What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-14 compared with 2022-02-17 · 272 added, 304 removed, 1594 unchanged (27% of the section changed)

17 unchanged sentences

Asset impairment, exit, and restructuring costs 66 164 80

Interest expense 265 339 402

Equity in earnings of unconsolidated affiliates ( 832 ) ( 595 ) ( 579 )

Loss on debt extinguishment — 36 409

Investment income ( 96 ) ( 111 ) ( 196 )

Interest and investment income ( 293 ) ( 96 ) ( 111 )

Interest expense 396 265 339

Other (income) expense - net ( 358 ) ( 94 ) ( 255 )

111 unchanged sentences

Proceeds from sales of assets and businesses 131 245 728

Investments in and advances to affiliates ( 34 ) ( 5 ) ( 13 )

Investments in affiliates ( 77 ) ( 34 ) ( 5 )

Investments in retained interest in securitized receivables — — ( 2,121 )

Proceeds from retained interest in securitized receivables — — 6,724

Purchases of marketable securities — ( 2 ) ( 27 )

Proceeds from sales of marketable securities 1 6 104

Cost method investments ( 155 ) ( 69 ) ( 30 )

Other – net 42 ( 78 ) 7

28 unchanged sentences

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

5 unchanged sentences

Stock compensation expense 2 151 151

Stock option exercises net of taxes 1 20 20

Other — ( 2 ) — ( 12 ) ( 14 )

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

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

3 unchanged sentences

Cash dividends paid-$ 1.48 per share ( 834 ) ( 834 )

Share repurchases ( 4 ) ( 133 ) ( 133 )

Stock compensation expense 3 161 161

Stock option exercises net of taxes 1 4 4

Other — 5 — ( 17 ) ( 12 )

5 unchanged sentences

Cash dividends paid-$ 1.60 per share ( 899 ) ( 899 )

Share repurchases ( 17 ) ( 1,450 ) ( 1,450 )

Stock compensation expense 3 147 147

Stock option exercises net of taxes 1 4 4

Other — 2 — ( 3 ) ( 1 )

5 unchanged sentences

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.

ADM unlocks the power of nature to enrich the quality of life.

The Company is an indispensable global agricultural supply chain manager and processor;

a premier human and animal nutrition provider;

a trailblazer in groundbreaking solutions to support healthier living;

an industry-leading innovator in replacing petroleum-based products;

and a leader in sustainability.

ADM’s breadth, depth, insights, facilities and logistical expertise give the Company unparalleled capabilities to meet demand driven by global trends related to food security, health and well-being, and sustainability of the agriculture and food value chains.

From the seed of the idea to the outcome of the solution, ADM gives customers an edge in solving the nutritional and sustainability challenges of today and tomorrow.

The Company is one of the world’s leading producers of ingredients for sustainable nutrition.

From staple foods, such as flour, oils, and sweeteners, to innovative alternatives like plant-based meat and dairy, ADM offers the industry’s broadest portfolio of food and beverage solutions.

The Company is also a leader in animal nutrition.

Today, more and more people want to feed their pets with the same kind of clean, simple, and healthy products that they eat themselves, and consumers expect livestock and poultry to be fed and raised naturally, humanely, and sustainably.

ADM offers a range of ingredients, flavors, and solutions from nature to meet every animal’s needs.

Principles of Consolidation

9 unchanged sentences

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)

Summary of Significant Accounting Policies (Continued)

Segregated Cash and Investments

3 unchanged sentences

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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies (Continued)

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.

This value includes an allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances including any accrued interest receivables thereon.

The Company estimates uncollectible accounts by pooling receivables 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.

1 unchanged sentence

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.

Long-term receivables recorded in other assets were not material to the Company’s overall receivables portfolio.

The Company recorded bad debt expense in selling, general, and administrative expenses of $ 88 million, $ 32 million, and $ 47 million in the years ended December 31, 2022, 2021, and 2020, respectively.

Inventories of certain merchandisable agricultural commodities, which include inventories acquired under deferred pricing contracts, are stated at market value.

Changes to the allowance for estimated uncollectible accounts are as follows:

Year Ended December 31

Beginning, January 1 $ 122 $ 100

Current year provisions 88 32

Recoveries 2 5

Write-offs against allowance ( 12 ) ( 28 )

Foreign exchange translation adjustment ( 2 ) ( 1 )

Ending, December 31 $ 199 $ 122

Effective January 1, 2020, the Company adopted Accounting Standards Codification (ASC) Topic 326, Financial Instruments - Credit Losses (Topic 326), and recorded a cumulative effect adjustment to retained earnings at January 1, 2020 of $ 8 million as a result of the adoption of Topic 326.

Certain merchandisable agricultural commodity inventories, 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.

1 unchanged sentence

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.

8 unchanged sentences

(In millions)

FIFO inventories $ 4,260 $ 3,310

Market inventories 9,769 7,941

Supplies and other inventories 452 462

Raw materials and supplies $ 6,975 $ 7,331

Finished goods 7,796 7,150

Total inventories $ 14,771 $ 14,481

Included in raw materials and supplies are work in process inventories which were not material as of December 31, 2022 and 2021.

Fair Value Measurements

30 unchanged sentences

Cost method investments of $ 488 million and $ 297 million as of December 31, 2022 and 2021, 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.

Revaluation gains of $ 37 million, $ 49 million, and $ 23 million for the years ended December 31, 2022, 2021, and 2020, respectively, in connection with observable third-party transactions, are recorded in interest and investment income in the Company’s consolidated statements of earnings.

As of December 31, 2022, the cumulative amount of upward adjustments is $ 113 million.

Property, Plant, and Equipment

1 unchanged sentence

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 Company 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:

8 unchanged sentences

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

Income tax effects from AOCI are released when the individual units of account are sold, terminated, or extinguished.

Archer-Daniels-Midland Company

5 unchanged sentences

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).

The Company recorded impairment charges totaling $ 2 million related to customer lists, $ 52 million related to goodwill and other intangibles, and $ 26 million related to customer lists during the years ended December 31, 2022, 2021, and 2020, respectively (see Note 9 for additional information).

Asset Abandonments and Write-Downs

2 unchanged sentences

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 2022 and 2021, the Company temporarily idled certain assets which were not material.

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.

The Company restarted the 2020 idled facilities in April 2021.

During the years ended December 31, 2022, 2021, and 2020, asset abandonment and impairment charges were $ 35 million, $ 73 million, and $ 28 million, respectively.

4 unchanged sentences

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 transportation service contracts, the Company recognizes revenue over time as the mode of transportation 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”).

9 unchanged sentences

Research and Development

Costs associated with research and development are expensed as incurred.

Costs associated with research and development are expensed as incurred and recorded within selling, general, and administrative expenses.

Such costs incurred, net of expenditures subsequently reimbursed by government grants, were $ 216 million, $ 171 million, and $ 160 million for the years ended December 31, 2022, 2021, and 2020, respectively.

14 unchanged sentences

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.

Redeemable Noncontrolling Interest

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.

Operations in Ukraine and Russia

ADM employs approximately 640 people in Ukraine and operates an oilseeds crushing plant, a grain port terminal, inland and river silos, and a trading office.

Most of the facilities have been temporarily idled since February 24, 2022, some of which were brought back online during the quarter ended September 30, 2022, due in part to the opening of the Black Sea grain export corridor.

The Company’s footprint in Russia is limited to operations related to the production and transport of essential food commodities and ingredients.

As a result of the ongoing conflict in Ukraine, the Company reviewed the valuation of its assets and recorded immaterial charges in the year ended December 31, 2022 related to receivables and inventories.

As of December 31, 2022, ADM concluded that 1) receivables, net of allowances, are deemed collectible;

and 2) commodity inventories are valued appropriately.

The temporarily idled property, plant, and equipment, which is immaterial, are not considered impaired.

The Company also evaluated the impact of Russia’s recent announcement of its purported annexation of four Ukrainian regions on the valuation of ADM’s assets in those regions and concluded that the assets are appropriately valued.

As the conflict in Ukraine evolves, the Company will continue to review the valuation of these assets and make any required adjustments, which are not expected to be material to the Company’s consolidated financial statements.

Archer-Daniels-Midland Company

1 unchanged sentence

Summary of Significant Accounting Policies (Continued)

Pending Accounting Standards

Through December 31, 2024, 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 the 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 the 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, 2024, except for hedging relationships existing as of December 31, 2024, 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, 2024 expiry date and does not expect the adoption of the amended guidance to have an impact on the consolidated financial statements.

Effective January 1, 2023, the Company will be required to adopt the amended guidance of ASC Topic 805, Business Combinations , which improves comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination.

The amended guidance requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

Early adoption is permitted.

The Company does not expect the adoption of this amended guidance to have a significant impact on its consolidated financial statements.

Effective January 1, 2023, the Company will be required to adopt the amended guidance of ASC Subtopic 405-50, Liabilities - Supplier Finance Programs , which enhances the transparency of supplier finance programs.

The amended guidance requires an entity (buyer) in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

The adoption of this amended guidance will require the Company to provide disclosures about its supplier finance programs, if material, but is not expected to have an impact on its consolidated financial statements.

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.

Revenue is measured based on the consideration specified in the contract with a customer.

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.

1 unchanged sentence

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.

The Company recognized revenue from transportation service contracts of $ 818 million, $ 606 million, and $ 423 million for the years ended December 31, 2022, 2021, and 2020, respectively.

3 unchanged sentences

Accordingly, amounts billed to customers for such costs are included as a component of revenues.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Revenues (Continued)

Taxes Collected from Customers and Remitted to Governmental Authorities

4 unchanged sentences

Contract liabilities recognized as revenues for the years ended December 31, 2022 and 2021 were $ 581 million and $ 626 million, respectively.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Revenues (Continued)

Disaggregation of Revenues

63 unchanged sentences

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 measured based on the consideration specified in the contract.

Revenue is recognized when a performance obligation is satisfied by transferring control over a product or providing service to a customer.

The amount of revenue recognized follows the contractually specified price which may include freight or other contractually specified cost components.

The Company engages in various structured trade finance activities to leverage its global trade flows whereby the Company obtains letters of credit (LCs) to guarantee payments on both global purchases and sales of grain.

LCs guaranteeing payment on grain sales are sold on a non-recourse basis with no continuing involvement.

The Company earns returns from the difference in interest rates between the LCs that guarantee payment on the underlying purchases and sales of grain given the differing risk profiles of the underlying transactions.

The net return related to structured trade finance activities is included in revenue and is not significant for the years ended December 31, 2022, 2021, and 2020.

Carbohydrate Solutions

13 unchanged sentences

Reinsurance premiums are recognized on a straight-line basis over the period underlying the policy.

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)

Acquisitions (Continued)

Fiscal year 2022 acquisitions

During the year ended December 31, 2022, the Company acquired Kansas Protein Foods LLC for cash consideration of $ 23 million.

The cash consideration of this acquisition, net of $ 1 million in cash acquired, was allocated as follows:

(In millions)

Property, plant, and equipment $ 9

Cash consideration $ 22

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;

1 unchanged sentence

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.

The aggregate cash consideration of these acquisitions, net of $ 21 million in cash acquired, was allocated as follows.

In 2022, the Company made immaterial adjustments to the purchase price allocations related to these acquisitions.

These adjustments have been reflected in the table below.

(In millions) P4 Deerland Sojaprotein Others Total

13 unchanged sentences

The post-acquisition financial results of these acquisitions are reported in the Nutrition segment.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Acquisitions (Continued)

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

4 unchanged sentences

Customer lists 15 to 20 220 176 37 14 447

Recipes 7 16 — — — 16

Other intellectual property 7 to 10 — 35 — 3 38

Recipes and others 7 16 58 — 3 77

Total other intangible assets acquired $ 245 $ 252 $ 42 $ 18 $ 557

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Acquisitions (Continued)

Fiscal year 2020 acquisitions

8 unchanged sentences

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)

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)

Fair Value Measurements

39 unchanged sentences

Cash equivalents 448 — — 448

Marketable securities 1 — — 1

Segregated investments 1,338 — — 1,338

3 unchanged sentences

Foreign currency contracts — 191 — 191

Interest rate contracts — 15 — 15

Debt conversion option — — 15 15

1 unchanged sentence

Total Liabilities $ — $ 1,994 $ 936 $ 2,930

Estimated fair values for inventories and inventory-related payables carried at market are based on exchange-quoted prices, adjusted for differences in local markets and quality, referred to as basis.

Estimated fair values of inventories and inventory-related payables stated 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.

The basis adjustments are generally determined using inputs from competitor and broker quotations or market transactions and are considered observable.

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 movement of these basis adjustments.

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.

Changes in the fair value of inventories and inventory-related payables are recognized in the consolidated statements of earnings as a component of cost of products sold.

Archer-Daniels-Midland Company

6 unchanged sentences

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.

The basis adjustments are generally determined using inputs from competitor and broker quotations or market transactions and are considered observable.

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 movement of these basis adjustments.

In some cases, the basis adjustments are unobservable because they are supported by little to no market activity.

3 unchanged sentences

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 changes in the fair value of derivatives designated as effective cash flow hedges are recognized in the consolidated balance sheets as a component of 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.

61 unchanged sentences

Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense 2 1,992 ( 19 ) 1,975

Purchases/Issuance of debt conversion option 20 — 17 37

Purchases 123 — — 123

Sales ( 30 ) — — ( 30 )

13 unchanged sentences

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, 2022 and 2021.

56 unchanged sentences

Commodity Contracts — ( 68 ) — —

Debt Conversion Option — — ( 17 ) —

Total gain (loss) recognized in earnings $ 28 $ ( 564 ) $ ( 17 ) $ ( 153 ) $ ( 706 )

2 unchanged sentences

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

Derivatives Designated as Cash Flow or Net Investment Hedging Strategies

Derivatives Designated as Cash Flow or Net Investment Hedging Instruments

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

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

The Company uses cross-currency swaps and foreign exchange forwards designated as net investment hedges to protect the Company’s investment in a foreign subsidiary against changes in foreign currency exchange rates.

The Company executed USD-fixed to Euro-fixed cross-currency swaps with an aggregate notional amount of $ 1.2 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)

Derivative Instruments & Hedging Activities (Continued)

Commodity Contracts

For each of the hedge programs described below, the derivatives are designated as cash flow hedges.

1 unchanged sentence

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.

The Company’s corn processing plants normally grind approximately 65 million bushels per month.

During the past 12 months, the Company hedged between 17 % and 33 % of its monthly grind.

12 unchanged sentences

At December 31, 2022, the Company had designated hedges representing between 53 % and 83 % of the anticipated monthly natural gas consumption over the next 12 months.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Derivative Instruments & Hedging Activities (Continued)

As of December 31, 2022 and 2021, the Company had after-tax losses of $ 17 million and after-tax gains of $ 161 million in AOCI, respectively, related to gains and losses from these programs.

The Company expects to recognize $ 17 million of the 2022 after-tax losses in its consolidated statement of earnings during the next 12 months.

Interest Rate Contracts

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.

The Company had interest rate swaps maturing on various dates with aggregate notional amount of $ 1.0 billion as of December 31, 2021 and none as of December 31, 2022.

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, 2022 and 2021, the Company executed swap locks maturing on various dates with an aggregate notional amount of $ 400 million.

As of December 31, 2022 and 2021, the Company had after-tax gains of $ 82 million and $ 35 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.

Foreign Currency Contracts

The Company executed USD-fixed to Euro-fixed cross-currency swaps with an aggregate notional amount of $ 0.8 billion and $ 1.2 billion as of December 31, 2022 and 2021, respectively, and foreign exchange forwards with an aggregate notional amount of $ 2.5 billion and $ 2.6 billion as of December 31, 2022 and 2021, respectively.

Amounts excluded from the assessment of hedge effectiveness are immaterial for all periods presented.

As of December 31, 2022 and 2021, the Company had after-tax gains of $ 79 million and after-tax losses of $ 44 million in AOCI, respectively, related to foreign exchange gains and losses from net investment hedge transactions.

The amount is deferred in AOCI until the underlying investment is divested.

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

2 unchanged sentences

(In millions)

Foreign Currency Contracts $ 21 $ 75 $ — $ 265

Commodity Contracts $ — $ 20 $ 86 $ —

Interest Rate Contracts 109 — 46 —

Foreign Currency Contracts 104 — 21 75

Total $ 213 $ 20 $ 153 $ 75

9 unchanged sentences

Pre-tax gains (losses) on:

Interest Contracts $ ( 16 ) $ — $ — $ —

Commodity Contracts — 351 — —

Interest Contracts 1 — — —

Total gain (loss) recognized in earnings $ 1 $ 351 $ — $ — $ 352

3 unchanged sentences

Pre-tax gains (losses) on:

Interest Rate Contracts $ ( 75 ) $ — $ ( 2 ) $ —

Commodity Contracts $ — $ 490 $ — $ —

Interest Rate Contracts ( 16 ) — — —

Total gain (loss) recognized in earnings $ ( 16 ) $ 490 $ — $ — $ 474

3 unchanged sentences

Pre-tax gains (losses) on:

Interest Rate Contracts $ ( 46 ) $ — $ 1 $ —

Commodity Contracts $ 7 $ 27 $ — $ ( 2 )

Interest Rate Contracts ( 75 ) — ( 2 ) —

Total gain (loss) recognized in earnings $ ( 68 ) $ 27 $ ( 2 ) $ ( 2 ) $ ( 45 )

1 unchanged sentence

The Company has designated € 1.3 billion and € 1.8 billion of its outstanding long-term debt and commercial paper borrowings at December 31, 2022 and 2021, 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.

As of December 31, 2022 and 2021, the Company had after-tax gains of $ 228 million and $ 55 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.

17 unchanged sentences

(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.

The amounts are reported net of allowances of $ 3 million and $ 4 million at December 31, 2022 and 2021, respectively.

Interest earned on financing receivables of $ 15 million, $ 11 million, and $ 20 million for the years ended December 31, 2022, 2021, and 2020, respectively, is included in interest and investment income in the consolidated statements of earnings.

(2) Non-trade receivables included $ 18 million and $ 27 million of reinsurance recoverables as of December 31, 2022 and 2021, respectively.

16 unchanged sentences

As of December 31, 2022, 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 %).

( 50.0 %), Aston Foods and Food Ingredients ( 50.0 %), and Vimison S.A.

The Company had 67 and 63 unconsolidated domestic and foreign affiliates as of December 31, 2022 and 2021, respectively.

16 unchanged sentences

The Company provides credit facilities totaling $ 116 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.

There was no outstanding balance on these facilities as of December 31, 2022.

Net sales to unconsolidated affiliates during the years ended December 31, 2022, 2021, and 2020 were $ 7.8 billion, $ 6.6 billion, and $ 4.7 billion, respectively.

11 unchanged sentences

Total $ 4,162 $ 4,182

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 changes in goodwill during the year ended December 31, 2022 were related to foreign currency translation losses of $ 123 million, partially offset by 2022 acquisitions and adjustments to purchase price allocations related to 2021 acquisitions (see Note 3).

The following table sets forth the other intangible assets:

5 unchanged sentences

Trademarks/brands $ 397 $ — $ 397 $ 409 $ — $ 409

Other — — — 1 — 1

Intangible assets with definite lives:

1 unchanged sentence

Customer lists 1 to 30 1,544 ( 542 ) 1,002 1,580 ( 454 ) 1,126

Capitalized software and related costs 1 to 8 714 ( 383 ) 331 464 ( 354 ) 110

Capitalized software and related costs 5 721 ( 449 ) 272 714 ( 383 ) 331

Land rights 2 to 50 109 ( 25 ) 84 122 ( 28 ) 94

3 unchanged sentences

Total $ 3,812 $ ( 1,430 ) $ 2,382 $ 3,780 $ ( 1,215 ) $ 2,565

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 changes in the gross amounts during the year ended December 31, 2022 were primarily related to additions to intangible assets in process, partially offset by decreases related to foreign currency translation of $ 89 million.

The changes in accumulated amortization during the year ended December 31, 2022 were related to amortization expense, partially offset by decreases related to foreign currency translation of $ 30 million.

Aggregate amortization expense was $ 235 million, $ 177 million, and $ 173 million for the years ended December 31, 2022, 2021, and 2020, respectively, of which $ 69 million, $ 33 million, and $ 45 million, respectively, were for amortization of capitalized software and related costs.

The estimated future aggregate amortization expense for the next five years is $ 246 million, $ 273 million, $ 255 million, $ 251 million, and $ 245 million, respectively.

12 unchanged sentences

1.75 % Notes € 600 million 2023 641 681

Fixed to Floating Rate Notes € 500 million 2022 569 —

4.5 % Notes $ 600 million 2049 589 588

5.375 % Debentures $ 432 million 2035 425 425

11 unchanged sentences

6.45 % Debentures $ 103 million 2038 102 102

2.75 % Notes $ 500 million 2025 — 493

Fixed to Floating Rate Notes € 500 million 2022 — 569

Other 177 177

2 unchanged sentences

Total long-term debt $ 7,735 $ 8,011

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

On February 28, 2022 , the Company issued its first sustainability bond of $ 750 million aggregate principal amount of 2.900 % notes due March 1, 2032 .

Net proceeds before expenses were $ 748 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 .

The Company expects to apply an amount equal to the net proceeds to finance or refinance eligible green projects and/or eligible social projects.

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

On September 29, 2022, Archer Daniels Midland Singapore, Pte.

Ltd., a wholly-owned subsidiary of the Company, closed on a $ 500 million revolving credit facility at an interest rate of Secured Overnight Financing Rate plus a fixed spread .

The facility will be used to finance working capital requirements of ADM entities in the Asia Pacific region and general corporate purposes.

Archer-Daniels-Midland Company

1 unchanged sentence

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.

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.

Discount amortization expense, net of premium amortization, of $ 6 million, $ 10 million, and $ 13 million for the years ended December 31, 2022, 2021, and 2020, 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).

At December 31, 2022, the fair value of the Company’s long-term debt was below the carrying value by $ 0.2 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, 2022, are $ 942 million, $ 6 million, $ 693 million, $ 998 million, and $ 250 million, respectively.

1 unchanged sentence

The weighted average interest rates on short-term borrowings outstanding at December 31, 2022 and 2021, were 6.21 % and 1.23 %, 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.

Of the Company’s total lines of credit, $ 5.0 billion supported the combined U.S.

and European commercial paper borrowing programs, against which there was $ 0.3 billion of commercial paper outstanding at December 31, 2022.

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, 2022.

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

The Company had outstanding standby letters of credit and surety bonds at December 31, 2022 and 2021, totaling $ 1.6 billion and $ 1.2 billion, respectively.

The Company has accounts receivable securitization programs (the “Programs”).

4 unchanged sentences

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)

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.

4 unchanged sentences

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 2022, 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

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Stock Compensation (Continued)

A summary of option activity during 2022 is presented below:

3 unchanged sentences

Shares under option at December 31, 2021 4,584 $ 37.20

Granted — 0.00

Exercised ( 2,484 ) 36.30

4 unchanged sentences

The aggregate intrinsic value of options outstanding and exercisable at December 31, 2022, is $ 115 million and $ 115 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, 2022, 2021, and 2020, were $ 117 million, $ 37 million, and $ 32 million, respectively.

4 unchanged sentences

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).

In 2022, 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) and adjusted earnings per share (EPS) with a modifier for gender parity and greenhouse gas emissions.

During the years ended December 31, 2022, 2021, and 2020, 2.3 million, 2.7 million, and 2.7 million common stock or stock units, respectively, were granted as Restricted Stock Awards and PSUs.

At December 31, 2022, there were 14.7 million shares available for future grants pursuant to the 2020 plan.

The fair value of Restricted Stock Awards is determined based on the market value of the Company’s shares on the grant date.

In 2022, the fair value of PSUs issued was based on the weighted-average values of adjusted ROIC and adjusted EPS determined based on the market value of the Company’s shares on the grant date.

In 2021 and 2020, the fair value of PSUs issued was based on the weighted-average values of adjusted ROIC and compound average growth rate of Nutrition’s segment operating profit determined based on the market value of the Company’s shares on the grant date.

The weighted-average grant-date fair values of awards granted during the years ended December 31, 2022, 2021, and 2020 were $ 70.13 , $ 53.28 , and $ 45.59 , respectively.

Archer-Daniels-Midland Company

1 unchanged sentence

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 2022 is presented below:

20 unchanged sentences

2022 2021 2020

(Gain) loss on sales of assets and businesses $ ( 100 ) $ ( 138 ) $ 39

Gains on sale of assets $ ( 78 ) $ ( 100 ) $ ( 138 )

Pension settlement — 83 —

1 unchanged sentence

$ ( 358 ) $ ( 94 ) $ ( 255 )

Individually significant items included in the table above are:

Gains on sale of assets for the year ended December 31, 2022 consisted of gains on sales of certain assets and disposals of individually insignificant assets in the ordinary course of business.

Gains on sale 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.

Gains on sale 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.

Archer-Daniels-Midland Company

1 unchanged sentence

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, 2022 included a legal recovery related to the 2019 and 2020 closure of the Company’s Reserve, Louisiana, export facility of $ 110 million, net foreign exchange gains of $ 105 million, a $ 50 million one-time payment from the USDA Biofuel Producer Recovery Program, and the non-service components of net pension benefit income of $ 25 million, partially offset by other net expense.

Other - net for the year ended December 31, 2021 included the non-service components of net pension benefit income of $ 16 million, net foreign exchange gains of $ 24 million, 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.

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

48 unchanged sentences

$ ( 1,065 ) $ ( 1,086 )

During 2022, the Company decreased valuation allowances by $68 million primarily related to net operating loss and foreign capital loss carryforwards.

Archer-Daniels-Midland Company

15 unchanged sentences

railroad credits ( 1.2 ) ( 2.0 ) ( 8.0 )

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 ) —

tax on foreign earnings 0.2 — 0.6

Valuation allowances — 0.7 0.2

1 unchanged sentence

Effective income tax rate 16.6 % 17.4 % 5.4 %

The effective tax rate for 2022 was impacted by the geographic mix of earnings and discrete tax items.

The effective tax rates for 2021 and 2020 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.

ADM’s operations in foreign jurisdictions accounted for 48 %, 35 %, and 77 % of the Company’s total pre-tax earnings in fiscal years 2022, 2021, and 2020, respectively.

The foreign rate differential was primarily due to lower tax rates applicable to the income earned from the Company’s operations in Switzerland, Asia, and the Caribbean.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022 (“Inflation Act”), which includes, among other provisions, changes to the U.S.

corporate income tax system, including a 15 % minimum tax based on “adjusted financial statement income,” and a one percent excise tax on net repurchases of stock for tax years beginning after December 31, 2022.

While the Inflation Act has no immediate impact and is not expected to have a material adverse effect on ADM’s results of operations going forward, the Company will continue to evaluate its impact as further information becomes available.

Undistributed earnings of the Company’s foreign subsidiaries and corporate joint ventures were approximately $ 15.5 billion at December 31, 2022.

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.

tax on undistributed Subpart F, and the minimum tax on Global Intangible Low Taxed Income (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.

7 unchanged sentences

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

1 unchanged sentence

Income Taxes (Continued)

The Company had $ 496 million and $ 465 million of tax assets related to net operating loss carryforwards of certain international subsidiaries at December 31, 2022 and 2021, respectively.

As of December 31, 2022, approximately $ 399 million of these assets have no expiration date, and the remaining $ 97 million expire at various times through fiscal 2032.

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 $ 142 million and $ 200 million against these tax assets at December 31, 2022 and 2021, respectively, due to the uncertainty of their realization.

The Company had $ 42 million and $ 74 million of tax assets related to foreign capital loss carryforwards at December 31, 2022 and 2021, 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.

The Company has recorded a valuation allowance of $ 42 million and $ 74 million against these tax assets at December 31, 2022 and 2021, respectively, due to the uncertainty of their realization.

The Company had $ 21 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, 2022 and 2021, a majority of which will expire between 2023 and 2027.

Due to the uncertainty of realization, the Company recorded a valuation allowance of $ 15 million and $ 13 million related to state income tax assets net of federal tax benefit as of December 31, 2022 and 2021, respectively.

10 unchanged sentences

Additions (adjustments) related to acquisitions 11 —

Reductions related to prior years’ tax positions — ( 3 )

Reductions related to lapse of statute of limitations ( 6 ) ( 9 )

3 unchanged sentences

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.

At December 31, 2022 and 2021, the Company had accrued interest and penalties on unrecognized tax benefits of $ 39 million.

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.

14 unchanged sentences

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.

Currently the Company is under audit for fiscal years 2016 and 2017.

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 is more likely than not to be sustained based upon its technical merits, and accordingly, has not recorded a tax liability for these assessments.

The Company intends to vigorously defend its position against any assessments.

In 2014, the Company’s wholly-owned subsidiary in the Netherlands, ADM Europe B.V., received a tax assessment from the Netherlands tax authority challenging the transfer pricing aspects of a 2009 business reorganization, which involved two of its subsidiary companies in the Netherlands.

As of December 31, 2022, this assessment was $ 87 million in tax and $ 31 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.

On April 23, 2020, the court issued an unfavorable ruling and in October 2020, assigned a third party expert to establish a valuation.

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.

On September 30, 2022, the court issued a ruling consistent with the valuation report, and the Dutch tax authorities have filed an appeal.

ADM intends to file a cross-appeal in the first quarter of 2023.

As of December 31, 2022, the Company has accrued its best estimate of what it believes will be the likely outcome of the litigation.

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.

Most leases include options to renew, with renewal terms that can extend the lease term from 6 months 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.

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

December 31, 2021 December 31, 2020

Year Ended December 31

2022 2021 2020

(In millions)

5 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities $ 357 $ 197 $ 314

December 31, 2021 December 31, 2020

Weighted-average remaining lease term - operating leases (in years) 7 6

6 unchanged sentences

(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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Employee Benefit Plans

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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.

The Company also 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)

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:

2 unchanged sentences

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.

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.

salaried pension plan and the Supplemental Executive Retirement Plan (SERP) began 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.

2 unchanged sentences

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.

11 unchanged sentences

Settlement charges — 83 — — — —

Curtailments ( 2 ) — — — — —

Amortization of actuarial loss 17 33 38 5 6 6

17 unchanged sentences

Employee contributions 3 2 — —

Curtailments ( 2 ) — — —

Settlements ( 1 ) ( 715 ) — —

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Net amount recognized in the balance sheet $ ( 318 ) $ ( 436 ) $ ( 118 ) $ ( 154 )

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.

In 2022, the actuarial gain in the pension plans was primarily due to increases in the global bond yields while actual return on plan assets was related to unfavorable asset performance in countries with material assets including the U.S., Canada, and Switzerland.

The Company uses the corridor approach when amortizing actuarial losses.

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unrecognized prior service credit of $ 75 million and unrecognized actuarial loss of $ 226 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

1 unchanged sentence

Employee Benefit Plans (Continued)

Included in AOCI for postretirement benefits at December 31, 2022, 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 $ 16 million.

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

25 unchanged sentences

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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Employee Benefit Plans (Continued)

Common collective trust (CCT) funds:

3 unchanged sentences

The investments are valued at NAV provided by administrators of the funds.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Employee Benefit Plans (Continued)

Corporate debt instruments:

95 unchanged sentences

At December 31, 2022 and 2021, the Company had approximately 169.0 million shares and 156.6 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.

Treasury stock of $ 4.9 billion and $ 5.1 billion at December 31, 2022 and 2021, respectively, is recorded at cost as a reduction of common stock, and treasury stock of $ 1.7 billion and $ 0.3 billion at December 31, 2022 and 2021, respectively, is recorded at cost as a reduction of retained earnings.

Archer-Daniels-Midland Company

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Balance at December 31, 2022 $ ( 2,622 ) $ 148 $ ( 22 ) $ ( 13 ) $ ( 2,509 )

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

The change in foreign currency translation adjustment in 2022 is due to the U.S.

dollar appreciation impacting the equity value of the Company’s foreign subsidiaries, partially offset by net investment hedges as discussed in Note 5, while the change in foreign currency translation adjustment in 2021 is primarily due to net investment hedges.

Archer-Daniels-Midland Company

6 unchanged sentences

(In millions)

Foreign currency translation adjustment

$ — $ — $ 7 Other income/expense

$ — $ — $ 7 Net of tax

Deferred loss (gain) on hedging activities

$ ( 1 ) $ 16 $ 68 Revenues

( 351 ) ( 490 ) ( 27 ) Cost of products sold

— 2 46 Other income/expense

— — 2 Interest expense

16 68 44 Revenues

( 474 ) 45 100 Total before tax

118 7 ( 13 ) Tax on reclassifications

$ ( 356 ) $ 52 $ 87 Net of tax

— — 2 Other (income) expense - net

( 352 ) ( 474 ) 45 Earnings before income taxes

62 118 7 Income tax expense

$ ( 290 ) $ ( 356 ) $ 52 Net earnings

Pension liability adjustment

2 unchanged sentences

Actuarial losses 142 176 39 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.

23 99 7 Earnings before income taxes

( 4 ) ( 26 ) ( 11 ) Income tax expense

$ 19 $ 73 $ ( 4 ) Net earnings

Segment and Geographic Information

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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)

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.

9 unchanged sentences

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.

The Company engages in various structured trade finance activities to leverage its global 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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Segment and Geographic Information (Continued)

The Carbohydrate Solutions segment is engaged in corn and wheat wet and dry milling and other activities.

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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.

This segment also includes the Company’s share of the results of its equity investments in Hungrana Ltd., Almidones Mexicanos S.A., and Aston Foods and Food Ingredients.

In November 2021, the Company sold its ethanol production complex in Peoria, Illinois.

In August 2022, the Company launched two joint ventures, GreenWise Lactic and LG Chem Illinois Biochem, with LG Chem, a leading global diversified chemical company, for the U.S.

production of lactic acid and polylactic acid to meet growing demand for a wide variety of plant-based products.

The Nutrition segment serves various end markets including food, beverages, nutritional supplements, and feed and premix for livestock, aquaculture, and pet food.

2 unchanged sentences

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.

This segment also includes the Company’s share of the results of its equity investment in Vimison S.A.

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)

Segment and Geographic Information (Continued)

Intersegment sales have been recorded at amounts approximating market.

2 unchanged sentences

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.

Corporate results principally include the impact of LIFO-related adjustments, unallocated corporate expenses, interest cost net of interest income, and 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.

Archer-Daniels-Midland Company

Notes to Consolidated Financial Statements (Continued)

Segment and Geographic Information (Continued)

Segment Information

38 unchanged sentences

Total $ 794 $ 807 $ 800

Long-lived asset abandonments and write-downs (1)

Long-lived asset impairments (1)

Ag Services and Oilseeds $ — $ 10 $ 8

3 unchanged sentences

Total $ 35 $ 73 $ 28

Investment income

Interest and investment income

Ag Services and Oilseeds $ 52 $ 27 $ 39

22 unchanged sentences

Gains on sales of assets and businesses (1)

Impairment, restructuring, exit, and settlement charges (2)

Impairment, restructuring, and settlement charges (2)

( 147 ) ( 213 ) ( 76 )

2 unchanged sentences

Earnings before income taxes $ 5,233 $ 3,313 $ 1,883

(1) The gains in 2021 were related to the sale of certain ethanol and other assets.

(1) The gains in 2022 were related to the sale of certain assets.

The gains in 2021 were related to the sale of ethanol and certain 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 2022 were related to the impairment of certain assets, restructuring, and settlement contingencies.

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

35 unchanged sentences

Mexico 3,709 2,934 2,244

Canada 2,272 1,818 1,280

United Kingdom 2,231 1,848 1,519

16 unchanged sentences

Total asset impairment, exit, and restructuring costs $ 66 $ 164 $ 80

(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

1 unchanged sentence

Asset Impairment, Exit, and Restructuring Costs (Continued)

(1) Restructuring and exist costs for the year ended December 31, 2022 consisted of several individually insignificant restructuring charges totaling $ 28 million presented as specified items within segment operating profit and restructuring charges of $ 1 million in Corporate.

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.

(2) Impairment charge - goodwill and other intangible assets for the year ended December 31, 2022 consisted of customer list impairment of $ 2 million in Nutrition presented as specified items within segment operating profit.

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, 2022 consisted of impairments related to certain long-lived assets in Carbohydrate Solutions and Nutrition of $ 15 million and $ 20 million, respectively, presented as specified items within segment operating profit.

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.

Sale of Accounts Receivable

5 unchanged sentences

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.

In exchange, ADM Receivables receives a cash payment of up to $ 1.8 billion for the accounts receivable transferred.

The First Program terminates on May 18, 2023, 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”).

5 unchanged sentences

In exchange, ADM Ireland Receivables receives a cash payment of up to $ 0.8 billion (€ 0.8 billion) for the accounts receivables transferred.

The Second Program terminates on February 16, 2023, unless extended.

The Second Program terminates on March 16, 2023, unless extended.

Archer-Daniels-Midland Company

8 unchanged sentences

Cash collections from customers on receivables sold were $ 56.9 billion, $ 47.3 billion, and $ 34.2 billion for the years ended December 31, 2022, 2021, and 2020, 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.

Of the 2020 amount, $ 6.7 billion was cash collections on the deferred consideration reflected as cash inflows from investing activities for the years ended December 31, 2020.

Receivables pledged as collateral to the Purchasers were $ 0.6 billion and $ 0.5 billion as of December 31, 2022 and 2021, respectively.

21 unchanged sentences

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.

AOT and Maize allege that members of the putative class collectively suffered damages calculated to be between approximately $500 million to over $2.0 billion as a result of the Company’s alleged actions.

On July 14, 2020, Green Plains Inc.

5 unchanged sentences

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.

UWGP filed an amended complaint on October 19, 2021, which the court dismissed on July 12, 2022.

UWGP has appealed the dismissal to the United States Court of Appeals for the Seventh Circuit.

On October 26, 2021, GP filed a new complaint in Nebraska federal district court, alleging substantially the same facts and asserting a claim for tortious interference with contractual relations.

On March 18, 2022, the Nebraska federal district court granted ADM’s motion to transfer the GP case back to the Central District of Illinois for further proceedings.

ADM moved to dismiss the complaint on May 20, 2022 and on December 30, 2022, the court dismissed GP’s complaint with prejudice.

GP has appealed the dismissal.

The Company denies liability, and is vigorously defending itself in these actions.

4 unchanged sentences

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”).

We have audited the accompanying consolidated balance sheets of Archer-Daniels-Midland Company (the Company) as of December 31, 2022 and 2021, the related consolidated statements of earnings, comprehensive income (loss), cash flows, and shareholders’ equity for each of the three years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

16 unchanged sentences

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.

Market or Fair Values of Certain Merchandisable Agricultural Commodity Inventories, Inventory-Related Payables, and Forward Commodity Purchase and Sales Contracts

Forward commodity purchase and sales contracts that qualify as derivative contracts are also stated at market or 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.

As of December 31, 2022, the market or fair values of certain merchandisable agricultural commodity inventories, inventory-related payables, forward commodity contracts in an asset position, and forward commodity contracts in a liability position were $9,041 million, $1,270 million, $1,337 million, and $1,268 million, respectively.

Auditing the estimated market or fair values of merchandisable agricultural commodity inventories, inventory-related payables, and forward commodity purchase and sale contracts is complex due to the judgment involved in determining market or fair value, specifically related to determining the estimated basis adjustments, which represent the adjustment made to exchange quoted prices to arrive at the market or fair values of certain merchandisable agricultural commodity inventories, inventory-related payables, and forward commodity purchase and sales contracts.

The basis adjustments are generally determined using inputs from competitor or broker quotations or market transactions and 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 these basis adjustments.

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 market or fair values of 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.

To test the estimated market or 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.

1 unchanged sentence

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.

Finally, we evaluated the adequacy of the Company’s financial statement disclosures related to the estimated market or fair values of certain merchandisable agricultural inventories, inventory-related payables, and forward commodity purchase and sale contracts.

/s/ Ernst & Young LLP

8 unchanged sentences

In our opinion, Archer-Daniels-Midland Company (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, 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.

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.

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, 2022 and 2021, the related consolidated statements of earnings, comprehensive income (loss), cash flows, and shareholders’ equity for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2), and our report dated February 14, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data