17
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, 1997
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 __
1
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--$10.2 billion
(Based on the closing price of the New York Stock Exchange on
August 18, 1997)
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--531,196,269 shares
(August 31, 1997)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders' report for the year ended
June 30, 1997 are incorporated by reference into Parts I, II and
IV.
Portions of the annual proxy statement for the year ended June
30, 1997 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 $3.8 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 cocoa beans, 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
2
PAGE 3
Item 1. BUSINESS--Continued
(including rail,
barge, truck and ocean vessels) and storage
facilities.
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), 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). 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.
3
PAGE 4
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, 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 produces wheat
starch and vital wheat gluten for the baking
industry. 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 grinds cocoa beans and produces cocoa
liquor, cocoa butter, cocoa powder, chocolate and
various compounds for the food processing
industry.
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.
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PAGE 5
The Company produces
bakery products and mixes which are sold to the
baking industry.
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 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 wet corn milling and wheat starch
production.
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.
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PAGE 6
Additionally, the
Company has a 20% interest in a joint venture
which consists of 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 four Mexican-based wheat flour mills.
Item 1. BUSINESS--Continued
The Company owns a 30% non-voting equity interest
in Minnesota Corn Processors (MCP). MCP operates
wet corn milling plants in Minnesota and
Nebraska.
The Company formed a strategic alliance with
United Grain Growers of Canada (UGG) which
resulted in the Company having approximately 45%
ownership of UGG. UGG, with more than 165
locations throughout Western Canada, is involved
in grain merchandising, crop input marketing and
distribution, livestock production services and
farm business communications.
Consolidated Nutrition, L.C., a joint venture
between the Company and Ag Processing Inc., is a
supplier of premium animal feeds and animal
health products. The Company has a 50% ownership
interest in this joint venture.
ADM/Countrymark, LLC, a joint venture between the
Company and Countrymark Cooperative Inc.,
operates a grain business in Indiana, Kentucky,
Maryland, Michigan and Ohio. The Company has a
50% ownership interest in this joint venture.
The Company owns a 25% interest in Acatos &
Hutchinson, a U.K. based company, that processes
and markets edible oil.
Almidones Mexicanos S.A. (Mexico), of which the
Company has a 50% interest, operates a wet corn
milling plant in Mexico.
Golden Peanut Company, a joint venture between
the Company, Gold Kist, Inc. and Alimenta
Processing Corporation, is a major supplier of
peanuts to both the domestic and export markets.
The Company has a 33 1/3% ownership interest in
this joint venture.
ADM-Riceland
Partnership, a joint venture between the Company
and Riceland Foods, Inc., is a processor of rice
and rice products for institutional and consumer
food customers. The Company has a 50% ownership
interest in this joint venture.
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.
The Company
participates in various joint ventures that
operate oilseed crushing facilities, oil
refineries and related storage facilities in
China and Indonesia.
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PAGE 7
Item 1. BUSINESS--Continued
The percentage of net
sales and other operating income by classes of
products and services for the last three fiscal
years were as follows:
<TABLE>
<CAPTION
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Oilseed products 64% 61% 61%
Corn products 16 18 19
Wheat and other
milled products 12 13 11
Other products and services 8 8 9
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
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. 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 and Harvest Burgers
for Recipes, its soy protein powdered non-dairy
beverage, Nutribev, and its non-dairy frozen
dessert, Dairylike. Additionally, the Company is
developing and expanding production facilities to
produce emulsifiers, distilled monoglycerides,
astaxanthan and isoflavones.
7
PAGE 8
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.
(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.
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PAGE 9
Item 1. BUSINESS--Continued
(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.
Research to support sales and development for
cocoa and chocolate products is done in
Milwaukee, Wisconsin and the Netherlands.
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PAGE 10
Item 1. BUSINESS--Continued
The amounts spent
during the three years ended June 30, 1997, 1996
and 1995 for such technical efforts were
approximately $12.2, $11.5 and $11.3 million,
respectively.
(xii)Material effects of
capital expenditures for environmental protection
During 1997, $21
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 17,160 at June 30,
1997.
(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,
1997 and is incorporated herein by reference.
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PAGE 11
Item 1. BUSINESS--Continued
(e) Executive Officers and Certain Significant
Employees
Name Title Age
G. Allen Andreas President and Chief Executive 54
Officer from 1997. Counsel to
the Executive Committee from
September 1994. Vice President
from 1988.
Michael D. Andreas Currently on a temporary 48
administrative leave from the
Company. Vice Chairman of the
Board
of Directors from October 1992 to
October 1996. Executive Vice
President from 1988 to October
1996.
Martin L. Andreas Senior Vice President from 1988.58
Assistant to the Chairman.
Charles P. Archer Treasurer from October 1992. 42
Assistant Treasurer from 1988
to 1992.
Lewis W. Batchelder Group Vice President from 52
July 1997. Senior Vice President
of ADM/Growmark. Various grain
merchandising positions since
1971.
Charles T. Bayless Executive Vice President from 62
July 1997. Group Vice President
from January 1993. Vice President
from 1992. President of ADM
Processing Division since 1980.
Howard E. Buoy Group Vice President from 70
January 1993. Vice President
of ADM Processing Division
from 1979.
William H. Camp Vice President from April 1993.48
Vice President of ADM Processing
Division from 1990 to 1993.
Mark J. Cheviron Vice President from July 1997.48
Vice President of Corporate
Security and Administrative
Services since May 1997. Director
of Security since 1980.
11
PAGE 12
Item 1. BUSINESS-Continued
Barrie R. Cox Vice President from January 1996.
50
President of ADM Food Additives
Division from 1994. Vice
President
of ADM Corn Processing Division
from 1990 to 1995.
Larry H. Cunningham Group Vice President and 53
President of ADM Corn Processing
Division from October 1996.
Vice President and President
of Protein Specialties
Division since July 1993.
Formerly President of
A. E. Staley Manufacturing Co.
Craig L. Hamlin Group Vice President from 51
October 1994. President of
ADM Milling from 1989.
Edward A. Harjehausen Vice President from October46
1992. Vice President of ADM
Corn Processing Division from
1988.
James C. Ielase Group Vice President since 56
July 1997. President of Golden
Peanut Company from April 1995
to June 1997. Private investments
from 1992 to April 1995.
Burnell D Kraft Senior Vice President from 66
July 1997. Group Vice President
from 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 53
President of ADM Investor
Services.
John E. Long Vice President from July 1996.68
President of ADM Research
Division from 1992. Various
senior research positions from
1975.
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PAGE 13
Item 1. BUSINESS-Continued
Jack McDonald Vice President from October 1994.
65
President of Southern Cotton Oil
Division from 1990.
John D. McNamara Group Vice President and 49
President of North American
Oilseed Processing Division from
July 1997. President of ADM Agri-
Industries since 1992.
International merchandising
positions since 1984.
Steven R. Mills Controller from October 1994. 42
Various senior treasury and
accounting positions from 1979.
Paul B. Mulhollem Group Vice President from 48
July 1997. Vice President from
January 1996. Managing Director
of ADM International, Ltd., from
1993. International merchandising
positions since 1992.
Brian F. Peterson Vice President from January 1996.
55
President of ADM BioProducts
Division from 1995. Various
merchandising positions from
1980.
Raymond V. Preiksaitis Group Vice President from44
July 1997. Vice President -
Management Information Systems
from 1988.
John G. Reed Vice President from 1982. 67
Richard P. Reising Senior Vice President from July53
1997. Vice President, Secretary
and General Counsel from
1991 to 1997.
John D. Rice Vice President from 1993 and 43
President of ADM Food Oils
Division since December 1996.
Vice President of ADM Processing
Division from 1992.
Kenneth A. Robinson Vice President from January 1996.
50
Vice President of ADM Processing
Division from 1985.
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PAGE 14
Item 1. BUSINESS-Continued
Douglas J. Schmalz Vice President and Chief 51
Financial Officer from 1986.
Controller from 1986 to 1994.
David J. Smith Vice President, Secretary and 42
General Counsel from July, 1997.
Assistant General Counsel from
1995. Assistant Secretary from
1988 to July 1997. Member of the
Law
Department since 1981.
Stephen H. Yu Vice President from January 1996.
37
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.
G. Allen Andreas and Martin L.
Andreas are nephews of Dwayne O. Andreas, a director
of the registrant. Michael D. Andreas is the son of
Dwayne O. Andreas. Charles P. Archer is the son of
S. M. Archer, Jr., a director of the registrant.
14
PAGE 15
Item 2. PROPERTIES
(a) Processing Facilities
The Company owns, leases, or has
a 50% or greater interest in the following
processing plants:
<TABLE>
<CAPTION>
United Foreign Total
States
-------------------------
<S> ----
<C> <C>
<C>
Owned 133 67 200
Leased 3 - 3
Joint Venture 54 21 75
---- ---- ----
190 88 278
=== === ===
</TABLE>
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 materials and demand for finished
products.
The Company operates thirty-seven domestic and nine
foreign oilseed crushing plants with a daily processing
capacity of approximately 84,000 metric 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,
Mexico 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,
corn gluten pellet, and alcohol bottling 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, and
thirteen foreign flour mills with a total daily
capacity of approximately 408,000 cwt. of flour. The
Company also operates seven bakery mix and specialty
ingredient plants, 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 and Central America
in California, Illinois, Indiana, Iowa, Kansas,
Louisiana, Minnesota, Missouri, Nebraska, New York,
North Carolina, Oklahoma, Oregon, Pennsylvania,
Tennessee, Texas, Washington, Wisconsin, Canada,
Barbados, Belize and Jamaica.
15
PAGE 16
Item 2. PROPERTIES
The Company also has an interest, through a joint
venture, in rice milling plants in Arkansas and
Louisiana.
The Company operates eleven domestic oilseed refineries
in Georgia, Illinois, Indiana, Iowa, Nebraska,
Tennessee and Texas as well as eight foreign refineries
in Canada, England, Germany, and the Netherlands. The
Company also has an interest, through a joint venture,
in an oilseed refinery in Texas. The Company produces
packaged oils in California, Georgia, Illinois and
Germany. The Company also has an interest, through a
joint venture, in a packaged oils plant in England. Soy
protein specialty products are produced in Illinois and
the Netherlands, lecithin products are produced in
Illinois, Iowa, Nebraska, Canada, Germany and the
Netherlands, and Vitamin E is produced in Illinois.
Cotton linter pulp is produced in Tennessee and
cottonseed flour is produced in Texas.
The Company produces feed and food additives at seven
bioproducts plants located in Illinois, North Carolina,
and Ireland. The Company also operates formula feed and
animal health and nutrition plants in Georgia,
Illinois, Iowa, Minnesota, Ohio, Texas, Washington,
Canada, Ireland, Barbados, Belize, China and Puerto
Rico. The Company also has an interest, through a joint
venture, in formula feed and pet food plants in
Alabama, Arkansas, Georgia, Illinois, Iowa, Indiana,
Kansas, Kentucky, Michigan, Minnesota, Missouri,
Nebraska, Ohio, Pennsylvania, Tennessee, Wisconsin,
Canada, Puerto Rico and Trinidad.
The Company operates three domestic and seven foreign
chocolate and cocoa bean processing plants located in
Massachusetts, North Carolina, Wisconsin, Canada,
China, France, Germany, the Netherlands and Singapore.
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 England, France and Germany.
16
PAGE 17
Item 2. PROPERTIES--Continued
(b) Procurement Facilities
The Company operates one hundred ninety domestic
terminal, country and river elevators covering the
major grain producing states, including one hundred
twenty-eight country elevators and sixty-two 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, North Dakota, Oklahoma, South Carolina,
Tennessee, and Texas. Domestic grain terminals,
elevators and processing plants have an aggregate
storage capacity of approximately 401,000,000 bushels.
The Company also has an interest, through a joint
venture, in fourteen grain terminals and elevators
located in Indiana, Kentucky, Maryland, Michigan, and
Ohio with an aggregate storage capacity of
approximately 58,000,000 bushels. The Company also
operates forty-six foreign grain elevators in Barbados,
Brazil, Canada, Ireland and Germany. Thirteen cotton
gins are located in Texas and serve the cottonseed
crushing plants in that area.
Item 3. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
In 1993, the State of Illinois Environmental Protection
Agency ("IEPA") brought administrative enforcement
proceedings arising out of the Company's alleged
failure to obtain permits for certain pollution control
equipment at certain of the Company's processing
facilities in Illinois. The Company and IEPA have
executed a settlement agreement with respect to one of
these proceedings. That agreement is currently before
the Illinois Pollution Control Board for approval. The
Company believes it has meritorious defenses to the
remaining proceeding. In management's opinion this
settlement and the remaining proceeding 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 35
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.
17
PAGE 18
LITIGATION REGARDING ALLEGED ANTICOMPETITIVE PRACTICES
The Company and certain of its current and former
officers and directors are currently defendants in
various lawsuits related to alleged anticompetitive
practices by the Company as described in more detail
below. The Company and the individual defendants named
in these actions intend to vigorously defend the
actions unless they can be settled on terms deemed
acceptable to the parties. The Company has paid and
intends to continue to pay the legal expenses of its
current and former officers and directors and to
indemnify these persons with respect to these actions
in accordance with Article X of the Bylaws of the
Company.
GOVERNMENTAL INVESTIGATIONS
Federal grand juries in the Northern Districts of
Illinois, California and Georgia, under the direction
of the United States Department of Justice ("DOJ"),
have been investigating possible violations by the
Company and others with respect to the sale of lysine,
citric acid and high fructose corn syrup, respectively.
In connection with an agreement with the DOJ, the
Company has paid the United States a fine of $100
million. This agreement constitutes a global resolution
of all matters between the DOJ and the Company
and brought to a close all DOJ investigations of the
Company.
The Company received notice that certain foreign
governmental entities were commencing investigations to
determine whether anticompetitive practices occurred in
their jurisdictions. In February 1997, the Company's
three Mexican subsidiaries were notified that the
Mexican Federal Competition Commission commenced an
investigation as to whether the Company's marketing and
sale of lysine in Mexico resulted in violations of that
country's federal antitrust laws. In June 1997, the
Company and several of its European subsidiaries were
notified that the Commission of the European
Communities initiated an investigation as to their
possible anticompetitive practices in the amino acid
markets, in particular the lysine market, in the
European Union. In September 1997, the Company received
a request for information from the Commission of the
European Communities with respect to an investigation
being conducted by that Commission into the possible
existence of certain agreements and/or concerted
practices in the citric acid market within the European
Union. Each of these investigations is in the early
stages and, accordingly, their ultimate outcome and
materiality cannot presently be determined.
HIGH FRUCTOSE CORN SYRUP ACTIONS
The Company, along with other companies, has been named
as a defendant in thirty antitrust suits involving the
sale of high fructose corn syrup. Twenty-nine of these
actions have been brought as putative class actions.
18
PAGE 19
FEDERAL ACTIONS. Twenty-two of these putative class
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. These twenty-two 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 parties are in the midst of discovery in
this action.
On January 14, 1997, the Company, along with other
companies, was named a defendant in a non-class action
antitrust suit involving the sale of high fructose corn
syrup and corn syrup. This action which is encaptioned
Gray & Co. v. Archer Daniels Midland Co., et al, No. 97-
69-AS and was filed in federal court in Oregon, alleges
violations of federal antitrust laws and Oregon and
Michigan state antitrust laws, including allegations
that defendants conspired to fix, raise, maintain and
stabilize the price of corn syrup and
high fructose corn syrup, and seeks treble damages,
attorneys' fees and costs of an unspecified amount. The
parties are in the midst of discovery in this action.
STATE ACTIONS. The Company, along with other companies,
also has been named as a defendant in six putative
class action antitrust suits filed in California state
court involving the sale of high fructose corn syrup.
These 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. One of
the California putative classes comprises certain
direct purchasers of high fructose corn syrup in the
State of California during certain periods in the
1990s. This action was filed on October 17, 1995 in
Superior Court for the County of Stanislaus, California
and encaptioned Kagome Foods, Inc. v Archer-Daniels-
Midland Co. et al., Civil Action No. 37236. This action
has been removed to federal court and consolidated with
the federal class action litigation pending in the
Central District of Illinois referred to above. The
other five California putative classes comprise certain
indirect purchasers of high fructose corn syrup and
dextrose 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. This action and the other four indirect
purchases actions have been coordinated before a single
court in Stanislaus County, California under the
caption, Food Additives (HFCS) cases, Master File No.
39693. The other four actions are encaptioned, Goings
v. Archer Daniels Midland Co., et al., Civil Action No.
750276 (Filed on July 21, 1995, Orange County Superior
Court); Rainbow Acres v. Archer Daniels Midland Co., et
al., Civil Action No. 974271 (Filed on November 22,
1995, San Francisco County Superior Court); Patane v.
Archer Daniels Midland Co., et al., Civil Action No.
212610 (Filed on January 17, 1996, Sonoma County
Superior Court); and St. Stan's Brewing Co. v. Archer
Daniels Midland Co., et al., Civil Action No. 37237
(Filed on October 17, 1995, Stanislaus County Superior
Court). The parties are in the midst of discovery in
this action.
The Company, along with other companies, also has been
named a defendant in a putative class action antitrust
suit filed in Alabama state court. 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. On April 23, 1997, the
court granted the defendants' motion to sever and
dismiss
the non-Alabama claims. The remaining parties are in
the midst of discovery in this action.
LYSINE ACTIONS
The Company, along with other companies, had been named
as a defendant in twenty-one putative class action
antitrust suits involving the sale of lysine. Except
for several plaintiffs that opted out of the federal
class action settlement and the actions specifically
described below, all such suits have been settled,
dismissed or withdrawn.
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PAGE 20
STATE ACTIONS. The Company has been named as a
defendant, along with other companies, in two putative
class action antitrust suits and one non-class action
suit filed in Alabama state court, one putative class
action antitrust suit filed in Tennessee state court
and one putative class action antitrust suit filed in
Michigan state court involving the sale of lysine. The
two putative Alabama class 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 two
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. The parties are in the midst of
discovery in this action. The other Alabama action,
encaptioned Bailey v. Archer Daniels Midland Co., et
al., Civil Action No. 95-165, and filed on December 11,
1995 in the Circuit Court of Tallapoosa County, has
been placed on the court's administrative docket
pending the outcome of the Ashley action. The non-class
action, encaptioned Kent v. Archer Daniels Midland Co.,
et al, No. CV 9701108, and filed on February 21, 1997
in the Circuit Court of Jefferson County, Alabama,
includes allegations that are similar to these
contained in the putative class actions and seeks
monetary relief in the amount of $670,000, injunctive
relief against alleged illegal conduct, attorneys fees
and costs, punitive damages and other unspecified
relief. The Tennessee action, encaptioned McCormack
Farms v. Archer Daniels Midland Co., et al., Civil
Action No. 96C-2190, and filed on June 11, 1996 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. The Company has
not yet filed a responsive pleading. The Michigan
action alleges a restraint of trade in violation of the
Michigan Antitrust Reform Act and include allegations
that defendants conspired to fix, raise, maintain and
stabilize the price 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 Michigan during certain periods in
the 1990s. This action, encaptioned Michigan Pork
Producers Assn, et al. v. Archer Daniels Midland Co.,
et al., No. 906-10696-CZ, was filed on September 25,
1996 in Kent County Circuit Court. The Company has not
yet filed a responsive pleading in either action.
CITRIC ACID ACTIONS
The Company, along with other companies, had been named
as a defendant in eleven putative class action
antitrust suits and two non-class action antitrust
suits involving the sale of citric acid. Except for
several plaintiffs that opted out of the federal class
action settlement and the actions specifically
described below, all such suits have been settled or
dismissed.
FEDERAL ACTIONS. Seven of these actions alleged
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 sought 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. These six actions were
transferred to the United States District Court for the
Northern District of California and consolidated as In
Re Citric Acid Antitrust Litigation, MDL No. 1092,
Master File No. C-95-2963(FMS). On September 27, 1996
the Company entered into an agreement with counsel for
the plaintiff class in this consolidated action in
which among other things, the Company agreed to pay $35
million to members of the class, without admitting the
alleged violations of law. On March 3, 1997, the court
preliminarily approved the settlement and final
approval was granted on July 23, 1997. On February 4,
1997, a class action complaint, encaptioned Galavan
Supplements Ltd. v. Archer Daniels Midland Co., et al.,
No. 97-0704 JGD (VAPx), was filed in the United States
District Court for the Central District of California.
The Company, along with other companies, was named a
defendant in this putative class
action brought on behalf of a class consisting of all
persons and entities outside of the United States who
purchased citric acid directly from any defendants
through their foreign facilities during the time period
July 1, 1991 through June 30, 1995. This action alleges
violations of the federal antitrust laws, including
allegations that the defendants conspired to fix,
maintain and stabilize the price of citric acid and to
allocate amongst themselves their major citric acid
customers, accounts and market shares on a worldwide
basis. The Company, along with other defendants, has
moved to dismiss this action. The Company, along with
other companies, also has been named as a defendant in
two non-class action federal antitrust suits involving
the sale of citric acid. One action was filed on June
9, 1997 in the United States District Court for the
Northern District of California and is encaptioned The
Proctor & Gamble Manufacturing Co., et al. v. Archer-
Daniels-Midland Company, et al., Civil Action No. 97-
2155 (VRW). The other action was filed on June 26, 1997
in the United States District Court for the Northern
District of California and is encaptioned Conopco,
Inc., et al. v. Archer-Daniels-Midland Company, et al.,
Civil Action No. 97-2407 (MMC). Both actions
20
PAGE 21
allege violations of federal antitrust laws, including
allegations that defendants agreed to fix, raise and
maintain the price of citric acid, and seek an
injunction against continued alleged illegal conduct,
treble damages of an unspecified amount, attorney's
fees and costs, and other unspecified relief. These
actions, which have been brought by entities that opted
out of the federal class action, have been coordinated
with In Re Citric Acid Antitrust Litigation that also
is pending in the United States District Court for the
Northern District of California. The Company and the
plaintiffs in Conopco have reached a tentative
settlement agreement which provides for consideration
to be paid by the Company in the form of cash and
product in amounts not deemed material. The parties are
in the midst of discovery in the remaining action.
STATE ACTIONS. The Company, along with other companies,
also has been named as a defendant in 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 currently is seeking appellate review
of the denial of its motion to dismiss this action. The
Company, along with other companies, also has been
named as a defendant in
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 San Francisco,
California and is encaptioned Bianco v. Archer Daniels
Midland Co., et al., Civil Action No. 978912. The
second action was filed on June 28, 1996 in San
Francisco County Superior Court and is encaptioned
Wignall v. Archer Daniels Midland Co., et al., Civil
Action No. 979360. These actions recently have been
coordinated before a single court in San Francisco,
County, California under the caption, Food Additives
(Lysine/Citric Acid) cases, Coordination Proceeding No.
3265. The Company, along with other companies, also has
been named as a defendant in one putative class action
antitrust suit filed in Wisconsin state court involving
the sale of citric acid. This action alleges violations
of the laws of Wisconsin, Minnesota, Alabama, Arizona,
California, District of Columbia, Florida, Tennessee,
West Virginia, Mississippi, New Mexico, North Carolina,
South Dakota, North Dakota, Kansas, Louisiana, Michigan
and Maine, including allegations that defendants
conspired to maintain the price of citric acid at
artificially high levels and seeks injunctive relief,
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 citric acid in the above referenced
states during the period July 1, 1991 through June 27,
1995. This action was filed on December 20, 1996 in the
Circuit Court for Milwaukee County, Wisconsin and is
encaptioned Raz, et al. v. Archer-Daniels-Midland Co.,
et al., No. 96-CV-9729. The Company has moved to
dismiss this action and that motion is set for hearing
in October, 1997.
HIGH FRUCTOSE CORN SYRUP/CITRIC ACID STATE CLASS
ACTIONS
The Company, along with other companies, has been named
as a defendant in 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 California
Judicial Council has bifurcated the citric acid and
high fructose corn syrup claims in these actions and
coordinated them with other actions in San Francisco
County Superior Court and Stanislaus County Superior
Court. 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 also 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 parties are in the midst of discovery in
this action. The Company, along with other companies,
also has been named as defendant in a 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 1993 through June 27, 1995. 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-CP. The parties are in the midst of discovery in
this action. The Company, along with other companies,
also has been named as a defendant in a 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 parties are in the
midst of discovery in this action. The Company, along
with other companies, has been named as a defendant in
a 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.
The parties are in the midst of discovery in this
action.
21
PAGE 22
HIGH FRUCTOSE CORN SYRUP/CITRIC ACID/LYSINE STATE CLASS
ACTIONS
The Company, along with other companies, has been named
as a defendant in 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.
The other actions are encaptioned Nu Laid Foods, Inc.
v. Archer Daniels Midland Co., et al., No 39693 (Filed
on December 18, 1995 Stanislaus County Superior Court);
Abbott v. Archer Daniels Midland Co., et al., No. 41014
(Filed on December 21, 1995, Stanislaus County Superior
Court); Noldin v. Archer Daniels Midland Co., et al.,
No. 41015 (Filed on December 21, 1995, Stanislaus
County Superior Court); Guzman v. Archer Daniels
Midland Co., et al., No. 41013 (Filed on December 21,
1995, Stanislaus County Superior Court) and Ricci v.
Archer Daniels Midland Co., et al., No. 96-AS-00383
(Filed on February 6, 1996, Sacramento County Superior
Court). As noted above, the plaintiffs in these actions
and the lysine defendants have executed a settlement
agreement that has been approved by the court and the
California Judicial Council has bifurcated the citric
acid and high fructose corn syrup claims and
coordinated them with other actions in San Francisco
County Superior Court and Stanislaus County Superior
Court.
SHAREHOLDER DERIVATIVE ACTIONS
Following the public announcement of the grand
jury investigations in June 1995 discussed above, three
shareholder derivative suits were filed against certain
of the Company's then current directors and executive
officers and nominally against the Company in the
United States District Court for the Northern District
of Illinois and 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
then 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 1, 1996. Plaintiffs
have supplemented the complaint to include the
antitrust settlements and guilty plea described above.
The fourteen shareholder derivative suits filed in the
Delaware Court of Chancery have been consolidated as In
Re Archer Daniels Midland Derivative Litigation,
Consolidated No. 14403. An amended and consolidated
complaint was filed on November 19, 1996. ADM moved to
dismiss the complaint on December 12, 1996. On May 29,
1997, the Company executed a Memorandum of
Understanding with counsel for both the Illinois and
Delaware shareholder derivative plaintiffs. This
Memorandum of Understanding provides for, among other
things, $8 million to be paid by or on behalf of
certain defendants in these actions to the Company and
certain changes in the structure and policies of the
Company's Board of Directors. On May 30, 1997, the
United States District Court for the Central District
of Illinois preliminarily approved this settlement and
on July 7, 1997 final approval was granted. Certain
entities appealed the final settlement approval order
to the United States Court of Appeals for the Seventh
Circuit and that appeal is pending. Provided the order
approving the Memorandum of Understanding is affirmed,
the parties have agreed to jointly seek dismissal of
the Delaware actions with prejudice.
DELAWARE STATE LAW/FEDERAL SECURITIES LAWS ACTIONS
The Company and certain of its current and former
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 1995 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 of shareholders.
The Delaware Court of Chancery dismissed this action on
February 20, 1996. On September 17, 1997, the Supreme
Court of Delaware affirmed the lower court's judgment
and remanded the case to provide the plaintiff's an
opportunity to replead.
22
PAGE 23
OTHER
As described in the notes to the consolidated financial
statements and management's discussion of operations
and financial condition, the Company has made
provisions to cover assessed fines, litigation
settlements and related costs and expenses described
above. However, because of the early stage of other
putative class actions and proceedings described above,
including those related to high fructose corn syrup,
the ultimate outcome and materiality of these matters
cannot presently be determined. Accordingly, no
provision for any liability that may result therefrom
has been made in the consolidated financial statements.
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,
1997 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, 1997 and is incorporated herein by
reference.
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, 1997 and is incorporated herein by
reference.
Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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, 1997 and is incorporated herein by
reference.
23
PAGE 24
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, 1997 are incorporated herein by
reference:
Consolidated balance sheets--June 30, 1997 and 1996
Consolidated statements of earnings--Years ended
June 30, 1997, 1996 and 1995
Consolidated statements of shareholders' equity--Years
ended
June 30, 1997, 1996 and 1995
Consolidated statements of cash flows--Years ended
June 30, 1997, 1996 and 1995
Notes to consolidated financial statements--June 30,
1997
Summary of Significant Accounting Policies
Report of Independent Auditors
Quarterly Financial Data (Unaudited)
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
"Section 16(a) Beneficial Ownership Reporting
Compliance" of the definitive proxy statement for 1997
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 "Compensation and Stock
Option Committee Report" of the definitive proxy
statement for 1997 and is incorporated herein by
reference.
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 1997 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 1997 and is incorporated
herein by reference.
24
PAGE 25
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, 1997, are
incorporated by reference in Item 8, and are also
incorporated herein by reference:
Consolidated balance sheets--June 30, 1997 and 1996
Consolidated statements of earnings--Years ended
June 30, 1997, 1996 and 1995
Consolidated statements of shareholders' equity--
Years ended June 30, 1997, 1996 and 1995
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
--Continued
Consolidated statements of cash flows--Years ended
June 30, 1997, 1996 and 1995
Notes to consolidated financial
statements--June 30,
1997
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.
(4)
Instruments defining the rights of security
holders, including:
25
PAGE 26
(i)Indenture dated May 15, 1981, between the r
egistrant 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 r
egistrant 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;
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
--Continued
(iii)Indenture dated as of March 1, 1984 betwe
en 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 r
egistrant 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, the $250,000,000 - 7
1/8%
Debentures due March 1, 2013, and the
$350,000,000 -
7 1/2% Debentures due March 15, 2027.
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.
26
PAGE 27
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
--Continued
(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 For
m 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 registra
nt
(23)Consent of independent audit
ors
(24) Powers of attorney
(27) Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was not filed during the quarter ended
June 30, 1997.
27
PAGE 28
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 26, 1997
ARCHER-DANIELS-MIDLAND COMPANY
/s/ D. J. Smith /s/ D. J. Schmalz /s/ S. R. Mills
D. J. Smith D. J. Schmalz S. R. Mills
Vice President, Secretary Vice President
and Controller
and General Counsel Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on September 26, 1997,
by the following persons on behalf of the Registrant and in
the capacities indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ G. A. Andreas
G. A. Andreas*,
Chief Executive and Director
(Principal Executive Officer)
/s/ D. O. Andreas /s/ M. B. Mulroney
D. O. Andreas*, M. B. Mulroney*,
Chairman of the Board of Director
Directors
/s/ S. M. Archer, Jr. /s/ R. S. Strauss
S. M. Archer, Jr.*, R. S. Strauss*,
Director Director
/s/ J. R. Block /s/ J. K. Vanier
J. R. Block*, J. K. Vanier*,
Director Director
/s/ R. R. Burt /s/ O. G. Webb
R. R. Burt*, O. G. Webb*,
Director Director
/s/ Mrs. M. H. Carter /s/ A. Young
Mrs. M. H. Carter*, A. Young*,
Director Director
/s/ G. O. Coan /s/ D. J. Smith
G. O. Coan*, Attorney-in-Fact
Director
/s/ F. R. Johnson
F. R. Johnson*,
Director
</TABLE>
*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.
28
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, 1997, 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 25th day of September, 1997.
/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, 1997, 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 25th day of September, 1997.
/s/ G. ALLEN ANDREAS
G. ALLEN 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, 1997, 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 25th day of September, 1997.
/s/S. M. ARCHER
3 S. M. ARCHER
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, 1997, 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 25th day of September, 1997.
/s/J. R. BLOCK
J. R. BLOCK
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, 1997, 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 25th day of September, 1997.
/s/ RICHARD BURT
RICHARD BURT
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, 1997, 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 25th day of September, 1997.
/s/M. H. CARTER
M. H. CARTER
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, 1997, 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 25th day of September, 1997.
/s/G. O. COAN
G. O. COAN
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, 1997, 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 25th day of September, 1997.
/s/ F. ROSS JOHNSON
F. ROSS JOHNSON
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, 1997, 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 25th day of September, 1997.
/s/ M. BRIAN MULRONEY
M. BRIAN MULRONEY
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, 1997, 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 25th day of September, 1997.
/s/R. S. STRAUSS
R. S. STRAUSS
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, 1997, 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 25th day of September, 1997.
/s/ J. K. VANIER
J. K. VANIER
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, 1997, 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 25th day of September, 1997.
/s/ O. G. WEBB
O. G. WEBB
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, 1997, 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 25th day of September, 1997.
/s/ ANDREW YOUNG
ANDREW YOUNG
13
PAGE 1
EXHIBIT 23--CONSENT OF INDEPENDENT AUDITORS
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
June 30, 1997
We consent to the incorporation by reference in this Annual
Report (Form
10-K) of Archer Daniels Midland Company of our report dated July
31, 1997 included in the 1997 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 July 31,
1997, 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,
1997.
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.
Registration Statement No. 333-13233 on Form S-3 dated
October 1, 1996 as amended by Amendment No. 1 dated November
8, 1996, Amendment No. 2 dated March 20, 1997 and Amendment
No. 3 dated March 31, 1997 (definitive Prospectus dated April
1, 1997) relating to secondary offering of the Common Stock
of Archer Daniels Midland Company.
Registration Statement No. 333-30137 on Form S-3 dated June
26, 1997 relating to Debt Securities and Warrants to purchase
Debt Securities of Archer Daniels Midland Company.
Registration Statement No. 333-31623 on Form S-3 dated July
18, 1997 as amended by Amendment No. 1 dated July 29, 1997,
(definitive Prospectus dated August 5, 1997) relating to
secondary offering of the Common Stock of Archer Daniels
Midland Company.
/S/ERNST & YOUNG LLP
ERNST & YOUNG LLP
Minneapolis, Minnesota
September 29, 1997
1
PAGE 1
EXHIBIT 21--SUBSIDIARIES OF THE REGISTRANT
ARCHER DANIELS MIDLAND COMPANY
June 30, 1997
Following is a list of the Registrant's subsidiaries showing the
percentage of voting securities owned:
<TABLE>
<CAPTION>
Organized Under
Laws of Ownershi
p
<S> <C>
<C>
ADM Agri-Industries Ltd. Canada 100%
ADM Europe BV Netherlands 100
ADM Europoort BV Netherlands 100
ADM/Growmark River Systems, 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 & Co. KG Germany 100
ADM Ringaskiddy Ireland 100
ADM Transportation Co. Delaware 100
ADMIC Investments NV Netherlands 100
Antilles
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 Luxembourg 42
(CIP)(A)
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 95
Premiere Agri Technologies Inc. Delaware 100
Tabor Grain Co. Nevada 100
</TABLE>
(A) Not included in consolidated financial statements--included
on the equity basis.
(B) ADM International Ltd. has twenty-two 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 twelve 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-nine domestic subsidiaries and sixty-eight
international subsidiaries have been omitted because, considered
in the aggregate as a single subsidiary, they would not
constitute a significant subsidiary.
1
PAGE 1
MANAGEMENT'S DISCUSSION OF
OPERATIONS AND FINANCIAL CONDITION - JUNE 30, 1997
Operations
The Company is in one business segment - procuring,
transporting, storing, processing and merchandising agricultural
commodities and products. A summary of net sales and other
operating income by classes of products and services is as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------------------
-----
(in millions)
<S> <C> <C>
<C>
Oilseed products $8,860 $8,027 $7,620
Corn products 2,171 2,431 2,368
Wheat and other milled 1,631 1,662 1,371
products
Other products
1,191 1,120 1,196
------ ------ ------
$13,85 $13,24 $12,55
3 0 5
====== ====== ======
= = =
</TABLE>
1997 compared to 1996
Net sales and other operating income increased $613 million to
a record high $13.9 billion for 1997 due principally to a 4%
increase in average selling prices and to a lesser extent sales
attributable to recently acquired operations. Sales of oilseed
products increased 10% to $8.9 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 for the
year due principally to improved export vegetable oil demand.
Sales of corn products decreased 11% to $2.2 billion due
primarily to decreased sales volumes of fuel alcohol as reduced
corn supplies and the resulting higher cost of corn resulted in
the Company reducing its production of fuel alcohol. Average
selling prices of corn products were up 3% for the year due to
the good demand for the Company's fuel alcohol and bioproducts,
including lysine and threonine. These average selling price
increases were partially offset by lower average selling prices
for the Company's sweetener products as a result of the start-up
of new corn wet milling facilities in the industry and the
resulting overcapacity in the marketplace. Sales of wheat and
other milled products decreased 2% to $1.6 billion due to both
decreased volumes of products sold and to lower average selling
prices reflecting excess milling capacity in the industry. This
volume decrease was partially offset by sales related to
recently acquired operations in Canada and the Caribbean. The
increase in other products and services was due principally to
the sales related to the Company's recently acquired cocoa
business partially offset by lower merchandising and
transportation revenues.
Cost of products sold and other operating costs increased $700
million to $12.6 billion due principally to a 5% increase in
average raw material commodity prices and to costs attributable
to recently acquired operations.
1
PAGE 2
The $86 million decrease in gross profit to $1.3 billion
resulted primarily from decreased merchandising and
transportation margins and the net effect of increased raw
material costs versus higher sales prices. These decreases were
partially offset by gross profit attributable to recently
acquired operations.
Selling, general and administrative expenses increased $202
million to $675 million due primarily to increased legal and
litigation related costs of $171 million including provisions
related to fines and litigation settlements arising out of the
United States Department of Justice antitrust investigation of
the Company's lysine and citric acid products, as well as a
securities suit brought by shareholders (see note 11 to the
financial statements). Additionally, selling, general and
administrative expenses increased $26 million due to expenses
attributable to recently acquired operations.
The decrease in other income for 1997 was due principally to
decreased gains on marketable securities transactions, decreased
investment income due to both lower invested funds and lower
interest rates, increased interest expense due primarily to
increased levels of borrowings, and a decrease in other income
as 1996 results included a $15 million gain on the sale of the
Company's Supreme Sugar subsidiary.
The decrease in income taxes for 1997 resulted primarily from
lower pretax earnings. The increase in the Company's effective
income tax rate to 41% for the year compared to an effective
rate of 34% last year was due principally to the non-
deductibility for income tax purposes of a portion of the
Company's litigation settlements and fines.
1996 compared to 1995
Net sales and other operating income increased $685 million to
$13.2 billion for 1996 due principally to a 6% 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
5% to $8 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
$2.4 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 21% to $1.7 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 transportation revenues.
Cost of products sold and other operating costs increased $961
million to $11.9 billion due primarily to a 16% increase in
average raw material commodity prices, partially offset by costs
attributable to recently divested operations.
The $276 million decrease in gross profit to $1.4 billion in
1996 resulted primarily from a $242 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 $23
million to $473 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.
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.
Liquidity and Capital Resources
At June 30, 1997, the Company continued to show substantial
liquidity with working capital of $2 billion, including cash and
marketable securities of $728 million. Working capital also
includes inventory with a replacement cost in excess of its LIFO
carrying value of approximately $45 million. During 1997, the
Company's cash and marketable securities net of short-term debt
decreased $1.3 billion, working capital decreased $716 million
and shareholders' equity decreased $95 million reflecting the
Company's investments in property, plant and equipment
expansions, investments in affiliates, business acquisitions,
and purchases of the Company's common stock. Capital resources
remained strong as reflected in the Company's net worth of $6.1
billion. The principal sources of capital during the year were
funds generated from operations and funds generated from the
issuance of $350 million of 7.5% debentures due in 2027. The
Company's ratio of long-term debt to total capital at year end
was approximately 26%. Annual maturities of long-term debt range
from $11 million to $24 million during the next four years and
will be $428 million in 2002.
2
PAGE 3
Commercial paper and commercial bank lines of credit are
available to meet seasonal cash requirements. At June 30, 1997,
the Company had $864 million of 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 Aa3, 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, various grand juries under the direction of the
United States Department of Justice ("DOJ") have been conducting
investigations into possible violations by the Company and
others of federal antitrust laws and related matters with
respect to the sale of lysine, citric acid and high fructose
corn syrup. In connection with an agreement with the DOJ, the
Company has paid the United States a fine of $100 million. This
agreement constitutes a global resolution of all matters between
the DOJ and the Company and brings to a close all DOJ
investigations of the Company. In addition, related civil class
actions and other proceedings have been filed against the
Company, which could result in the Company being subject to
monetary damages, other sanctions and expenses. As also
discussed in Note 11 to the consolidated financial statements,
the Company has settled certain civil federal class action suits
involving lysine, citric acid, and securities, and certain state
actions filed by indirect purchasers of lysine. The Company made
provisions of $200 million in fiscal 1997 and $31 million in
fiscal 1996 to cover such fines and settlements and related
costs and expenses. Because of the early stage of other putative
class actions and proceedings, including those related to high
fructose corn syrup, the ultimate outcome and materiality of
these matters cannot presently be determined. Accordingly, no
provision for any liability that may result therefrom has been
made in the consolidated financial statements.
Market Risk Sensitive Instruments and Positions
The market risk inherent in the Company's market risk
sensitive instruments and positions is the potential loss
arising from adverse changes in commodity prices, marketable
equity security prices, foreign currency exchange rates, and
interest rates as discussed below.
Commodities
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. To reduce price
risk caused by market fluctuations, the Company generally
follows a policy of hedging its inventories and related purchase
and sale contracts. In addition, the Company from time to time
will hedge portions of its 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. To
obtain a proper matching of revenue and expense, gains or losses
arising from open and closed hedging transactions are included
in inventories as a cost of the commodities and reflected in the
statement of earnings when the product is sold.
A sensitivity analysis has been prepared to estimate the
Company's exposure to market risk of its commodity position. The
Company's daily net commodity position consists of inventories,
related purchase and sales contracts, and exchange traded
contracts, including those to hedge portions of production
requirements. The fair value of such position is a summation of
the fair values calculated for each commodity by valuing each
net position at quoted futures prices. Market risk is estimated
as the potential loss in fair value resulting from a
hypothetical 10% adverse change in such prices. The results of
this analysis, which may differ from actual results, are as
follows for fiscal 1997:
<TABLE>
<CAPTION>
Fair Value Market
Risk
--------------------------------
-----
(in millions)
<S> <C> <C>
Highest long position $468 $47
Highest short position 314 31
Average position (long) 123 12
</TABLE>
Marketable Equity Securities
Marketable equity securities at June 30, 1997, which are
recorded at a fair value of $911 million and include net
unrealized gains of $183 million, have exposure to price risk.
This risk is estimated as the potential loss in fair value
resulting from a hypothetical 10% adverse change in prices
quoted by stock exchanges and amounts to $91 million. Actual
results may differ.
Currencies
In order to reduce the risk of foreign currency exchange rate
fluctuations, the Company follows a policy of hedging
substantially all transactions, except for amounts permanently
invested as described below, denominated in a currency other
than the functional currencies applicable to each of its various
entities. The instruments used for hedging are readily
marketable exchange traded futures contracts and forward
contracts with banks. The changes in market value of such
contracts have a high correlation to the price changes in the
currency of the related hedged transactions. The potential loss
in fair value for such net currency position resulting from 10%
adverse change in foreign currency exchange rates is not
material.
The amount permanently invested in foreign subsidiaries and
affiliates and translated into dollars using the year end
exchange rate is $1.7 billion at June 30, 1997. The potential
loss in fair value resulting from a hypothetical 10% adverse
change in quoted foreign currency exchange rates amounts to $167
million. Actual results may differ.
3
PAGE 4
Interest
At June 30, 1997, the fair value of the Company's long-term
debt is estimated at $2.7 billion using quoted market prices or
discounted future cash flows based on the Company's current
incremental borrowing rates for similar types of borrowing
arrangements. Such fair value exceeded the long-term debt
carrying value by $336 million. Market risk is estimated as the
potential increase in fair value resulting from a hypothetical
one-half percent decrease in interest rates and amounts to $107
million.
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.
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 amounts reported in its consolidated financial statements
and accompanying notes. Actual results could differ from those
estimates.
Reclassification
Certain items in prior year financial statements have been
reclassified to conform to the current year's presentation.
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.
4
PAGE 5
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 caused by market fluctuations, the Company
generally follows a policy of hedging its inventories and
related purchase and sale contracts. In addition, the Company
from time to time will hedge portions of its 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 inventories 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
generally uses the straight line method in computing
depreciation for financial reporting purposes and generally uses
accelerated methods for income tax purposes. The annual
provisions for depreciation have been computed principally in
accordance with the following ranges of asset lives: buildings -
10 to 50 years; machinery and equipment - 3 to 30 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. Sales of the Company,
including the sales value of grain merchandised, were $18.1
billion in 1997, $18.0 billion in 1996, and $15.6 billion in
1995, and such sales include export sales of $5.4 billion in
1997, $5.7 billion in 1996 and $4.3 billion in 1995.
Per Share Data
Share and per share information have been adjusted to give
effect to all stock dividends, including the 5% stock dividend
declared in July 1997 and payable in September 1997. 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.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards Number 128
(SFAS 128) "Earnings Per Share." This statement establishes
standards for computing and presenting basic and diluted
earnings per share (EPS) for financial statements issued for
periods ending after December 15, 1997. The adoption of SFAS 128
will not have a material effect on the Company's reported EPS.
5
PAGE 6
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended June 30
------------------------------
-------
1997 1996 1995
-------------------------------
------
(In thousands, except per share
amounts)
<S> <C> <C> <C>
Net sales and other operating $13,853,2 $13,239,8 $12,555,4
income 62 39 03
Cost of products sold and other 12,552,71 11,853,07 10,892,47
operating costs 8 0 6
--------- --------- ---------
- - -
Gross Profit 1,300,544 1,386,769 1,662,927
Selling, general and administrative 675,103 473,294 450,365
expenses
--------- --------- ---------
- - -
Earnings From Operations 625,441 913,475 1,212,562
Other income (expense) 18,964 140,938 (31,039)
--------- --------- ---------
- - -
Earnings Before Income Taxes 644,405 1,054,413 1,181,523
Income taxes 267,096 358,501 385,608
--------- --------- ---------
- - -
Net Earnings $ $ $
377,309 695,912 795,915
========= ========= =========
= = =
Net earnings per common share $ $ $
.66 1.20 1.34
========= ========= =========
= =
Average number of shares outstanding 567,954 577,547 596,139
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
6
PAGE 7
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
June 30
----------------------
-----
1997 1996
----------------------
----
Assets (In thousands)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ $
397,788 534,702
Marketable securities 330,208 820,147
Receivables 1,329,350 1,131,591
Inventories 2,094,092 1,790,636
Prepaid expenses 132,897 107,607
---------- ----------
Total Current Assets 4,284,335 4,384,683
Investments and Other Assets
Investments in and advances to 1,102,420 624,305
affiliates
Long-term marketable securities 987,665 1,092,969
Other assets 271,352 233,611
---------- ----------
2,361,437 1,950,885
Property, Plant and Equipment
Land 118,898 114,542
Buildings 1,448,945 1,245,662
Machinery and equipment 6,841,225 6,034,979
Construction in progress 765,720 588,711
Less allowances for depreciation (4,466,193 (3,869,593
) )
---------- ----------
- -
4,708,595 4,114,301
---------- ----------
- -
$11,354,36 $10,449,86
7 9
========== ==========
= =
</TABLE>
7
PAGE 8
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
June 30
----------------------
--
1997 1996
----------------------
--
(In thousands)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $ 604,831 $ -
Accounts payable 1,126,313 993,403
Accrued expenses 493,944 525,626
Current maturities of long-term debt 23,667 114,522
---------- ----------
Total Current Liabilities 2,248,755 1,633,551
Long-Term Debt 2,344,949 2,002,979
Deferred Liabilities
Income taxes 597,514 562,362
Other 113,020 106,165
---------- ----------
710,534 668,527
Shareholders' Equity
Common stock 4,192,321 3,869,875
Reinvested earnings 1,857,808 2,274,937
---------- ----------
6,050,129 6,144,812
---------- ----------
$11,354,37 $10,449,869
8
========== ==========
</TABLE>
See notes to consolidated financial statements.
8
PAGE 9
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended June 30
-----------------------------
-----
1997 1996 1995
-----------------------------
-----
(In thousands)
<S> <C> <C> <C>
Operating Activities
Net earnings $ $ $ 795,915
377,309 695,912
Adjustments to reconcile to net cash
provided by operations
Depreciation and amortization 446,412 393,605 384,872
Deferred income taxes (12,235) 72,673 25,421
Amortization of long-term debt 29,094 25,584 21,908
discount
(Gain) loss on marketable securities (59,549) (109,359 27,633
transactions )
Other (40,758) (33,243) 8,432
Changes in operating assets and
liabilities
Receivables (23,225) (183,569 (82,203)
)
Inventories 23,046 (320,529 (41,561)
)
Prepaid expenses (18,760) (1,683) 5,219
Accounts payable and accrued (110,653 314,494 45,611
expenses )
-------- -------- ---------
- -
Total Operating Activities 610,681 853,885 1,191,247
Investing Activities
Purchases of property, plant and (779,508 (754,268 (558,604)
equipment ) )
Net assets of businesses acquired (429,940 (28,612) (55,126)
)
Investments in and advances to (416,861 (110,615 (122,565)
affiliates ) )
Purchases of marketable securities (966,203 (816,401 (2,017,619
) ) )
Proceeds from sales of marketable 1,607,63 1,260,71 1,940,370
securities 1 0
-------- -------- ---------
- -
Total Investing Activities (984,881 (449,186 (813,544)
) )
Financing Activities
Long-term debt borrowings 348,695 42,066 17,626
Long-term debt payments (115,853 (22,233) (32,304)
)
Net borrowings under line of credit 421,046 - -
agreements
Purchases of treasury stock (312,525 (259,980 (179,613)
) )
Cash dividends and other (104,077 (84,443) (45,213)
)
-------- -------- ---------
- -
Total Financing Activities 237,286 (324,590 (239,504)
)
-------- -------- ---------
- -
Increase (Decrease) In Cash And Cash (136,914 80,109 138,199
Equivalents )
Cash And Cash Equivalents Beginning Of 534,702 454,593 316,394
Period
-------- -------- --------
- -
Cash And Cash Equivalents End Of $ $ $ 454,593
Period 397,788 534,702
======== ======== =========
= =
</TABLE>
See notes to consolidated financial statements.
9
PAGE 10
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock
---------
--
Shares Amount Reinvest
ed
Earnings
-----------------------------
------
(In thousands)
<S> <C> <C> <C>
Balance July 1, 1994 $ 343,639 $3,415,9 $1,629,4
55 66
Net earnings - - 795,915
Cash dividends paid - $.08 per - - (46,825)
share
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 3,668,97 2,185,18
7 8
Net earnings - - 695,912
Cash dividends paid - $.16 per - - (90,860)
share
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 3,869,87 2,274,93
5 7
Net earnings - - 377,309
Cash dividends paid - $.19 per - - (106,990
share )
5% stock dividend 26,565 594,590 (594,590
)
Treasury stock purchases (16,707) (312,525 -
)
Foreign currency translation - - (73,393)
Change in unrealized net gains on
marketable securities - - (19,199)
--------- -------- --------
-- -
Other 2,195 40,381 (266)
--------- -------- --------
--
Balance June 30, 1997 557,874 $4,192,32 $1,857,8
1 08
========= ======== ========
= ==
</TABLE>
See notes to consolidated financial statements.
10
PAGE 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1-Marketable Securities and Cash Equivalents
<TABLE>
<CAPTION>
Unrealiz Unrealize Fair
ed d
Cost Gains Losses Value
--------------------------------------
--------
(In thousands)
<S> <C> <C> <C> <C>
1997
United States government
obligations
Maturity less than 1 year $ $ $ $
455,657 66 19 455,704
Maturity 1 year to 5 74,332 70 108 74,294
years
Other debt securities
Maturity less than 1 year 157,588 435 - 158,023
Equity securities 728,448 186,551 3,540 911,459
-------- -------- -------- --------
-- -- -- --
$1,416,0 $187,122 $ 3,667 $1,599,4
25 80
======== ======== ======== ========
== == == ==
1996
United States government obligations
Maturity less than 1 year $1,184,2 $ $ $1,188,0
16 4,027 235 08
Maturity 1 year to 5 19,026 - 201 18,825
years
Other debt securities
Maturity less than 1 year 148,345 716 - 149,061
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
======== ======== ======== ========
== == == ==
</TABLE>
11
PAGE 12
Note 2-Inventories
<TABLE>
<CAPTION>
1997 1996
----------------------
-----
(In thousands)
<S> <C> <C>
LIFO inventories
FIFO value $ 521,277 $ 705,814
LIFO valuation reserve (44,811) (190,641)
---------- ----------
LIFO carrying value 476,466 515,173
FIFO inventories, including
hedging procedure method 1,617,626 1,275,463
---------- ----------
$2,094,092 $1,790,636
========== ==========
Note 3-Accrued Expenses
1997 1996
----------------------
-----
(In thousands)
Payroll and employee benefits $ $
128,205 117,211
Income taxes 99,744 175,603
Other 265,995 232,812
---------- ----------
-
$ $
493,944 525,626
========== ==========
</TABLE>
12
PAGE 13
<TABLE>
<CAPTION>
Note 4-Debt and Financing Arrangements
1997 1996
------------------------
-----
(In thousands)
<S> <C> <C>
7.5% Debentures $350 million face
amount, due in 2027 $ 347,860 $ -
8.875% Debentures $300 million face
amount, due in 2011 298,331 298,271
8.125% Debentures $300 million face
amount, due in 2012 298,079 298,015
8.375% Debentures $300 million face
amount, due in 2017 294,285 294,178
7.125% Debentures $250 million face
amount, due in 2013 249,416 249,397
6.25% Notes $250 million
face amount, due in 2003 249,353 249,280
Zero Coupon Debt $400 million face
amount, due in 2002 209,967 183,736
7% Debentures $250 million face
amount,
due in 2011 131,486 129,083
10.25% Debentures $100 million
face amount, due in 2006 98,847 98,767
6% Bonds 150 million Deutsche Mark
face amount, due in June 1997 - 98,370
Industrial Revenue Bonds at various
rates from 5.30% to 13.25% and due
in varying amounts to 2011 74,571 76,498
Other 116,421 141,906
---------- ----------
Total long-term debt 2,368,616 2,117,501
Less current maturities (23,667) (114,522)
---------- ----------
$2,344,949 $2,002,979
========== ==========
</TABLE>
13
PAGE 14
At June 30, 1997, the fair value of the Company's long-term debt
exceeded the carrying value by $336 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 10.33% and 5.36%, respectively.
The aggregate maturities for long-term debt for the five years
after June 30, 1997 are $24 million, $15 million, $11 million,
$21 million and $428 million, respectively.
At June 30, 1997 the Company had lines of credit totaling $864
million. The weighted average interest rate on short-term
borrowings outstanding at June 30, 1997 was 4.81%.
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, 1997 and 1996,
the Company had approximately 19.7 million and 33.4 million
common shares, respectively, in treasury. Treasury stock is
recorded at cost, $327 million at June 30, 1997, 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, 1997, options for 4,320,588
shares at a weighted average price of $14.39 per share were
outstanding of which 1,616,528 shares were exercisable at a
weighted average price of $13.16 per share. There were 3,958,635
shares available for future grant at June 30, 1997. The Company
accounts for its stock option plans in accordance with
Accounting Principles Board (APB) Opinion Number 25 "Accounting
for Stock Issued to Employees." Under APB 25 no compensation
expense is recognized if the exercise price of the employee
stock option equals the market price on the grant date.
Statement of Financial Accounting Standards Number 123
"Accounting for Stock-Based Compensation" requires the fair
value of options granted and the pro forma impact on earnings
and earnings per share be disclosed when material. The pro forma
impact for 1997 and 1996 is not material.
Cumulative foreign currency translation losses of $107 million
and unrealized gains on securities of $120 million at June 30,
1997, net of applicable taxes, are included as components of
reinvested earnings.
14
PAGE 15
<TABLE>
<CAPTION>
Note 6-Other Income (Expense)
1997 1996 1995
(In thousands)
<S> <C> <C> <C>
Investment income $ $ $
121,991 150,446 147,133
Interest expense (197,214) (170,089) (170,88
6)
Gain (loss) on marketable
securities transactions 59,810 109,359 (27,633
)
Equity in earnings (losses) 35,243 31,780 (19,801
of affiliates )
Other (866) 19,442 40,148
_________ ________ _______
_ __ __
$ $ $
18,994 140,938 (31,039
)
====== ===== =====
</TABLE>
Interest expense is net of interest capitalized of $41 million,
$43 million and $32 million in 1997, 1996 and 1995,
respectively.
The Company made interest payments of $198 million, $188 million
and $181 million in 1997, 1996 and 1995 respectively.
The realized gains on sales of available-for-sale marketable
securities totaled $63 million, $109 million and $18 million in
1997, 1996 and 1995, respectively. The realized losses totaled
$3 million and $46 million in 1997 and 1995, respectively.
15
PAGE 16
Note 7-Income Taxes
For financial reporting purposes, earnings before income taxes
includes the following components:
<TABLE>
<CAPTION>
1997 1996 1995
________________________________
(In thousands)
<S> <C> <C> <C>
United States $ $ $1,022,2
563,086 907,376 45
Foreign 81,319 147,037 159,278
________ ________ ________
__ __ _
$ $1,054,4 $1,181,5
644,405 13 23
====== ====== ======
</TABLE>
Significant components of income taxes are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
______________________________________
(In thousands)
<S> <C> <C> <C>
Current
Federal $ $ $
216,641 207,166 271,702
State 29,440 29,604 38,768
Foreign 27,352 46,646 42,085
Deferred
Federal (5,357) 69,253 30,191
State (2,910) 6,467 2,108
Foreign 1,930 (635) 754
_________ _________ _________
_
$ $ $
267,096 358,501 385,608
====== ====== =====
</TABLE>
Significant components of the Company's deferred tax liabilities
and assets are as follows:
<TABLE>
<CAPTION>
1997 1996
__________________________
(In
thousands)
<S> <C>
<C>
Deferred tax liabilities
Depreciation $446,083 $413,792
Unrealized gain on marketable 62,957 73,727
securities
Bond discount amortization 56,312 60,659
Other 76,992 66,812
________ ________
642,344 614,990
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
<C>
Deferred tax assets
Postretirement benefits 29,318 27,822
Other 64,186 76,337
________ ________
93,504 104,159
________ ________
Net deferred tax liabilities 548,840 510,831
Current net deferred tax assets included
in prepaid expenses 48,674 51,531
________ ________
Non-current net deferred tax $597,514 $562,362
liabilities
===== =====
</TABLE>
Reconciliation of the statutory federal income tax rate to the
Company's effective tax rate is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 35.0%
Litigation settlements and fines 7.5 - -
State income taxes, net of
federal tax benefit 2.7 2.2 2.3
Foreign sales corporation (3.4) (2.4) (1.8)
Other (0.4) (0.8) (2.9)
_____ _____
____
Effective rate 41.4 % 34.0% 32.6%
==== ====
====
</TABLE>
The Company made income tax payments of $312 million, $268
million and $354 million in 1997, 1996 and 1995, respectively.
Undistributed earnings of the Company's foreign subsidiaries
amounting to approximately $460 million at June 30, 1997, are
considered to be permanently 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 $161 million, which range from $7
million to $31 million during each of the next five years, and
expire on various dates through 2026. Rent expense for 1997,
1996 and 1995 was $69 million, $73 million and $73 million,
respectively.
16
PAGE 17
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, 1997, the plans had assets at
fair value of $432 million and projected benefit obligations of
$458 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 fully accrued
accumulated postretirement benefit obligations (APBO) for the
unfunded plans at June 30, 1997 were $59 million, based on a
discount rate of 7.5% and an assumed health care cost trend rate
of 9.7% for 1998 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 $9,500. The Company matches these contributions, at
various levels, to a maximum of $6,333.
<TABLE>
<CAPTION>
Note 10-Geographic Information
1997 1996 1995
(In millions)
<S> <C> <C> <C>
Net sales and other operating
income:
United States $ 9,733 $ 9,661 $ 9,052
Europe 3,039 2,753 2,754
Other foreign 1,041 826 749
_______ _______ _______
$13,853 $13,240 $12,555
==== ==== ====
Sales or transfers between
geographic areas:
United States $ 354 $ 282 $ 166
Europe 51 108 115
Other foreign 146 133 54
_______ ______ ______
$ 551 $ 523 $ 335
==== ==== ====
Earnings from operations:
United States $ 550 $ 805 $ 1,089
Europe 46 69 77
Other foreign 29 39 47
_______ ______ ______
$ 625 $ 913 $ 1,213
==== ==== ====
Identifiable assets:
United States $ 6,663 $ 6,025 $ 5,351
Europe 1,288 929 846
Other foreign 585 418 334
_______ ______ ______
$ 8,536 $ 7,372 $ 6,531
==== ==== ====
</TABLE>
Earnings from operations represent earnings before other income
and income taxes.
Sales or transfers between geographic areas are made at
established transfer prices.
Identifiable assets exclude cash and cash equivalents,
marketable securities and investments in and advances to
affiliates. At June 30, 1997, approximately $1.3 billion of the
Company's cash and cash equivalents, marketable securities and
investments in affiliates were foreign assets, of which $697
million were in Europe.
17
PAGE 18
Note 11. Antitrust Investigation and Related Litigation
Federal grand juries in the Northern Districts of Illinois,
California and Georgia, under the direction of the United States
Department of Justice ("DOJ"), have been investigating possible
violations by the Company and others with respect to the sale of
lysine, citric acid and high fructose corn syrup, respectively.
In connection with an agreement with the DOJ, the Company has
paid the United States a fine of $100 million. This agreement
constitutes a global resolution of all matters between the DOJ
and the Company and brings to a close all DOJ investigations of
the Company.
Following public announcement in June 1995 of these
investigations, the Company and certain of its then current
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, was named as a defendant in a number of
putative class action antitrust suits and other proceedings
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 actions and proceedings unless they can
be settled on terms deemed acceptable by the parties. These
matters have resulted and could result in the Company being
subject to monetary damages, other sanctions and expenses.
The Company has made provisions of $200 million in fiscal 1997
and $31 million in fiscal 1996 to cover the fine, litigation
settlements related to the federal lysine class action, federal
securities class action, the federal citric class action and
certain state actions filed by indirect purchasers of lysine,
and related costs and expenses associated with the litigation
described in the proceeding paragraph. Because of the early
stage of other putative class actions and proceedings, including
those related to high fructose corn syrup, the ultimate outcome
and materiality of these matters cannot presently be determined.
Accordingly, no provision for any liability that may result
therefrom has been made in the consolidated financial
statements.
The Company and its directors have also been named as defendants
in a putative class action suit which 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 1995 Annual
Meeting of Shareholders. This case was dismissed and is now on
appeal in the Supreme Court of Delaware.
18
PAGE 19
QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
Quarter
---------------------------------------
--------
<S> <C> <C> <C> <C> <C>
First Second Third Fourth Total
------- ------- ------- ------- -------
(In thousands, except per share amounts)
Fiscal 1997
Net sales $3,330,47 $3,514,9 $3,414,8 $3,593,03 $13,853,2
5 38 18 1 62
Gross profit 370,000 386,463 216,407 327,674 1,300,544
Net earnings 3,553 189,941 61,167 122,648 377,309
Per common 0.01 0.33 0.10 .022 0.66
share
Fiscal 1996
Net sales $3,078,58 $3,424,6 $3,433,4 $3,303,13 $13,239,8
6 85 35 3 39
Gross profit 329,244 402,790 344,877 309,858 1,386,769
Net earnings 163,102 225,970 163,285 143,555 695,912
Per common 0.28 0.39 0.28 0.25 1.20
share
</TABLE>
Results for the first quarter of fiscal 1997 include a charge of
$.31 per share for fines and litigation settlements arising out
of the United States Department of Justice antitrust
investigation of the Company's lysine and citric acid products
as well as resolution of a securities suit brought by
shareholders.
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>
<C>
Cash
Market Price Dividends
High Low Per Share
Fiscal 1997--Quarter Ended
June 30 22 7/8 16 1/4 0.048
March 31 21 7/8 16 1/2 0.048
December 31 22 18 1/8 0.048
September 30 18 3/8 14 7/8 0.046
Fiscal 1996--Quarter Ended
June 30 18 3/8 16 1/4 0.046
March 31 17 3/4 15 1/4 0.046
December 31 16 5/8 13 1/2 0.046
September 30 16 3/8 13 0.022
</TABLE>
The number of shareholders of the Company's common stock at June
30, 1997 was 33,834. 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.
19
PAGE 20
Archer Daniels Midland Company
TEN-YEAR SUMMARY
<TABLE>
<CAPTION>
Operating, Financial and Other Data (Dollars in thousands,
except per share data)
1997 1996 1995
<S> <C> <C> <C>
Operating
Net sales and other operating income $13,853,262 $13,239,839 $12,555,403
Depreciation and amortization 446,412 393,605 384,872
Net earnings 377,309 695,912 795,915
Per common share .66 1.20 1.34
Cash dividends 106,990 90,860 46,825
Per common share .19 .16 .08
Financial
Working capital $2,035,580 $ 2,751,132 $2,540,260
Per common share 3.65 4.80 4.33
Current ratio 1.9 2.7 3.2
Inventories 2,094,092 1,790,636 1,473,896
Net property, plant and equipment 4,708,595 4,114,301 3,762,281
Gross additions to property, plant
and equipment 1,127,360 801,426 657,915
Total assets 11,354,367 10,449,869 9,756,887
Long-term debt 2,344,949 2,002,979 2,070,095
Shareholders' equity 6,050,129 6,144,812 5,854,165
Per common share 10.85 10.72 9.97
Other
Weighted average shares outstanding (000's) 567,954 577,547 596,139
Number of shareholders 33,834 35,431 34,385
Number of employees 17,160 14,811 14,833
</TABLE>
Certain items in prior year financial statements have been
reclassified to conform to the current year's presentation.
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 1997.
Net earnings for 1997 include a charge of $.31 per share for
fines and litigation settlements arising out of the United
States Department of Justice antitrust investigation of the
Company's lysine and citric acid products as well as resolution
of a securities suit brought by shareholders.
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.
20
PAGE 21
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C>
$11,158,4 $9,578,37 $9,026,17 $8,271,5 $7,551,9 $7,729,6 $6,808,6
79 0 7 88 72 20 32
354,463 328,549 293,729 261,367 248,113 220,538 183,952
484,069 567,527 503,757 466,678 483,522 424,673 353,058
.80 .91 .80 .74 .77 .68 .56
32,586 32,266 30,789 29,527 25,976 17,271 17,095
.05 .05 .05 .05 .04 .03 .03
$2,783,81 $2,961,50 $2,276,56 $1,674,7 $1,627,4 $1,487,1 $1,408,6
7 3 4 35 59 51 64
4.67 4.75 3.64 2.68 2.59 2.39 2.27
3.5 4.1 3.4 3.0 3.4 3.4 3.0
1,422,147 1,131,787 1,025,030 917,495 771,233 694,998 773,702
3,538,575 3,214,834 3,060,096 2,695,62 2,131,80 1,832,25 1,661,22
5 7 8 0
682,485 572,022 614,844 911,586 550,851 405,888 370,295
8,746,853 8,404,111 7,524,530 6,260,60 5,450,01 4,728,30 4,397,56
7 0 8 4
2,021,417 2,039,143 1,562,491 980,273 750,901 690,052 692,878
5,045,421 4,883,251 4,492,353 3,922,29 3,573,22 3,033,50 2,630,52
5 8 3 9
8.46 7.82 7.19 6.28 5.68 4.87 4.25
602,307 624,968 626,641 628,811 626,610 620,769 631,571
33,940 33,654 32,277 28,981 26,076 20,382 18,491
16,013 14,168 13,524 13,049 11,861 10,214 9,631
</TABLE>
21
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 397,788
<SECURITIES> 330,208
<RECEIVABLES> 1,329,350
<ALLOWANCES> 0
<INVENTORY> 2,094,092
<CURRENT-ASSETS> 4,284,335
<PP&E> 9,174,788
<DEPRECIATION> 4,466,193
<TOTAL-ASSETS> 11,354,367
<CURRENT-LIABILITIES> 2,248,755
<BONDS> 2,344,949
0
0
<COMMON> 4,192,321
<OTHER-SE> 1,857,808
<TOTAL-LIABILITY-AND-EQUITY> 11,354,367
<SALES> 13,853,262
<TOTAL-REVENUES> 13,853,262
<CGS> 12,552,718
<TOTAL-COSTS> 12,552,718
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 197,214
<INCOME-PRETAX> 644,405
<INCOME-TAX> 267,096
<INCOME-CONTINUING> 377,309
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 377,309
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 632,549
<SECURITIES> 230,668
<RECEIVABLES> 1,356,393
<ALLOWANCES> 0
<INVENTORY> 2,463,801
<CURRENT-ASSETS> 4,814,077
<PP&E> 8,999,149
<DEPRECIATION> 4,372,814
<TOTAL-ASSETS> 11,634,211
<CURRENT-LIABILITIES> 2,607,164
<BONDS> 2,327,931
0
0
<COMMON> 3,702,008
<OTHER-SE> 2,322,572
<TOTAL-LIABILITY-AND-EQUITY> 11,634,211
<SALES> 10,260,231
<TOTAL-REVENUES> 10,260,231
<CGS> 9,287,361
<TOTAL-COSTS> 9,287,361
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 142,762
<INCOME-PRETAX> 458,575
<INCOME-TAX> 203,914
<INCOME-CONTINUING> 254,661
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 254,661
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 337,254
<SECURITIES> 555,902
<RECEIVABLES> 1,306,209
<ALLOWANCES> 0
<INVENTORY> 2,199,435
<CURRENT-ASSETS> 4,534,578
<PP&E> 8,331,146
<DEPRECIATION> 4,034,270
<TOTAL-ASSETS> 11,016,605
<CURRENT-LIABILITIES> 2,130,577
<BONDS> 1,984,735
0
0
<COMMON> 3,830,125
<OTHER-SE> 2,400,107
<TOTAL-LIABILITY-AND-EQUITY> 11,016,605
<SALES> 6,845,413
<TOTAL-REVENUES> 6,845,413
<CGS> 6,088,950
<TOTAL-COSTS> 6,088,950
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94,260
<INCOME-PRETAX> 365,897
<INCOME-TAX> 172,403
<INCOME-CONTINUING> 193,494
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 193,494
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 452,871
<SECURITIES> 930,391
<RECEIVABLES> 1,187,038
<ALLOWANCES> 0
<INVENTORY> 1,557,400
<CURRENT-ASSETS> 4,230,254
<PP&E> 8,151,982
<DEPRECIATION> 3,938,840
<TOTAL-ASSETS> 10,784,946
<CURRENT-LIABILITIES> 2,056,350
<BONDS> 1,992,590
0
0
<COMMON> 3,845,980
<OTHER-SE> 2,229,266
<TOTAL-LIABILITY-AND-EQUITY> 10,784,946
<SALES> 3,330,475
<TOTAL-REVENUES> 3,330,475
<CGS> 2,960,475
<TOTAL-COSTS> 2,960,475
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,127
<INCOME-PRETAX> 78,109
<INCOME-TAX> 74,556
<INCOME-CONTINUING> 3,553
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,553
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<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> 13,239,839
<TOTAL-REVENUES> 13,239,839
<CGS> 11,853,070
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