PAGE 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to
______________
Commission file number 1-44
ARCHER-DANIELS-MIDLAND COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-0129150
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
4666 Faries Parkway Box 1470 Decatur, Illinois 62525
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code217-424-5200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, no par value New York Stock Exchange
Chicago Stock Exchange
Swiss Exchange
Tokyo Stock Exchange
Frankfurt Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant.
Common Stock, no par value--$8.7 billion
(Based on the closing price of the New York Stock Exchange on
August 19, 1996)
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Common Stock, no par value--518,975,939 shares
(August 19, 1996)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders' report for the year ended
June 30, 1996 are incorporated by reference into Parts I, II and
IV.
Portions of the annual proxy statement for the year ended June
30, 1996 are incorporated by reference into Part III.
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PART I
Item 1. BUSINESS
(a) General Development of Business
Archer Daniels Midland Company was incorporated
in Delaware in 1923, successor to the Daniels
Linseed Co. founded in 1902.
During the last five years, the Company has
experienced significant growth, spending
approximately $3.3 billion for construction of new
plants, expansions of existing plants and the
acquisitions of plants and transportation equipment.
There have been no significant dispositions during
this period. However, during this period, the
Company has disposed of its Supreme Sugar subsidiary
and its British Arkady bakery ingredient business.
In addition, the Company has contributed its formula
feed operations, its rice milling operations, its
Mexican wheat flour mills and its masa corn flour
business to various unconsolidated joint ventures.
(b) Financial Information About Industry Segments
The Company is in one business segment--
procuring, transporting, storing, processing and
merchandising agricultural commodities and products.
(c) Narrative Description of Business
(i)Principal products
produced and principal markets for and methods of
distribution of such products.
The Company is engaged in the business of
procuring, transporting, storing, processing and
merchandising agricultural commodities and
products. It is one of the world's largest
processors of oilseeds, corn and wheat. The
Company also processes milo, oats, barley and
peanuts. Other operations include transporting,
merchandising and storing agricultural
commodities and products. These operations and
processes produce products which have primarily
two end uses: food or feed ingredients. Each
commodity processed is in itself a feed
ingredient as are the by-products produced during
the processing of each commodity.
Production processes of all commodities are
capital intensive and similar in nature. These
processes involve grinding, crushing or milling
with further value added through extraction,
refining and fermenting. Generally, each
commodity can be processed by any of these
methods to generate additional value added
products. All commodities and related processed
products share the same network of commodity
procurement facilities, transportation services
(including rail, barge, truck and ocean vessels)
and storage facilities.
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Item 1. BUSINESS--Continued
The geographic areas, customers and marketing
methods are basically the same for all
commodities and their related further processed
products. Feed ingredient products and by-
products are sold to farmers, feed dealers and
livestock producers, all of whom purchase
products from across the entire commodity chain.
Food ingredient products are also sold to one
basic group of customers: food and beverage
processors. Any single customer may purchase
products produced from all commodities, and any
single food or feed product could include
ingredients produced from all commodities
processed.
Oilseed Products
Soybeans, cottonseed, sunflower seeds, canola,
peanuts, flaxseed and corn germ are processed to
provide vegetable oils and meals principally for
the food and feed industries. Crude vegetable
oil is sold "as is" or is further processed by
refining and hydrogenating into margarine,
shortening, salad oils and other food products.
Partially refined oil is sold for use in
chemicals, paints and other industrial products.
Lecithin, an emulsifier produced in the vegetable
oil refining process, is marketed as a food and
feed ingredient. Natural source Vitamin E, an
antioxidant, and distilled monoglycerides, an
emulsifier, are produced from soybeans and other
oilseeds.
Oilseed meals supply more than one-half of the
high protein ingredients used in the domestic
manufacture of commercial livestock and poultry
feeds. Soybean meal is further processed into soy
flour and grits, used in both food and industrial
products, and into value-added soy protein
products. Textured vegetable protein (TVP R), a
soy protein product developed by the Company, is
sold primarily to the institutional food market
and, through others, to the food consumer market.
The Company also produces a wide range of other
edible soy protein products including isolated
soy protein, soy protein concentrate, soy-based
milk products, soy flours and vegetable patties
(Harvest Burgers R). The Company produces and
markets a wide range of consumer and
institutional health foods based on the Company's
various soy protein products. The Company
produces cottonseed flour which is sold primarily
to the pharmaceutical industry. Cotton cellulose
pulp is manufactured and sold to the chemical,
paper and filter markets.
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Item 1. BUSINESS--Continued
Corn Products
The Company is engaged in dry milling
and wet milling corn operations. Products
produced for use by the food and beverage
industry include syrup, starch, glucose,
dextrose, crystalline dextrose, high fructose
sweeteners, crystalline fructose and grits. Corn
gluten feed and distillers grains are produced
for use as feed ingredients. Ethyl alcohol is
produced to beverage grade or for industrial use
as ethanol. In gasoline, ethanol increases
octane, and is used as an extender and oxygenate.
Corn germ, a by-product of the milling process,
is further processed as an oilseed.
By fermentation of dextrose, the
Company produces citric and lactic acids, feed-
grade amino acids and vitamins, lactates,
sorbitol, monosodium glutamate, nematodes and
food emulsifiers principally for the food and
feed industries.
Wheat and Other Milled Products
Wheat flour is sold primarily to large
bakeries, durum flour is sold to pasta
manufacturers and bulgur, a gelatinized wheat
food, is sold to both the export and the domestic
food markets. The Company mills oats into oat
bran and oat flour for institutional and consumer
food customers. The Company also mills milo to
produce industrial flour that is used in the
manufacturing of wall board for the building
industry.
Other Products and Services
The Company buys, stores and cleans
agricultural commodities, such as oilseeds, corn,
wheat, milo, oats and barley, for resale to other
processors worldwide.
The Company produces and distributes
formula feeds and animal health and nutrition
products to the livestock, dairy and poultry
industries. Many of the feed ingredients and
health and nutrition products are produced in our
other commodity processing operations.
The Company produces bakery products
and mixes which are sold to the baking industry.
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Item 1. BUSINESS--Continued
The Company produces spaghetti,
noodles, macaroni, and other consumer food
products. The Company also produces lettuce,
other fresh vegetables and herbs in its
hydroponic greenhouse.
Malt products are produced for use by
the food and beverage industries.
The Company raises fish for
distribution to consumer food customers.
Hickory Point Bank and Trust Co. furnishes public
banking services, except commercial loans, as
well as cash management and securities
safekeeping services for the Company.
ADM Investor Services, Inc. is a registered
futures commission merchant and a clearing member
of all principal commodities exchanges. ADM
Securities Inc. is a securities broker-dealer
registered with the Securities and Exchange
Commission and a member of the National
Association of Securities Dealers, Inc.
Agrinational
Insurance Company, a Vermont subsidiary, acts as
a direct insurer and reinsurer of a portion of
the Company's domestic and foreign property and
casualty insurance risks.
Alfred C. Toepfer
International (Germany) and affiliates, of which
the Company has a 50% interest, is one of the
world's largest, most respected trading companies
specializing in processed agricultural products.
Toepfer has forty-one sales offices worldwide.
Compagnie
Industrielle et Financiere des Produits Amylaces
SA (Luxembourg) and affiliates, of which the
Company has a 41.5% interest, owns European
agricultural processing plants that are primarily
engaged in corn wet milling and wheat starch
production.
The Company, through its partnership
with Gold Kist, Inc. and Alimenta Processing
Corporation d/b/a Golden Peanut Company, is a
major supplier of peanuts to both the domestic
and export markets. These peanuts are used in
peanut butter, snacks, cereals and many other
foods.
The Company, through its partnership
with Ag Processing Inc. d/b/a Consolidated
Nutrition, is a supplier of premium animal feeds
and animal health products.
The Company, through its partnership with
Riceland Foods, Inc., is a processor of rice and
rice products for institutional and consumer food
customers.
Gruma S.A. de C.V. (Mexico) and affiliates, of
which the Company has a 22% interest, is the
world's largest producer and marketer of corn
flour and tortillas with operations in the U.S.,
Mexico and Central America. Additionally, the
Company has a 20% interest in the combined U.S.
corn flour operations of ADM and Gruma. The
Company also has a 40% share, through a joint
venture with Gruma, of two Mexican-based wheat
flour mills.
The Company owns a 48% interest in Heartland Rail
Corporation. Heartland's 81% owned affiliate,
Iowa Interstate Railroad, operates a regional
railroad in Iowa and Illinois.
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Item 1. BUSINESS--Continued
The Company participates in various joint
ventures that operate oilseed crushing
facilities, oil refineries and related storage
facilities in China and Indonesia.
The percentage of net sales and other operating
income by classes of products and services for
the last three fiscal years were as follows:
1996 1995 1994
________________________
Oilseed products 61% 60% 59%
Corn products 19 20 20
Wheat and other
milled products 12 11 12
Other products and services8 9 9
___ ___ ___
100% 100% 100%
=== === ===
Methods of Distribution
Since the Company's customers are principally
other manufacturers and processors, its products
are distributed mainly in bulk from processing
plants or storage facilities directly to the
customers' facilities. The Company owns a large
number of trucks and trailers and owns or leases
large numbers of railroad tank cars and hopper
cars to augment those provided by the railroads.
The Company uses the inland waterway system and
functions as a contract carrier of commodities
for its own operations as well as for other
companies. The Company owns and leases
approximately 2,000 river barges and 27 line-haul
towboats.
(ii) Status of new products
The Company continues to expand its business
through the development and production of new,
value-added products. From dextrose, the Company
is currently producing the feed-grade amino acids
lysine, threonine and tryptophan and food
additives citric acid, monosodium glutamate
(MSG), lactic acid, xanthan gum and sorbitol. The
Company has entered the vitamin market with the
production of riboflavin and vitamin E and is
currently expanding production facilities to
produce biotin and vitamin C. The Company
continues to develop its soy protein meat
substitutes, Harvest Burgers R and Harvest
Burgers R for Recipes TM and its soy protein
powdered non-dairy beverage, Nutribev R.
Additionally, the Company is developing and
expanding production facilities to produce
emulsifiers, distilled monoglycerides,
astaxanthan and isoflavones.
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Item 1. BUSINESS--Continued
(iii) Source and availability of raw materials
Substantially all of the Company's raw materials
are agricultural commodities. In any single
year, the availability and price of these
commodities are subject to wide fluctuations due
to unpredictable factors such as weather,
plantings, government (domestic and foreign)
farm programs and policies, changes in global
demand created by population growth and higher
standards of living and worldwide production of
similar and competitive crops.
(iv) Patents, trademarks and licenses
The Company owns several valuable patents,
trademarks and licenses but does not consider its
business dependent upon any single or group of
patents, trademarks and licenses.
(v) Extent to which business is seasonal
Since the Company is so widely diversified in
global agribusiness markets, there are no
material seasonal fluctuations in the
manufacture, sale and distribution of its
products and services. There is a degree of
seasonality in the growing season and procurement
of the Company's principal raw materials:
oilseeds, wheat, corn and other grains. However,
the actual physical movement of the millions of
bushels of these crops through the Company's
storage and processing facilities is reasonably
constant throughout the year. The worldwide need
for food is not seasonal and is ever expanding as
is the world's population.
(vi) Working capital items
Price variations and availability of grain at
harvest often cause wide fluctuations in the
Company's inventories and short-term borrowings.
(vii) Dependence on single customer
No material part of the Company's business is
dependent upon a single customer or very few
customers.
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Item 1. BUSINESS--Continued
(viii) Amount of backlog
Because of the nature of the Company's business,
the backlog of orders at year end is not a
significant indication of the Company's activity
for the current or upcoming year.
(ix) Business subject to renegotiation
The Company has no business with the government
that is subject to renegotiation.
(x) Competitive conditions
Markets for the Company's products are highly
price competitive and sensitive to product
substitution. No single company competes with
the Company in all of its markets; however, a
number of large companies compete in one or more
markets. Major competitors in one or more
markets include, but are not limited to, Cargill,
Inc., ConAgra, Inc., CPC International, Eridania
Beghin-Say and Tate & Lyle.
(xi) Research and development expenditures
Practically all of the Company's technical
efforts and expenditures are concerned with food
and feed ingredient products. Special efforts are
being made to find improvements in food
technology to alleviate the protein malnutrition
throughout the world, utilizing the three largest
United States crops-corn, soybeans and wheat.
The need to successfully market new or improved
food and feed ingredients developed in the
Company's research laboratories led to the
concept of technical support. The Company is
staffed with technical representatives who work
closely with customers and potential customers on
the development of food and feed products which
incorporate Company produced ingredients. These
technical representatives are an adjunct to both
the research and sales functions.
The Company maintains a research laboratory in
Decatur, Illinois where product and process
development activities are conducted. To develop
new bioproducts and to improve existing
bioproducts, new cultures are developed using
classical mutation and genetic engineering.
Protein research is conducted at facilities in
Decatur where meat and dairy pilot plants support
application research. Research to support sales
and development for bakery products is done at a
laboratory in Olathe, Kansas.
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Item 1. BUSINESS--Continued
The amounts spent during the three years ended
June 30, 1996, 1995 and 1994 for such technical
efforts were approximately $17.1, $16.5 and $20.1
million, respectively. In addition, the Company
maintains separate quality control departments
which are supervised by research personnel.
(xii)Material effects of capital expenditures for
environmental protection
During 1996, $25 million was spent for equipment,
facilities and programs for pollution control and
compliance with the requirements of various
environmental agencies.
There have been no material effects upon the
earnings and competitive position of the Company
resulting from compliance with federal, state and
local laws or regulations enacted or adopted
relating to the protection of the environment.
The Company expects that expenditures for
environmental facilities and programs will
continue at approximately the present rate with
no unusual amounts anticipated for the next two
years.
(xiii) Number of employees
The number of persons employed by the Company was
14,811 at June 30, 1996.
(d)Financial Information About Foreign and Domestic
Operations and Export Sales
The Company's foreign operations are principally
in developed countries and do not entail any undue
or unusual business risks. Geographic financial
information is set forth in "Note 10 of Notes to
Consolidated Financial Statements" of the annual
shareholders' report for the year ended June 30,
1996 and is incorporated herein by reference.
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Item 1. BUSINESS--Continued
Export sales by classes of products for the last
three fiscal years were as follows:
1996 1995 1994
________________________
Oilseed products 7% 8% 5%
Corn products 7 7 6
Wheat and other milled
products 1 1 1
Other products and services 1 - -
__ __ ___
16% 16% 12%
=== === ===
(e) Executive Officers
Name Title Age
Dwayne O. Andreas Chairman of the Board of 78
Directors from 1972.
Chief Executive Officer.
James R. Randall President from 1975. 71
G. Allen Andreas Vice President from 1988. 53
Counsel to the Executive
Committee from September 1994.
Michael D. Andreas Vice Chairman of the Board 47
of Directors from October 1992.
Executive Vice President
from 1988.
Martin L. Andreas Senior Vice President from 1988.57
Executive Assistant to the
Chief Executive.
Charles P. Archer Treasurer from October 1992. 41
Assistant Treasurer from 1988.
Charles T. Bayless Group Vice President from 61
January 1993. Vice President
from 1992. President of ADM
Processing Division since 1980.
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Item 1. Business--Continued
Howard E. Buoy Group Vice President from 69
January 1993. Vice President
of ADM Processing Division
from 1979.
William H. Camp Vice President from April 1993.47
Vice President of ADM Processing
Division from 1990 to 1993.
Barrie R. Cox Vice President from January 1996.
49
President of ADM Food Additives
Division from 1994. Vice
President of ADM Corn Processing
Division from 1990.
Larry H. Cunningham Vice President and President 52
of Protein Specialties
Division since July 1993.
Formerly President of
A. E. Staley Manufacturing Co.
Craig L. Hamlin Group Vice President from 50
October 1994. President of
ADM Milling from 1989.
Edward A. Harjehausen Vice President from October 45
1992. Vice President of
ADM Corn Processing Division
from 1988.
Burnell D Kraft Group Vice President from 65
January 1993. Vice President
from 1984. President of
ADM/Growmark, Collingwood
Grain and Tabor Grain Co.
subsidiaries.
Paul L. Krug, Jr. Vice President from 1991 and 52
President of ADM Investor
Services. Formerly a Vice
President of Continental Grain
Company.
John E. Long Vice President from July 1996. 67
President of ADM Research
Division from 1992. Various
senior research positions from 1975.
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Item 1. BUSINESS--Continued
Jack McDonald Vice President from October 1994.
64
President of Southern Cotton Oil
Division from 1990.
Steven R. Mills Controller from October 1994. 41
Various senior treasury and
accounting positions from 1979.
Paul B. Mulhollem Vice President from January 1996.
47
Managing Director of ADM
International, Ltd., from 1993.
International merchandising
positions since 1992. Formerly
Group President of Continental
Grain Company.
Brian F. Peterson Vice President from January 1996.
54
President of ADM BioProducts
Division from 1995. Various
merchandising positions from
1980.
Raymond V. Preiksaitis Vice President - Management 43
Information Systems from 1988.
John G. Reed Vice President from 1982. 66
Chief Executive-Europe from
September 1994.
Richard P. Reising Vice President, Secretary and 52
General Counsel from 1991.
Secretary and Assistant General
Counsel since 1988.
John D. Rice Vice President from 1993. 42
Vice President of ADM Processing
Division from 1992. Various
merchandising positions from
1988 to 1992.
Kenneth A. Robinson Vice President from January 1996.
49
Vice President of ADM Processing
Division from 1985.
Douglas J. Schmalz Vice President and Chief 50
Financial Officer from 1986.
Terrance S. Wilson Group Vice President from 58
January 1993. Officer of
ADM Corn Processing Division
since 1988.
Stephen H. Yu Vice President from January 1996.
36
Managing Director of ADM
Asia-Pacific, Ltd., from 1993.
Various merchandising positions
with Continental Grain Company
from 1986.
Officers of the registrant are elected by the Board
of Directors for terms of one year and until their
successors are duly elected and qualified.
Lowell W. Andreas and Dwayne O. Andreas, directors
of the registrant, are brothers. Michael D. Andreas
is the son of Dwayne O. Andreas. G. Allen Andreas
and Martin L. Andreas are nephews of Dwayne O.
Andreas and Lowell W. Andreas. Charles P. Archer is
the son of S. M. Archer, Jr., a director of the
registrant.
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Item 2. PROPERTIES
(a) Processing Facilities
The Company owns, leases, or has a 50% or greater
interest in the following processing plants:
United
States Foreign Total
______________________________________________
Owned 127 47 174
Leased 3 - 3
Joint Venture59 22 81
___ __ ___
189 69 258
=== == ===
The Company's operations are such that most products
are efficiently processed near the source of raw
materials. Consequently, the Company has many plants
located strategically in grain producing areas. The
annual volume processed will vary depending upon
availability of raw material and demand for the
finished products.
The Company operates thirty-three domestic and seven
foreign oilseed crushing plants with a daily processing
capacity of approximately 82,000 tons. The domestic
plants are located in Alabama, Arkansas, Georgia,
Illinois, Indiana, Iowa, Kansas, Louisiana, Minnesota,
Missouri, Mississippi, Nebraska, North Dakota, Ohio,
South Carolina, Tennessee and Texas. The foreign
plants are located in Canada, England, Germany and the
Netherlands.
The Company operates four wet corn milling and two dry
corn milling plants with a daily grind capacity of
approximately 1,600,000 bushels. These plants and other
related properties, including corn germ extraction and
corn gluten pellet plants, are located in Illinois,
Iowa, New York and North Dakota. The Company also has
interests, through joint ventures, in corn milling
plants in Mexico, Bulgaria, Hungary, Slovakia and
Turkey.
The Company operates twenty-nine domestic wheat and
durum flour mills, a domestic bulgur plant, six
Canadian flour mills and one flour mill each in Belize
and Barbados with a total daily capacity of
approximately 346,000 cwt. of flour. The Company also
operates three corn flour mills, two milo mills, two
pasta plants and two starch and gluten plants. These
plants and other related properties are strategically
located across North America in California, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota,
Missouri, Nebraska, New York, North Carolina, Oklahoma,
Oregon, Pennsylvania, Tennessee, Texas, Washington,
Wisconsin, Canada, Barbados and Belize. The Company
also has an interest, through a joint venture, in rice
milling plants in Arkansas and Louisiana.
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Item 2. PROPERTIES--Continued
The Company operates ten domestic oilseed refineries in
Illinois, Indiana, Iowa, Georgia, Nebraska, Tennessee
and Texas as well as seven foreign refineries in
England, Canada, Germany and the Netherlands. The
Company has an interest, through a joint venture, in an
oilseed refinery in Texas. The Company produces
packaged oils in Georgia, Illinois, California and
Germany and soy protein specialty products in Illinois
and the Netherlands. Lecithin products are produced in
Illinois, Iowa, Nebraska, Canada, Germany and the
Netherlands. Cotton linter pulp is produced in
Tennessee and cottonseed flour is produced in Texas.
The Company produces feed and food additives at eight
bioproduct plants located in Illinois, North Carolina
and Ireland. The Company also operates formula feed,
animal health and nutrition and pet food plants in
Georgia, Illinois, Iowa, Ohio, Texas, Washington,
Canada, England, Ireland, Barbados, Belize, China and
Puerto Rico. The Company also has interests, through
joint ventures, in formula feed and pet food plants in
Alabama, Arkansas, Georgia, Illinois, Iowa, Indiana,
Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio,
Pennsylvania, Tennessee, Vermont, Wisconsin, Canada,
Puerto Rico and Trinidad.
The Company operates five North American barley malting
plants located in Illinois, Minnesota, Wisconsin and
Canada.
The Company operates various other food ingredient
plants in Iowa, Kansas, Nebraska, Washington, Germany,
England and France.
(b) Procurement Facilities
The Company operates one hundred sixty-eight domestic
terminal, country and river elevators covering the
Midwest, West and South Central states, including one
hundred five country elevators and sixty-three terminal
and river loading facilities including three grain
export elevators in Louisiana. Elevators are located
in Colorado, Georgia, Illinois, Indiana, Iowa, Kansas,
Louisiana, Minnesota, Missouri, Montana, Nebraska,
North Carolina, Oklahoma, South Carolina, Tennessee and
Texas. Domestic grain terminals, elevators and
processing plants have an aggregate storage capacity of
approximately 372,000,000 bushels. The Company has an
interest, through a joint venture, in sixteen grain
terminals and elevators located in Illinois, Indiana,
Kentucky, Maryland, Michigan and Ohio. The Company also
operates twelve foreign grain elevators in Barbados,
Canada, Ireland and Germany. Thirteen cotton gins are
located in Texas and serve the cottonseed crushing
plants in that area.
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Item 3. LEGAL PROCEEDINGS
In 1993, the State of Illinois Environmental Protection
Agency brought administrative enforcement proceedings
arising out of the Company's failure to obtain permits
for certain pollution control equipment at certain of
the Company's processing facilities in Illinois. The
Company believes it has meritorious defenses. In
management's opinion these proceedings will not, either
individually or in the aggregate, have a material
adverse effect on the Company's financial condition or
results of operations.
The Company is involved in approximately 24
administrative and judicial proceedings in which it has
been identified as a potentially responsible party
(PRP) under the federal Superfund law and its state
analogs for the study and clean-up of sites
contaminated by material discharged into the
environment. In all of these matters, there are
numerous PRPs. Due to various factors such as the
required level of remediation and participation in the
clean-up effort by others, the Company's future clean-
up costs at these sites cannot be reasonably estimated.
However, in management's opinion these proceedings will
not, either individually or in the aggregate, have a
material adverse effect on the Company's financial
condition or results of operations.
The Company is the target of an investigation being
conducted by a grand jury in the Northern District of
Illinois into possible violations of federal antitrust
laws and related crimes in the food additives industry.
This investigation in Chicago is focused on antitrust
violations with respect to lysine. A federal grand
jury in San Francisco is investigating antitrust
violations with respect to citric acid and a federal
grand jury in Atlanta is investigating antitrust
violations with respect to high fructose corn syrup.
The Company and two of its executive officers - Michael
D. Andreas and Terrance S. Wilson - have been informed
that they are targets of the lysine investigation and
indictments are being considered against them.
Following public announcement in June 1995 of the
investigation, the Company and certain of its directors
and executive officers were named as defendants in at
least seventeen putative class action suits on behalf
of all purchasers of securities of the Company during
the period between certain dates in 1992 and 1995.
Fourteen of these suits were consolidated under the
name In Re Archer-Daniels-Midland Company Securities
Litigation, United States District Court, Northern
District of Illinois, Civil Action No. 95-C-3979, and a
consolidated complaint was filed on September 22, 1995.
The consolidated complaint alleges that the defendants
made material misrepresentations and omissions with
respect to the Company and its operations and with
respect to actions of the Company and its officers
regarding antitrust violations, as a result of which
market prices of the Company's securities were
artificially inflated during the putative class period.
The consolidated complaint alleges that the conduct
complained of violates federal securities laws. The
plaintiffs request unspecified compensatory damages,
costs (including attorneys and expert fees), expenses
and other unspecified relief on behalf of the putative
class. On October 31, 1995, the Court granted the
defendants' motion to transfer the consolidated action
to the Central District of Illinois (wherein it now
bears the caption E. M. Lawrence Limited Frozen
Retirement Trust Dated September 1, 1992, et al. v.
Archer-Daniels-Midland Co., et al., Case Number 95-
2287) where it was further consolidated with three
similar actions also pending in the Central District.
The Company and the
individual defendants have moved to dismiss this
consolidated complaint. On September 27, 1996 the
Company entered into an agreement with counsel for the
plaintiff class in which among other things, the
Company agreed to pay $30 million to members of the
class, without admitting the alleged violations of law.
Formal papers seeking court approval of the settlement
are expected to be filed soon.
15
PAGE 16
Item 3. LEGAL PROCEEDINGS--Continued
The Company, along with other companies, has been named
as a defendant in at least twenty-nine putative class
action antitrust suits involving the sale of high
fructose corn syrup. At least twenty-two of those
actions allege violations of federal antitrust laws,
including allegations that the defendants agreed to
fix, stabilize and maintain at artificially high levels
the prices of high fructose corn syrup, and seek
injunctions against continued alleged illegal conduct,
treble damages of an unspecified amount, attorneys fees
and costs, and other unspecified relief. The putative
classes in these cases comprise certain direct
purchasers of high fructose corn syrup during certain
periods in the 1990s. One such action was filed on July
21, 1995 in the United States District Court for the
Northern District of Alabama and is encaptioned Golden
Eagle, Inc. v. Archer-Daniels-Midland Co., et al.,
Civil Action No. 95-B-1888-J. This and other similar
actions have been transferred to the United States
District Court for the Central District of Illinois and
consolidated under the caption In Re High Fructose Corn
Syrup Antitrust Litigation, MDL No. 1087 and Master
File No. 95-1477. The Company, along with other
companies, also has been named as a defendant in at
least six putative class action antitrust suits filed
in California state court and at least one putative
class action antitrust suit filed in Alabama state
court involving the sale of high fructose corn syrup.
The California actions allege violations of the
California antitrust and unfair competition laws,
including allegations that the defendants agreed to
fix, stabilize and maintain at artificially high levels
the prices of high fructose corn syrup, and seek treble
damages of an unspecified amount, attorneys fees and
costs, restitution and other unspecified relief. Two of
the California putative classes comprise certain direct
purchasers of high fructose corn syrup in the State of
California during certain periods in the 1990s. One
such action was filed on October 17, 1995 in Superior
Court for the County of Stanislaus, California and
encaptioned St. Stan's Brewing Co. v Archer-Daniels-
Midland Co. et al., Civil Action No. 37237. The other
four California putative classes comprise certain
indirect purchasers of high fructose corn syrup in the
State of California during certain periods in the
1990s. One such action was filed on July 21, 1995 in
the Superior Court of the County of Los Angeles,
California and is encaptioned Borgeson v. Archer-
Daniels-Midland Co., et al., Civil Action No. BC131940.
The Alabama action alleges violations of the Alabama,
Michigan and Minnesota antitrust laws, including
allegations that defendants agreed to fix, stabilize
and maintain at artificially high levels the prices of
high fructose corn syrup, and seeks an injunction
against continued illegal conduct, damages of an
unspecified amount, attorneys fees and costs, and other
unspecified relief. The putative class in the Alabama
action comprises certain indirect purchasers in
Alabama, Michigan and
Minnesota during the period March 18, 1994 to March 18,
1996. This action was filed on March 18, 1996 in the
Circuit Court of Coosa
County, Alabama, and is encaptioned Caldwell v. Archer-
Daniels-Midland Co., et al., Civil Action No. 96-17.
16
PAGE 17
Item 3. LEGAL PROCEEDINGS--Continued
The Company was named as a defendant in at least
seventeen putative class action antitrust suits
involving the sale of lysine. Six of these actions
allege violations of federal antitrust laws, including
allegations that certain entities agreed to fix,
stabilize and maintain at artificially high levels the
price of lysine, and seek injunctions against continued
alleged illegal conduct, treble damages of an
unspecified amount, attorneys fees and costs, and other
unspecified relief. The putative classes in these cases
comprise certain direct purchasers of lysine for
certain periods in the 1990s. One such action was filed
on August 9, 1995 in the United States District for the
Northern District of Illinois and is encaptioned K&L
Feeds v. Archer-Daniels-Midland Co., Civil Action No.
95-C-4587. This and other similar actions have been
transferred to the United States District Court for the
Northern District of Illinois and consolidated as In Re
Amino Acid Lysine Antitrust Litigation, MDL No. 1083
and Master File No. 95-7679. On April 4, 1996, the
Company executed a settlement agreement with counsel
for the plaintiff class in which, among other things,
the Company agreed to pay $25 million to members of the
class, without admitting the alleged violations of law.
This settlement agreement has been approved by the
court and certain objectors to the settlement have
appealed the final order of approval to the United
States Court of Appeals for the Seventh Circuit. The
Company also has been named as a defendant in at least
one non-class action federal antitrust suit involving
the sale of lysine. This action was filed on November
13, 1995 in the United States District Court for the
Eastern District of Missouri and is encaptioned Purina
Mills, Inc., et al. v Archer-Daniels-Midland Co., Civil
Action No. 95-CV-2227. It alleges violations of federal
antitrust laws, including allegations that certain
entities agreed to fix, stabilize and maintain at
artificially high levels the price of lysine, and seeks
an injunction against continued alleged illegal
conduct, treble damages of an unspecified amount,
attorneys fees and costs, and other unspecified relief.
The Company also has been named as a defendant in at
least six putative class action antitrust suits filed
in California state court, at least two putative class
action antitrust suits filed in Alabama state court, at
least two putative class action antitrust suits filed
in Minnesota state court, at least one putative class
action antitrust suit filed in Georgia state court and
at least one putative class action antitrust suit filed
in Tennessee state court involving the sale of lysine.
The California actions allege violations of the
California antitrust and unfair competition laws,
including allegations that the defendants agreed to
fix, stabilize and maintain at artificially high levels
the prices of lysine, and
seek treble damages of an unspecified amount, attorneys
fees and costs, restitution and other unspecified
relief. The putative classes in the California actions
comprise certain indirect purchasers of lysine in the
State of California during certain periods in the
1990s. One such action was filed on September 29, 1995
in the Superior Court of the County of San Diego,
California, and is encaptioned Equine Competition
Products, Inc. v. Archer-Daniels-Midland Co., Civil
Action No. 693014. The Company has entered into an
agreement with counsel for the indirect purchasers
class in which among other things, the Company agreed
to pay $500,000 to members of the class, without
admitting the alleged violations of law. This
settlement received preliminary court approval on
September 20 and will be mailed to class members for a
final hearing on November 21, 1996. The Alabama actions
allege violations of the Alabama antitrust laws,
including allegations that the defendants agreed to
fix, stabilize and maintain at artificially high levels
the prices of lysine, and seek an injunction against
continued alleged illegal conduct, damages of an
unspecified amount, attorneys fees and costs, and other
unspecified relief. The putative classes in the Alabama
actions comprise certain indirect purchasers of lysine
in the State of Alabama during certain periods in the
1990s. One such action was filed on August 17, 1995 in
the Circuit Court of DeKalb County, Alabama, and is
encaptioned Ashley v. Archer-Daniels-Midland Co., et
al., Civil Action No. 95-336. One Minnesota action
alleges violations of the Minnesota, Tennessee,
Wisconsin, South Dakota, North Dakota, Kansas,
Louisiana, Michigan and Maine antitrust laws, including
allegations that defendants conspired to maintain the
price of lysine at artificially high levels, and seeks
treble damages of an unspecified amount, attorneys fees
and costs, and other unspecified relief. The putative
class in this action comprises certain indirect
purchasers in the aforementioned states of lysine
during the period June 1, 1992 through April 19, 1996.
This action was filed on April 10, 1996 in the District
Court for Renville County, Minnesota and is encaptioned
Big Valley Milling, Inc. v. Archer-Daniels-Midland Co.,
et al., No. C7-96-260. The other Minnesota action,
encaptioned, United Mills v. Archer-Daniels-Midland
Co., et al., No. 65-C2-96-215, and filed in the same
court, seeks identical relief on behalf of certain
indirect purchasers of lysine in all of the
aforementioned states except Tennessee. The Georgia
action, encaptioned Long v. Archer-Daniels-Midland Co.,
et al., Civil Action No. E-43829, and filed in Fulton
County Superior Court, alleges a restraint of trade in
violation of Georgia common law and the Georgia state
RICO act. This action includes allegations that the
defendants conspired to maintain the price of lysine at
artificially high levels and seeks an injunction
against continued illegal conduct, treble damages of an
unspecified amount, attorneys fees and costs, and other
unspecified relief. The putative class in the action
comprises certain indirect purchasers of lysine in the
state of Georgia during the period January 1, 1990
until the present. The Company has moved to dismiss
this action. The Tennessee action, encaptioned
McCormack Farms v. Archer Daniels Midland Co., et al.,
Civil Action No. 96C-2190, and filed in Davidson County
Circuit Court, alleges a restraint of trade in
violation of the Tennessee Trade Practices Act and
Tennessee Consumer Protection Act. This action includes
allegations that defendants conspired to fix, maintain
or stabilize the prices of lysine and seeks an
injunction against continued illegal conduct, treble
damages of an unspecified amount, attorneys' fees and
costs, and other unspecified relief. The putative class
in this case comprises certain indirect purchasers of
lysine within the State of Tennessee during the period
June 10, 1992 through June 10, 1996.
17
PAGE 18
Item 3. LEGAL PROCEEDINGS--Continued
The Company, along with other companies, has been named
as a defendant in at least nine putative class action
antitrust suits involving the sale of citric acid. Six
of these actions allege violations of federal antitrust
laws, including allegations that the defendants agreed
to fix, stabilize and maintain at artificially high
levels the prices of citric acid, and seek injunctions
against continued alleged illegal conduct, treble
damages of an unspecified amount, attorneys fees and
costs, and other unspecified relief. The putative
classes in these cases comprise certain direct
purchasers of citric acid for certain periods in the
1990s. One such action was filed on August 18, 1995, in
the United States District Court for the Northern
District of California, and is encaptioned 7-Up
Bottling Co. of Philadelphia, Inc. v. Archer-Daniels-
Midland Co., et al, Civil Action No. 95-2963. Other
similar actions have been transferred to this same
court and consolidated as In Re Citric Acid Antitrust
Litigation, MDL No. 1092, Master File No. C-95-2963FMS.
On September 27, 1996 the Company entered into an
agreement with counsel for the plaintiff class in which
among other things, the Company agreed to pay $35
million to members of the class, without admitting the
alleged violations of law. Formal papers seeking court
approval of the settlement are expected to be filed
soon. The Company, along with other companies, also has
been named as a defendant in at least one putative
class action antitrust suit filed in Alabama state
court involving the sale of citric acid. This action
alleges violations of the Alabama antitrust laws,
including allegations that the defendants agreed to
fix, stabilize and maintain at artificially high levels
the prices of citric acid, and seeks an injunction
against continued alleged illegal conduct, damages of
an unspecified amount, attorneys fees and costs, and
other unspecified relief. The putative class in the
Alabama action comprises certain indirect purchasers of
citric acid in the State of Alabama from July 1993
until July 1995. This action was filed on July 27, 1995
in the Circuit Court of Walker County, Alabama and is
encaptioned Seven Up Bottling Co. of Jasper, Inc. v.
Archer-Daniels-Midland Co., et al., Civil Action No. 95-
436. The Company has moved to dismiss this action.
The Company, along with other companies, also has been
named as a defendant in at least two putative class
action antitrust suits filed in California state court
involving the sale of citric acid. These actions allege
violations of the California antitrust and unfair
competition laws, including allegations that the
defendants conspired to fix, maintain or stabilize the
price of citric acid, and seek injunctions against
continued illegal conduct, treble damages of an
unspecified amount, attorneys fees and costs, and other
unspecified relief. The putative classes in these cases
comprise certain indirect purchasers of citric acid
within the State of California during certain periods
in the 1990s. One such action was filed on June 12,
1996 in the Superior Court of the County of Los
Angeles, California and is encaptioned Bianco v. Archer
Daniels Midland Co., et al., Civil Action No. 978912.
18
PAGE 19
Item 3. LEGAL PROCEEDINGS--Continued
The Company, along with other companies, has been named
as a defendant in at least six putative class action
antitrust suits involving the sale of both high
fructose corn syrup and citric acid. Two of these
actions allege violations of the California antitrust
and unfair competition laws, including allegations that
the defendants agreed to fix, stabilize and maintain at
artificially high levels the prices of high fructose
corn syrup and citric acid, and seek treble damages of
an unspecified amount, attorneys fees and costs,
restitution and other unspecified relief. The putative
class in one of these California cases comprises
certain direct purchasers of high fructose corn syrup
and citric acid in the State of California during the
period January 1, 1992 until at least October 1995.
This action was filed on October 11, 1995 in the
Superior Court of Stanislaus County, California and is
entitled Gangi Bros. Packing Co. v. Archer-Daniels-
Midland Co., et al., Civil Action No. 37217. The
putative class in the other California case comprises
certain indirect purchasers of high fructose corn syrup
and citric acid in the state of California during the
period October 12, 1991 until November 20, 1995. This
action was filed on November 20, 1995 in the Superior
Court of San Francisco County and is encaptioned MCFH,
Inc. v. Archer-Daniels-Midland Co., et al., Civil
Action No. 974120. The Company, along with other
companies, also has been named as a defendant in at
least one putative class action antitrust suit filed in
West Virginia state court involving the sale of high
fructose corn syrup and citric acid. This action
alleges violations of the West Virginia antitrust laws,
including allegations that the defendants agreed to
fix, stabilize and maintain at artificially high levels
the prices of high fructose corn syrup and citric acid,
and seeks treble damages of an unspecified amount,
attorneys fees and costs, and other unspecified relief.
The putative class in the West Virginia action
comprises certain entities within the State of West
Virginia that purchased products containing high
fructose corn syrup and/or citric acid for resale from
at least 1992 until 1994. This action was filed on
October 26, 1995, in the Circuit Court for Boone
County, West Virginia, and is encaptioned Freda's v.
Archer-Daniels-Midland Co., et al., Civil Action No. 95-
C-125. The Company, along with other companies, also
has been named as defendant in at least one putative
class action antitrust suit filed in Michigan state
court involving the sale of high fructose corn syrup
and citric acid. This action alleges violations of the
Michigan antitrust laws, including allegations that the
defendants agreed to fix, stabilize and maintain at
artificially high levels the prices of high fructose
corn syrup and citric acid, and seeks treble damages of
an unspecified amount, attorneys fees and costs, and
other unspecified relief. The putative class in the
Michigan action comprises certain persons within the
State of Michigan that purchased products containing
high fructose corn syrup and/or citric acid during the
period January 1992 through February 26, 1996. This
action was filed on February 26, 1996 in the Circuit
Court for Ingham County, Michigan, and is encaptioned
Wilcox v. Archer-Daniels-Midland Co., et al., Civil
Action No. 96-82473-CF. The Company, along with other
companies, also has been named as a
defendant in at least one putative class action
antitrust suit filed in the Superior Court for the
District of Columbia involving the sale of high
fructose corn syrup and citric acid. This action
alleges violations of the District of Columbia
antitrust laws, including allegations that the
defendants agreed to fix, stabilize and maintain at
artificially high levels the prices of high fructose
corn syrup and citric acid, and seeks treble damages of
an unspecified amount, attorneys fees and costs, and
other unspecified relief. The putative class in the
District of Columbia action comprises certain persons
within the District of Columbia that purchased products
containing high fructose corn syrup and/or citric acid
during the period January 1, 1992 through December 31,
1994. This action was filed on April 12, 1996 in the
Superior Court for the District of Columbia, and is
encaptioned Holder v. Archer-Daniels-Midland Co., et
al., Civil Action No. 96-2975. The Company, along with
other companies, has been named as a defendant in at
least one putative class action antitrust suit filed in
Kansas state court involving the sale of high fructose
corn syrup and citric acid. This action alleges
violations of the Kansas antitrust laws, including
allegations that the defendants agreed to fix,
stabilize and maintain at artificially high levels the
prices of high fructose corn syrup and citric acid, and
seeks treble damages of an unspecified amount, court
costs and other unspecified relief. The putative class
in the Kansas action comprises certain persons within
the State of Kansas that purchased products containing
high fructose corn syrup and/or citric acid during at
least the period January 1, 1992 through December 31,
1994. This action was filed on May 7, 1996 in the
District Court of Wyandotte County, Kansas and is
encaptioned Waugh v. Archer-Daniels-Midland Co., et
al., Case No. 96-C-2029.
19
PAGE 20
Item 3. LEGAL PROCEEDINGS--Continued
The Company, along with other companies, also has been
named as a defendant in at least six putative class
action antitrust suits filed in California state court
involving the sale of high fructose corn syrup, citric
acid and/or lysine. These actions allege violations of
the California antitrust and unfair competition laws,
including allegations that the defendants agreed to
fix, stabilize and maintain at artificially high levels
the prices of high fructose corn syrup, citric acid
and/or lysine, and seek treble damages of an
unspecified amount, attorneys fees and costs,
restitution and other unspecified relief. One of the
putative classes comprises certain direct purchasers of
high fructose corn syrup, citric acid and/or lysine in
the State of California during a certain period in the
1990s. This action was filed on December 18, 1995 in
the Superior Court for Stanislaus County, California
and is encaptioned Nu Laid Foods, Inc. v. Archer-
Daniels-Midland Co., et al., Civil Action No. 39693.
The other five putative classes comprise certain
indirect purchasers of high fructose corn syrup, citric
acid and/or lysine in the State of California during
certain periods in the 1990s. One such action was filed
on December 14, 1995 in the Superior Court for
Stanislaus County, California and is encaptioned Batson
v. Archer-Daniels-Midland Co., et al., Civil Action No.
39680.
Also following the public announcement of the grand
jury investigation in June 1995, three shareholder
derivative suits were filed against certain of the
Company's directors and executive officers and
nominally against the Company in the United States
District Court for the Northern District of Illinois
and at least fourteen similar shareholder derivative
suits were filed in the Delaware Court of Chancery. The
derivative suits filed in federal court in Illinois
were consolidated under the name Felzen, et al. v.
Andreas, et al., Civil Action No. 95-C-4006, 95-C-4535,
and a consolidated amended derivative complaint was
filed on September 29, 1995. This complaint names all
current directors of the Company (except Mr. Coan) and
one former director as defendants and names the Company
as a nominal defendant. It alleges breach of fiduciary
duty, waste of corporate assets, abuse of control and
gross mismanagement, based on the antitrust allegations
described above as well as other alleged wrongdoing. On
October 31, 1995, the Court granted the defendants'
motion to transfer the Illinois consolidated derivative
action to the Central District of Illinois, wherein it
now bears the case number 95-2279. On April 26, 1996,
the court dismissed the suit without prejudice and
permitted the plaintiffs twenty-one days to refile it.
The plaintiffs refiled the complaint on May 17, 1996.
The defendants again moved to dismiss the complaint on
June 7, 1996.
20
PAGE 21
Item 3. LEGAL PROCEEDINGS--Continued
The Company and its directors also have been named as
defendants in a putative class action suit encaptioned
Loudon v. Archer-Daniels-Midland Co., et al., Civil
Action No. 14638, filed in the Delaware Court of
Chancery on October 20, 1995. This action alleges
violations of Delaware state law and seeks invalidation
of the election of the Company's directors on the basis
of alleged omissions from the proxy statement issued by
the Company prior to its October 19, 1995 annual
meeting. The Court of Chancery dismissed this action on
February 20, 1996, and the case is now on appeal in the
Supreme Court of Delaware. The Company and its
directors also have been named as defendants in a
similar suit filed on November 1, 1995 in the United
States District Court for the Central District of
Illinois, and encaptioned Buckley v. Archer-Daniels-
Midland Co., et al., Civil Action No. 95-C-2269,
alleging violations of analogous provisions of federal
securities law. The defendants moved to dismiss this
action. The Court granted the motion to dismiss on June
6, 1996, and the case is now on appeal.
The Company and the individual defendants named in the
actions described above intend to vigorously defend
them unless they can be settled on terms deemed
acceptable to the parties.
The Company from time to time, in the ordinary course
of business, is named as a defendant in various other
lawsuits. In management's opinion, the gross liability
from such other lawsuits, including environmental
exposure, with or without insurance recoveries is not
considered to be material to the Company's financial
condition or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5.MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information responsive to this Item is set forth in
"Common Stock Market Prices and Dividends" of the annual
shareholders' report for the year ended June 30, 1996
and is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Information responsive to this Item is set forth in the
"Ten-Year Summary of Operating, Financial and Other
Data" of the annual shareholders' report for the year
ended June 30, 1996 and is incorporated herein by
reference.
21
PAGE 22
Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information responsive to this Item is set forth in
"Management's Discussion of Operations and Financial
Condition" of the annual shareholders' report for the
year ended June 30, 1996 and is incorporated herein by
reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and supplementary
data included in the annual shareholders' report for the
year ended June 30, 1996 are incorporated herein by
reference:
Consolidated balance sheets--June 30, 1996 and 1995
Consolidated statements of earnings--Years ended
June 30, 1996, 1995 and 1994
Consolidated statements of shareholders' equity--Years
ended
June 30, 1996, 1995 and 1994
Consolidated statements of cash flows--Years ended
June 30, 1996, 1995 and 1994
Notes to consolidated financial statements--June 30, 1996
Summary of Significant Accounting Policies
Report of Independent Auditors
Quarterly Financial Data (Unaudited)
Recent Developments:
See Item 3 of this Form 10-K report for an update of
recent developments related to the antitrust
investigation and related litigation including the
Company's agreement to settle a consolidated securities
class action lawsuit for $30 million and a class action
lawsuit involving the sale of citric acid for $35
million.
Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to directors and executive
officers is set forth in "Election of Directors" and
"Rule 405 Disclosure" of the definitive proxy statement
for 1996 and is incorporated herein by reference.
Certain information with respect to executive officers
is included in Item 1 (e) of this report.
Item 11. EXECUTIVE COMPENSATION
Information responsive to this Item is set forth
in "Executive Compensation" and "Salary and Stock
Option Committee's Report" of the definitive
proxy statement for 1996 and is incorporated
herein by reference.
22
PAGE 23
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information responsive to this Item is set forth in
"Principal Holders of Voting Securities" of the
definitive proxy statement for 1996 and is incorporated
herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information responsive to this Item is set forth in
"Certain Relationships and Related Transactions" of the
definitive proxy statement for 1996 and is incorporated
herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) The following consolidated financial
statements and other financial data of the
registrant and its subsidiaries, included in the
annual report of the registrant to its
shareholders for the year ended June 30, 1996, are
incorporated by reference in Item 8, and are also
incorporated herein by reference:
Consolidated balance sheets--June 30, 1996 and 1995
Consolidated statements of earnings--Years ended
June 30, 1996, 1995 and 1994
Consolidated statements of shareholders' equity--
Years ended June 30, 1996, 1995 and 1994
Consolidated statements of cash flows--Years ended
June 30, 1996, 1995 and 1994
Notes to consolidated financial statements--June
30,
1996
Summary of Significant Accounting Policies
Quarterly Financial Data (Unaudited)
(a)(2) Schedules are not applicable and
therefore not included in this report.
Financial statements of affiliates accounted
for by the equity method have been omitted because
they do not, considered individually, constitute
significant subsidiaries.
(a)(3) LIST OF EXHIBITS
(3)Composite Certificate of Incorporation and
Bylaws filed on November 7, 1986 as Exhibits 3(a)
and 3(b), respectively, to Post Effective
Amendment No. 1 to Registration Statement on Form
S-3, Registration No. 33-6721, are incorporated
herein by reference.
23
PAGE 24
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
--Continued
(4)Instruments defining the rights of security
holders, including:
(i) Indenture dated May 15,
1981, between the registrant and Morgan
Guaranty Trust Company of New York, as
Trustee (incorporated by reference to
Exhibit 4(b) to Amendment No. 1 to
Registration Statement No. 2-71862),
relating to the $250,000,000 - 7% Debentures
due May 15, 2011;
(ii) Indenture dated May 1,
1982, between the registrant and Morgan
Guaranty Trust Company of New York, as
Trustee (incorporated by reference to
Exhibit 4(c) to Registration Statement No. 2-
77368), relating to the $400,000,000 Zero
Coupon Debentures due May 1, 2002;
(iii) Indenture dated as
of March 1, 1984 between the registrant and
Chemical Bank, as Trustee (incorporated by
reference to Exhibit 4 to the registrant's
Current Report on Form 8-K dated August 3,
1984 (File No. 1-44)), as supplemented by
the Supplemental Indenture dated as of
January 9, 1986, between the registrant and
Chemical Bank, as Trustee (incorporated by
reference to Exhibit 4 to the registrant's
Current Report on Form 8-K dated January 9,
1986 (File No. 1-44)), relating to the
$100,000,000 - 10 1/4% Debentures due
January 15, 2006;
(iv) Indenture dated June 1,
1986 between the registrant and Chemical
Bank, (as successor to Manufacturers Hanover
Trust Company), as Trustee (incorporated by
reference to Exhibit 4(a) to Registration
Statement No. 33-6721), and Supplemental
Indenture dated as of August 1, 1989 between
the registrant and Chemical Bank (as
successor to Manufacturers Hanover Trust
Company), as Trustee (incorporated by
reference to Exhibit 4(c) to Post-Effective
Amendment No. 3 to Registration Statement
No. 33-6721), relating to the $300,000,000
- 8 7/8% Debentures due April 15, 2011, the
$300,000,000 - 8 3/8% Debentures due April
15, 2017, the $300,000,000 - 8 1/8%
Debentures due June 1, 2012, the
$250,000,000 - 6 1/4% Notes due May 15,
2003, and the $250,000,000 - 7 1/8%
Debentures due March 1, 2013.
24
PAGE 25
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
--Continued
Copies of constituent
instruments defining rights of holders of
long-term debt of the Company and
Subsidiaries, other than the Indentures
specified herein, are not filed herewith,
pursuant to Instruction (b)(4) (iii)(A) to
Item 601 of Regulation S-K, because the
total amount of securities authorized under
any such instrument does not exceed 10% of
the total assets of the Company and
Subsidiaries on a consolidated basis. The
registrant hereby agrees that it will, upon
request by the Commission, furnish to the
Commission a copy of each such instrument.
(10) Material Contracts--Copies of the
Company's stock option plans and its savings and
investment plans, pursuant to Instruction
(10)(iii)(A) to Item 601 of Regulation S-K, are
incorporated herein by reference as follows:
(i) Registration Statement
No. 2-91811 on Form S-8 dated June 22, 1984
(definitive Prospectus dated July 16, 1984)
relating to the Archer Daniels Midland 1982
Incentive Stock Option Plan.
(ii) Registration Statement
No. 33-49409 on Form S-8 dated March 15,
1993 relating to the Archer Daniels Midland
1991 Incentive Stock Option Plan and Archer
Daniels Midland Company Savings and
Investment Plan.
(iii) Registration
Statement No. 33-58387 on Form S-8 dated
April 3, 1995 relating to the ADM Savings
and Investment Plan for Salaried Employees
and the ADM Savings and Investment Plan for
Hourly Employees.
(13) Portions of annual report to
shareholders incorporated by reference
(21) Subsidiaries of the registrant
(23) Consent of independent auditors
(24) Powers of attorney
(27) Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was filed on April 16, 1996 to
report information pertaining to the Company's
participation in an agreement to settle the
federal class action lawsuits filed against
several companies involving the sale of lysine.
25
PAGE 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: September 30, 1996
ARCHER-DANIELS-MIDLAND COMPANY
/s/ R. P. Reising
R. P. Reising
Vice President, Secretary
and General Counsel
/s/ D. J. Schmalz
D. J. Schmalz
Vice President and
Chief Financial Officer
/s/ S. R. Mills
S. R. Mills
Controller
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on September 30, 1996,
by the following persons on behalf of the Registrant and in
the capacities indicated.
D. O. Andreas*, Chairman of the Board, Chief Executive and
Director
(Principal Executive Officer)
L. W. Andreas*, Director
M. D. Andreas*, Director
M. L. Andreas*, Director
Ralph Bruce*, Director
G. O. Coan*, Director
J. H. Daniels*, Director
R. A. Goldberg*, Director
F. R. Johnson*, Director
J. R. Randall*, Director
Mrs. N. A. Rockefeller*, Director
R. S. Strauss*, Director
J. K. Vanier*, Director
O. G. Webb*, Director
D. J. Smith
Attorney-in-Fact
*Powers of Attorney authorizing R. P. Reising, D. J. Schmalz and
D. J. Smith and each of them, to sign the Form 10-K on behalf of
the above-named officers and directors of the Company are being
filed with the Securities and Exchange Commission.
26
PAGE 1
EXHIBIT 24 -- POWERS OF ATTORNEY
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
Director, Chairman of the Board and Chief Executive (Principal
Executive Officer) of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such Chairman of the Board, Chief
Executive and Director of said Company to the Form 10-K for the
fiscal year ending June 30, 1996, and all amendments thereto, to
be filed by said Company with the Securities and Exchange
Commission, Washington, D.C., and to file the same, with all
exhibits thereto and other supporting documents, with said
Commission, granting unto said attorneys-in-fact, and each of
them, full power and authority to do and perform any and all
acts necessary or incidental to the performance and execution of
the powers therein expressly granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ D. O. ANDREAS
D. O. Andreas
1
PAGE 2
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ L. W. Andreas
L. W. Andreas
2
PAGE 3
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ M. D. Andreas
M. D. Andreas
3
PAGE 4
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ Martin L. Andreas
Martin L. Andreas
4
PAGE 5
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ Ralph Bruce
Ralph Bruce
5
PAGE 6
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ Gaylord O. Coan
Gaylord O. Coan
6
PAGE 7
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ John H. Daniels
John H. Daniels
7
PAGE 8
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ Ray A. Goldberg
Ray A. Goldberg
8
PAGE 9
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ F. R. Johnson
F. R. Johnson
9
PAGE 10
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ J. R. Randall
J. R. Randall
10
PAGE 11
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ Mrs. Nelson A. Rockefeller
Mrs. Nelson A. Rockefeller
11
PAGE 12
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ Robert S. Strauss
Robert S. Strauss
12
PAGE 13
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ John K. Vanier
John K. Vanier
13
PAGE 14
ARCHER-DANIELS-MIDLAND COMPANY
Power of Attorney of Director
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of ARCHER-DANIELS-MIDLAND COMPANY, a Delaware
corporation, does hereby make, constitute and appoint D. J.
SCHMALZ, R. P. REISING and D. J. SMITH, and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with
power of substitution, for the undersigned and in the
undersigned's name, place and stead, to sign and affix the
undersigned's name as such director of said Company to the Form
10-K for the fiscal year ending June 30, 1996, and all
amendments thereto, to be filed by said Company with the
Securities and Exchange Commission, Washington, D.C., and to
file the same, with all exhibits thereto and other supporting
documents, with said Commission, granting unto said attorneys-in-
fact, and each of them, full power and authority to do and
perform any and all acts necessary or incidental to the
performance and execution of the powers therein expressly
granted.
IN WITNESS WHEREOF, the undersigned has hereunto set
the undersigned's hand this 20th day of September, 1996.
/s/ O. Glenn Webb
O. Glenn Webb
14
PAGE 1
EXHIBIT 23--CONSENT OF INDEPENDENT AUDITORS
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
June 30, 1996
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Archer Daniels Midland Company of our
report dated August 1, 1996 included in the 1996 Annual Report
to Shareholders of Archer Daniels Midland Company.
We also consent to the incorporation by reference in the
following Registration Statements of our report dated August 1,
1996 with respect to the consolidated financial statements of
Archer Daniels Midland Company incorporated herein by reference,
in this Annual Report (Form 10-K) for the year ended June 30,
1996.
Registration Statement No. 2-91811 on Form S-8 dated June 22,
1984 (definitive Prospectus dated July 16, 1984) relating to
the Archer Daniels Midland Company 1982 Incentive Stock
Option Plan.
Registration Statement No. 33-49409 on Form S-8 dated March
15, 1993 relating to the Archer Daniels Midland 1991
Incentive Stock Option Plan and Archer Daniels Midland
Company Savings and Investment Plan.
Registration Statement No. 33-50879 on Form S-3 dated
November 1, 1993 relating to Debt Securities and Warrants to
purchase Debt Securities of Archer Daniels Midland Company.
Registration Statement No. 33-55301 on Form S-3 dated August
31, 1994 as amended by Amendment No. 1 dated October 7, 1994
(definitive Prospectus dated October 11, 1994) relating to
secondary offering of the Common Stock of Archer Daniels
Midland Company.
Registration Statement No. 33-56223 on Form S-3 dated October
28, 1994 as amended by Amendment No. 1 dated December 27,
1994 (definitive Prospectus dated December 30, 1994) relating
to secondary offering of the Common Stock of Archer Daniels
Midland Company.
Registration Statement No. 33-58387 on Form S-8 dated April
3, 1995 relating to the ADM Savings and Investment Plan for
Salaried Employees and the ADM Savings and Investment Plan
for Hourly Employees.
ERNST & YOUNG LLP
Minneapolis, Minnesota
September 30, 1996
1
PAGE 1
EXHIBIT 21--SUBSIDIARIES OF THE REGISTRANT
ARCHER DANIELS MIDLAND COMPANY
June 30, 1996
Following is a list of the Registrant's subsidiaries showing the
percentage of voting securities owned:
Organized Under
Laws of Ownership
ADM Agri-Industries Ltd. Canada 100%
ADM Europe BV Netherlands 100
ADM Europoort BV Netherlands 100
ADM/Growmark River System, Inc. Delaware 100
ADM Beteiligungs. GmbH Germany 100
ADM International Ltd. (B) England 100
ADM Investor Services, Inc. Delaware 100
ADM Ireland Holdings Ltd. Ireland 100
ADM Milling Co. Minnesota 100
ADM Oelmuhlen GmbH Germany 100
ADM Ringaskiddy Ireland 100
ADM Transportation Co. Delaware 100
ADMIC Investments NV Netherlands Antilles100
Agrinational Insurance Company Vermont 100
Agrinational Ltd. Cayman Islands 100
Alfred C. Toepfer International (A) Germany 50
American River Transportation Co. Delaware 100
Collingwood Grain, Inc. Kansas 100
Compagnie Industrielle Et Financiere (CIP)(A) Luxembourg
42
Consolidated Nutrition, L.C. (A) Iowa 50
Erith Oil Works Ltd. England 100
Fleischmann Malting Company, Inc. Delaware 100
Gruma S.A. de C.V. (A) Mexico 22
Hickory Point Bank & Trust Co. Illinois 100
Midland Stars, Inc. Delaware 100
Oelmuhle Hamburg AG (C) Germany 86
Premiere Agri Technologies Inc. Delaware 100
Tabor Grain Co. Nevada 100
(A) Not included in consolidated financial statements--included
on the equity basis.
(B) ADM International Ltd. has twenty-one subsidiary companies
whose names have been omitted because, considered in the
aggregate as a single subsidiary, they would not constitute a
significant subsidiary.
(C) Oelmuhle Hamburg AG has eleven subsidiaries whose names have
been omitted because, considered in the aggregate as a single
subsidiary, they would not constitute a significant subsidiary.
The names of twenty-four domestic subsidiaries and thirty-four
international subsidiaries have been omitted because, considered
in the aggregate as a single subsidiary, they would not
constitute a significant subsidiary.
1
PAGE 1
Archer Daniels Midland Company
MANAGEMENT'S DISCUSSION OF
OPERATIONS AND FINANCIAL CONDITION - June 30, 1996
The Company is in one business segment - procuring,
transporting, storing, processing and merchandising agricultural
commodities and products. The availability and price of
agricultural commodities are subject to wide fluctuations due to
unpredictable factors such as weather, plantings, government
(domestic and foreign) farm programs and policies, changes in
global demand created by population growth and higher standards
of living, and global production of similar and competitive
crops. Generally, changes in the price of agricultural
commodities can be passed through to the price of processed
products. Ethanol is one of a limited few of the Company's
processed products which must be priced to compete with products
produced from other raw materials. To reduce price risk of
market fluctuations, the Company follows a policy of hedging
substantially all inventory and related purchase and sales
contracts. In addition, the Company from time to time will hedge
portions of its anticipated production requirements. The
instruments used are principally readily marketable exchange
traded futures contracts which are designated as hedges. The
changes in market value of such contracts have a high
correlation to the price changes of the hedged commodity. Also,
the underlying commodity can be delivered against such
contracts. To obtain a proper matching of revenue and expense,
gains or losses arising from open and closed hedging
transactions are included in inventory as a cost of the
commodities and reflected in the income statement when the
product is sold. Inflation, over time, has an impact on
agricultural commodity prices. The Company's business is capital
intensive and inflation could impact the cost of capital
investment.
OPERATIONS
A summary of net sales and other operating income by classes of
products and services is as follows:
1996 1995 1994
________________________________
(In millions)
Oilseed products $ 8,125 7,643$ 6,656
Corn products 2,561 2,477 2,294
Wheat and other milled products 1,644 1,384 1,394
Other products 984 1,168 1,030
________ ________ ________
$ 13,314 $ 12,672 $ 11,374
======== ======== ========
1
PAGE 2
1996 compared to 1995
Net sales and other operating income increased $642 million to a
record high
$13.3 billion for 1996 due principally to a 7% increase in
average selling prices. This increase was partially offset by
the decrease due to the sale of the Company's Supreme Sugar
subsidiary and British Arkady bakery ingredient business and the
contribution of the Company's formula feed operation to an
unconsolidated subsidiary. Sales of oilseed products increased
6% to $8.1 billion due primarily to higher average selling
prices reflecting relatively strong demand for protein meal in
the domestic market and the higher cost of raw materials. Sales
volumes of oilseed products were up slightly for the year as the
aforementioned meal demand more than offset the weaker export
vegetable oil demand. Sales of corn products increased 3% to
$2.6 billion due primarily to increased sales volumes resulting
from good demand for the Company's fuel, beverage and industrial
alcohol as well as for various bioproducts, including citric
acid, lysine and MSG. These volume increases were partially
offset by lower average selling prices and lower sales volumes
for the Company's sweetener products. Sales of wheat and other
milled products increased 19% to $1.6 billion due principally to
increased average selling prices reflecting the higher costs of
raw materials. These increased average selling prices were
partially offset by decreased sales volumes reflecting reduced
export flour demand. The decrease in sales of other products
and services for the year was due principally to the sale of the
Company's Supreme Sugar subsidiary and British Arkady bakery
ingredient business as well as the contribution of the Company's
formula feed operation to an unconsolidated joint venture.
These decreases were partially offset by increased merchandising
and transporting revenues.
Cost of products sold and other operating costs increased $920
million to $11.9 billion due primarily to a 16% increase in
average raw material commodity prices partially offset by cost
attributable to recently divested operations.
The $278 million decrease in gross profit to $1.4 billion in
1996 resulted primarily from a $244 million decrease due to the
net effect of higher raw material commodity prices versus
increased average selling prices and to a lesser extent gross
profit attributable to recently divested operations.
Selling, general and administrative expenses increased $21
million to $450 million in 1996 due primarily to an increase in
legal and litigation related expenses which were partially
offset by $29 million of expenses attributable to recently
divested operations and by an $8 million decrease in bad debt
expense.
The increase in other income for 1996 was due principally to
increased gains on marketable securities transactions and, to a
lesser extent, increased equity in earnings of unconsolidated
affiliates. Other income for 1996 included a $15 million gain
on the sale of the Company's Supreme Sugar subsidiary.
2
PAGE 3
The decrease in income taxes for 1996 was the result of lower
pretax earnings partially offset by a higher effective income
tax rate. The Company's effective income tax rate for 1996 was
34% compared to an effective rate of 33% for 1995.
1995 compared to 1994
Net sales and other operating income for 1995 increased $1.3
billion to $12.7 billion. The increase is primarily due to a 9%
increase in volume and to a lesser extent a 2% increase in
average selling prices. Sales of oilseed products increased 15%
to $7.6 billion due primarily to increased volume as strong
export demand for vegetable oils and good domestic demand for
meal products contributed to favorable oilseed processing market
conditions. Sales of corn products increased 8% to $2.5 billion
due primarily to increased average selling prices resulting from
strong demand from the food and beverage industry for sweetener
products and increased demand for ethanol. Sales of wheat and
other milled products were at levels comparable to last year as
sales attributable to acquired companies were offset by the
Company's contribution of its rice milling operations to a joint
venture in 1995. The increase in sales of other products is due
primarily to feed operations acquired in 1994, a portion of
which were contributed to a joint venture in 1995.
Cost of products sold and other operating costs increased $793
million to $11 billion in 1995 due primarily to the 9% increase
in volumes partially offset by declines in average raw material
commodity prices.
The combined effect of increased sales volumes, higher average
selling prices and lower raw material commodity prices resulted
in gross profits increasing $505 million to $1.6 billion in
1995. Approximately $360 million of the increase can be
attributed to improved gross profits resulting from the net
price effect of higher average selling prices and lower average
raw material commodity prices. The remaining increase is due
primarily to sales volume increases.
Selling, general and administrative expenses increased $58
million to $429 million in 1995 due principally to general cost
increases in support of the increased sales volumes, a $12
million increase in bad debt expense and a $6 million increase
in charitable contribution expense.
The decrease in other income for 1995 resulted primarily from
losses on marketable securities transactions and decreased
equity in earnings of unconsolidated affiliates. These
decreases were partially offset by increased investment income,
due to both higher levels of invested funds and higher interest
rates, and by the $43 million gain on the sale of the Company's
British Arkady bakery ingredient business.
Excluding the effect in 1994 of the increase in the statutory
federal income tax rate from 34% to 35%, which resulted in
additional income tax accruals and a non-recurring income tax
charge of $14 million, the Company's 1995 effective tax rate of
33% approximates the 1994 effective rate.
3
PAGE 4
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company continued to show substantial
liquidity with working capital of $2.8 billion, including cash
and marketable securities of $1.4 billion. Working capital also
includes inventory with a replacement cost in excess of its LIFO
carrying value of approximately $191 million. The cash and
marketable securities, consisting principally of United States
government obligations, are available for working capital,
future expansion and stock repurchase plans. Capital resources
were strengthened as shown by the increase in net worth to $6.1
billion. The principal source of capital during the year was
funds generated from operations. The Company's ratio of long-
term debt to total capital at year end was approximately 23%.
Annual maturities of long-term debt range from $13 million to
$34 million during the next five years except for 1997 when $115
million is due.
Commercial paper and commercial bank lines of credit are
available to meet seasonal cash requirements. At June 30, 1996,
the Company had $370 million of unused short-term bank credit
lines. Both Standard & Poor's and Moody's continue to assign
their highest ratings to the Company's commercial paper and to
rate the Company's long-term debt as AA- and Aa2, respectively.
In addition to the cash flow generated from operations, the
Company has access to equity and debt capital through numerous
alternatives from public and private sources in the domestic and
international markets.
As discussed in Note 11 to the consolidated financial
statements, the Company, along with a number of other domestic
and foreign companies, is the subject of grand jury
investigation into possible violations of federal antitrust laws
and related crimes in the food additives industry. Neither the
Company nor any director, officer or employee has been charged
in connection with the investigations. The Company and two of
its executive officers have been informed that they are targets
of the lysine investigation and indictments are being considered
against them. In addition, related civil class action suits for
alleged violations of federal securities and antitrust laws are
pending. The ultimate outcome of the investigations and the
putative class actions cannot presently be determined. However,
the Company, without admitting the alleged violations of the
law, has paid $25 million in full settlement of the federal
lysine class action antitrust suit filed in the Northern
District of Illinois. Several plaintiffs have opted out of this
settlement and numerous state class action antitrust cases
involving the sale of lysine remain pending. In the Company's
opinion the ultimate resolution of the lysine contingency, to
the extent not provided for, will not have a material adverse
effect on the Company's consolidated financial condition or
annual results of operations, but it could be material to the
consolidated operating results of a particular future quarter if
resolved unfavorably. Because of the early stage of the other
investigations and putative class actions, the ultimate outcome
of these matters cannot presently be determined and accordingly
no provision for any liability that may result therefrom has
been made in the accompanying consolidated financial statements.
4
PAGE 5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company is in one business segment - procuring,
transporting, storing, processing, and merchandising
agricultural commodities and products. The availability and
price of agricultural commodities are subject to wide
fluctuations due to unpredictable factors such as weather,
plantings, government (domestic and foreign) farm programs and
policies, changes in global demand created by population growth
and higher standards of living, and global production of similar
and competitive crops. Generally, changes in the price of
agricultural commodities can be passed through to the price of
processed products. Ethanol is one of a limited few of the
Company's processed products which must be priced to compete
with products produced from other raw materials.
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and all majority-owned subsidiaries. Investments in
affiliates are carried at cost plus equity in undistributed
earnings since acquisition.
Use of Estimates
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amount reported in its consolidated financial
statements and accompanying notes. Actual results could differ
from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less at the time of purchase to be
cash equivalents.
Marketable Securities
The Company classifies all of its marketable securities as
available-for-sale. Available-for-sale securities are carried
at fair value, with the unrealized gains and losses, net of
income taxes, reported as a component of shareholders' equity.
Inventories
Inventories, consisting primarily of merchandisable agricultural
commodities and related value-added products, are carried at
cost, which is not in excess of market prices. Inventory cost
methods include the last-in, first-out (LIFO) method, the first-
in, first-out (FIFO) method and the hedging procedure method.
The hedging procedure method approximates FIFO cost.
To reduce price risk of market fluctuations, the Company follows
a policy of hedging substantially all inventory and related
purchase and sales contracts. In addition, the Company from
time to time will hedge portions of its anticipated production
requirements. The instruments used are readily marketable
exchange traded futures contracts which are designated as
hedges. The changes in market value of such contracts have a
high correlation to the price changes of the hedged commodity.
Also, the underlying commodity can be delivered against such
contracts. To obtain a proper matching of revenue and expense,
gains or losses arising from open and closed hedging
transactions are included in inventory as a cost of the
commodities and reflected in the statement of earnings when the
product is sold.
Property, Plant and Equipment
Property, plant, and equipment are recorded at cost. 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 - 10 to 50 years;
machinery and equipment - 3 to 20 years.
Net Sales
The Company follows a policy of recognizing sales at the time of
product shipment. Net margins from grain merchandised, rather
than the total sales value thereof, are included in net sales in
the consolidated statements of earnings. Gross sales of the
Company, including the total sales value of grain merchandised,
were $18.1 billion in 1996, $15.9 billion in 1995, and $14.1
billion in 1994, and include export sales of $5.7 billion in
1996, $4.2 billion in 1995 and $3.2 billion in 1994.
Per Share Data
Share and per share information have been adjusted to give
effect to the 50% stock dividend in the form of a three-for-two
stock split paid in December 1994 and to the 5% stock dividends
in the three years ended June 30, 1996, including the 5% stock
dividend declared in July 1996 and payable in September 1996.
Net earnings per common share is determined by dividing net
earnings by the weighted average number of common shares
outstanding. The impact of common stock equivalents is not
material.
New Accounting Standards
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 121 (SFAS
121) "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." Management believes that
the adoption of SFAS 121 in fiscal 1997 will not have a material
adverse effect on the Company's consolidated financial
statements.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 123 (SFAS
123) "Accounting for Stock-Based Compensation." SFAS 123 allows
companies to choose whether to account for stock-based
compensation under the current method as prescribed in
Accounting Principles Board Opinion Number 25 (APB 25) or use
the fair value method described in SFAS 123. The Company plans
to continue to follow the accounting measurement provisions of
APB 25 and believes the impact of implementing the disclosure
provisions of SFAS 123 will not be material to its consolidated
financial statements.
5
PAGE 6
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Year Ended June 30
_________________________________
1996 1995 1994
_________________________________
(In thousands, except
per share amounts)
<S> <C> <C> <C>
Net sales and other operating income$ 13,314,049$12,671,868$11
,374,372
Cost of products sold and other
operating costs 11,949,61111,029,38410,236,737
______________________________
Gross Profit 1,364,438 1,642,484 1,137,635
Selling, general and administrative
expenses 450,010 429,358 371,237
______________________________
Earnings From Operations 914,428 1,213,126 766,398
Other income (expense) 139,985 (31,603) (28,095)
______________________________
Earnings Before Income Taxes 1,054,413 1,181,523 738,303
Income taxes 358,501 385,608 254,234
______________________________
Net Earnings 695,912 795,915 484,069
========== ====================
Net earnings per common share $ 1.27$ 1.40$ .84
==============================
Average number of shares outstanding550,045 567,751 573,626
==============================
See notes to consolidated financial statements.
</TABLE>
6
PAGE 7
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30
__________________________________
1996 1995
__________________________________
Assets (In thousands)
<S> <C>
<C>
Current Assets
Cash and cash equivalents $ 534,702 $ 454,593
Marketable securities 820,147 664,690
Receivables 1,131,591 1,013,562
Inventories 1,790,636 1,473,896
Prepaid expenses 107,607 105,904
__________
Total Current Assets 4,384,683 3,712,645
Investments and Other Assets
Investments in and advances
to affiliates 624,305 502,698
Long-term marketable securities1,092,969 1,604,219
Other assets 233,611 175,044
__________ __________
1,950,885 2,281,961
Property, Plant and Equipment
Land 114,542 113,098
Buildings 1,245,662 1,109,249
Machinery and equipment 6,034,979 5,443,561
Construction in progress 588,711 642,825
Less allowances for depreciation(3,869,593) (3,546,452)
__________ __________
4,114,301 3,762,281
__________ __________
$10,449,869 $9,756,887
=========== ==========
</TABLE>
7
PAGE 8
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30
_________________________________
1996 1995
_________________________________
(In thousands)
Liabilities and Shareholders' Equity
<S> <C> <C>
Current Liabilities
Accounts payable $ 993,403 $ 725,046
Accrued expenses 525,626 431,725
Current maturities of long-term debt114,522 15,614
__________ __________
Total Current Liabilities 1,633,551 1,172,385
Long-Term Debt 2,002,979 2,070,095
Deferred Credits
Income taxes 562,362 538,351
Other 106,165 121,891
__________ __________
668,527 660,242
Shareholders' Equity
Common stock 3,869,875 3,668,977
Reinvested earnings 2,274,937 2,185,188
__________ __________
6,144,812 5,854,165
__________ __________
$10,449,869 $9,756,887
=========== ==========
See notes to consolidated financial statements.
</TABLE>
8
PAGE 9
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30
1996 1995 1994
(In thousands)
<S> <C> <C> <C>
Operating Activities
Net earnings $ 695,912$ 795,915$ 484,069
Adjustments to reconcile to net
cash provided by operations
Depreciation and amortization 393,605 384,872 354,463
Deferred income taxes 72,673 25,421 22,009
Amortization of long-term debt discount25,58421,908 19,613
(Gain) loss on marketable securities
transactions (109,359) 27,633 (25,785)
Other (33,243) 8,432 2,555
Changes in operating assets and liabilities
Receivables (183,569) (82,203) (114,741)
Inventories (320,529) (41,561) (172,649)
Prepaid expenses (1,683) 5,219 (13,450)
Accounts payable and accrued expenses314,49445,611 74,287
_________ ________ ________
Total Operating Activities 853,885 1,191,247 630,371
Investing Activities
Purchases of property, plant and equipment(754,268) (558,604)
(514,364)
Business acquisitions (28,612) (55,126) (257,731)
Investments in and advances to affiliates(110,615)(122,565)16,
506
Purchases of marketable securities(816,401)(2,017,619)(2,136,5
53)
Proceeds from sales of marketable
securities 1,260,710 1,940,370 2,643,368
_________ _________ _________
Total Investing Activities (449,186) (813,544) (248,774)
Financing Activities
Long-term debt borrowings 42,066 17,626 12,001
Long-term debt payments (22,233) (32,304) (76,133)
Purchases of treasury stock (259,980) (179,613) (355,226)
Cash dividends and other (84,443) (45,213) (32,328)
_________ _________ _________
Total Financing Activities (324,590) (239,504) (451,686)
_________ _________ _________
Increase (Decrease) In Cash And Cash
Equivalents 80,109 138,199 (70,089)
Cash And Cash Equivalents Beginning Of
Period 454,593 316,394 386,483
__________ _________ _________
Cash And Cash Equivalents End Of Period$534,702$ 454,593$ 316
,394
========== ========= =========
See notes to consolidated financial statements.
</TABLE>
9
PAGE 10
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
___________________________________
Reinvested
Shares Amount Earnings
___________________________________
(In thousands)
<S> <C> <C>
<C>
Balance July 1, 1993 $ 342,299 $3,366,622$ 1,516,629
Net earnings - - 484,069
Cash dividends - $.06 per share - - (32,586)
5% stock dividend 16,364 381,707 (381,707)
Treasury stock purchases (15,597) (355,226) -
Foreign currency translation - - 43,363
Other 573 22,852 (302)
_______ __________ __________
Balance June 30, 1994 343,639 3,415,955 1,629,466
Net earnings - - 795,915
Cash dividends - $.08 per share - - (46,825)
3-for-2 stock split 172,030 - -
5% stock dividend 25,358 406,019 (406,019)
Treasury stock purchases (9,756) (179,613) -
Foreign currency translation - - 66,005
Unrealized net gains on
marketable securities - - 147,118
Other 1,253 26,616 (472)
_______ __________ __________
Balance June 30, 1995 532,524 3,668,977 2,185,188
Net earnings - - 695,912
Cash dividends - $.17 per share - - (90,860)
5% stock dividend 25,991 411,542 (411,542)
Treasury stock purchases (15,632) (259,980) -
Foreign currency translation - - (96,101)
Change in unrealized net
gains on marketable securities - - (7,421)
Other 2,938 49,336 (239)
_______ _________ _________
Balance June 30, 1996 545,821 $3,869,875 $2,274,937
======= ========== ==========
See notes to consolidated financial statements.
</TABLE>
10
PAGE 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1-Marketable Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Unrealize Unrealiz Fair
d ed
Cost Gains Losses Value
_________________________________________________________
(In thousands)
1996
United States
government
obligations
Maturity less than 1 $1,184,2 $ 4,027 $ $1,188,0
year 16 235 08
Maturity 1 year to 5 19,026 - 201 18,825
years
Other debt securities
Maturity less than 1 148,345 716 - 149,061
year
Maturity 1 year to 5 58,962 1,813 - 60,775
years
Equity securities 804,052 212,906 5,602 1,011,35
6
________ _________ ________ ________
__ _ __ __
$2,214,6 $219,462 $ 6,038 $2,428,0
01 25
======== ========= ======== ========
== = == ==
Unrealize Unrealiz Fair
d ed
Cost Gains Losses Value
_________________________________________________________
(In thousands)
1995
United States
government
obligations
Maturity less than 1 $1,057,1 $ $ $1,057,6
year 89 731 281 39
Maturity 1 year to 5 453,276 9,719 - 462,995
years
Other debt securities
Maturity less than 1 59,319 - 61 59,258
year
Maturity 1 year to 5 174,811 2,441 - 177,252
years
Equity securities 751,344 217,014 6,495 961,863
________ _________ ________ ________
__ _ __ __
$2,495,9 $ $ $2,719,0
39 229,905 6,837 07
======== ========= ======== ========
== = == ==
</TABLE>
11
PAGE 12
Note 2-Inventories
<TABLE>
<CAPTION>
1996 1995
(In thousands)
<S> <C> <C>
LIFO inventories
FIFO value $ 705,814 $ 416,804
LIFO valuation reserve (190,641) (56,036)
__________ __________
LIFO carrying value 515,173 360,768
FIFO inventories, including
hedging procedure method 1,275,463 1,113,128
__________ __________
$1,790,636 $1,473,896
========== ==========
Note 3-Accrued Expenses
1996 1995
(In thousands)
Income taxes $ 175,603 $ 109,323
Payroll and employee benefits 117,211 111,452
Insurance loss reserves 78,611 76,987
Other 154,201 133,963
__________ __________
$ 525,626 $ 431,725
========== ==========
</TABLE>
12
PAGE 13
Note 4-Long-Term Debt and Financing Arrangements
<TABLE>
<CAPTION>
1996 1995
_____________________
(In thousands)
<S> <C> <C>
8.875% Debentures $300 million face
amount, due in 2011 $ 298,271 $ 298,216
8.125% Debentures $300 million face
amount, due in 2012 298,015 297,955
8.375% Debentures $300 million face
amount, due in 2017 294,178 294,079
7.125% Debentures $250 million face
amount, due in 2013 249,397 249,378
6.25% Notes $250 million
face amount, due in 2003 249,280 248,998
Zero Coupon Debt $400 million face
amount, due in 2002 183,736 160,855
7% Debentures $250 million face amount,
due in 2011 129,083 127,017
10.25% Debentures $100 million
face amount, due in 2006 98,767 98,693
6% Bonds 150 million Deutsche Mark
face amount, due in June 1997 98,370 108,424
Industrial Revenue Bonds at various
rates from 5.30% to 13.25% and due
in varying amounts to 2011 76,498 78,253
Other 141,906 123,841
__________ __________
Total long-term debt 2,117,501 2,085,709
Less current maturities (114,522) (15,614)
__________ __________
$2,002,979 $2,070,095
========== ==========
</TABLE>
13
PAGE 14
At June 30, 1996, the fair value of the Company's long-term debt
exceeded the carrying value by $298 million, as estimated by
using quoted market prices or discounted future cash flows based
on the Company's current incremental borrowing rates for similar
types of borrowing arrangements.
Unamortized original issue discounts on the 7% Debentures and
Zero Coupon Debt issues are being amortized at 15.35% and
13.80%, respectively. Accelerated amortization of the discounts
for tax purposes has the effect of lowering the actual rate of
interest to be paid over the remaining lives of the issues to
approximately 10.48% and 5.52%, respectively.
The aggregate maturities for long-term debt for the five years
after June 30, 1996 are $115 million, $34 million, $18 million,
$13 million and $19 million, respectively.
At June 30, 1996 the Company had unused lines of credit totaling
$370 million.
Note 5-Shareholders' Equity
The Company has authorized 800 million shares of common stock
and 500,000 shares of preferred stock, both without par value.
No preferred stock has been issued. At June 30, 1996 and 1995,
the Company had approximately 31.8 million and 35.2 million
common shares, respectively, in treasury. Treasury stock is
recorded at cost, $495 million at June 30, 1996, as a reduction
of common stock.
Stock option plans provide for the granting of options to
employees to purchase common stock of the Company at market
value on the date of grant. Options expire five to ten years
after the date of grant. At June 30, 1996 options for 3,327,393
shares at prices ranging from $11.60 to $18.26 per share were
outstanding, of which 1,139,031 shares were exercisable. There
were 623,726 shares available for future grant at June 30, 1996.
Cumulative foreign currency translation losses of $34 million
and unrealized gains on securities of $140 million at June 30,
1996, net of applicable taxes, are included as components of
reinvested earnings.
14
PAGE 15
Note 6-Other Income (Expense)
<TABLE>
<CAPTION>
1996 1995 1994
________________________________
(In thousands)
<S> <C> <C> <C>
Investment income $ $ $
150,446 147,133 100,706
Interest expense (170,089 (170,886 (173,429
) ) ))
Gain (loss) on marketable
securities transactions 109,359 (27,633) 25,785
Equity in earnings of 31,780 (19,801) 24,230
affiliates
Other 18,489 39,584 (5,387)
________ ________ ________
__ __ __
$ $ $
139,985 (31,603) (28,095)
======== ======== ========
== == ==
</TABLE>
Interest expense is net of interest capitalized of $43 million,
$32 million and $26 million in 1996, 1995 and 1994,
respectively.
The Company made interest payments of $188 million, $181 million
and $180 million in 1996, 1995 and 1994 respectively.
The realized gains on sales of available-for-sale marketable
securities totaled $109 million, $18 million and $36 million in
1996, 1995 and 1994, respectively. The realized losses totaled
$46 million and $10 million in 1995 and 1994, respectively.
15
PAGE 16
Note 7-Income Taxes
For financial reporting purposes, earnings before income taxes
includes the following components:
<TABLE>
<CAPTION>
1996 1995 1994
________________________________
(In thousands)
<S> <C> <C>
<C>
United States $ $1,022,2 $
907,376 45 662,709
Foreign 147,037 159,278 75,594
________ ________ ________
__ __ _
$1,054,4 $1,181,5 $
13 23 738,303
======== ======== ========
== == =
</TABLE>
Significant components of income taxes are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
_______________________________________
(In thousands)
<S> <C> <C> <C>
Current
Federal $ $271,702 $202,708
207,166
State 29,604 38,768 30,969
Foreign 46,646 42,085 14,460
Deferred
Federal 69,253 30,191 4,102
State 6,467 2,108 (3,036)
Foreign (635) 754 5,031
_________ _________ _________
_
$ $ 385,608 $254,234
358,501
========= ========= =========
=
</TABLE>
Significant components of the Company's deferred tax liabilities
and assets are as follows:
<TABLE>
<CAPTION> 1996 1995
__________________________
(In thousands)
<S> <C> <C>
Deferred tax liabilities
Depreciation $413,792 $386,883
Unrealized gain on marketable 73,727 75,978
securities
Bond discount amortization 60,659 62,941
Other 66,812 62,036
________ ________
614,990 587,838
Deferred tax assets
Postretirement benefits 27,822 26,274
Other 76,337 79,829
________ ________
104,159 106,103
________ ________
Net deferred tax liabilities 510,831 481,735
Current net deferred tax assets included
in prepaid expenses 51,531 56,616
________ ________
Non-current net deferred tax $562,362 538,351
liabilities
======== ========
</TABLE>
16
PAGE 17
Reconciliation of the statutory federal income tax rate to the
Company's effective tax rate is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
_____ ____ _____
<S> <C> <C>
<C>
Statutory rate 35.0% 35.0% 35.0%
State income taxes, net of
federal tax benefit 2.2 2.3 2.3
Foreign sales corporation (2.4) (1.8) (2.7)
Federal tax rate increase - - (1.8)
Other (0.8) (2.9) (2.0)
____ ____ ____
Effective rate 34.0 % 32.6% 34.4%
==== ==== ====
</TABLE>
The Company made income tax payments of $268 million, $354
million and $250 million in 1996, 1995 and 1994, respectively.
In 1994, the federal income tax rate increase resulted in
additional income tax accruals and a non-recurring income tax
charge of $14 million, or $.02 per share.
Undistributed earnings of the Company's foreign subsidiaries
amounting to approximately $400 million at June 30, 1996, are
considered to be indefinitely reinvested and, accordingly, no
provision for U. S. income taxes has been provided thereon. It
is not practicable to determine the deferred tax liability for
temporary differences related to these undistributed earnings.
Note 8-Leases
The Company has noncancellable operating leases with total
future rental commitments of $146 million, which range from $7
million to $26 million during each of the next five years, and
expire on various dates through 2026. Rent expense for 1996,
1995 and 1994 was $73 million, $73 million and $69 million,
respectively.
Note 9-Employee Benefit Plans
The Company has noncontributory and trusteed pension plans
covering substantially all employees. It is the Company's
policy to fund pension costs as required by the Employee
Retirement Income Security Act. At June 30, 1996, the plans had
assets at fair value of $295 million and projected benefit
obligations of $352 million based on a discount rate of 7.5%.
Pension expense is not material.
The Company has postretirement health care and life insurance
plans covering substantially all employees. The accumulated
postretirement benefit obligations (APBO) for the unfunded plans
at June 30, 1996, were $76 million, based on a discount rate of
7.5% and an assumed health care cost trend rate of 10.4% for
1997 gradually decreasing to 5.5% by 2004. Expense of these
plans is not material. A 1% increase in the health care cost
trend rate assumption would not have had a material impact on
the APBO or expense for the year.
In addition, the Company has savings and investment plans
available to eligible employees with one year of service.
Employees may contribute up to 6% of their salaries, not to
exceed $9,000. The Company matches these contributions, at
various levels, to a maximum of $6,000.
17
PAGE 18
Note 10-Geographic Information
<TABLE>
<CAPTION>
Net Sales
and Other Earnings
Operating From Identifiable
Income Operations Assets
_________ __________ ____________
(In millions)
<S> <C> <C> <C>
1996
United States $ 9,733 $806 $6,025
Foreign 3,581 108 1,347
_______ ____ ______
$13,314 $914 $7,372
======= ==== ======
1995
United States $ 9,177 $1,089 $5,350
Foreign 3,495 124 1,181
_______ ______ ______
$12,672 $1,213 $6,531
======= ====== ======
1994
United States $ 8,365 $704 $5,140
Foreign 3,009 62 1,083
_______ ____ ______
$11,374 $766 $6,223
======= ==== ======
</TABLE>
Earnings from operations represent earnings before other income
and income taxes.
Identifiable assets exclude cash and cash equivalents,
marketable securities and investments in and advances to
affiliates. At June 30, 1996, approximately $900 million of the
Company's cash and cash equivalents, marketable securities, and
investments in and advances to affiliates were foreign assets.
18
PAGE 19
Note 11-Antitrust Investigation and Related Litigation
The Company, along with a number of other domestic and foreign
companies, is the subject of an investigation being conducted by
a grand jury in the Northern District of Illinois into possible
violations of federal antitrust laws and related crimes in the
food additives industry. The investigation in Chicago is
directed towards possible price fixing with respect to lysine.
A federal grand jury in San Francisco is investigating possible
price fixing with respect to citric acid and a federal grand
jury in Atlanta is investigating possible price fixing with
respect to high fructose corn syrup. Neither the Company nor
any director, officer or employee of the Company has been
charged in connection with these investigations. The Company
and two of its executive officers have been informed that they
are targets of the lysine investigation and indictments are
being considered against them.
Following public announcement in June 1995 of these
investigations, the Company and certain of its directors and
executive officers were named as defendants in a number of
putative class action suits for alleged violations of federal
securities laws on behalf of all purchasers of securities of the
Company during the period between certain dates in 1992 and
1995. The Company along with other domestic and foreign
companies, has been named as a defendant in a number of putative
class action antitrust suits involving the sale of lysine,
citric acid, and high fructose corn syrup. The plaintiffs
generally request unspecified compensatory damages, costs,
expenses and unspecified relief. The Company and the
individuals named as defendants intend to vigorously defend
these class actions unless they can be settled on terms deemed
acceptable by the parties.
These matters could result in the Company being subject to
monetary damages, fines, penalties and other sanctions and
expenses. On July 20, 1996, Federal District Court Judge Milton
Shadur approved a settlement in the federal lysine class action
antitrust suit filed in the Northern District of Illinois
(consolidated as In Re Amino Acid Lysine Antitrust Litigation
MDL No. 1083) and the Company has paid $25 million in full
settlement thereof without admitting the alleged violations of
law. Several plaintiffs have opted out of this settlement and
numerous state class action antitrust cases involving the sale
of lysine remain pending. In fiscal year 1996, the Company made
provisions sufficient to cover the amount of such settlement and
related costs and expenses in its consolidated financial
statements which amount is not material. In the Company's
opinion the ultimate resolution of the lysine contingency, to
the extent not provided for, will not have a material adverse
effect on the Company's consolidated financial condition or
annual results of operations, but it could be material to the
consolidated operating results of a particular future quarter if
resolved unfavorably. Because of the early stage of the other
investigations and putative class actions, the ultimate outcome
of these matters cannot presently be determined. Accordingly,
no provision for any liability that may result therefrom has
been named in the accompanying consolidated financial
statements.
19
PAGE 20
The Company and its directors also have been named as defendants
in two putative class action suits, one of which alleges
violations of Delaware state law and a similar case in District
Court in Illinois which alleges violations of federal securities
laws. Both cases seek invalidation of the election of the
Company's directors on the basis of alleged omissions from the
proxy statement issued by the Company prior to its 1995 Annual
Meeting of Shareholders. The case relating to violations of
Delaware law has been dismissed and is now on appeal in the
Supreme Court of Delaware. The case filed in Federal District
Court in Illinois has likewise been dismissed and has been
appealed to the Seventh Circuit Court of Appeals. The Company
and the individuals named as defendants intend to vigorously
defend these actions.
Shareholder derivative actions also have been filed against
certain of the Company's directors and executive officers and
nominally against the Company alleging that the individuals
named as defendants breached their fiduciary duties to the
Company and seeking monetary damages and other relief on behalf
of the Company from the individuals named as defendants. The
Company has sought or intends to seek dismissal of these
derivative actions on the ground that they cannot be maintained
unless the plaintiffs first brought their complaints to the
Company's Board of Directors, which they did not.
The Company from time to time, in the ordinary course of
business, is named as a defendant in various other lawsuits. In
the Company's opinion, the gross liability from such other
lawsuits, including environmental exposure, with or without
insurance recoveries is not considered to be material to the
Company's consolidated financial condition or results of
operations.
20
PAGE 21
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Archer Daniels Midland Company
Decatur, Illinois
We have audited the accompanying consolidated balance
sheets of Archer Daniels Midland Company and subsidiaries as of
June 30, 1996 and 1995, and the related consolidated statements
of earnings, shareholders' equity and cash flows for each of the
three years in the period ended June 30, 1996. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Archer Daniels Midland Company and its
subsidiaries at June 30, 1996 and 1995, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended June 30, 1996, in conformity
with generally accepted accounting principles.
ERNST & YOUNG, LLP
Minneapolis, Minnesota
August 1, 1996
21
PAGE 22
QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
Quarter
___________________________________________________________
First Second Third Fourth Total
___________________________________________________________
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Fiscal 1996
Net sales $3,120,738$3,415,058$3,486,665$3,291,588$13,314,049
Gross profit 324,331 396,852 338,871 304,384 1,364,438
Net earnings 163,102 225,970 163,285 143,555 695,912
Per common share .29 .41 .30 .27 1.27
Fiscal 1995
Net sales $3,015,223$3,221,804$3,299,662$3,135,179$12,671,868
Gross profit 344,819 477,625 425,513 394,527 1,642,484
Net earnings 154,544 220,098 195,701 225,572 795,915
Per common share .27 .39 .34 .40 1.40
</TABLE>
Results for the fourth quarter of fiscal 1995 included a $36 million, or $.06
per share, after tax gain from the sale of the Company's British Arkady bakery
ingredient business.
22
PAGE 23
COMMON STOCK MARKET PRICES AND DIVIDENDS
The Company's common stock is listed and traded on the New York Stock Exchange,
Chicago Stock Exchange, Tokyo Stock Exchange, Frankfurt Stock Exchange and the
Swiss Exchange. The following table sets forth, for the periods indicated, the
high and low market prices of the common stock and common stock cash dividends.
<TABLE>
<CAPTION>
<S> <C> <C>
Cash
Market Price Dividends
High Low Per Share
Fiscal 1996--Quarter Ended
June 30 19 1/4 17 0.048
March 31 18 3/4 16 0.048
December 31 17 1/2 14 1/8 0.048
September 30 17 1/4 13 5/8 0.023
Fiscal 1995--Quarter Ended
June 30 18 16 3/8 0.023
March 31 19 16 1/2 0.023
December 31 19 1/8 15 0.023
September 30 15 7/8 13 1/2 0.014
</TABLE>
The number of shareholders of the Company's common stock at June 30, 1996 was
35,431. The Company expects to continue its policy of paying regular cash
dividends, although there is no assurance as to future dividends because they
are dependent on future earnings, capital requirements and financial condition.
23
PAGE 24
TEN-YEAR SUMMARY
Operating, Financial and Other Data (Dollars in thousands, except per share
data)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
Operating
Net sales and other operating income $13,314,049 $12,671,868 $11,374,372
Depreciation and amortization 393,605 384,872 354,463
Net earnings 695,912 795,915 484,069
Per common share 1.27 1.47 .84
Cash dividends 90,860 46,825 32,586
Per common share .17 .08 .06
Financial
Working capital $ 2,751,132 $2,540,260 $2,783,817
Per common share 5.04 4.54 4.90
Current ratio 2.7 3.2 3.5
Inventories 1,790,636 1,473,896 1,422,147
Net property, plant and equipment 4,114,301 3,762,281 3,538,575
Gross additions to property, plant
and equipment 801,426 657,915 682,485
Total assets 10,449,869 9,756,887 8,746,853
Long-term debt 2,002,979 2,070,095 2,021,417
Shareholders' equity 6,144,812 5,854,165 5,045,421
Per common share 11.26 10.47 8.88
Other
Weighted average shares outstanding (000's) 550,045 567,751 573,626
Number of shareholders 35,431 34,385 33,940
Number of employees 14,811 14,833 16,013
</TABLE>
Share and per share data have been adjusted for three-for-two stock splits in
December 1989 and December 1994, and annual 5% stock dividends through September
1996.
Net earnings for 1993 includes a credit of $68 million or $.11 per share and a
charge of $35 million or $.06 per share for the cumulative effects of changes in
accounting for income taxes and postretirement benefits, respectively.
24
PAGE 25
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C> <C> <C>
1993 1992 1991 1990 1989 1988 1987
9,811,362 $9,231,50 $8,468,1 $7,751,3 $7,928,8 $6,798,3 $5,774,6
2 98 41 36 94 21
328,549 293,729 261,367 248,113 220,538 183,952 155,899
567,527 503,757 466,678 483,522 424,673 353,058 265,355
.95 .84 .78 .81 .72 .59 .44
32,266 30,789 29,527 25,976 17,271 17,095 16,189
.05 .05 .05 .04 .03 .03 .03
$2,961,50 $2,276,56 $1,674,7 $1,627,4 $1,487,1 $1,408,6 $1,252,4
3 4 35 59 51 64 06
4.98 3.82 2.81 2.72 2.51 2.39 2.08
4.1 3.4 3.0 3.4 3.4 3.0 3.5
1,131,787 1,025,030 917,495 771,233 694,998 773,702 784,338
3,214,834 3,060,096 2,695,62 2,131,80 1,832,25 1,661,22 1,478,45
5 7 8 0 8
572,022 614,844 911,586 550,851 405,888 370,295 314,730
8,404,111 7,524,530 6,260,60 5,450,01 4,728,30 4,397,56 3,862,09
7 0 8 4 1
2,039,143 1,562,491 980,273 750,901 690,052 692,878 657,465
4,883,251 4,492,353 3,922,29 3,573,22 3,033,50 2,630,52 2,367,67
5 8 3 9 3
8.22 7.55 6.59 5.97 5.11 4.46 3.93
595,208 596,801 598,867 596,771 591,209 601,496 600,734
33,654 32,277 28,981 26,076 20,382 18,491 17,199
14,168 13,524 13,049 11,861 10,214 9,631 10,573
</TABLE>
25
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 534,702
<SECURITIES> 820,147
<RECEIVABLES> 1,131,591
<ALLOWANCES> 0
<INVENTORY> 1,790,636
<CURRENT-ASSETS> 4,384,683
<PP&E> 7,983,894
<DEPRECIATION> 3,869,593
<TOTAL-ASSETS> 10,449,869
<CURRENT-LIABILITIES> 1,633,551
<BONDS> 2,002,979
0
0
<COMMON> 3,869,875
<OTHER-SE> 2,274,937
<TOTAL-LIABILITY-AND-EQUITY> 10,449,869
<SALES> 13,314,049
<TOTAL-REVENUES> 13,314,049
<CGS> 11,949,611
<TOTAL-COSTS> 11,949,611
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 170,089
<INCOME-PRETAX> 1,054,413
<INCOME-TAX> 358,501
<INCOME-CONTINUING> 695,912
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 695,912
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.27
</TABLE>
