Archer-Daniels-Midland Co 10-K

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial Statements Page No. Consolidated Statements of Earnings 59 Consolidated Statements of Comprehensive Income (Loss) 60 Consolidated Balance Sheets 61 Consolidated Statements of Cash Flows 62 Consolidated Statements of Shareholders’ Equity 63 Notes to Consolidated Financial Statements 64 Reports of Independent Registered Public Accounting Firm PCAOB ID: 42 119 58 Archer-Daniels-Midland Company Consolidated Statements of Earnings Year Ended (In millions, except per share amounts) December 31 2023 2022 2021 Revenues $ 93,935 $ 101,556 $ 85,249 Cost of products sold 86,422 93,986 79,262 Gross Profit 7,513 7,570 5,987 Selling, general and administrative expenses 3,456 3,358 2,994 Asset impairment, exit, and restructuring costs 342 66 164 Equity in earnings of unconsolidated affiliates ( 551 ) ( 832 ) ( 595 ) Loss on debt extinguishment — — 36 Interest and investment income ( 499 ) ( 293 ) ( 96 ) Interest expense 647 396 265 Other (income) expense - net ( 176 ) ( 358 ) ( 94 ) Earnings Before Income Taxes 4,294 5,233 3,313 Income tax expense 828 868 578 Net Earnings Including Noncontrolling Interests 3,466 4,365 2,735 Less: Net earnings (losses) attributable to noncontrolling interests ( 17 ) 25 26 Net Earnings Attributable to Controlling Interests $ 3,483 $ 4,340 $ 2,709 Average number of shares outstanding – basic 541 562 564 Average number of shares outstanding – diluted 542 563 566 Basic earnings per common share $ 6.44 $ 7.72 $ 4.80 Diluted earnings per common share $ 6.43 $ 7.71 $ 4.79 See notes to consolidated financial statements. 59 Archer-Daniels-Midland Company Consolidated Statements of Comprehensive Income (Loss) Year Ended (In millions) December 31 2023 2022 2021 Net earnings including noncontrolling interests $ 3,466 $ 4,365 $ 2,735 Other comprehensive income (loss): Foreign currency translation adjustment 48 ( 301 ) 279 Tax effect 32 ( 93 ) ( 103 ) Net of tax amount 80 ( 394 ) 176 Pension and other postretirement benefit liabilities adjustment ( 88 ) 140 289 Tax effect 2 ( 15 ) ( 71 ) Net of tax amount ( 86 ) 125 218 Deferred gain (loss) on hedging activities 15 ( 84 ) 33 Tax effect ( 5 ) 7 7 Net of tax effect 10 ( 77 ) 40 Unrealized gain (loss) on investments 16 ( 12 ) ( 2 ) Tax effect ( 1 ) 1 — Net of tax effect 15 ( 11 ) ( 2 ) Other comprehensive income (loss) 19 ( 357 ) 432 Comprehensive income (loss) 3,485 4,008 3,167 Less: Comprehensive income (loss) attributable to noncontrolling interests ( 20 ) 5 26 Comprehensive income (loss) attributable to controlling interests $ 3,505 $ 4,003 $ 3,141 See notes to consolidated financial statements. 60 Archer-Daniels-Midland Company Consolidated Balance Sheets (In millions) December 31, 2023 December 31, 2022 Assets Current Assets Cash and cash equivalents $ 1,368 $ 1,037 Segregated cash and investments 7,228 9,010 Trade receivables - net 4,232 4,926 Inventories 11,957 14,771 Other current assets 4,982 5,666 Total Current Assets 29,767 35,410 Investments and Other Assets Investments in and advances to affiliates 5,500 5,467 Goodwill and other intangible assets 6,341 6,544 Right-of-use assets 1,211 1,088 Other assets 1,304 1,332 Total Investments and Other Assets 14,356 14,431 Property, Plant, and Equipment Land and land improvements 573 502 Buildings 5,876 5,639 Machinery and equipment 20,223 19,194 Construction in progress 1,360 1,440 28,032 26,775 Accumulated depreciation ( 17,524 ) ( 16,842 ) Net Property, Plant, and Equipment 10,508 9,933 Total Assets $ 54,631 $ 59,774 Liabilities, Temporary Equity, and Shareholders’ Equity Current Liabilities Short-term debt $ 105 $ 503 Trade payables 6,313 7,803 Payables to brokerage customers 7,867 9,856 Current lease liabilities 300 292 Accrued expenses and other payables 4,076 4,795 Current maturities of long-term debt 1 942 Total Current Liabilities 18,662 24,191 Long-Term Liabilities Long-term debt 8,259 7,735 Deferred income taxes 1,309 1,402 Non-current lease liabilities 931 816 Other 1,005 1,014 Total Long-Term Liabilities 11,504 10,967 Temporary Equity - Redeemable noncontrolling interest 320 299 Shareholders’ Equity Common stock 3,154 3,147 Reinvested earnings 23,465 23,646 Accumulated other comprehensive income (loss) ( 2,487 ) ( 2,509 ) Noncontrolling interests 13 33 Total Shareholders’ Equity 24,145 24,317 Total Liabilities, Temporary Equity, and Shareholders’ Equity $ 54,631 $ 59,774 See notes to consolidated financial statements. 61 Archer-Daniels-Midland Company Consolidated Statements of Cash Flows (In millions) Year Ended December 31 2023 2022 2021 Operating Activities Net earnings including noncontrolling interests $ 3,466 $ 4,365 $ 2,735 Adjustments to reconcile net earnings to net cash provided by (used in) operating results Depreciation and amortization 1,059 1,028 996 Asset impairment charges 309 37 125 Deferred income taxes ( 23 ) ( 89 ) ( 129 ) Equity in earnings of affiliates, net of dividends ( 143 ) ( 457 ) ( 177 ) Stock compensation expense 112 147 161 Deferred cash flow hedges 15 ( 84 ) 34 Loss on debt extinguishment — — 36 (Gain) loss on sales of assets and businesses/investment revaluation 38 ( 115 ) ( 149 ) Other – net ( 106 ) 178 309 Changes in operating assets and liabilities, net of acquisitions and dispositions Segregated investments ( 194 ) ( 1,512 ) 400 Trade receivables 737 ( 1,682 ) ( 578 ) Inventories 2,889 ( 295 ) ( 2,839 ) Other current assets 694 ( 279 ) 1,298 Trade payables ( 1,544 ) 1,389 1,919 Payables to brokerage customers ( 2,059 ) 891 2,527 Accrued expenses and other payables ( 790 ) ( 44 ) ( 73 ) Total Operating Activities 4,460 3,478 6,595 Investing Activities Capital expenditures ( 1,494 ) ( 1,319 ) ( 1,169 ) Net assets of businesses acquired ( 23 ) ( 22 ) ( 1,564 ) Proceeds from sales of assets and businesses 60 131 245 Investments in affiliates ( 18 ) ( 77 ) ( 34 ) Cost method investments — ( 155 ) ( 69 ) Other – net ( 21 ) 42 ( 78 ) Total Investing Activities ( 1,496 ) ( 1,400 ) ( 2,669 ) Financing Activities Long-term debt borrowings 501 752 1,329 Long-term debt payments ( 963 ) ( 482 ) ( 534 ) Net borrowings (payments) under lines of credit agreements ( 390 ) ( 428 ) ( 1,085 ) Share repurchases ( 2,673 ) ( 1,450 ) — Cash dividends ( 977 ) ( 899 ) ( 834 ) Other – net ( 102 ) 8 6 Total Financing Activities ( 4,604 ) ( 2,499 ) ( 1,118 ) Effect of exchange rate on cash, cash equivalents, restricted cash, and restricted cash equivalents ( 3 ) — — Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents ( 1,643 ) ( 421 ) 2,808 Cash, cash equivalents, restricted cash, and restricted cash equivalents – beginning of year 7,033 7,454 4,646 Cash, cash equivalents, restricted cash, and restricted cash equivalents – end of year $ 5,390 $ 7,033 $ 7,454 Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents to the consolidated balance sheets Cash and cash equivalents $ 1,368 $ 1,037 $ 943 Restricted cash and restricted cash equivalents included in segregated cash and investments 4,022 5,996 6,511 Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 5,390 $ 7,033 $ 7,454 Cash paid for interest and income taxes were as follows: Interest $ 711 $ 409 $ 276 Income taxes $ 742 $ 708 $ 553 See notes to consolidated financial statements. 62 Archer-Daniels-Midland Company Consolidated Statements of Shareholders’ Equity Accumulated Other Total Common Stock Reinvested Comprehensive Noncontrolling Shareholders’ Shares Amount Earnings Income (Loss) Interests Equity (In millions) Balance, December 31, 2020 556 $ 2,824 $ 19,780 $ ( 2,604 ) $ 22 $ 20,022 Comprehensive income Net earnings 2,709 26 Other comprehensive income (loss) 432 — Total comprehensive income 3,167 Cash dividends paid-$ 1.48 per share ( 834 ) ( 834 ) Stock compensation expense 3 161 161 Stock option exercises net of taxes 1 4 4 Other — 5 — ( 17 ) ( 12 ) Balance, December 31, 2021 560 $ 2,994 $ 21,655 $ ( 2,172 ) $ 31 $ 22,508 Comprehensive income Net earnings 4,340 25 Other comprehensive income (loss) ( 337 ) ( 20 ) Total comprehensive income 4,008 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 ) Balance, December 31, 2022 547 $ 3,147 $ 23,646 $ ( 2,509 ) $ 33 $ 24,317 Comprehensive income Net earnings 3,483 ( 17 ) Other comprehensive income (loss) 22 ( 3 ) Total comprehensive income 3,485 Cash dividends paid-$ 1.80 per share ( 977 ) ( 977 ) Share repurchases ( 36 ) ( 2,697 ) ( 2,697 ) Stock compensation expense 3 112 112 Stock option exercises net of taxes ( 1 ) ( 110 ) ( 110 ) Other — 5 10 — 15 Balance, December 31, 2023 513 $ 3,154 $ 23,465 $ ( 2,487 ) $ 13 $ 24,145 See notes to consolidated financial statements. 63 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements Note 1. Summary of Significant Accounting Policies Nature of Business ADM unlocks the power of nature to enrich the quality of life for people and animals. ADM’s innovation and expertise are helping people live healthier lives and support a healthier planet. The Company’s globally-integrated footprint combined with local insight give ADM capabilities few other companies have to meet critical and global needs. With a foundation in nature and nutrition, the Company is a leader in sustainability, scaling across entire value chains to help decarbonize the industry, and safeguard the planet. ADM has three business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The Company is an essential global agricultural supply chain manager and processor supporting food security by connecting local needs with global capabilities. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company consolidates all entities, including variable interest entities (VIEs), in which it has a controlling financial interest. For VIEs, the Company assesses whether it is the primary beneficiary as defined under the applicable accounting standard. Investments in affiliates, including VIEs through which the Company exercises significant influence but does not control the investee and is not the primary beneficiary of the investee’s activities, are carried at cost plus equity in undistributed earnings since acquisition and are adjusted, where appropriate, for basis differences between the investment balance and the underlying net assets of the investee. The Company’s portion of the results of certain affiliates and results of certain VIEs are included using the most recent available financial statements. In each case, the financial statements are within 93 days of the Company’s year-end and are consistent from period to period. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect amounts reported in its consolidated financial statements and accompanying notes. Actual results could differ from those estimates. 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. Segregated Cash and Investments The Company segregates certain cash, cash equivalents, and investment balances in accordance with regulatory requirements, commodity exchange requirements, and insurance arrangements. These balances represent deposits received from customers of the Company’s registered futures commission merchant and commodity brokerage services, cash margins and securities pledged to commodity exchange clearinghouses, and cash pledged as security under certain insurance arrangements. Segregated cash and investments also include restricted cash collateral for the various insurance programs of the Company’s captive insurance business. To the degree these segregated balances are comprised of cash and cash equivalents, they are considered restricted cash and cash equivalents on the statement of cash flows. 64 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 1. Summary of Significant Accounting Policies (Continued) Receivables The Company records accounts receivable at net realizable value. 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. The Company minimizes credit risk due to the large and diversified nature of its worldwide customer base. ADM manages its exposure to counter-party credit risk through credit analysis and approvals, credit limits, and monitoring procedures. 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 $ 6 million, $ 88 million, and $ 32 million in the years ended December 31, 2023, 2022, and 2021, respectively. Changes to the allowance for estimated uncollectible accounts are as follows: Year Ended December 31 2023 2022 (In millions) Beginning, January 1 $ 199 $ 122 Current year provisions 6 88 Recoveries 2 2 Write-offs against allowance ( 28 ) ( 12 ) Foreign exchange translation adjustment — ( 2 ) Other 36 1 Ending, December 31 $ 215 $ 199 Current year provisions in the year ended December 31, 2023 is net of reversals of prior year general provisions for economic factors related to the pandemic and provision for a certain customer. Write-offs against allowance in the year ended December 31, 2023 were related to a customer in Brazil and allowance on receivables that were subsequently sold in the current year. Other in the year ended December 31, 2023 is due primarily to reclassifications. Inventories 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. The following table sets forth the Company’s inventories as of December 31, 2023 and 2022. December 31, 2023 December 31, 2022 (In millions) Raw materials and supplies $ 5,475 $ 6,975 Finished goods 6,482 7,796 Total inventories $ 11,957 $ 14,771 Included in raw materials and supplies are work in process inventories which were not material as of December 31, 2023 and 2022. 65 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 1. Summary of Significant Accounting Policies (Continued) Fair Value Measurements The Company determines fair value based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the market approach valuation technique to measure the majority of its assets and liabilities carried at fair value. Three levels are established within the fair value hierarchy that may be used to report fair value: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Observable inputs, including Level 1 prices that have been adjusted; quoted prices for similar assets or liabilities; quoted prices in markets that are less active than traded exchanges; and other inputs that are observable or can be substantially corroborated by observable market data. Level 3: Unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. In evaluating the significance of fair value inputs, the Company generally classifies assets or liabilities as Level 3 when their fair value is determined using unobservable inputs that individually or when aggregated with other unobservable inputs, represent more than 10% of the fair value of the assets or liabilities. Judgment is required in evaluating both quantitative and qualitative factors in the determination of significance for purposes of fair value level classification. Level 3 amounts can include assets and liabilities whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as assets and liabilities for which the determination of fair value requires significant management judgment or estimation. Based on historical experience with the Company’s suppliers and customers, the Company’s own credit risk and knowledge of current market conditions, the Company does not view nonperformance risk to be a significant input to fair value for the majority of its forward commodity purchase and sale contracts. However, in certain cases, if the Company believes the nonperformance risk to be a significant input, the Company records estimated fair value adjustments, and classifies the measurement in Level 3. In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of input that is a significant component of the fair value measurement determines the placement of the entire fair value measurement in the hierarchy. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels. The Company’s policy regarding the timing of transfers between levels, including both transfers into and transfers out of Level 3, is to measure and record the transfers at the end of the reporting period. Derivatives The Company recognizes all of its derivative instruments as either assets or liabilities at fair value in its consolidated balance sheet. Unrealized gains are reported as other current assets and unrealized losses are reported as accrued expenses and other payables. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. The majority of the Company’s derivatives have not been designated as hedging instruments, and as such, changes in fair value of these derivatives are recognized in earnings immediately. For those derivative instruments that are designated and qualify as hedging instruments, the Company designates the hedging instrument, based upon the exposure being hedged, as a cash flow hedge or a net investment hedge. For derivative instruments that are designated and qualify as highly-effective cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss) (AOCI) and as an operating activity in the statement of cash flows and reclassified into earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings. Hedge components excluded from the assessment of effectiveness and gains and losses related to discontinued hedges are recognized in the consolidated statement of earnings during the current period. For derivative instruments that are designated and qualify as net investment hedges, foreign exchange gains and losses related to changes in foreign currency exchange rates are deferred in AOCI until the underlying investment is divested. 66 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 1. Summary of Significant Accounting Policies (Continued) Cost Method Investments Cost method investments of $ 438 million and $ 488 million as of December 31, 2023 and 2022, respectively, are included in Other Assets in the Company’s consolidated balance sheets. Revaluation losses of $ 76 million for the year ended December 31, 2023 were related to investments in the alternative protein category and precision fermentation. Revaluation gains of $ 37 million and $ 49 million for the years ended December 31, 2022 and 2021, respectively, were in connection with observable third-party transactions (a level 2 measurement under applicable accounting standards). Revaluation gains and losses are recorded in interest and investment income in the Company’s consolidated statements of earnings. As of December 31, 2023, the cumulative amounts of upward and downward adjustments were $ 113 million and $ 76 million, respectively. Property, Plant, and Equipment Property, plant, and equipment are recorded at cost. Repair and maintenance costs are expensed as incurred. 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: buildings - 15 to 40 years; machinery and equipment - 3 to 40 years. The Company capitalized interest on major construction projects in progress of $ 32 million, $ 20 million, and $ 17 million for the years ended December 31, 2023, 2022, and 2021, respectively. Income Taxes The Company accounts for income taxes in accordance with the liability method. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and reported amounts in the consolidated financial statements using statutory rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in the results of operations in the period that includes the enactment date under the law. Applicable accounting standards prescribe a minimum threshold a tax position is required to meet before being recognized in the consolidated financial statements. The Company recognizes in its consolidated financial statements tax positions determined more likely than not to be sustained upon examination, based on the technical merits of the position. The Company classifies interest on income tax-related balances as interest expense and classifies tax-related penalties as selling, general, and administrative expenses. Income tax effects from AOCI are released when the individual units of account are sold, terminated, or extinguished. Goodwill and other intangible assets Goodwill and other intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. Definite-lived intangible assets, including capitalized expenses related to the Company’s 1ADM program such as third-party configuration costs and internal labor, are amortized over their estimated useful lives of 1 to 50 years and are reviewed for impairment whenever there are indicators the carrying value of the assets may not be fully recoverable. The Company’s accounting policy is to evaluate goodwill and other intangible assets with indefinite lives for impairment on October 1 of each fiscal year or whenever there are indicators the carrying value of the assets may not be fully recoverable. The Company recorded impairment charges totaling $ 201 million related to goodwill, customer list, and discontinued animal nutrition trademarks, $ 2 million related to customer list, and $ 52 million related to goodwill and other intangibles during the years ended December 31, 2023, 2022, and 2021, respectively (see Note 9 for additional information). 67 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 1. Summary of Significant Accounting Policies (Continued) The goodwill impairment charge recorded during the year ended December 31, 2023 of $ 137 million was related to the Animal Nutrition reporting unit that was evaluated for impairment using a quantitative assessment. The Company utilized a third-party valuation specialist to assist management in determining the fair value of the Animal Nutrition reporting unit. The fair value of the Animal Nutrition reporting unit was estimated based on a combination of discounted cash flows (income approach) and the use of pricing multiples derived from an analysis of comparable public companies multiplied against historical and or anticipated financial metrics (market approach). As a result of the impairment testing in the fourth quarter of 2023, the Company determined the fair value of the Animal Nutrition reporting unit was below its carrying value. The decline in the fair value of the Animal Nutrition reporting unit was primarily driven by a higher discount rate due to changes in the underlying business performance and industry conditions as well as the macroeconomic environment, causing a decline in projected cash flows. Asset Abandonments and Write-Downs The Company evaluates long-lived assets for impairment whenever indicators of impairment exist. In addition, assets are written down to fair value after consideration of the Company’s ability to utilize the assets for their intended purpose, employ the assets in alternative uses, or sell the assets to recover the carrying value. Fair value is generally based on discounted cash flow analysis which relies on management’s estimate of market participant assumptions or estimated selling price for assets considered held for sale (a Level 3 measurement under applicable accounting standards). During 2023, 2022 and 2021, the Company temporarily idled certain assets which were not material. During the years ended December 31, 2023, 2022, and 2021, asset abandonment and impairment charges were $ 108 million, $ 35 million, and $ 73 million, respectively. Payables to Brokerage Customers Payables to brokerage customers represent the total of customer accounts at the Company’s futures commission merchant with credit or positive balances. Customer accounts are used primarily in connection with commodity transactions and include gains and losses on open commodity trades as well as securities and other deposits made for margins or other purposes as required by the Company or the exchange-clearing organizations or counterparties. Payables to brokerage customers have a corresponding balance in segregated cash and investments and customer omnibus receivable in other current assets. Revenues The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product or service to a customer. For transportation service contracts, the Company recognizes revenue over time as the 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”). Stock Compensation The Company recognizes expense for its stock compensation based on the fair value of the awards that are granted. The Company’s stock compensation plans provide for the granting of restricted stock, restricted stock units, performance stock units, and stock options. The fair values of stock options and performance stock units are estimated at the date of grant using the Black-Scholes option valuation model and a lattice valuation model, respectively. These valuation models require the input of subjective assumptions. Measured compensation cost, net of forfeitures, is recognized ratably over the vesting period of the related stock compensation award. Research and Development 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 $ 256 million, $ 216 million, and $ 171 million for the years ended December 31, 2023, 2022, and 2021, respectively. 68 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 1. Summary of Significant Accounting Policies (Continued) Per Share Data Basic earnings per common share are determined by dividing net earnings attributable to controlling interests by the weighted average number of common shares outstanding. In computing diluted earnings per share, average number of common shares outstanding is increased by common stock options outstanding with exercise prices lower than the average market price of common shares using the treasury share method. Business Combinations The Company’s acquisitions are accounted for in accordance with ASC Topic 805, Business Combinations, as amended . The consideration transferred is allocated to various assets acquired and liabilities assumed at their estimated fair values as of the acquisition date with the residual allocated to goodwill. Fair values allocated to assets acquired and liabilities assumed in business combinations require management to make significant judgments, estimates, and assumptions, especially with respect to intangible assets. Management makes estimates of fair values based upon assumptions it believes to be reasonable. These estimates are based upon historical experience and information obtained from the management of the acquired companies and are inherently uncertain. The estimated fair values related to intangible assets primarily consist of customer relationships, trademarks, and developed technology which are determined primarily using discounted cash flow models. Estimates in the discounted cash flow models include, but are not limited to, certain assumptions that form the basis of the forecasted results (e.g. revenue growth rates, customer attrition rates, and royalty rates). These significant assumptions are forward looking and could be affected by future economic and market conditions. During the measurement period, which may take up to one year from the acquisition date, adjustments due to changes in the estimated fair value of assets acquired and liabilities assumed may be recorded as adjustments to the consideration transferred and the related allocations. Upon the conclusion of the measurement period or the final determination of the values of assets acquired and liabilities assumed, whichever comes first, any such adjustments are charged to the consolidated statements of earnings. 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. Operations in Ukraine and Russia ADM employs approximately 630 people in Ukraine and operates an oilseeds crushing plant, a grain port terminal, inland and river silos, and a trading office. 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 concluded that as of December 31, 2023, receivables, net of allowances, are deemed collectible and market inventories are valued appropriately. The Company also evaluated the impact of Russia’s announcement of its purported annexation of four Ukrainian regions on the valuation of ADM’s assets in those regions and concluded 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. New Accounting Standards Effective January 1, 2023, the Company adopted the amended guidance of Accounting Standards Codification (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 ASC Topic 606, Revenue from Contracts with Customers , (Topic 606). The Company’s adoption of this amended guidance did not have an impact on its consolidated financial statements. 69 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 1. Summary of Significant Accounting Policies (Continued) Effective January 1, 2023, the Company adopted 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. ADM has Supplier Payable Programs (“SPP”) with financial institutions which act as its paying agents for payables due to certain of its suppliers. The Company has neither an economic interest in a supplier’s participation in the SPP nor a direct financial relationship with the financial institutions, and has concluded its obligations to the suppliers, including amounts due and scheduled payment terms, are not impacted by their participation in the SPP. Accordingly, amounts associated with the SPP continue to be classified in current liabilities in the Company’s consolidated balance sheet and in operating activities in its consolidated statement of cash flows. The supplier invoices that have been confirmed as valid under the program require payment in full generally within 90 days of the invoice date. As of December 31, 2023 and 2022, the Company's outstanding payment obligations suppliers had elected to sell to the financial institutions were $ 274 million and $ 196 million, respectively. Changes to the outstanding payment obligations are as follows: Year Ended December 31 2023 (In millions) Beginning, January 1 $ 196 Obligations confirmed 1,100 Obligations paid ( 1,022 ) Ending, December 31 $ 274 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 are retained through the end of the hedging relationship. The Company’s adoption of the amended guidance will not have an impact on its consolidated financial statements. Effective December 31, 2024, the Company will be required to adopt the amended guidance of ASC 280, Segment Reporting , which improves disclosures about a public entity’s reportable segments and addresses requests from investors and other allocators of capital for more detailed information about a reportable segment’s expenses. The amended guidance improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and permits entities to disclose more than one measure of a reportable segment’s profitability used by the Chief Operating Decision Maker. The adoption of the amended guidance will result in expanded disclosures in the Company’s segment and geographic information footnote but will not have an impact on the consolidated financial statements. Effective December 31, 2025, the Company will be required to adopt the amended guidance of ASC 740, Income Taxes , which enhances the transparency and decision usefulness of income tax disclosures. The amendments address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The adoption of the amended guidance will result in expanded disclosures in the Company’s income taxes footnote but will not have an impact on the consolidated financial statements. 70 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 2. Revenues Revenue Recognition The Company principally generates revenue from merchandising and transporting agricultural commodities, and manufacturing products for use in food, beverages, feed, energy, and industrial applications, and ingredients and solutions for human and animal nutrition. Revenue is measured based on the consideration specified in the contract with a customer. The Company follows a policy of recognizing revenue at a single point in time when it satisfies its performance obligation by transferring control over a product or service to a customer. The majority of the Company’s contracts with customers have one performance obligation and a contract duration of one year or less. The Company applies the practical expedient in paragraph 10-50-14 of Topic 606 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. For transportation service contracts, the Company recognizes revenue over time as the mode of transportation moves towards its destination in accordance with the transfer of control guidance of Topic 606. The Company recognized revenue from transportation service contracts of $ 761 million, $ 818 million, and $ 606 million for the years ended December 31, 2023, 2022, and 2021, respectively. For physically settled derivative sales contracts that are outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by ASC 610-20. Shipping and Handling Costs Shipping and handling costs related to contracts with customers for the sale of goods are accounted for as a fulfillment activity and are included in cost of products sold. Accordingly, amounts billed to customers for such costs are included as a component of revenues. Taxes Collected from Customers and Remitted to Governmental Authorities The Company does not include taxes assessed by governmental authorities that are (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers, in the measurement of transactions prices or as a component of revenues and cost of products sold. Contract Liabilities Contract liabilities relate to advance payments from customers for goods and services the Company has yet to provide. Contract liabilities of $ 626 million and $ 694 million as of December 31, 2023 and 2022, respectively, were recorded in accrued expenses and other payables in the consolidated balance sheet. Revenues recognized in the year ended December 31, 2023 from the December 31, 2022 contract liabilities were $ 469 million. 71 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 2. Revenues (Continued) Disaggregation of Revenues The following tables present revenue disaggregated by timing of recognition and major product lines for the years ended December 31, 2023, 2022, and 2021. Year Ended December 31, 2023 Topic 606 Revenue Topic 815 (1) Total Point in Time Over Time Total Revenue Revenues (In millions) Ag Services and Oilseeds Ag Services $ 4,110 $ 761 $ 4,871 $ 42,549 $ 47,420 Crushing 470 — 470 13,550 14,020 Refined Products and Other 2,295 — 2,295 9,691 11,986 Total Ag Services and Oilseeds 6,875 761 7,636 65,790 73,426 Carbohydrate Solutions Starches and Sweeteners 7,431 — 7,431 2,454 9,885 Vantage Corn Processors 2,989 — 2,989 — 2,989 Total Carbohydrate Solutions 10,420 — 10,420 2,454 12,874 Nutrition Human Nutrition 3,634 — 3,634 — 3,634 Animal Nutrition 3,577 — 3,577 — 3,577 Total Nutrition 7,211 — 7,211 — 7,211 Other Business 424 — 424 — 424 Total Revenues $ 24,930 $ 761 $ 25,691 $ 68,244 $ 93,935 72 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 2. Revenues (Continued) Year Ended December 31, 2022 Topic 606 Revenue Topic 815 (1) Total Point in Time Over Time Total Revenue Revenues (In millions) Ag Services and Oilseeds Ag Services $ 4,053 $ 818 $ 4,871 $ 48,310 $ 53,181 Crushing 573 — 573 12,566 13,139 Refined Products and Other 2,724 — 2,724 10,519 13,243 Total Ag Services and Oilseeds 7,350 818 8,168 71,395 79,563 Carbohydrate Solutions Starches and Sweeteners 7,696 — 7,696 2,555 10,251 Vantage Corn Processors 3,710 — 3,710 — 3,710 Total Carbohydrate Solutions 11,406 — 11,406 2,555 13,961 Nutrition Human Nutrition 3,769 — 3,769 — 3,769 Animal Nutrition 3,867 — 3,867 — 3,867 Total Nutrition 7,636 — 7,636 — 7,636 Other Business 396 — 396 — 396 Total Revenues $ 26,788 $ 818 $ 27,606 $ 73,950 $ 101,556 Year Ended December 31, 2021 Topic 606 Revenue Topic 815 (1) Total Point in Time Over Time Total Revenue Revenues (In millions) Ag Services and Oilseeds Ag Services $ 2,831 $ 606 $ 3,437 $ 41,580 $ 45,017 Crushing 441 — 441 10,927 11,368 Refined Products and Other 2,458 — 2,458 8,204 10,662 Total Ag Services and Oilseeds 5,730 606 6,336 60,711 67,047 Carbohydrate Solutions Starches and Sweeteners 5,866 — 5,866 1,745 7,611 Vantage Corn Processors 3,499 — 3,499 — 3,499 Total Carbohydrate Solutions 9,365 — 9,365 1,745 11,110 Nutrition Human Nutrition 3,189 — 3,189 — 3,189 Animal Nutrition 3,523 — 3,523 — 3,523 Total Nutrition 6,712 — 6,712 — 6,712 Other Business 380 — 380 — 380 Total Revenues $ 22,187 $ 606 $ 22,793 $ 62,456 $ 85,249 (1) Topic 815 revenue relates to the physical delivery or the settlement of the Company’s sales contracts accounted for as derivatives and are outside the scope of Topic 606. 73 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 2. Revenues (Continued) Ag Services and Oilseeds The Ag Services and Oilseeds segment generates revenue from the sale of commodities, from service fees for the transportation of goods, from the sale of products manufactured in its global processing facilities, and from its structured trade finance activities. Revenue is measured based on the consideration specified in the contract. Revenue is recognized when a performance obligation is satisfied by transferring control over a product or providing service to a customer. For transportation service contracts, the Company recognizes revenue over time as the mode of transportation moves towards its destination in accordance with the transfer of control guidance of Topic 606. The amount of revenue recognized follows the contractually specified price which may include freight or other contractually specified cost components. For physically settled derivative sales contracts outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20. The 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, 2023, 2022, and 2021. Carbohydrate Solutions The Carbohydrate Solutions segment generates revenue from the sale of products manufactured at the Company’s global corn and wheat milling facilities around the world. Revenue is recognized when control over products is transferred to the customer. Products are shipped to customers from the Company’s various facilities and from its network of storage terminals. The amount of revenue recognized is based on the consideration specified in the contract which could include freight and other costs depending on the specific shipping terms of each contract. For physically settled derivative sales contracts outside the scope of Topic 606, the Company recognizes revenue when control of the inventory is transferred within the meaning of Topic 606 as required by Topic 610-20. Nutrition The Nutrition segment sells ingredients and solutions including plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, enzymes, botanical extracts, edible beans, formula feeds, animal health and nutrition products, pet food and treats, and other specialty food and feed ingredients. Revenue is recognized when control over products is transferred to the customer. The amount of revenue recognized follows the contracted price or the mutually agreed price of the product. Freight and shipping are recognized as a component of revenue at the same time control transfers to the customer. Other Business Other Business includes the Company’s futures commission business whose primary sources of revenue are commissions and brokerage income generated from executing orders and clearing futures contracts and options on futures contracts on behalf of its customers. Commissions and brokerage revenue are recognized on the date the transaction is executed. Other Business also includes the Company’s captive insurance business which generates third party revenue through its proportionate share of premiums from third-party reinsurance pools. Reinsurance premiums are recognized on a straight-line basis over the period underlying the policy. 74 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 3. Acquisitions Fiscal year 2023 acquisitions During the year ended December 31, 2023, the Company acquired Prairie Pulse Inc., an 83 % majority stake in Buckminster Química, and D.C.A. Finance B.V. for an aggregate cash consideration of $ 25 million. The aggregate cash consideration of these acquisitions, net of $ 2 million in cash acquired, was preliminarily allocated as follows: (In millions) Property, plant, and equipment $ 18 Goodwill 20 Other long-term assets 2 Long-term liabilities ( 17 ) Aggregate cash consideration $ 23 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 Goodwill 13 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; Deerland Probiotics & Enzymes (“Deerland”), a leader in probiotic, prebiotic, and enzyme technology; and Sojaprotein, a leading European provider of non-GMO soy ingredients, for an aggregate consideration of $ 1.6 billion using cash on hand. The aggregate cash consideration of these acquisitions, net of $ 21 million in cash acquired, was 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 Working capital $ 11 $ 27 $ 35 $ 7 $ 80 Property, plant, and equipment 73 43 85 6 207 Goodwill 317 396 192 35 940 Other intangible assets 245 252 42 18 557 Other long-term assets — — 12 2 14 Long-term liabilities — ( 74 ) ( 10 ) — ( 84 ) Temporary equity - redeemable noncontrolling interest ( 150 ) — — — ( 150 ) Aggregate cash consideration $ 496 $ 644 $ 356 $ 68 $ 1,564 75 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 3. Acquisitions (Continued) The Company has the option to acquire the remaining 25 % interest in P4 from December 31, 2023 to March 31, 2025, based on a fixed multiple of earnings before interest, taxes, depreciation, and amortization for the twelve months prior to the exercise of this option. The noncontrolling interest holders also have the option to put the 25 % interest to the Company on the same terms. The Company records the 25 % remaining interest in temporary equity - redeemable noncontrolling interest. Of the $ 940 million allocated to goodwill, $ 313 million is expected to be deductible for tax purposes. The 2021 acquisitions advance ADM’s growth strategy by expanding the Company’s capabilities in pet treat and supplements and the fast-growing global demand for plant-based proteins as well as capabilities in the high-value flavor segment and the fast growing demand for food, beverages, and supplements. The post-acquisition financial results of these acquisitions are reported in the Nutrition segment. The following table sets forth the fair values and the useful lives of the other intangible assets acquired. Useful Lives P4 Deerland Sojaprotein Others Total (In years) (In millions) Intangible assets with finite lives: Trademarks/brands 7 to 15 $ 9 $ 18 $ 5 $ 1 $ 33 Customer lists 15 to 20 220 176 37 14 447 Recipes and others 7 16 58 — 3 77 Total other intangible assets acquired $ 245 $ 252 $ 42 $ 18 $ 557 Note 4. Fair Value Measurements The following tables set forth, by level, the Company’s assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2023 and 2022. Fair Value Measurements at December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (In millions) Assets: Inventories carried at market $ — $ 4,274 $ 2,713 $ 6,987 Unrealized derivative gains: Commodity contracts — 628 731 1,359 Foreign exchange contracts — 187 — 187 Cash equivalents 209 — — 209 Segregated investments 1,362 — — 1,362 Total Assets $ 1,571 $ 5,089 $ 3,444 $ 10,104 Liabilities: Unrealized derivative losses: Commodity contracts $ — $ 500 $ 457 $ 957 Foreign exchange contracts — 144 — 144 Inventory-related payables — 1,219 101 1,320 Total Liabilities $ — $ 1,863 $ 558 $ 2,421 76 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 4. Fair Value Measurements (Continued) Fair Value Measurements at December 31, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (In millions) Assets: Inventories carried at market $ — $ 6,281 $ 2,760 $ 9,041 Unrealized derivative gains: Commodity contracts — 796 541 1,337 Foreign currency contracts — 258 — 258 Interest rate contracts — 109 — 109 Cash equivalents 405 — — 405 Segregated investments 1,453 — — 1,453 Total Assets $ 1,858 $ 7,444 $ 3,301 $ 12,603 Liabilities: Unrealized derivative losses: Commodity contracts $ — $ 665 $ 603 $ 1,268 Foreign currency contracts — 275 — 275 Debt conversion option — — 6 6 Inventory-related payables — 1,181 89 1,270 Total Liabilities $ — $ 2,121 $ 698 $ 2,819 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 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 and inventory-related payables are recognized in the consolidated statements of earnings as a component of cost of products sold. 77 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 4. Fair Value Measurements (Continued) Derivative contracts include exchange-traded commodity futures and options contracts, forward commodity purchase and sale contracts, and OTC instruments related primarily to agricultural commodities, energy, interest rates, and foreign currencies. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified in Level 1. The majority of the Company’s exchange-traded futures and options contracts are cash-settled on a daily basis and, therefore, are not included in these tables. Fair value for forward commodity purchase and sale contracts is estimated based on exchange-quoted prices adjusted for differences in local markets. Market valuations for the Company’s forward commodity purchase and sale contracts are adjusted for location (basis) because the exchange-quoted prices represent contracts that have standardized terms for commodity, quantity, future delivery period, delivery location, and commodity quality or grade. The basis adjustments are generally determined using inputs from competitor and broker quotations or market transactions 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 observable inputs are available for substantially the full term of the contract, it is classified in Level 2. When unobservable inputs have a significant impact (more than 10%) on the measurement of fair value, the contract is classified in Level 3. Except for certain derivatives designated as cash flow hedges, changes in the fair value of commodity-related derivatives are recognized in the consolidated statements of earnings as a component of cost of products sold. Changes in the fair value of foreign currency-related derivatives are recognized in the consolidated statements of earnings as a component of revenues, cost of products sold, and other (income) expense - net, depending upon the purpose of the contract. The changes in the fair value of derivatives designated as effective cash flow hedges are recognized in the consolidated balance sheets as a component of AOCI until the hedged items are recorded in earnings or it is probable the hedged transaction will no longer occur. The Company’s cash equivalents are comprised of money market funds valued using quoted market prices and are classified as Level 1. The Company’s segregated investments are comprised of U.S. Treasury securities. U.S. Treasury securities are valued using quoted market prices and are classified in Level 1. The debt conversion option was the equity linked embedded derivative related to the exchangeable bonds. The fair value of the embedded derivative was included in long-term debt, with changes in fair value recognized as interest, and was valued with the assistance of a third-party pricing service (a level 3 measurement). 78 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 4. Fair Value Measurements (Continued) The following tables present a rollforward of the activity of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2023 and 2022. Level 3 Fair Value Assets Measurements at December 31, 2023 Inventories Carried at Market Commodity Derivative Contracts Gains Total (In millions) Balance, December 31, 2022 $ 2,760 $ 541 $ 3,301 Total increase (decrease) in net realized/unrealized gains included in cost of products sold 432 1,460 1,892 Purchases 29,929 — 29,929 Sales ( 30,038 ) — ( 30,038 ) Settlements ( 4 ) ( 1,559 ) ( 1,563 ) Transfers into Level 3 1,584 371 1,955 Transfers out of Level 3 ( 1,950 ) ( 82 ) ( 2,032 ) Ending balance, December 31, 2023 (1) $ 2,713 $ 731 $ 3,444 (1) Includes increase in unrealized gains of $ 2.1 billion relating to Level 3 assets still held at December 31, 2023. Level 3 Fair Value Liabilities Measurements at December 31, 2023 Inventory- related Payables Commodity Derivative Contracts Losses Debt Conversion Option Total (In millions) Balance, December 31, 2022 $ 89 $ 603 $ 6 $ 698 Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense 5 1,303 ( 6 ) 1,302 Purchases 49 — — 49 Settlements ( 35 ) ( 1,583 ) — ( 1,618 ) Transfers into Level 3 1 157 — 158 Transfers out of Level 3 ( 8 ) ( 23 ) — ( 31 ) Ending balance, December 31, 2023 (1) $ 101 $ 457 $ — $ 558 (1) Includes increase in unrealized losses of $ 1.3 billion relating to Level 3 liabilities still held at December 31, 2023. 79 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 4. Fair Value Measurements (Continued) Level 3 Fair Value Assets Measurements at December 31, 2022 Inventories Carried at Market Commodity Derivative Contracts Gains Total (In millions) Balance, December 31, 2021 $ 3,004 $ 460 $ 3,464 Total increase (decrease) in net realized/unrealized gains included in cost of products sold 867 1,648 2,515 Purchases 49,735 — 49,735 Sales ( 50,414 ) — ( 50,414 ) Settlements — ( 1,672 ) ( 1,672 ) Transfers into Level 3 1,088 400 1,488 Transfers out of Level 3 ( 1,520 ) ( 295 ) ( 1,815 ) Ending balance, December 31, 2022 (1) $ 2,760 $ 541 $ 3,301 (1) Includes increase in unrealized gains of $ 2.7 billion relating to Level 3 assets still held at December 31, 2022. Level 3 Fair Value Liabilities Measurements at December 31, 2022 Inventory- related Payables Commodity Derivative Contracts Losses Debt Conversion Option Total (In millions) Balance, December 31, 2021 $ 106 $ 815 $ 15 $ 936 Total increase (decrease) in net realized/unrealized losses included in cost of products sold and interest expense 3 2,483 ( 9 ) 2,477 Purchases 183 — — 183 Sales ( 203 ) — — ( 203 ) Settlements — ( 2,844 ) — ( 2,844 ) Transfers into Level 3 — 401 — 401 Transfers out of Level 3 — ( 252 ) — ( 252 ) Ending balance, December 31, 2022 (1) $ 89 $ 603 $ 6 $ 698 (1) Includes increase in unrealized losses of $ 2.5 billion relating to Level 3 liabilities still held at December 31, 2022. Transfers into Level 3 of assets and liabilities previously classified in Level 2 were due to the relative value of unobservable inputs to the total fair value measurement of certain products and derivative contracts rising above the 10% threshold. Transfers out of Level 3 were primarily due to the relative value of unobservable inputs to the total fair value measurement of certain products and derivative contracts falling below the 10% threshold and thus permitting reclassification to Level 2. 80 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 4. Fair Value Measurements (Continued) In some cases, the price components that result in differences between exchange-traded prices and local prices for inventories and commodity purchase and sale contracts are observable based upon available quotations for these pricing components, and in some cases, the differences are unobservable. These price components primarily include transportation costs and other adjustments required due to location, quality, or other contract terms. In the table below, these other adjustments are referred to as basis. The 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, 2023 and 2022. The Company’s Level 3 measurements may include basis only, transportation cost only, or both price components. As an example, for Level 3 inventories with basis, the unobservable component as of December 31, 2023 is a weighted average 25.0 % of the total price for assets and 33.2 % of the total price for liabilities. Weighted Average % of Total Price December 31, 2023 December 31, 2022 Component Type Assets Liabilities Assets Liabilities Inventories and Related Payables Basis 25.0 % 33.2 % 19.4 % 15.2 % Transportation cost 11.5 % — % 10.5 % — % Commodity Derivative Contracts Basis 24.2 % 24.9 % 22.7 % 26.5 % Transportation cost 9.3 % 3.2 % 13.5 % 3.7 % In certain of the Company’s principal markets, the Company relies on price quotes from third parties to value its inventories and physical commodity purchase and sale contracts. These price quotes are generally not further adjusted by the Company in determining the applicable market price. In some cases, availability of third-party quotes is limited to only one or two independent sources. In these situations, absent other corroborating evidence, the Company considers these price quotes as 100% unobservable and, therefore, the fair value of these items is reported in Level 3. Note 5. Derivative Instruments & Hedging Activities Derivatives Not Designated as Hedging Instruments The majority of the Company’s derivative instruments have not been designated as hedging instruments. The Company uses exchange-traded futures and exchange-traded and OTC options contracts to manage its net position of merchandisable agricultural product inventories and forward cash purchase and sales contracts to reduce price risk caused by market fluctuations in agricultural commodities and foreign currencies. The Company also uses exchange-traded futures and exchange-traded and OTC options contracts as components of merchandising strategies designed to enhance margins. The results of these strategies can be significantly impacted by factors such as the correlation between the value of exchange-traded commodities futures contracts and the value of the underlying commodities, counterparty contract defaults, and volatility of freight markets. Derivatives, including exchange traded contracts and forward commodity purchase or sale contracts, and inventories of certain merchandisable agricultural products, which include amounts acquired under deferred pricing contracts, are stated at fair value or market value. Inventory is not a derivative and therefore fair values of and changes in fair values of inventories are not included in the tables below. 81 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 5. Derivative Instruments & Hedging Activities (Continued) The following table sets forth the fair value of derivatives not designated as hedging instruments as of December 31, 2023 and 2022. December 31, 2023 December 31, 2022 Assets Liabilities Assets Liabilities (In millions) Foreign Currency Contracts $ 187 $ 122 $ 154 $ 275 Commodity Contracts 1,343 957 1,337 1,248 Debt Conversion Option — — — 6 Total $ 1,530 $ 1,079 $ 1,491 $ 1,529 The following table sets forth the pre-tax gains (losses) on derivatives not designated as hedging instruments that have been included in the consolidated statements of earnings for the years ended December 31, 2023, 2022, and 2021. Cost of Other expense (income) - net products Interest (In millions) Revenues sold Expense For the Year Ended December 31, 2023 Consolidated Statement of Earnings $ 93,935 $ 86,422 $ 647 $ ( 176 ) Pre-tax gains (losses) on: Foreign Currency Contracts $ ( 33 ) $ 322 $ — $ 43 Commodity Contracts — 619 — — Debt Conversion Option — — 6 Total gain (loss) recognized in earnings $ ( 33 ) $ 941 $ 6 $ 43 $ 957 For the Year Ended December 31, 2022 Consolidated Statement of Earnings $ 101,556 $ 93,986 $ 396 $ ( 358 ) Pre-tax gains (losses) on: Foreign Currency Contracts $ ( 42 ) $ 367 $ — $ 194 Commodity Contracts — ( 120 ) — — Debt Conversion Option — — 9 — Total gain (loss) recognized in earnings $ ( 42 ) $ 247 $ 9 $ 194 $ 408 For the Year Ended December 31, 2021 Consolidated Statement of Earnings $ 85,249 $ 79,262 $ 265 $ ( 94 ) Pre-tax gains (losses) on: Foreign Currency Contracts $ 3 $ ( 140 ) $ — $ 189 Commodity Contracts — ( 1,606 ) — — Debt Conversion Option — — 19 — Total gain (loss) recognized in earnings $ 3 $ ( 1,746 ) $ 19 $ 189 $ ( 1,535 ) 82 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 5. Derivative Instruments & Hedging Activities (Continued) Changes in the market value of inventories of certain merchandisable agricultural commodities, 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. Changes in the fair value of foreign currency-related derivatives are recognized in the consolidated statements of earnings as a component of revenues, cost of products sold, and other (income) expense - net depending on the purpose of the contract. Derivatives Designated as Cash Flow or Net Investment Hedging Instruments The Company had certain derivatives designated as cash flow and net investment hedges as of December 31, 2023 and 2022. 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. Commodity Contracts For each of the hedge programs described below, the derivatives are designated as cash flow hedges. The changes in the market value of such derivative contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. Once the hedged item is recognized in earnings, the gains and losses arising from the hedge are reclassified from AOCI to either revenues or cost of products sold, as applicable. The Company uses futures or options contracts to hedge the purchase price of anticipated volumes of corn to be purchased and processed in a future month. The objective of this hedging program is to reduce the variability of cash flows associated with the Company’s forecasted purchases of corn. The Company’s corn processing plants normally grind approximately 59 million bushels per month. During the past 12 months, the Company hedged between 18 % and 34 % of its monthly grind. At December 31, 2023, the Company had designated hedges representing between 4 % to 28 % of its anticipated monthly grind of corn for the next 12 months. The Company, from time to time, also uses futures, options, and swaps to hedge the sales price of certain ethanol sales contracts. The Company has established hedging programs for ethanol sales contracts that are indexed to unleaded gasoline prices and to various exchange-traded ethanol contracts. The objective of these hedging programs is to reduce the variability of cash flows associated with the Company’s sales of ethanol. During the past 12 months and as of December 31, 2023, the Company had no hedges related to ethanol sales. The Company uses futures and options contracts to hedge the purchase price of anticipated volumes of soybeans to be purchased and processed in a future month for certain of its U.S. soybean crush facilities, subject to certain program limits. The Company also uses futures or options contracts to hedge the sales prices of anticipated soybean meal and soybean oil sales proportionate to the soybean crushing process at these facilities, subject to certain program limits. During the past 12 months, the Company hedged between 77 % and 100 % of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities. At December 31, 2023, the Company had designated hedges representing between 0 % and 100 % of the anticipated monthly soybean crush for soybean purchases and soybean meal and oil sales at the designated facilities over the next 12 months. The Company uses futures and OTC swaps to hedge the purchase price of anticipated volumes of natural gas consumption in a future month for certain of its facilities in North America and Europe, subject to certain program limits. During the past 12 months, the Company hedged between 54 % and 85 % of the anticipated monthly natural gas consumption at the designated facilities. At December 31, 2023, the Company had designated hedges representing between 38 % and 64 % of the anticipated monthly natural gas consumption over the next 12 months. 83 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 5. Derivative Instruments & Hedging Activities (Continued) As of December 31, 2023 and 2022, the Company had after-tax gains of $ 42 million and after-tax losses of $ 17 million in AOCI, respectively, related to gains and losses from these programs. The Company expects to recognize $ 42 million of the 2023 after-tax gains in its consolidated statement of earnings during the next 12 months. Interest Rate Contracts The Company used 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 matched 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, the Company executed swap locks maturing on various dates with an aggregate notional amount of $ 400 million. During the quarter ended March 31, 2023, the Company unwound the swap locks in anticipation of the April 3, 2023 debt issuance. Foreign Currency Contracts 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 $ 0.8 billion as of December 31, 2023 and 2022, and foreign exchange forwards with an aggregate notional amount of $ 2.1 billion and $ 2.5 billion as of December 31, 2023 and 2022, respectively. Amounts excluded from the assessment of hedge effectiveness are immaterial for all periods presented. As of December 31, 2023 and 2022, the Company had after-tax losses of $ 5 million and after-tax gains of $ 79 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, 2023 and 2022. December 31, 2023 December 31, 2022 Assets Liabilities Assets Liabilities (In millions) Commodity Contracts $ 16 $ — $ — $ 20 Interest Rate Contracts — — 109 — Foreign Currency Contracts — 22 104 — Total $ 16 $ 22 $ 213 $ 20 84 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 5. Derivative Instruments & Hedging Activities (Continued) The following table sets forth the pre-tax gains (losses) on derivatives designated as hedging instruments that have been included in the consolidated statement of earnings for the years ended December 31, 2023, 2022, and 2021. Cost of products sold (In millions) Revenues For the Year Ended December 31, 2023 Consolidated Statement of Earnings $ 93,935 $ 86,422 Effective amounts recognized in earnings Pre-tax gains (losses) on: Commodity Contracts — 322 Total gain (loss) recognized in earnings $ — $ 322 $ 322 For the Year Ended December 31, 2022 Consolidated Statement of Earnings $ 101,556 $ 93,986 Effective amounts recognized in earnings Pre-tax gains (losses) on: Commodity Contracts $ — $ 351 Interest Rate Contracts 1 — Total gain (loss) recognized in earnings $ 1 $ 351 $ 352 For the Year Ended December 31, 2021 Consolidated Statement of Earnings $ 85,249 $ 79,262 Effective amounts recognized in earnings Pre-tax gains (losses) on: Commodity Contracts $ — $ 490 Interest Rate Contracts ( 16 ) — Total gain (loss) recognized in earnings $ ( 16 ) $ 490 $ 474 Other Net Investment Hedging Strategies The Company has designated € 0.7 billion and € 1.3 billion of its outstanding long-term debt and commercial paper borrowings at December 31, 2023 and 2022, respectively, as hedges of its net investment in a foreign subsidiary. As of December 31, 2023 and 2022, the Company had after-tax gains of $ 212 million and $ 228 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. 85 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 6. Other Current Assets The following table sets forth the items in other current assets: December 31, 2023 December 31, 2022 (In millions) Unrealized gains on derivative contracts $ 1,546 $ 1,704 Margin deposits and grain accounts 560 723 Customer omnibus receivable 1,052 1,309 Financing receivables - net (1) 237 235 Insurance premiums receivable 61 54 Prepaid expenses 445 443 Biodiesel tax credit 119 68 Tax receivables 491 616 Non-trade receivables 304 361 Other current assets 167 153 $ 4,982 $ 5,666 (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 $ 6 million and $ 3 million at December 31, 2023 and 2022, respectively. Interest earned on financing receivables of $ 21 million, $ 15 million, and $ 11 million for the years ended December 31, 2023, 2022, and 2021, respectively, is included in interest and investment income in the consolidated statements of earnings. Note 7. Accrued Expenses and Other Payables The following table sets forth the items in accrued expenses and other payables: December 31, 2023 December 31, 2022 (In millions) Unrealized losses on derivative contracts $ 1,101 $ 1,543 Accrued compensation 439 475 Income tax payable 284 248 Other taxes payable 172 136 Insurance claims payable 73 223 Contract liability 626 694 Other accruals and payables 1,381 1,476 $ 4,076 $ 4,795 86 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 8. Investments in and Advances to Affiliates The Company applies the equity method of accounting for investments in investees over which ADM has the ability to exercise significant influence, including the Company’s 22.5 % share ownership in Wilmar as of December 31, 2023 and 2022. As of December 31, 2023, 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 %), Aston Foods and Food Ingredients ( 50.0 %), Red Star Yeast Company, LLC ( 40.0 %), LSCP, LLLP ( 22.1 %), Vimison S.A. de C.V. ( 45.3 %), ADM Matsutani LLC ( 50 %), Matsutani Singapore Pte. Ltd. ( 50 %), ADM Vland Biotech Shandong Co., Ltd. ( 50 %), Dusial S.A. ( 42.8 %), and Vitafort ZRT ( 34.3 %). The Company had 73 and 67 unconsolidated domestic and foreign affiliates as of December 31, 2023 and 2022, respectively. The following table summarizes the combined balance sheets as of December 31, 2023 and 2022, and the combined statements of earnings of the Company’s unconsolidated affiliates for the years ended December 31, 2023, 2022, and 2021. December 31 (In millions) 2023 2022 Current assets $ 41,032 $ 41,407 Non-current assets 29,773 30,589 Current liabilities ( 33,812 ) ( 36,091 ) Non-current liabilities ( 8,973 ) ( 9,300 ) Noncontrolling interests ( 2,489 ) ( 2,641 ) Net assets $ 25,531 $ 23,964 Year Ended December 31 (In millions) 2023 2022 2021 Revenues $ 85,754 $ 109,448 $ 87,528 Gross profit 4,261 8,946 7,719 Net income 2,452 3,140 2,315 The Company’s share of the undistributed earnings of its unconsolidated affiliates as of December 31, 2023 is $ 5.9 billion. The Company’s investment in Wilmar has a carrying value of $ 4.1 billion as of December 31, 2023, and a market value of $ 3.8 billion based on quoted market price converted to U.S. dollars at the applicable exchange rate at December 31, 2023. The Company evaluated the near-term prospects of Wilmar in relation to the severity and duration of the decline in fair value. Based on that evaluation, the Company does not consider the investment to be other-than-temporarily impaired at December 31, 2023. The Company provides credit facilities totaling $ 121 million to six unconsolidated affiliates. One facility that bears interest at 5.97 % has an outstanding balance of $ 2 million while the other five facilities have no outstanding balance as of December 31, 2023. The outstanding balance is included in other current assets in the accompanying consolidated balance sheet. Net sales to unconsolidated affiliates during the years ended December 31, 2023, 2022, and 2021 were $ 7.0 billion, $ 7.8 billion, and $ 6.6 billion, respectively. Accounts receivable due from unconsolidated affiliates as of December 31, 2023 and 2022 was $ 167 million and $ 286 million, respectively. 87 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 9. Goodwill and Other Intangible Assets Goodwill balances attributable to consolidated businesses, by segment, are set forth in the following table. December 31, 2023 December 31, 2022 (In millions) Ag Services and Oilseeds $ 235 $ 193 Carbohydrate Solutions 224 224 Nutrition 3,640 3,731 Other Business 4 14 Total $ 4,103 $ 4,162 The changes in goodwill during the year ended December 31, 2023 were primarily related to impairment of $ 137 million in the Animal Nutrition reporting unit of Nutrition, partially offset by an increase due to an acquisition of $ 20 million principally in the Ag Services and Oilseeds segment and foreign currency translation gains of $ 65 million primarily in the Nutrition segment. As of December 31, 2023 and 2022, accumulated amortization loss was $ 156 million and $ 19 million, respectively. The following table sets forth the other intangible assets: December 31, 2023 December 31, 2022 Useful Gross Accumulated Gross Accumulated Life Amount Amortization Net Amount Amortization Net (In years) (In millions) Intangible assets with indefinite lives: Trademarks/brands $ 375 $ — $ 375 $ 397 $ — $ 397 Other 58 — 58 — — — Intangible assets with definite lives: Trademarks/brands 5 to 20 53 ( 35 ) 18 70 ( 28 ) 42 Customer lists 1 to 30 1,544 ( 627 ) 917 1,544 ( 542 ) 1,002 Capitalized software and related costs 5 to 8 950 ( 523 ) 427 721 ( 449 ) 272 Land rights 2 to 50 107 ( 30 ) 77 109 ( 25 ) 84 Other intellectual property 6 to 20 211 ( 135 ) 76 228 ( 112 ) 116 Recipes and other 1 to 35 511 ( 304 ) 207 547 ( 274 ) 273 Intangible assets in process 83 — 83 196 — 196 Total $ 3,892 $ ( 1,654 ) $ 2,238 $ 3,812 $ ( 1,430 ) $ 2,382 The changes in the gross amounts during the year ended December 31, 2023 were primarily related to additions to capitalized software and related costs, net of the decrease in intangible assets in process and increases related to foreign currency translation of $ 53 million, partially offset by impairments of $ 64 million and reclassifications. The changes in accumulated amortization during the year ended December 31, 2023 were related to amortization expense and foreign currency translation of $ 15 million, partially offset by reclassifications. Aggregate amortization expense was $ 234 million, $ 235 million, and $ 177 million for the years ended December 31, 2023, 2022, and 2021, respectively, of which $ 72 million, $ 69 million, and $ 33 million, respectively, were for amortization of capitalized software and related costs. The estimated future aggregate amortization expense for the next five years is $ 338 million, $ 345 million, $ 337 million, $ 330 million, and $ 310 million, respectively. 88 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 10. Debt Financing Arrangements The Company’s long-term debt consisted of the following: Debt Instrument Interest Rate Face Amount Due Date December 31, 2023 December 31, 2022 (In millions) 2.5 % Notes $ 1 billion 2026 $ 998 $ 997 3.25 % Notes $ 1 billion 2030 991 989 2.900 % Notes $ 750 million 2032 744 744 2.700 % Notes $ 750 million 2051 732 731 1 % Notes € 650 million 2025 717 691 4.5 % Notes $ 600 million 2049 589 589 4.500 % Notes $ 500 million 2033 492 — 5.375 % Debentures $ 432 million 2035 426 425 3.75 % Notes $ 408 million 2047 403 403 5.935 % Debentures $ 336 million 2032 334 334 5.765 % Debentures $ 297 million 2041 297 297 4.535 % Debentures $ 383 million 2042 288 286 4.016 % Debentures $ 371 million 2043 263 260 7 % Debentures $ 160 million 2031 159 159 6.95 % Debentures $ 157 million 2097 154 154 7.5 % Debentures $ 147 million 2027 147 147 6.625 % Debentures $ 144 million 2029 144 144 6.75 % Debentures $ 103 million 2027 103 103 6.45 % Debentures $ 103 million 2038 102 102 1.750 % Notes € 600 million 2023 — 641 0 % Bonds $ 300 million 2023 — 304 Other 177 177 Total long-term debt including current maturities 8,260 8,677 Current maturities ( 1 ) ( 942 ) Total long-term debt $ 8,259 $ 7,735 On April 3, 2023 , the Company issued $ 500 million aggregate principal amount of 4.500 % Notes due August 15, 2033 . Net proceeds before expenses were $ 493 million. Proceeds from the borrowings were used for general corporate purposes. In June 2023, the Company redeemed € 600 million aggregate principal amount of 1.750 % Notes due 2023. In August 2023, the Company redeemed $ 300 million aggregate principal amount of zero coupon exchangeable bonds due 2023. 89 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 10. Debt Financing Arrangements (Continued) During the year ended December 31, 2023, Archer Daniels Midland Singapore, Pte. Ltd., a wholly-owned subsidiary of the Company, increased its revolving credit facility from $ 500 million to $ 750 million at an interest rate of Secured Overnight Financing Rate plus a fixed spread . The facility is used to finance working capital requirements and for general corporate purposes. 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 $ 745 million. Proceeds from the borrowings were used to finance investments and expenditures in eligible green projects that contribute to environmental objectives and/or eligible social projects that aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes. 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. Discount amortization expense, net of premium amortization, of $ 15 million, $ 6 million, and $ 10 million for the years ended December 31, 2023, 2022, and 2021, respectively, are included in interest expense related to the Company’s long-term debt. At December 31, 2023, the fair value of the Company’s long-term debt exceeded the carrying value by $ 0.3 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, 2023, are $ 1 million, $ 718 million, $ 999 million, $ 251 million, and $ 1 million, respectively. At December 31, 2023, the Company had lines of credit, including the accounts receivable securitization programs described below, totaling $ 13.2 billion, of which $ 11.5 billion was unused. The weighted average interest rates on short-term borrowings outstanding at December 31, 2023 and 2022, were 7.44 % and 6.21 %, respectively. 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 $ 5 million commercial paper outstanding at December 31, 2023. 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, 2023. The Company had outstanding standby letters of credit and surety bonds at December 31, 2023 and 2022, totaling $ 1.6 billion. The Company has accounts receivable securitization programs (the “Programs”). The Programs provide the Company with up to $ 3.0 billion in funding resulting from the sale of accounts receivable. As of December 31, 2023, the Company utilized $ 1.6 billion of its facility under the Programs (see Note 19 for more information on the Programs). Note 11. Stock Compensation The Company’s employee stock compensation plans provide for the granting of options to employees to purchase common stock of the Company pursuant to the Company’s 2020 Incentive Compensation Plan. These options are issued at market value on the date of grant, vest incrementally over one year to five years , and expire ten years after the date of grant. The fair value of each option grant is estimated as of the date of grant using the Black-Scholes single option pricing model. The volatility assumption used in the Black-Scholes single option pricing model is based on the historical volatility of the Company’s stock. The volatility of the Company’s stock was calculated based upon the monthly closing price of the Company’s stock for the period immediately prior to the date of grant corresponding to the average expected life of the grant. The average expected life represents the period of time that option grants are expected to be outstanding. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of option grants. No options were granted in 2023, 2022, and 2021. 90 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 11. Stock Compensation (Continued) A summary of option activity during 2023 is presented below: Shares Weighted-Average Exercise Price (In thousands, except per share amounts) Shares under option at December 31, 2022 2,097 $ 38.27 Exercised ( 483 ) 42.15 Forfeited or expired — 0.00 Shares under option at December 31, 2023 1,614 $ 37.11 Exercisable at December 31, 2023 1,614 $ 37.11 The weighted-average remaining contractual term of options outstanding and exercisable at December 31, 2023, is 2 years. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2023, is $ 59 million. The total intrinsic values of options exercised during the years ended December 31, 2023, 2022, and 2021, were $ 20 million, $ 117 million, and $ 37 million, respectively. Cash proceeds received from options exercised during the years ended December 31, 2023, 2022, and 2021, were $ 20 million, $ 90 million, and $ 64 million, respectively. At December 31, 2023, unrecognized compensation expense related to option grants to be recognized as compensation expense during the next year was immaterial. The Company’s 2020 Incentive Compensation Plan provides for the granting of restricted stock and restricted stock units (Restricted Stock Awards) at no cost to certain officers and key employees. In addition, the Company’s 2020 Incentive Compensation Plan also provides for the granting of performance stock units (PSUs) at no cost to certain officers and key employees. Restricted Stock Awards are made in common stock or stock units with equivalent rights and vest at the end of a restriction period of three years . Starting with the February 2023 grant, Restricted Stock Awards have a three-year graded vesting schedule and vest at 33.33 % each year. 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 GHG emissions. During the years ended December 31, 2023, 2022, and 2021, 1.7 million, 2.3 million, and 2.7 million common stock or stock units, respectively, were granted as Restricted Stock Awards and PSUs. At December 31, 2023, there were 13.5 million shares available for future grants pursuant to the 2020 plan. The fair value of Restricted Stock Awards and PSUs is 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, 2023, 2022, and 2021 were $ 78.90 , $ 70.13 , and $ 53.28 , respectively. A summary of Restricted Stock Awards and PSUs activity during 2023 is presented below: Restricted Stock Awards and PSUs Weighted Average Grant-Date Fair Value (In thousands, except per share amounts) Non-vested at December 31, 2022 6,408 $ 57.22 Granted 1,663 78.90 Vested ( 2,559 ) 45.66 Forfeited ( 180 ) 71.22 Non-vested at December 31, 2023 5,332 $ 69.82 91 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 11. Stock Compensation (Continued) At December 31, 2023, there was $ 91 million of total unrecognized compensation expense related to Restricted Stock Awards and PSUs. Amounts to be recognized as compensation expense during the next three years are $ 58 million, $ 30 million, and $ 3 million, respectively. The total grant-date fair value of Restricted Stock Awards that vested during the year ended December 31, 2023 was $ 153 million. Compensation expense for option grants, Restricted Stock Awards, and PSUs granted to employees is generally recognized on a straight-line basis during the service period of the respective grant. Certain of the Company’s option grants, Restricted Stock Awards, and PSUs continue to vest upon the recipient’s retirement from the Company and compensation expense related to option grants and Restricted Stock Awards granted to retirement-eligible employees is recognized in earnings on the date of grant. Compensation expense for PSUs is based on the probability of meeting the performance criteria. The Company recognizes forfeitures as they occur. Total compensation expense for option grants, Restricted Stock Awards, and PSUs recognized during the years ended December 31, 2023, 2022, and 2021 was $ 112 million, $ 147 million, and $ 161 million, respectively. Changes in incentive compensation expense are primarily caused by the level of attainment of the PSU performance criteria described above. Note 12. Other (Income) Expense – Net The following table sets forth the items in other (income) expense: (In millions) Year Ended December 31 2023 2022 2021 Gains on sale of assets $ ( 38 ) $ ( 78 ) $ ( 100 ) Pension settlement — — 83 Other – net ( 138 ) ( 280 ) ( 77 ) $ ( 176 ) $ ( 358 ) $ ( 94 ) Individually significant items included in the table above are: Gains on sale of assets for the year ended December 31, 2023 and 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. 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. Other - net for the year ended December 31, 2023 included the non-service components of net pension benefit income of $ 18 million, net foreign exchange gains of $ 85 million, and net 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 export facility in Reserve, Louisiana 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 net other 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 net other income. 92 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 13. Income Taxes The following table sets forth the geographic split of earnings before income taxes: Year Ended (In millions) December 31 2023 2022 2021 United States $ 1,844 $ 2,725 $ 2,140 Foreign 2,450 2,508 1,173 $ 4,294 $ 5,233 $ 3,313 Significant components of income taxes are as follows: (In millions) Year Ended December 31 2023 2022 2021 Current Federal $ 291 $ 379 $ 404 State 47 97 79 Foreign 513 481 224 Deferred Federal ( 52 ) 23 ( 59 ) State ( 10 ) 7 ( 12 ) Foreign 39 ( 119 ) ( 58 ) $ 828 $ 868 $ 578 93 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 13. Income Taxes (Continued) Significant components of deferred tax liabilities and assets are as follows: December 31, 2023 December 31, 2022 (In millions) Deferred tax liabilities Property, plant, and equipment $ 827 $ 811 Intangibles 358 417 Right of use assets 263 237 Equity in earnings of affiliates 214 191 Inventory reserves — 11 Debt exchange 50 52 Reserves and other accruals 49 86 Other 137 108 $ 1,898 $ 1,913 Deferred tax assets Pension and postretirement benefits $ 111 $ 104 Inventories 20 — Lease liabilities 268 244 Stock compensation 42 51 Foreign tax loss carryforwards 494 496 Capital loss carryforwards 42 42 State tax attributes 25 21 Reserves and other accruals 5 22 Other 93 77 Gross deferred tax assets 1,100 1,057 Valuation allowances ( 216 ) ( 209 ) Net deferred tax assets $ 884 $ 848 Net deferred tax liabilities $ 1,014 $ 1,065 The net deferred tax liabilities are classified as follows: Noncurrent assets (foreign) $ 295 $ 337 Noncurrent liabilities ( 1,106 ) ( 1,183 ) Noncurrent liabilities (foreign) ( 203 ) ( 219 ) $ ( 1,014 ) $ ( 1,065 ) During 2023, the Company increased valuation allowances primarily related to net operating loss carryforwards. 94 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 13. Income Taxes (Continued) Reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate on earnings is as follows: Year Ended December 31 2023 2022 2021 Statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 0.9 1.4 1.5 Foreign earnings taxed at rates other than the U.S. statutory rate ( 0.2 ) ( 3.8 ) ( 2.8 ) Foreign currency effects/remeasurement 0.5 0.6 — Income tax adjustment to filed returns ( 0.4 ) ( 0.1 ) 0.7 Tax benefit on U.S. biodiesel credits ( 1.7 ) ( 1.2 ) ( 1.9 ) Tax benefit on U.S. railroad credits ( 1.5 ) ( 1.2 ) ( 2.0 ) U.S. tax on foreign earnings 1.2 0.2 — Valuation allowances ( 0.2 ) — 0.7 Other ( 0.3 ) ( 0.3 ) 0.2 Effective income tax rate 19.3 % 16.6 % 17.4 % The effective tax rates for 2023 and 2022 were impacted by the geographic mix of earnings. The effective tax rate for 2022 was also impacted by discrete tax items. The effective tax rate for 2021 was impacted by the geographic mix of earnings and U.S. tax credits, including the biodiesel tax credit and the railroad maintenance tax credit. ADM’s operations in foreign jurisdictions accounted for 57 %, 48 %, and 35 % of the Company’s total pre-tax earnings in fiscal years 2023, 2022, and 2021, respectively. The foreign rate differential was primarily due to various tax rates applicable to the income earned from the Company’s operations in Switzerland, Asia, South America 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 $ 17.9 billion at December 31, 2023. 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 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. The Company has elected to pay the one-time transition tax on accumulated foreign earnings over eight years. As of December 31, 2023, the Company’s remaining transition tax liability was $ 85 million, which will be paid in installments through 2025. The Company incurred U.S. taxable income of $ 425 million, $ 684 million, and $ 244 million related to GILTI and deducted $ 77 million, $ 67 million, and $ 87 million related to Foreign Derived Intangible Income Deduction in fiscal years 2023, 2022, and 2021 respectively. The Company made an accounting policy election to treat GILTI as a period cost. The Company has recorded and will continue to record the impact of tax reform items as U.S. tax authorities issue Treasury Regulations and other guidance addressing tax reform-related changes. The additional guidance, along with the potential for additional global tax legislation changes, may affect significant deductions and income inclusions and could have a material adverse effect on the Company’s net income or cash flow. 95 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 13. Income Taxes (Continued) The Company had $ 494 million and $ 496 million of tax assets related to net operating loss carryforwards of certain international subsidiaries at December 31, 2023 and 2022, respectively. As of December 31, 2023, approximately $ 412 million of these assets have no expiration date, and the remaining $ 82 million expire at various times through fiscal 2033. 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 $ 160 million and $ 142 million against these tax assets at December 31, 2023 and 2022, respectively, due to the uncertainty of their realization. The Company had $ 42 million of tax assets related to foreign capital loss carryforwards at December 31, 2023 and 2022. The Company has recorded a valuation allowance of $ 42 million against these tax assets at December 31, 2023 and 2022 due to the uncertainty of their realization. The Company had $ 25 million and $ 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, 2023 and 2022, respectively, a majority of which will expire between 2024 and 2028. Due to the uncertainty of realization, the Company recorded a valuation allowance of $ 14 million and $ 15 million related to state income tax assets net of federal tax benefit as of December 31, 2023 and 2022, respectively. The change in the valuation allowance was related to the expiration of certain state income tax attributes which were fully reserved in prior years. The Company remains subject to federal examination in the U.S. for the calendar tax years 2018 through 2023. The following table sets forth a rollforward of activity of unrecognized tax benefits for the year ended December 31, 2023 and 2022 as follows: Unrecognized Tax Benefits December 31, 2023 December 31, 2022 (In millions) Beginning balance $ 151 $ 157 Additions related to current year’s tax positions 2 6 Additions related to prior years’ tax positions 28 26 Additions (adjustments) related to acquisitions — 11 Reductions related to lapse of statute of limitations ( 6 ) ( 6 ) Settlements with tax authorities ( 7 ) ( 43 ) Ending balance $ 168 $ 151 The additions and reductions in unrecognized tax benefits shown in the table included effects related to net income and shareholders’ equity. The changes in unrecognized tax benefits did not have a material effect on the Company’s net income or cash flow. At December 31, 2023 and 2022, the Company had accrued interest and penalties on unrecognized tax benefits of $ 52 million and $ 39 million, respectively. 96 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 13. Income Taxes (Continued) The Company is subject to income taxation and routine examinations in many jurisdictions around the world and frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various jurisdictions. In its routine evaluations of the exposure associated with various tax filing positions, the Company recognizes a liability, when necessary, for estimated potential tax owed by the Company in accordance with applicable accounting standards. Resolution of the related tax positions, through negotiations with relevant tax authorities or through litigation, may take years to complete. Therefore, it is difficult to predict the timing for resolution of tax positions and the Company cannot predict or provide assurance as to the ultimate outcome of these ongoing or future examinations. However, the Company does not anticipate that the total amount of unrecognized tax benefits will increase or decrease significantly in the next twelve months. Given the long periods of time involved in resolving tax positions, the Company does not expect that the recognition of unrecognized tax benefits will have a material impact on the Company’s effective income tax rate in any given period. If the total amount of unrecognized tax benefits were recognized by the Company at one time, there would be a reduction of $ 165 million on the tax expense for that period. 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, 2023, this assessment was $ 90 million in tax and $ 34 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. During the second quarter of 2021, the third party expert issued a final valuation. On September 30, 2022, the court issued a ruling consistent with the valuation report, and the Dutch tax authorities have filed an appeal. During the quarter ended March 31, 2023, ADM filed a cross-appeal. As of December 31, 2023, the Company has accrued its best estimate of what it believes will be the likely outcome of the litigation. Note 14. Leases Lessee Accounting The Company leases certain transportation equipment, plant equipment, office equipment, land, buildings, and storage facilities. Most leases include options to renew, with renewal terms that can extend the lease term from 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. Certain leases also include index and non-index escalation clauses and options to purchase the leased property. Leases accounted for as finance leases were immaterial at December 31, 2023. As an accounting policy election, the Company does not apply the recognition requirements of Topic 842 to short-term leases in all of its underlying asset categories. The Company recognizes short-term lease payments in earnings on a straight-line basis over the lease term, and variable lease payments in the period in which the obligation for those payments is incurred. The Company also combines lease and non-lease contract components in all of its underlying asset categories as an accounting policy election. 97 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 14. Leases (Continued) The following table sets forth the amounts relating to the Company’s total lease cost and other information. Year Ended December 31 2023 2022 2021 (In millions) Lease cost: Operating lease cost $ 390 $ 356 $ 336 Short-term lease cost 126 127 117 Total lease cost $ 516 $ 483 $ 453 Other information: Operating lease liability principal payments $ 374 $ 339 $ 325 Right-of-use assets obtained in exchange for new operating lease liabilities $ 327 $ 357 $ 197 December 31 2023 2022 Weighted-average remaining lease term - operating leases (in years) 7 7 Weighted average discount rate - operating leases 4.1 % 3.7 % Below is a tabular disclosure of the future annual undiscounted cash flows for operating lease liabilities as of December 31, 2023. Undiscounted Cash Flows (In millions) 2024 $ 334 2025 260 2026 186 2027 146 2028 101 Thereafter 339 Total 1,366 Less interest (1) ( 135 ) Lease liability $ 1,231 (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. 98 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 15. Employee Benefit Plans The Company provides substantially all U.S. employees and employees at certain foreign subsidiaries with retirement benefits including defined benefit pension plans and defined contribution plans. The Company also provides certain eligible U.S. employees who retire under qualifying conditions with subsidized postretirement health care coverage or Health Care Reimbursement Accounts. In 2021, the Company amended the ADM Retirement Plan and the ADM Pension Plan for Hourly-Wage Employees (collectively, the “Plans”) and entered into two binding agreements to purchase: (1) a group annuity contract from Principal Life Insurance Company (“Principal”) and (2) two group annuity contracts, separately from American General Life Insurance Company (“AGL”) and from AGL’s affiliate, The United States Life Insurance Company in the City of New York (“USL”), irrevocably transferring the future benefit obligations and annuity administration for approximately 6,000 retirees and terminated vested participants from the Plans to Principal, AGL, and USL. The purchase of the group annuity contracts was funded directly by the Plans’ assets and reduced the Company’s pension obligations by approximately $ 0.7 billion. As a result of the transactions, the Company recognized a non-cash pretax pension settlement charge of $ 83 million for the year ended December 31, 2021. 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) 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. The Company maintains 401(k) plans covering substantially all U.S. employees. The Company contributes cash to the plans to match qualifying employee contributions, and also provides a non-matching employer contribution of 1 % of pay to eligible participants. Under an employee stock ownership component of the 401(k) plans, employees may choose to invest in the Company’s stock as part of their own investment elections. Assets of the Company’s 401(k) plans consist primarily of listed common stocks and pooled funds. The Company’s 401(k) plans held 5.7 million shares of Company common stock at December 31, 2023, with a market value of $ 414 million. Cash dividends received on shares of Company common stock by these plans during the year ended December 31, 2023 were $ 10 million. The following table sets forth the components of retirement plan expense for the years ended December 31, 2023, 2022, and 2021: Pension Benefits Postretirement Benefits (In millions) Year Ended December 31 Year Ended December 31 2023 2022 2021 2023 2022 2021 Retirement plan expense Defined benefit plans: Service cost (benefits earned during the period) $ 41 $ 48 $ 64 $ — $ 1 $ 1 Interest cost 76 48 48 6 3 2 Expected return on plan assets ( 83 ) ( 79 ) ( 95 ) — — — Settlement charges — — 83 — — — Curtailments — ( 2 ) — — — — Amortization of actuarial loss 3 17 33 2 5 6 Amortization of prior service cost (credit) ( 20 ) ( 20 ) ( 20 ) — — ( 2 ) Net periodic defined benefit plan expense 17 12 113 8 9 7 Defined contribution plans 73 67 61 — — — Total retirement plan expense $ 90 $ 79 $ 174 $ 8 $ 9 $ 7 99 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 15. Employee Benefit Plans (Continued) The following tables set forth changes in the defined benefit obligation and the fair value of defined benefit plan assets for the years ended December 31, 2023 and 2022: Pension Benefits Postretirement Benefits December 31 2023 December 31 2022 December 31 2023 December 31 2022 (In millions) (In millions) Benefit obligation, beginning $ 1,587 $ 2,178 $ 118 $ 154 Service cost 41 48 — 1 Interest cost 76 48 6 3 Actuarial loss (gain) 83 ( 575 ) 6 ( 24 ) Employee contributions 3 3 — — Curtailments — ( 2 ) — — Business combinations ( 1 ) — — — Settlements ( 1 ) ( 1 ) — — Benefits paid ( 53 ) ( 47 ) ( 17 ) ( 16 ) Foreign currency effects 30 ( 65 ) — — Benefit obligation, ending $ 1,765 $ 1,587 $ 113 $ 118 Fair value of plan assets, beginning $ 1,269 $ 1,742 $ — $ — Actual return on plan assets 121 ( 438 ) — — Employer contributions 54 60 17 16 Employee contributions 3 3 — — Settlements ( 1 ) ( 1 ) — — Benefits paid ( 53 ) ( 47 ) ( 17 ) ( 16 ) Foreign currency effects 22 ( 50 ) — — Fair value of plan assets, ending $ 1,415 $ 1,269 $ — $ — Funded status $ ( 350 ) $ ( 318 ) $ ( 113 ) $ ( 118 ) Prepaid benefit cost $ 63 $ 60 $ — $ — Accrued benefit liability – current ( 19 ) ( 18 ) ( 14 ) ( 14 ) Accrued benefit liability – long-term ( 394 ) ( 360 ) ( 99 ) ( 104 ) Net amount recognized in the balance sheet $ ( 350 ) $ ( 318 ) $ ( 113 ) $ ( 118 ) In 2023, the actuarial loss in the pension plans was primarily due to decreases in the global bond yields while actual return on plan assets was related to favorable asset performance in countries with material assets including the U.S., the U.K., Canada, and Switzerland. The Company uses the corridor approach when amortizing actuarial losses. Under the corridor approach, net unrecognized actuarial losses in excess of 10% of the greater of the projected benefit obligation or the market related value of plan assets are amortized over future periods. For plans with little to no active participants, the amortization period is the remaining average life expectancy of the participants. For plans with active participants, the amortization period is the remaining average service period of the active participants. The amortization periods range from 4 to 27 years for the Company’s defined benefit pension plans and from 5 to 18 years for the Company’s postretirement benefit plans. Included in AOCI for pension benefits at December 31, 2023, are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service credit of $ 56 million and unrecognized actuarial loss of $ 272 million. 100 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 15. Employee Benefit Plans (Continued) Included in AOCI for postretirement benefits at December 31, 2023, 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 $ 20 million. The following table sets forth the principal assumptions used in developing net periodic benefit cost: Pension Benefits Postretirement Benefits December 31 2023 December 31 2022 December 31 2023 December 31 2022 Discount rate 4.8 % 2.5 % 5.1 % 2.7 % Expected return on plan assets 6.0 % 5.0 % N/A N/A Rate of compensation increase 4.3 % 4.2 % N/A N/A Interest crediting rate 3.9 % 1.9 % N/A N/A The following table sets forth the principal assumptions used in developing the year-end actuarial present value of the projected benefit obligations: Pension Benefits Postretirement Benefits December 31 2023 December 31 2022 December 31 2023 December 31 2022 Discount rate 4.5 % 4.8 % 4.9 % 5.1 % Rate of compensation increase 4.8 % 4.3 % N/A N/A Interest crediting rate 4.0 % 3.9 % N/A N/A The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with projected benefit obligations in excess of plan assets were $ 1.5 billion, $ 1.5 billion, and $ 1.0 billion, respectively, as of December 31, 2023, and $ 1.3 billion, $ 1.3 billion, and $ 0.9 billion, respectively, as of December 31, 2022. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $ 1.5 billion, $ 1.5 billion, and $ 1.0 billion, respectively, as of December 31, 2023 and $ 1.2 billion, $ 1.2 billion, and $ 0.8 billion, respectively, as of December 31, 2022. The accumulated benefit obligation for all pension plans as of December 31, 2023 and 2022, was $ 1.8 billion and $ 1.6 billion, respectively. For postretirement benefit measurement purposes, a 6.9 % annual rate of increase in the per capita cost of covered health care benefits was assumed for the year ended December 31, 2023. The rate was assumed to decrease gradually to 4.5 % by 2031 and remain at that level thereafter. Plan Assets The Company’s employee benefit plan assets are principally comprised of the following types of investments: Common stock: Equity securities are valued based on quoted exchange prices and are classified within Level 1 of the valuation hierarchy. Mutual funds: Mutual funds are valued at the closing price reported on the active market on which they are traded and are classified within Level 1 of the valuation hierarchy. 101 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 15. Employee Benefit Plans (Continued) Common collective trust (CCT) funds: The fair values of the CCTs are valued using net asset value (NAV). The investments in CCTs are comprised of U.S. and international equity, fixed income, and other securities. The investments are valued at NAV provided by administrators of the funds. Corporate debt instruments: Corporate debt instruments are valued using third-party pricing services and are classified within Level 2 of the valuation hierarchy. U.S. Treasury instruments: U.S. Treasury instruments are valued at the closing price reported on the active market on which they are traded and are classified within Level 1 of the valuation hierarchy. U.S. government agency, state, and local government bonds: U.S. government agency obligations and state and municipal debt securities are valued using third-party pricing services and are classified within Level 2 of the valuation hierarchy. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants’ methods, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following tables set forth, by level within the fair value hierarchy, the fair value of plan assets as of December 31, 2023 and 2022. Fair Value Measurements at December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (In millions) Common stock $ 37 $ — $ — $ 37 Mutual funds 147 — — 147 Corporate bonds — 473 — 473 U.S. Treasury instruments 262 — — 262 U.S. government agency, state and local government bonds — 8 — 8 Other — 7 — 7 Total assets $ 446 $ 488 $ — $ 934 Common collective trust funds at NAV U.S. equity 15 International equity 60 Fixed income 330 Other 76 Total assets at fair value $ 1,415 102 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 15. Employee Benefit Plans (Continued) Fair Value Measurements at December 31, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (In millions) Common stock $ 68 $ — $ — $ 68 Mutual funds 245 — — 245 Corporate bonds — 318 — 318 U.S. Treasury instruments 173 — — 173 U.S. government agency, state and local government bonds — 5 — 5 Other — 9 — 9 Total assets $ 486 $ 332 $ — $ 818 Common collective trust funds at NAV U.S. equity 23 International equity 76 Fixed income 247 Other 105 Total assets at fair value $ 1,269 Level 3 Gains and Losses: There are no Plan assets classified as Level 3 in the fair value hierarchy; therefore there are no gains or losses associated with Level 3 assets. The following table sets forth the actual asset allocation for the Company’s global pension plan assets as of the measurement date: December 31 2023 (1)(2) December 31 2022 (2) Equity securities 19 % 33 % Debt securities 77 % 62 % Other 4 % 5 % Total 100 % 100 % (1) The Company’s U.S. pension plans contain approximately 67 % of the Company’s global pension plan assets. The actual asset allocation for the Company’s U.S. pension plans as of the measurement date consists of 20 % equity securities and 80 % debt securities. The target asset allocation for the Company’s U.S. pension plans is approximately the same as the actual asset allocation. The actual asset allocation for the Company’s foreign pension plans as of the measurement date consists of 17 % equity securities, 71 % debt securities, and 12 % other. The target asset allocation for the Company’s foreign pension plans is approximately the same as the actual asset allocation. (2) The Company’s pension plans did not directly hold any shares of Company common stock as of the December 31, 2023 and 2022 measurement dates. 103 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 15. Employee Benefit Plans (Continued) Investment objectives for the Company’s plan assets are to: • Optimize the long-term return on plan assets in consideration of funded status risk. • Maintain a broad diversification of assets and appropriate risk exposure across asset classes. • Maintain careful control of the risk level within each asset class. Asset allocation targets promote optimal expected return and volatility characteristics given the long-term time horizon for fulfilling the obligations of the pension plans. Selection of the targeted asset allocation for plan assets was based upon a review of the expected return and risk characteristics of each asset class, as well as the correlation of returns among asset classes. The U.S. pension plans target asset allocation is also based on an asset and liability study that is updated periodically. Investment guidelines are established with each investment manager. These guidelines provide the parameters within which the investment managers agree to operate, including criteria that determine eligible and ineligible securities, diversification requirements, and credit quality standards, where applicable. In some countries, derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of underlying investments. The Company uses external consultants to assist in monitoring the investment strategy and asset mix for the Company’s plan assets. To develop the Company’s expected long-term rate of return assumption on plan assets, the Company generally uses long-term historical return information for the targeted asset mix identified in asset and liability studies. Adjustments are made to the expected long-term rate of return assumption when deemed necessary based upon revised expectations of future investment performance of the overall investment markets. Contributions and Expected Future Benefit Payments Based on actuarial calculations, the Company expects to contribute $ 27 million to the pension plans and $ 14 million to the postretirement benefit plan during 2024. The Company may elect to make additional discretionary contributions during this period. The following benefit payments, which reflect expected future service, are expected to be paid by the benefit plans: Pension Benefits Postretirement Benefits (In millions) 2024 $ 69 $ 14 2025 75 13 2026 82 11 2027 88 11 2028 94 10 2029-2033 559 41 Note 16. Shareholders’ Equity The Company has authorized one billion shares of common stock and 500,000 shares of preferred stock, each with zero par value. No preferred stock has been issued. At December 31, 2023 and 2022, the Company had approximately 202.5 million shares and 169.0 million shares, respectively, of its common shares in treasury. Treasury stock of $ 4.9 billion at December 31, 2023 and 2022 is recorded at cost as a reduction of common stock, and treasury stock of $ 2.7 billion and $ 1.7 billion at December 31, 2023 and 2022, respectively, is recorded at cost as a reduction of retained earnings. 104 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 16. Shareholders’ Equity (Continued) The following tables set forth the changes in AOCI by component and the reclassifications out of AOCI for the years ended December 31, 2023 and 2022: Foreign Currency Translation Adjustment Deferred Gain (Loss) on Hedging Activities Pension and Other Postretirement Benefit Liabilities Adjustment Unrealized Gain (Loss) on Investments Accumulated Other Comprehensive Income (Loss) (In millions) Balance at December 31, 2021 $ ( 2,248 ) $ 225 $ ( 147 ) $ ( 2 ) $ ( 2,172 ) Other comprehensive income before reclassifications ( 609 ) 268 117 ( 12 ) ( 236 ) Gain (loss) on net investment hedges 328 — — — 328 Amounts reclassified from AOCI — ( 352 ) 23 — ( 329 ) Tax effect ( 93 ) 7 ( 15 ) 1 ( 100 ) Net of tax amount ( 374 ) ( 77 ) 125 ( 11 ) ( 337 ) Balance at December 31, 2022 $ ( 2,622 ) $ 148 $ ( 22 ) $ ( 13 ) $ ( 2,509 ) Other comprehensive income before reclassifications 204 337 ( 46 ) 16 511 Gain (loss) on net investment hedges ( 153 ) — — — ( 153 ) Amounts reclassified from AOCI — ( 322 ) ( 42 ) — ( 364 ) Tax effect 32 ( 5 ) 2 ( 1 ) 28 Net of tax amount 83 10 ( 86 ) 15 22 Balance at December 31, 2023 $ ( 2,539 ) $ 158 $ ( 108 ) $ 2 $ ( 2,487 ) Amounts reclassified from AOCI Year Ended December 31 Affected line item in the Details about AOCI components 2023 2022 2021 consolidated statement of earnings (In millions) Deferred loss (gain) on hedging activities $ — $ ( 1 ) $ 16 Revenues ( 322 ) ( 351 ) ( 490 ) Cost of products sold ( 322 ) ( 352 ) ( 474 ) Earnings before income taxes 77 62 118 Income tax expense $ ( 245 ) $ ( 290 ) $ ( 356 ) Net earnings Pension liability adjustment Amortization of defined benefit pension items: Prior service losses (credit) $ ( 26 ) $ ( 119 ) $ ( 77 ) Other (income) expense – net Actuarial losses ( 16 ) 142 176 Other (income) expense – net ( 42 ) 23 99 Earnings before income taxes ( 10 ) ( 4 ) ( 26 ) Income tax expense (benefit) $ ( 52 ) $ 19 $ 73 Net earnings 105 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 17. Segment and Geographic Information The Company’s operations are organized, managed, and classified into three reportable business segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. Each of these segments is organized based upon the nature of products and services offered. The Company’s remaining operations are not reportable segments, as defined by the applicable accounting standard , and are classified as Other Business. The Ag Services and Oilseeds segment includes global activities related to the origination, merchandising, transportation, and storage of agricultural raw materials, and the crushing and further processing of oilseeds such as soybeans and soft seeds (cottonseed, sunflower seed, canola, rapeseed, and flaxseed) into vegetable oils and protein meals. Oilseeds products produced and marketed by the segment include ingredients for food, feed, energy, and industrial customers. Crude vegetable oils produced by the segment’s crushing activities are sold “as is” to manufacturers of renewable green diesel and other customers or are further processed by refining, blending, bleaching, and deodorizing into salad oils. Salad oils are sold “as is” or are further processed by hydrogenating and/or interesterifying into margarine, shortening, and other food products. Partially refined oils are used to produce biodiesel and glycols or are sold to other manufacturers for use in chemicals, paints, and other industrial products. Oilseed protein meals are principally sold to third parties to be used as ingredients in commercial livestock and poultry feeds. The Ag Services and Oilseeds segment is also a major supplier of peanuts and peanut-derived ingredients to both the U.S. and export markets. In North America, cotton cellulose pulp is manufactured and sold to the chemical, paper, and other industrial markets. The Ag Services and Oilseeds segment’s grain sourcing, handling, and transportation network (including barge, ocean-going vessel, truck, rail, and container freight services) provides reliable and efficient services to the Company’s customers and agricultural processing operations. The Ag Services and Oilseeds segment also includes agricultural commodity and feed product import, export, and global distribution, and structured trade finance activities. 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 investments in Wilmar, Pacificor, SoyVen, Olenex, Stratas Foods LLC, and Edible Oils Limited. The Carbohydrate Solutions segment is engaged in corn and wheat wet and dry milling and other activities. The Carbohydrate Solutions segment converts corn and wheat into products and ingredients used in the food and beverage industry including sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose. Dextrose and starch are used by the Carbohydrate Solutions segment as feedstocks in other downstream processes. By fermentation of dextrose, the Carbohydrate Solutions segment produces alcohol and other food and animal feed ingredients. Ethyl alcohol is produced by the Company for industrial use in products such as hand sanitizers and ethanol for use in gasoline due to its ability to increase octane as an extender and oxygenate. Corn gluten feed and meal, as well as distillers’ grains, are produced for use as animal feed ingredients. Corn germ, a by-product of the wet milling process, is further processed into vegetable oil and protein meal. Other Carbohydrate Solutions products include citric acids which are used in various food and industrial products. The Carbohydrate Solutions segment is a leader in carbon capture and sequestration. This segment also includes the Company’s share of the results of its equity investments in Hungrana Ltd., Almidones Mexicanos S.A., Aston Foods and Food Ingredients, Red Star Yeast Company, LLC, and LSCP, LLLP. In November 2021, the Company sold its ethanol production complex in Peoria, Illinois. The Nutrition segment serves various end markets including food, beverages, nutritional supplements, and feed and premix for livestock, aquaculture, and pet food. The segment engages in the manufacturing, sale, and distribution of a wide array of ingredients and solutions including plant-based proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, postbiotics, enzymes, botanical extracts, and other specialty food and feed ingredients. The Nutrition segment includes the activities related to the procurement, processing, and distribution of edible beans. The segment also includes activities related to the processing and distribution of formula feeds and animal health and nutrition products and the manufacture of contract and private label pet treats and foods. This segment also includes the Company’s share of the results of its equity investments in Vimison S.A. de C.V., ADM Matsutani LLC, Matsutani Singapore Pte. Ltd., ADM Vland Biotech Shandong Co., Ltd., Dusial S.A., and Vitafort ZRT. Other Business includes the Company’s financial business units related to futures commission and insurance activities. 106 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 17. Segment and Geographic Information (Continued) Intersegment sales have been recorded using principles consistent with ASC 606, Revenue from Contracts with Customers . Operating profit for each segment is based on net sales less identifiable operating expenses. Also included in operating profit for each segment is equity in earnings of affiliates based on the equity method of accounting. Specified items included in total segment operating profit and certain corporate items are not allocated to the Company’s individual business segments because operating performance of each business segment is evaluated by management exclusive of these items. Corporate results principally include 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. Correction of Certain Segment-Specific Historical Financial Information As previously disclosed, the Company received a voluntary document request from the SEC relating to intersegment sales between the Company’s Nutrition segment and the Company’s Ag Services and Oilseeds and Carbohydrate Solutions segments. In response, the Company engaged external counsel, assisted by a forensic accounting firm, to conduct an internal investigation, overseen by the Audit Committee of the Company’s Board of Directors, which is separately advised by external counsel (the Investigation). The Company has historically disclosed in the footnotes to its financial statements that intersegment sales have been recorded at amounts approximating market. In connection with the Investigation, the Company identified certain intersegment sales for the years ended December 31, 2021 through 2023 that occurred between the Company’s Nutrition segment and the Company’s Ag Services and Oilseeds and Carbohydrate Solutions segments that were not recorded at amounts approximating market. The correction of these immaterial errors does not have any impact on the Company’s previously reported Consolidated Statements of Earnings, Consolidated Statements of Comprehensive Income (Loss), Consolidated Balance Sheets, Consolidated Statements of Cash Flows, or Consolidated Statements of Shareholders’ Equity for any of the periods presented below. The following tables present: (i) adjustments and revised gross revenues, intersegment revenues, and operating profit amounts for the Ag Services and Oilseeds segment; (ii) adjustments and revised gross revenues, intersegment revenues and operating profit amounts for the Carbohydrate Solutions segment; and (iii) adjustments and revised operating profit amounts for the Nutrition segment, in each case, for each of the years ended December 31, 2023, 2022, and 2021. No adjustments were required to the gross revenues of the Nutrition segment. Impact of the Adjustments on Ag Services and Oilseeds Segment Gross Revenues and Operating Profit Years Ended December 31 (In millions) 2023 (1) 2022 2021 Gross revenues, as originally reported for 2022 and 2021 $ 77,457 $ 83,686 $ 70,455 Adjustments 1 15 24 Gross revenues, as revised $ 77,458 $ 83,701 $ 70,479 Intersegment revenues, as originally reported for 2022 and 2021 $ 4,031 $ 4,123 $ 3,408 Adjustments 1 15 24 Intersegment revenues, as revised $ 4,032 $ 4,138 $ 3,432 Segment operating profit, as originally reported for 2022 and 2021 $ 4,066 $ 4,386 $ 2,775 Adjustments 1 15 24 Segment operating profit, as revised $ 4,067 $ 4,401 $ 2,799 (1) The adjustments set forth in the table above for the year ended December 31, 2023 reflect adjustments effected for the period January 1, 2023 through September 30, 2023. Given the timing of the Investigation, no adjustments were effected in the fourth quarter of 2023. 107 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 17. Segment and Geographic Information (Continued) Impact of the Adjustments on Carbohydrate Solutions Segment Gross Revenues and Operating Profit Years Ended December 31 (In millions) 2023 (1) 2022 2021 Gross revenues, as originally reported for 2022 and 2021 $ 14,509 $ 16,336 $ 12,672 Adjustments 30 53 35 Gross revenues, as revised $ 14,539 $ 16,389 $ 12,707 Intersegment revenues, as originally reported for 2022 and 2021 $ 1,635 $ 2,375 $ 1,562 Adjustments 30 53 35 Intersegment revenues, as revised $ 1,665 $ 2,428 $ 1,597 Segment operating profit, as originally reported for 2022 and 2021 $ 1,345 $ 1,360 $ 1,283 Adjustments 30 53 35 Segment operating profit, as revised $ 1,375 $ 1,413 $ 1,318 (1) The adjustments set forth in the table above for the year ended December 31, 2023 reflect adjustments effected for the period January 1, 2023 through September 30, 2023. Given the timing of the Investigation, no adjustments were effected in the fourth quarter of 2023. Impact of the Adjustments on Nutrition Segment Operating Profit Years Ended December 31 (In millions) 2023 (1) 2022 2021 Segment operating profit, as originally reported for 2022 and 2021 $ 458 $ 736 $ 691 Adjustments ( 31 ) ( 68 ) ( 59 ) Segment operating profit, as revised $ 427 $ 668 $ 632 (1) The adjustments set forth in the table above for the year ended December 31, 2023 reflect adjustments effected for the period January 1, 2023 through September 30, 2023. Given the timing of the Investigation, no adjustments were effected in the fourth quarter of 2023. Separately, the Company determined that a portion of the originally reported gross revenues and intersegment revenues of each of the Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition segments included certain intrasegment revenues (resulting from sales within the segment), and should have included exclusively intersegment revenues (resulting from sales from one segment to the other). The correction of these immaterial errors does not have any impact on the Company’s previously reported Consolidated Statements of Earnings, Consolidated Statements of Comprehensive Income (Loss), Consolidated Balance Sheets, Consolidated Statements of Cash Flows, or Consolidated Statements of Shareholders’ Equity for any of the periods presented below. The following tables present: (i) additional adjustments and further revised gross revenues and intersegment revenues amounts for the Ag Services and Oilseeds segment; (ii) additional adjustments and further revised gross revenues and intersegment revenues amounts for the Carbohydrate Solutions segment; and (iii) adjustments and revised gross revenues and intersegment revenues amounts for the Nutrition segment, for each of the years ended December 31, 2023, 2022, and 2021 . 108 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 17. Segment and Geographic Information (Continued) Additional Impact of the Adjustments on Ag Services and Oilseeds Segment Gross Revenues and Intersegment Revenues Years Ended December 31 (In millions) 2023 (1) 2022 2021 Gross revenues, as revised $ 77,458 $ 83,701 $ 70,479 Additional adjustments ( 1,446 ) ( 1,579 ) ( 1,115 ) Gross revenues, as further revised $ 76,012 $ 82,122 $ 69,364 Intersegment revenues, as revised $ 4,032 $ 4,138 $ 3,432 Additional adjustments ( 1,446 ) ( 1,579 ) ( 1,115 ) Intersegment revenues, as further revised $ 2,586 $ 2,559 $ 2,317 (1) The adjustments set forth in the table above for the year ended December 31, 2023 reflect adjustments effected for the period January 1, 2023 through September 30, 2023. Given the timing of the Investigation, no adjustments were effected in the fourth quarter of 2023. Additional Impact of the Adjustments on Carbohydrate Solutions Segment Gross Revenues and Intersegment Revenues Years Ended December 31 (In millions) 2023 (1) 2022 2021 Gross revenues, as revised $ 14,539 $ 16,389 $ 12,707 Additional adjustments ( 11 ) ( 487 ) ( 295 ) Gross revenues, as further revised $ 14,528 $ 15,902 $ 12,412 Intersegment revenues, as revised $ 1,665 $ 2,428 $ 1,597 Additional adjustments ( 11 ) ( 487 ) ( 295 ) Intersegment revenues, as further revised $ 1,654 $ 1,941 $ 1,302 (1) The adjustments set forth in the table above for the year ended December 31, 2023 reflect adjustments effected for the period January 1, 2023 through September 30, 2023. Given the timing of the Investigation, no adjustments were effected in the fourth quarter of 2023. Impact of the Adjustments on Nutrition Segment Gross Revenues and Intersegment Revenues Years Ended December 31 (In millions) 2023 (1) 2022 2021 Gross revenues, as originally reported for 2022 and 2021 $ 7,466 $ 7,836 $ 6,933 Adjustments ( 141 ) ( 15 ) ( 68 ) Gross revenues, as revised $ 7,325 $ 7,821 $ 6,865 Intersegment revenues, as originally reported for 2022 and 2021 $ 255 $ 200 $ 221 Adjustments ( 141 ) ( 15 ) ( 68 ) Intersegment revenues, as revised $ 114 $ 185 $ 153 (1) The adjustments set forth in the table above for the year ended December 31, 2023 reflect adjustments effected for the period January 1, 2023 through September 30, 2023. Given the timing of the Investigation, no adjustments were effected in the fourth quarter of 2023. 109 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 17. Segment and Geographic Information (Continued) Segment Information The following tables present data by segment, adjusted for the matters discussed above, for the years ended December 31, 2023, 2022 and 2021. (In millions) Year Ended December 31 2023 2022 2021 Gross revenues Ag Services and Oilseeds $ 76,012 $ 82,122 $ 69,364 Carbohydrate Solutions 14,528 15,902 12,412 Nutrition 7,325 7,821 6,865 Other 424 396 380 Intersegment elimination ( 4,354 ) ( 4,685 ) ( 3,772 ) Total $ 93,935 $ 101,556 $ 85,249 Intersegment revenues Ag Services and Oilseeds $ 2,586 $ 2,559 $ 2,317 Carbohydrate Solutions 1,654 1,941 1,302 Nutrition 114 185 153 Total $ 4,354 $ 4,685 $ 3,772 Revenues from external customers Ag Services and Oilseeds Ag Services $ 47,420 $ 53,181 $ 45,017 Crushing 14,020 13,139 11,368 Refined Products and Other 11,986 13,243 10,662 Total Ag Services and Oilseeds 73,426 79,563 67,047 Carbohydrate Solutions Starches and Sweeteners 9,885 10,251 7,611 Vantage Corn Processors 2,989 3,710 3,499 Total Carbohydrate Solutions 12,874 13,961 11,110 Nutrition Human Nutrition 3,634 3,769 3,189 Animal Nutrition 3,577 3,867 3,523 Total Nutrition 7,211 7,636 6,712 Other 424 396 380 Total $ 93,935 $ 101,556 $ 85,249 110 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 17. Segment and Geographic Information (Continued) (In millions) Year Ended December 31 2023 2022 2021 Depreciation Ag Services and Oilseeds $ 350 $ 334 $ 349 Carbohydrate Solutions 304 307 322 Nutrition 132 120 101 Other 10 9 8 Corporate 29 24 27 Total $ 825 $ 794 $ 807 Long-lived asset impairments (1) Ag Services and Oilseeds $ 11 $ — $ 10 Carbohydrate Solutions 32 14 13 Nutrition 65 21 50 Total $ 108 $ 35 $ 73 Interest and investment income Ag Services and Oilseeds $ 54 $ 52 $ 27 Nutrition ( 18 ) 2 1 Other 499 185 16 Corporate ( 36 ) 54 52 Total $ 499 $ 293 $ 96 Equity in earnings of affiliates Ag Services and Oilseeds $ 459 $ 714 $ 500 Carbohydrate Solutions 76 94 70 Nutrition 21 23 24 Corporate ( 5 ) 1 1 Total $ 551 $ 832 $ 595 (1) See Note 18 for total asset impairment, exit, and restructuring costs. 111 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 17. Segment and Geographic Information (Continued) (In millions) Year Ended December 31 2023 2022 2021 Segment Operating Profit Ag Services and Oilseeds $ 4,067 $ 4,401 $ 2,799 Carbohydrate Solutions 1,375 1,413 1,318 Nutrition 427 668 632 Other 375 167 25 Specified Items: Gains on sales of assets and businesses (1) 17 47 77 Impairment, restructuring, and net settlement contingencies (2) ( 361 ) ( 147 ) ( 213 ) Total segment operating profit 5,900 6,549 4,638 Corporate ( 1,606 ) ( 1,316 ) ( 1,325 ) Earnings before income taxes $ 4,294 $ 5,233 $ 3,313 (1) The gains in 2023 and 2022 were related to the sale of certain assets. The gains in 2021 were related to the sale of ethanol and certain other assets. (2) The charges in 2023 were related to the impairment of certain long-lived assets, goodwill, intangibles, and an equity investment, restructuring, and a contingency related to import duties, partially offset by settlement/contingency adjustments. 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. (In millions) December 31 2023 2022 Investments in and advances to affiliates Ag Services and Oilseeds $ 4,888 $ 4,863 Carbohydrate Solutions 380 365 Nutrition 145 111 Corporate 87 128 Total $ 5,500 $ 5,467 Identifiable assets Ag Services and Oilseeds $ 25,473 $ 28,657 Carbohydrate Solutions 6,334 6,801 Nutrition 10,341 10,615 Other 8,701 10,569 Corporate 3,782 3,132 Total $ 54,631 $ 59,774 (In millions) Year Ended December 31 2023 2022 Gross additions to property, plant, and equipment Ag Services and Oilseeds $ 732 $ 568 Carbohydrate Solutions 351 261 Nutrition 262 314 Other 1 15 Corporate 37 53 Total $ 1,383 $ 1,211 112 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 17. Segment and Geographic Information (Continued) Geographic information: The following geographic data include revenues attributed to the countries based on the location of the subsidiary making the sale and long-lived assets based on physical location. Long-lived assets represent the net book value of property, plant, and equipment. Year Ended (In millions) December 31 2023 2022 2021 Revenues United States $ 38,783 $ 43,272 $ 35,396 Switzerland 19,898 21,821 18,453 Cayman Islands 7,646 5,883 5,515 Brazil 3,361 4,004 3,213 Mexico 3,185 3,709 2,934 Canada 2,400 2,272 1,818 United Kingdom 2,219 2,231 1,848 Other Foreign 16,443 18,364 16,072 $ 93,935 $ 101,556 $ 85,249 (In millions) December 31 2023 2022 Long-lived assets United States $ 6,660 $ 6,322 Brazil 874 801 Other Foreign 2,974 2,810 $ 10,508 $ 9,933 Note 18. Asset Impairment, Exit, and Restructuring Costs The following table sets forth the charges included in asset impairment, exit, and restructuring costs. (In millions) Year Ended December 31 2023 2022 2021 Restructuring and exit costs (1) $ 33 $ 29 $ 39 Impairment charge - goodwill and other intangible assets (2) 201 2 52 Impairment charge - other long-lived assets (3) 108 35 73 Total asset impairment, exit, and restructuring costs $ 342 $ 66 $ 164 113 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 18. Asset Impairment, Exit, and Restructuring Costs (Continued) (1) Restructuring and exit costs for the year ended December 31, 2023 consisted of several individually insignificant restructuring charges totaling $ 27 million presented as specified items within segment operating profit and $ 6 million in Corporate. Restructuring and exit 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, 2023 consisted of impairments related to goodwill of $ 137 million and customer list and discontinued animal nutrition trademarks totaling $ 64 million in Nutrition, presented as specified items within segment operating profit. 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. (3) Impairment charge - other long-lived assets for the year ended December 31, 2023 consisted of impairments related to certain long-lived assets in Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition of $ 10 million, $ 33 million, and $ 65 million, respectively, presented as specified items within segment operating profit. 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. Note 19. Sale of Accounts Receivable The Company has an accounts receivable securitization program (the “First Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the “First Purchasers”). Under the First Program, certain U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Receivables, LLC (“ADM Receivables”). 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 $ 1.9 billion for the accounts receivable transferred. The First Program terminates on May 17, 2024, unless extended. The Company also has an accounts receivable securitization program (the “Second Program”) with certain commercial paper conduit purchasers and committed purchasers (collectively, the “Second Purchasers”). Under the Second Program, certain non-U.S.-originated trade accounts receivable are sold to a wholly-owned bankruptcy-remote entity, ADM Ireland Receivables Company (ADM Ireland Receivables). ADM Ireland Receivables transfers certain of the purchased accounts receivable to each of the Second Purchasers together with a security interest in all of its right, title, and interest in the remaining purchased accounts receivable. In exchange, ADM Ireland Receivables receives a cash payment of up to $ 1.1 billion (€ 1.0 billion) for the accounts receivables transferred. The Second Program terminates on April 19, 2024, unless extended. Under the First and Second Programs (collectively, the “Programs”), ADM Receivables and ADM Ireland Receivables use the cash proceeds from the transfer of receivables to the First Purchasers and Second Purchasers (collectively, the “Purchasers”) and other consideration, as applicable, to finance the purchase of receivables from the Company and the ADM subsidiaries originating the receivables. The Company accounts for these transfers as sales. The Company acts as a servicer for the transferred receivables. At December 31, 2023 and 2022, the Company did not record a servicing asset or liability related to its retained responsibility, based on its assessment of the servicing fee, market values for similar transactions, and its cost of servicing the receivables sold. 114 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 19. Sale of Accounts Receivable (Continued) As of December 31, 2023 and 2022, the fair value of trade receivables transferred to the Purchasers under the Programs and derecognized from the Company’s consolidated balance sheet was $ 1.6 billion and $ 2.6 billion, respectively. Total receivables sold were $ 54.8 billion, $ 59.0 billion, and $ 50.3 billion for the years ended December 31, 2023, 2022, and 2021, respectively. Cash collections from customers on receivables sold were $ 53.6 billion, $ 56.9 billion, and $ 47.3 billion for the years ended December 31, 2023, 2022, and 2021, respectively. Receivables pledged as collateral to the Purchasers were $ 1.1 billion and $ 0.6 billion as of December 31, 2023 and 2022, respectively. Transfers of receivables under the Programs during the years ended December 31, 2023, 2022, and 2021 resulted in an expense for the loss on sale of $ 56 million, $ 21 million, and $ 11 million, respectively, which is classified as selling, general, and administrative expenses in the consolidated statements of earnings. The Company reflects cash flows related to the Programs as operating activities because the cash received from the Purchasers upon both the sale and collection of the receivables is not subject to significant interest rate risk given the short-term nature of the Company’s trade receivables. Note 20. Legal Proceedings The Company is routinely involved in a number of actual or threatened legal actions, including those involving alleged personal injuries, employment law, product liability, intellectual property, environmental issues, alleged tax liability (see Note 13 for information on income tax matters), and class actions. The Company also routinely receives inquiries from regulators and other government authorities relating to various aspects of its business, and at any given time, the Company has matters at various stages of resolution. The outcomes of these matters are not within Company’s complete control and may not be known for prolonged periods of time. In some actions, claimants seek damages, as well as other relief including injunctive relief, that could require significant expenditures or result in lost revenues. In accordance with applicable accounting standards, the Company records a liability in its consolidated financial statements for material loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a material loss contingency is reasonably possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to predict, particularly when the matters are in early procedural stages, with incomplete facts or legal discovery; involve unsubstantiated or indeterminate claims for damages; potentially involve penalties, fines, disgorgement, or punitive damages; or could result in a change in business practice. 115 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 20. Legal Proceedings (Continued) Commodities Class Actions On September 4, 2019, AOT Holding AG (“AOT”) filed a putative class action under the U.S. Commodities Exchange Act in federal district court in Urbana, Illinois, alleging that the Company sought to manipulate the benchmark price used to price and settle ethanol derivatives traded on futures exchanges. On March 16, 2021, AOT filed an amended complaint adding a second named plaintiff Maize Capital Group, LLC (“Maize”). AOT and Maize allege that members of the putative class 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. and its related entities (“GP”) filed a putative class action lawsuit, alleging substantially the same operative facts, in federal court in Nebraska, seeking to represent sellers of ethanol. On July 23, 2020, Midwest Renewable Energy, LLC (“MRE”) filed a putative class action in federal court in Illinois alleging substantially the same operative facts and asserting claims under the Sherman Act. On November 11, 2020, United Wisconsin Grain Producers LLC (“UWGP”) and five other ethanol producers filed a lawsuit in federal court in Illinois alleging substantially the same facts and asserting claims under the Sherman Act and Illinois, Iowa, and Wisconsin law. The court granted ADM’s motion to dismiss the MRE and UWGP complaints without prejudice on August 9, 2021 and September 28, 2021, respectively. On August 16, 2021, the court granted ADM’s motion to dismiss the GP complaint, dismissing one claim with prejudice and declining jurisdiction over the remaining state law claim. MRE filed an amended complaint on August 30, 2021, which ADM moved to dismiss on September 27, 2021. The court denied ADM’s motion to dismiss on September 26, 2023. 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 appealed the dismissal. As of December 31, 2023, the appeal was pending. The Company denies liability, and is vigorously defending itself in these actions. As these actions are in pretrial proceedings, the Company is unable at this time to predict the final outcome with any reasonable degree of certainty, but believes the outcome will not have a material adverse effect on its financial condition, results of operations, or cash flows. Intersegment Sales Investigations On June 30, 2023, the Company received a voluntary document request from the SEC relating to intersegment sales between the Company’s Nutrition reporting segment and the Company’s Ag Services and Oilseeds and Carbohydrate Solutions reporting segments. The Company is cooperating with the SEC. Following the Company’s January 21, 2024 announcement of the Investigation, the Company received voluntary document requests from the DOJ focused primarily on the same subject matter, and the DOJ directed grand jury subpoenas to certain current and former Company employees. The Company is cooperating with the DOJ. The Company is unable to predict the final outcome of these investigations with any reasonable degree of certainty. Securities Litigation On January 24, 2024, following the Company’s January 21, 2024 announcement of the investigation relating to intersegment sales, a purported stockholder of the Company filed a putative class action in the U.S. District Court for the Northern District of Illinois against the Company and its Chief Executive Officer, as well as Vikram Luthar and Ray Young. The plaintiff alleges false and misleading statements in the Company’s disclosures. The Company is unable to predict the final outcome of this proceeding with any reasonable degree of certainty. 116 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 21. Quarterly Financial Data (Unaudited) Quarter Ended March 31 June 30 September 30 December 31 Year (In millions, except per share amounts) Fiscal Year Ended December 31, 2023 Revenues $ 24,072 $ 25,190 $ 21,695 $ 22,978 $ 93,935 Gross Profit 2,080 1,883 1,810 1,740 7,513 Net Earnings Attributable to Controlling Interests 1,170 927 821 565 3,483 Basic Earnings Per Common Share 2.13 1.70 1.52 1.07 6.44 Diluted Earnings Per Common Share 2.12 1.70 1.52 1.06 6.43 Fiscal Year Ended December 31, 2022 Revenues $ 23,650 $ 27,284 $ 24,683 $ 25,939 $ 101,556 Gross Profit 1,897 2,100 1,811 1,762 7,570 Net Earnings Attributable to Controlling Interests 1,054 1,236 1,031 1,019 4,340 Basic Earnings Per Common Share 1.86 2.18 1.84 1.84 7.72 Diluted Earnings Per Common Share 1.86 2.18 1.83 1.84 7.71 Net earnings attributable to controlling interest for the second quarter of the year ended December 31, 2023 included after-tax gains of $ 8 million (equal to $ 0.02 per share) related to the sale of certain assets; after-tax charges of $ 93 million (equal to $ 0.17 per share) related to the impairment of certain assets, restructuring, and a contingency loss provision related to import duties; after-tax expenses of $ 2 million (equal to $ 0.00 per share) related to certain acquisitions; an after-tax gain on debt conversion option of $ 1 million (equal to $ 0.00 per share) related to the mark-to-market adjustment of the conversion of the exchangeable bond issued in August 2020; and a tax expense adjustment of $ 21 million (equal to $ 0.04 per share) related to certain discrete items. Net earnings attributable to controlling interest for the third quarter of the year ended December 31, 2023 included after-tax losses of $ 2 million (equal to $ 0.00 per share) related to the sale of certain assets; after-tax net charges of $ 54 million (equal to $ 0.10 per share) related to the impairment of certain assets and restructuring, partially offset by a contingency loss reversal; and after-tax expenses of $ 3 million (equal to $ 0.01 per share) related to certain acquisitions. Net earnings attributable to controlling interest for the fourth quarter of the year ended December 31, 2023 included after-tax gains of $ 5 million (equal to $ 0.00 per share) related to the sale of certain assets; after-tax charges of $ 158 million (equal to $ 0.30 per share) related to the impairment of certain long-lived assets and goodwill and restructuring; after-tax expenses of $ 1 million (equal to $ 0.00 per share) related to certain acquisitions; and a tax expense adjustment of $ 1 million (equal to $ 0.00 per share) related to certain discrete items. Net earnings attributable to controlling interest for the third quarter of the year ended December 31, 2022 included after-tax gains of $ 22 million (equal to $ 0.04 per share) related to the sale of certain assets; after-tax charges of $ 40 million (equal to $ 0.07 per share) related to the impairment of certain assets, restructuring, and settlement contingencies; an after-tax gain on debt conversion option of $ 8 million (equal to $ 0.01 per share) related to the mark-to-market adjustment of the conversion of the exchangeable bond issued in August 2020; and a tax expense adjustment of $ 7 million (equal to $ 0.01 per share) related to certain discrete items. 117 Archer-Daniels-Midland Company Notes to Consolidated Financial Statements (Continued) Note 21. Quarterly Financial Data (Unaudited) (Continued) Net earnings attributable to controlling interest for the fourth quarter of the year ended December 31, 2022 included after-tax gains of $ 13 million (equal to $ 0.02 per share) related to the sale of certain assets; after-tax charges of $ 55 million (equal to $ 0.10 per share) related to impairment of certain assets, restructuring, and settlement contingencies; an after-tax loss on debt conversion option of $ 3 million (equal to $ 0.00 per share) related to the mark-to-market adjustment of the conversion of the exchangeable bond issued in August 2020; and a tax expense adjustment of $ 5 million (equal to $ 0.01 per share) related to certain discrete items. Note 22. Subsequent Events In January 2024, the Company acquired Revela Foods, a Wisconsin-based developer and manufacturer of innovative dairy flavor ingredients and solutions, for $ 656 million, subject to working capital adjustments, and UK-based FDL, a leading developer and producer of premium flavor and functional ingredient systems, for $ 232 million. In February 2024, the Company acquired PT Trouw Nutrition Indonesia, a subsidiary of Nutreco and leading provider of functional and nutritional solutions for livestock farming in Indonesia, for $ 18 million, subject to working capital adjustments. 118 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Archer-Daniels-Midland Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Archer-Daniels-Midland Company (the Company) as of December 31, 2023 and 2022, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 12, 2024 expressed an adverse opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 119 Market or Fair Values of Certain Merchandisable Agricultural Commodity Inventories, Inventory-Related Payables, and Forward Commodity Purchase and Sales 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 are stated at market or fair value. 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, 2023, the market or 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 $6,987 million, $1,320 million, $1,359 million, and $957 million, respectively. Auditing the estimated market or 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 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 for 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 for certain merchandisable agricultural commodity inventories, inventory-related payables, and forward commodity purchase and sale contracts. Our tests included controls over the estimation process supporting the basis adjustments. To test the estimated 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. Specifically, we compared the basis adjustments used by management to competitor and broker quotations, trade publications, and/or recently executed transactions. Further, we investigated, to the extent necessary, basis adjustments that were inconsistent with third party available information. Finally, we evaluated the adequacy of the Company’s financial statement disclosures related to the estimated market or fair values of certain merchandisable agricultural inventories, inventory-related payables, and forward commodity purchase and sale contracts. Animal Nutrition Goodwill Impairment Evaluation Description of the Matter At December 31, 2023, the Company’s total goodwill was $4.1 billion of which $0.9 billion was assigned to the Animal Nutrition reporting unit. Goodwill is assigned to the Company’s reporting units as of the acquisition date. As discussed in Note 1 and Note 9 of the consolidated financial statements, goodwill is tested at the reporting unit level for impairment at least annually on October 1, or when events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company uses an income and market approach in its quantitative impairment tests. During 2023, the Company recorded an impairment charge of $137 million related to the Animal Nutrition reporting unit that represented the amount by which the carrying value of the reporting unit exceeded the fair value of the reporting unit at the impairment testing date. Auditing the Company’s Animal Nutrition goodwill impairment charge was complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting unit. In particular, the fair value estimate using a weighted income and market approach was sensitive to significant assumptions such as revenue growth rates, projected EBITDA margins, and the discount rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions and the performance of the Animal Nutrition reporting unit. 120 How We Addressed the Matter in Our Audit To test the estimated fair value used in the Company’s Animal Nutrition reporting unit goodwill impairment charge, we performed audit procedures that included, among others, assessing the methodologies used to determine the fair value of the reporting unit and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis. As it pertains to revenue growth rates and projected EBITDA margins, we compared the significant assumptions used by management to historical results and current industry and economic trends, as applicable. We assessed the historical accuracy of management’s estimates. In addition, we involved our valuation specialists to assist with our evaluation of the methodology used by the Company to determine the fair value of reporting unit and testing of the significant assumptions used by management, including the discount rate. Specifically, we evaluated the components of the discount rate used by the Company with the involvement of our valuation specialists. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1930. Saint Louis, Missouri March 12, 2024 121 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Archer-Daniels-Midland Company Opinion on Internal Control over Financial Reporting We have audited Archer-Daniels-Midland Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Archer-Daniels-Midland Company (the Company) has not maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management has identified a material weakness related to the Company’s accounting practices and procedures for intersegment transactions between the Nutrition segment and the Ag Services and Oilseeds and Carbohydrate Solutions segments. The absence of adequate controls with respect to the reporting of intersegment sales impacted the accuracy of the Company’s segment disclosures and review controls over key inputs and assumptions utilized by the Company when performing the goodwill and long-lived asset impairment tests. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, 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, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2). This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated March 12, 2024, which expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 122 Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Saint Louis, Missouri March 12, 2024 123 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. Item 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and interim Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of December 31, 2023. Based on that evaluation, the Company’s Chief Executive Officer and interim Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2023 and 2022, due to the material weakness described below. Management’s Report on Internal Control Over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Under the supervision and with the participation of management, including the Company’s Chief Executive Officer and interim Chief Financial Officer, the Company’s management assessed the design and operating effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2023 and 2022, due to the material weakness described below. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. Because the control deficiency described below could have resulted in a material misstatement of its annual or interim financial statements, the Company determined that this deficiency constitutes a material weakness. During the fourth quarter of 2023, in connection with the Investigation, the Company identified a material weakness in its internal control over financial reporting related to the Company’s accounting practices and procedures for intersegment sales. The material weakness resulted from inadequate controls that allowed for certain intersegment sales to be reported at amounts that were not in accordance with ASC 606, Revenue from Contracts with Customers . Specifically, the Company did not have adequate controls in place around measurement of certain intersegment sales between the Nutrition reporting segment and the Ag Services and Oilseeds and Carbohydrate Solutions reporting segments. The absence of adequate controls with respect to the reporting of intersegment sales impacted the accuracy of the Company’s segment disclosures and review controls over projected financial information utilized in goodwill and other long-lived asset impairment tests. Notwithstanding such material weakness in internal control over financial reporting, the Company’s Chief Executive Officer and interim Chief Financial Officer have concluded that the Company’s Consolidated Financial Statements included in this Annual Report on Form 10-K present fairly, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with GAAP. Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on the Company’s internal control over financial reporting as of December 31, 2023. That report is included herein. /s/ Juan R. Luciano Juan R. Luciano Chairman, Chief Executive Officer, and President /s/ Ismael Roig Ismael Roig Senior Vice President and Interim Chief Financial Officer 124