Total			$	595					$	579					$	454
(1) See Note 18 for total asset impairment, exit, and restructuring costs.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 17. Segment and Geographic Information (Continued)

			Year Ended
(In millions)			December 31
			2021						2020						2019
Segment Operating Profit
Ag Services and Oilseeds			$	2,775					$	2,105					$	1,935
Carbohydrate Solutions			1,283						717						644
Nutrition			691						574						418
Other			25						52						85
Specified Items:
Gains on sales of assets and businesses(1)			77						83						12
Impairment, restructuring, exit, and settlement charges(2)			(213)						(76)						(146)
Total segment operating profit			4,638						3,455						2,948
Corporate			(1,325)						(1,572)						(1,360)
Earnings before income taxes			$	3,313					$	1,883					$	1,588

(1) The gains in 2021 were related to the sale of certain ethanol and other assets. The gains in 2020 were related to the sale of a portion of the Company’s shares in Wilmar and certain other assets. The gains in 2019 were related to the sale of certain assets and a step-up gain on an equity investment.

(2) The charges in 2021 were related to the impairment of certain long-lived assets, goodwill, and other intangibles, restructuring, and a legal settlement. The charges in 2020 were related to the impairment of certain assets, restructuring, and settlement. The charges in 2019 were primarily related to the impairment of certain assets.

.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 17. Segment and Geographic Information (Continued)

(In millions)			December 31
			2021						2020
Investments in and advances to affiliates
Ag Services and Oilseeds			$	4,826					$	4,402
Carbohydrate Solutions			358						392
Nutrition			56						102
Corporate			45						17
Total			$	5,285					$	4,913
Identifiable assets
Ag Services and Oilseeds			$	25,976					$	24,792
Carbohydrate Solutions			6,238						5,963
Nutrition			10,142						8,652
Other			9,235						7,152
Corporate			4,545						3,160
Total			$	56,136					$	49,719
(In millions)			Year Ended December 31
			2021						2020
Gross additions to property, plant, and equipment
Ag Services and Oilseeds			$	451					$	261
Carbohydrate Solutions			260						251
Nutrition			242						149
Other			7						8
Corporate			45						30
Total			$	1,005					$	699

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 17. Segment and Geographic Information (Continued)

Geographic information: The following geographic data include revenues attributed to the countries based on the location of the subsidiary making the sale and long-lived assets based on physical location. Long-lived assets represent the net book value of property, plant, and equipment.

			Year Ended
(In millions)			December 31
			2021						2020						2019
Revenues
United States			$	35,396					$	25,986					$	27,509
Switzerland			18,453						13,819						13,016
Cayman Islands			5,515						3,958						4,374
Brazil			3,213						2,357						2,381
Mexico			2,934						2,244						2,068
United Kingdom			1,848						1,519						1,563
Other Foreign			17,890						14,472						13,745
			$	85,249					$	64,355					$	64,656

(In millions)			December 31
			2021						2020
Long-lived assets
United States			$	6,098					$	6,157
Brazil			760						781
Other Foreign			2,945						2,841
			$	9,803					$	9,779

Note 18. Asset Impairment, Exit, and Restructuring Costs

The following table sets forth the charges included in asset impairment, exit, and restructuring costs.

(In millions)			Year Ended December 31
			2021						2020						2019
Restructuring and exit costs (1)			$	39					$	26					$	161
Impairment charge - goodwill and other intangible assets (2)			52						26						11
Impairment charge - other long-lived assets (3)			73						28						131
Total asset impairment, exit, and restructuring costs			$	164					$	80					$	303

(1)Restructuring and exit costs for the year ended December 31, 2021 consisted of several individually insignificant restructuring charges totaling $35 million presented as specified items within segment operating profit and $4 million in Corporate. Restructuring and exit costs for the year ended December 31, 2020 consisted of several individually insignificant restructuring charges totaling $17 million presented as specified items within segment operating profit and $9 million in Corporate. Restructuring and exit costs for the year ended December 31, 2019 consisted of restructuring and pension settlement and remeasurement charges of $159 million in Corporate primarily related to early retirement and reorganization initiatives and several individually insignificant restructuring charges presented as specified items within segment operating profit.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 18. Asset Impairment, Exit, and Restructuring Costs (Continued)

(2)Impairment charge - goodwill and other intangible assets for the year ended December 31, 2021 consisted of goodwill impairment of $5 million and land rights impairment of $42 million in Ag Services and Oilseeds and goodwill impairment of $1 million and customer list impairment of $4 million in Nutrition, presented as specified items within segment operating profit. Impairment charge - goodwill and other intangible assets for the year ended December 31, 2020 consisted of other intangible asset impairments presented as specified items within segment operating profit. Impairment charge - goodwill and other intangible assets for the year ended December 31, 2019 consisted of goodwill and other intangible asset impairments presented as specified items within segment operating profit.

(3)Impairment charge - other long-lived assets for the year ended December 31, 2021 consisted of impairments related to certain long-lived assets in Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition of $10 million, $13 million, and $50 million, respectively, presented as specified items within segment operating profit. Impairment charge - other long-lived assets for the year ended December 31, 2020 consisted of impairments related to certain long-lived assets in Ag Services and Oilseeds and Nutrition of $8 million and $13 million, respectively, presented as specified items within segment operating profit, and $7 million of impairments related to certain assets in Corporate. Impairment charge - other long-lived assets for the year ended December 31, 2019 consisted of $130 million of asset impairments related to certain facilities, vessels, and other long-lived assets in Ag Services and Oilseeds and $1 million of asset impairments related to certain long-lived assets in Carbohydrate Solutions presented as specified items within segment operating profit.

Note 19. Sale of Accounts Receivable

The Company has an accounts receivable securitization program (the “Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the “First Purchasers”). Under the Program, certain U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Receivables, LLC (“ADM Receivables”). 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 $1.6 billion, an increase from $1.2 billion, as of December 31, 2020 for the accounts receivable transferred. The First Program terminates on May 18, 2022, unless extended. for the accounts receivables transferred.

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 $0.7 billion (€0.6 billion) for the accounts receivables transferred. The Second Program terminates on February 16, 2023, unless extended.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 19. Sale of Accounts Receivable (Continued)

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 acts as a servicer for the transferred receivables. At December 31, 2021 and 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 cost of servicing the receivables sold.

As of December 31, 2021 and 2020, the fair value of trade receivables transferred to the Purchasers under the Programs and derecognized from the Company’s consolidated balance sheet was $2.2 billion and $1.6 billion, respectively. Total receivables sold were $50.3 billion, $35.0 billion, and $34.5 billion for the years ended December 31, 2021, 2020, and 2019, respectively. Cash collections from customers on receivables sold were $47.3 billion, $34.2 billion, and $33.8 billion for the years ended December 31, 2021, 2020, and 2019, respectively. Of the amounts in 2020 and 2019, $6.7 billion and $13.1 billion were cash collections on the deferred consideration reflected as cash inflows from investing activities for the years ended December 31, 2020, and 2019, respectively. Receivables pledged as collateral to the Purchasers were $0.5 billion and $0.4 billion as of December 31, 2021 and 2020, respectively.

Transfers of receivables under the Programs during the years ended December 31, 2021, 2020, and 2019 resulted in an expense for the loss on sale of $11 million, $9 million, and $18 million, respectively, which is classified as selling, general, and administrative expenses in the consolidated statements of earnings.

In accordance with the amended guidance of Topic 230, the Company reflects cash flows related to the deferred receivables consideration 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.

Note 20. 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 13 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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Note 20. 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 filed an amended complaint adding a second named plaintiff Maize Capital Group, LLC (“Maize”). AOT and Maize allege that members of the putative class suffered “hundreds of millions of dollars in damages” as a result of the Company’s alleged actions. On July 14, 2020, Green Plains Inc. and its related entities (“GP”) filed a putative class action lawsuit, alleging substantially the same operative facts, in federal court in Nebraska, seeking to represent sellers of ethanol. On July 23, 2020, Midwest Renewable Energy, LLC (“MRE”) filed a putative class action in federal court in Illinois alleging substantially the same operative facts and asserting claims under the Sherman Act. On November 11, 2020, United Wisconsin Grain Producers LLC (“UWGP”) and five other ethanol producers filed a lawsuit in federal court in Illinois alleging substantially the same facts and asserting claims under the Sherman Act and Illinois, Iowa, and Wisconsin law. The court granted ADM’s motion to dismiss the MRE and UWGP complaints without prejudice on August 9, 2021 and September 28, 2021, respectively. On August 16, 2021, the court granted ADM’s motion to dismiss the GP complaint, dismissing one claim with prejudice and declining jurisdiction over the remaining state law claim. MRE filed an amended complaint on August 30, 2021, which ADM moved to dismiss on September 27, 2021. UWGP filed an amended complaint on October 19, 2021, which ADM moved to dismiss on December 9, 2021. On October 26, 2021, GP filed a new complaint in Nebraska federal district court, alleging substantially the same facts and asserting a claim for tortious interference with contractual relations. 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.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Archer-Daniels-Midland Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Archer-Daniels-Midland Company (the Company) as of December 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 17, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

			Fair Value Measurements over Certain Merchandisable Agricultural Inventory and Commodity Contracts
Description of the Matter			As explained in Notes 1 and 4 to the consolidated financial statements, certain merchandisable agricultural commodity inventory and inventory-related payables held by the Company are stated at fair value. The Company also enters into forward commodity purchase and sales contracts that qualify as derivative instruments which are stated at fair value. The merchandisable agricultural commodity inventory, inventory-related payables, and forward commodity purchase and sales contracts are considered level 2 and 3 fair value instruments. As of December 31, 2021, the fair values for certain merchandisable agricultural commodity inventories, inventory-related payables, forward commodity contracts in an asset position, and forward commodity contracts in a liability position were $9,769 million, $965 million, $1,362 million, and $1,759 million, respectively.
			Auditing the estimated fair values for merchandisable agricultural commodity inventories, inventory-related payables, and forward commodity purchase and sale contracts is complex due to the judgment involved in determining fair value, specifically related to determining the estimated basis adjustments, which represent the adjustment made to exchange quoted prices to arrive at the fair values for certain merchandisable agricultural commodity inventories, inventory-related payables, and forward commodity purchase and sales contracts. The basis adjustments are impacted 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 basis adjustment.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s determination of the estimated fair values for certain merchandisable agricultural commodity inventories, inventory-related payables, and forward commodity purchase and sale contracts. Our tests included controls over the estimation process supporting the basis adjustments.
			To test the estimated fair values of certain merchandisable agricultural commodity inventories, inventory-related payables, and forward commodity purchase and sale contracts, our audit procedures included, among others, evaluating (i) the Company’s selection of the principal market, (ii) the inputs for the basis adjustments, and (iii) the completeness and accuracy of the underlying data supporting the basis adjustments. For example, we evaluated management’s methodology for determining the basis adjustment including assessing the principal market identified and sources utilized by management to support the basis adjustment. Specifically, we compared the basis adjustments used by management to competitor and broker quotations, trade publications, and/or recently executed transactions. Further, we investigated, to the extent necessary, basis adjustments that were inconsistent with third party available information. Finally, we evaluated the adequacy of the Company’s financial statement disclosures related to the estimated fair values of certain merchandisable agricultural inventories, inventory-related payables, and forward commodity purchase and sale contracts.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1930.

Saint Louis, Missouri

February 17, 2022

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Archer-Daniels-Midland Company

Opinion on Internal Control over Financial Reporting

We have audited Archer-Daniels-Midland Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In our opinion, Archer-Daniels-Midland Company (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Pedigree Ovens, Inc., PetDine, LLC, The Pound Bakery, LLC, and NutraDine, LLC (P4); Deerland Holdings, Inc. (Deerland); and Sojaprotein D.O.O. Bečej (Sojaprotein), which are included in the 2021 consolidated financial statements of the Company and constituted 3% and 7% of total assets and shareholders' equity, respectively, as of December 31, 2021 and 0% and 1% of revenues and net earnings attributable to controlling interests, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of P4, Deerland and Sojaprotein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Archer-Daniels-Midland Company as of December 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2), and our report dated February 17, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Saint Louis, Missouri

February 17, 2022