PAGE 1
UNITED
STATES SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D. C.
20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ________________________ 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
Indicate by check mark whether the registrant (1) has
filed
all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such
shorter period that the registrant was required
to file such reports), and (2) has been subject
to such filing requirements for the past 90
days. Yes _X_ No ___.
Indicate the number of shares outstanding of
each of the issuer's classes of common stock,
as of the latest practicable date.
Common Stock, no par value -
571,429,962 shares
(January 31, 1998)
1
PAGE 2
PART I - FINANCIAL INFORMATION
ARCHER DANIELS MIDLAND COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS (Unaudited)
<TABLE>
<CAPTION>
THREE
MONTHS ENDED
DECEMBER 31,
1997 1996
--------------
-----------
(In
thousands,
except
per share
amounts)
<S>
<C>
<C>
Net sales and other operating income $4,130,29
8 $3,514,9
38
Cost of products sold and other
operating costs 3,767,939
3
,
1
2
8
,
4
7
5
_________
____
____ _
Gross Profit 362,359
386,463
Selling, general and administrative 136,745
expenses 114,061
_________
____
____ _
Earnings From Operations 225,614
272,402
Other income (expense) (16,209)
15,386 _________
________ _
Earnings Before Income Taxes 209,405
287,788
Income taxes 70,197
97,847 _________
________ _
Net Earnings $ 139,2 $
189,94
08 1
=========
=========
Average number of shares outstanding 557,806
571,258
Basic and diluted earnings per common $.25
$.33
share
Dividends per common share $.05
$.048
</TABLE>
See notes to consolidated financial statements.
2
PAGE 3
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
DECEMBE
R 31,
1997 1996
--------------
-----------
(In
thousands,
except
per share
amounts)
<S> <C> <C>
Net sales and other operating income $7,781,60
0 $6,845,4
13
Cost of products sold and other
operating costs 7,094,073
6
,
0
8
8
,
9
5
0
_________
____
____ _
Gross Profit 687,527
756,463
Selling, general and administrative 271,731
expenses 425,393
_________
____
____ _
Earnings From Operations 415,796
331,070
Other income (expense) (7,376)
34,827 _________
________ _
Earnings Before Income Taxes 408,420
365,897
Income taxes 137,862
172,403 _________
________ _
Net Earnings $ 270,5 $
193,49
58 4
=========
=========
Average number of shares outstanding 557,753
571,810
Basic and diluted earnings per common $.49
$.34
share
Dividends per common share $.098
$.094
</TABLE>
See notes to consolidated financial statements.
3
PAGE 4
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED
BALANCE
SHEETS
(Unaudi
ted)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30,
1997 1997
-------------
--
--
--
--
--
-
--
(In
thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 447,412 $ 397,788
Marketable securities 407,980 330,208
Receivables 1,924,924 1,329,350
Inventories 2,560,249 2,094,092
Prepaid expenses 191,689 132,897
__________ __________
Total Current Assets 5,532,254 4,284,335
Investments and Other Assets
Investments in and advances to 1,381,484 1,102,420
affiliates
Long-term marketable securities 1,141,223 987,665
Other assets 377,809 271,352
__________ __________
2,900,516 2,361,437
Property, Plant and Equipment
Land 125,198 118,898
Buildings 1,567,456 1,448,945
Machinery and equipment 7,246,904 6,841,225
Construction in progress 919,545 765,720
Less allowances for depreciation (4,705,680) (4,466,193)
__________ __________
5,153,423 4,708,595
__________ __________
$13,586,193 $11,354,367
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
PAGE 5
ARCHER DANIELS MIDLAND COMPANY AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30,
1997 1997
------------
--
--
--
--
--
-
--
(In
thousands)
<S> <C>
<C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $1,473,857 $ 604,831
Accounts payable 1,480,771 1,126,313
Accrued expenses 502,740 493,944
Current maturities of long-term debt 31,414 23,667
__________ __________
Total Current Liabilities 3,488,782 2,248,755
Long-term Debt 2,860,781 2,344,949
Deferred Credits
Income taxes 613,128 597,514
Other 138,667 113,020
__________ __________
751,795 710,534
Shareholders' Equity
Common stock 4,477,298 4,192,321
Reinvested earnings 2,007,537 1,857,808
__________ __________
6,484,835 6,050,129
__________ __________
$13,586,193
$11,354,367
========== ==========
</TABLE>
See notes to consolidated financial
statements.
5
PAGE 6
ARCHER DANIELS MIDLAND COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
DECEMB
ER, 31
1997 1996
-------------
-------
----(In
thousan
ds)
<S> <C> <C>
Operating Activities
Net earnings $ 270,558
$
193,494
Adjustments to reconcile to net cash
provided
by operations
Depreciation and amortization 241,530
215,135
Deferred income taxes 11,667
(24,350)
Amortization of long-term debt discount 16,063
14,056
(Gain)loss on marketable securities
transactions (36,147)
(48,272)
Other (8,393)
14,177
Changes in operating assets and
liabilities
Receivables (302,148)
(159,998)
Inventories (135,479)
(405,795)
Prepaid expenses (46,531)
(28,496)
Accounts payable and accrued expenses 144,188
355,598
________
________
Total Operating Activities 155,308
125,549
Investing Activities
Purchases of property, plant and equipment (320,081) (400,249)
Net assets of businesses acquired (368,371) (44,091)
Investments in and advances to affiliates (253,142) (334,164)
Purchases of marketable securities (696,257) (688,349)
Proceeds from sales of marketable 489,413 1,105,50
securities 0
________ ________
Total Investing Activities (1,148,438)
(361,353
)
Financing Activities
Long-term debt borrowings 441,464 -
Long-term debt payments (7,316) (18,024)
Net borrowings under line of credit 703,214 171,914
agreements
Purchases of treasury stock (42,135) (63,212)
Cash dividends and other (52,473) (52,322)
________
________
Total Financing Activities 1,042,754
38,356
________
________
(Increase) Decrease In Cash and Cash 49,624 (197,448
Equivalents
)
Cash and Cash Equivalents Beginning of 397,788
534,702
Period
________
________
Cash and Cash Equivalents End of Period $ 447,412 $
337,254 ======== ========
Supplemental Cash Flow Information
Noncash Investing and Financing Activities
Common stock issued in purchase $ 298,244 $ -
acquisition
</TABLE>
See notes to consolidated financial statements.
6
PAGE 7
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1.The accompanying unaudited consolidated
financial
statements have been prepared in accordance
with generally accepted accounting
principles for interim financial information
and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly,
they do not include all of the information
and footnotes required by generally accepted
accounting principles for complete financial
statements. In the opinion of management,
all adjustments (consisting of normal
recurring accruals) considered necessary for
a fair presentation have been included.
Operating results for the quarter and six
months ended December 31, 1997 are not
necessarily indicative of the results that
may be expected for the year ending June 30,
1998. For further information, refer to the
consolidated financial statements and
footnotes thereto included in the Company's
annual report on Form 10-K for the year
ended June 30, 1997.
In February 1997, the Financial Accounting
Standards Board issued Statement of
Financial Accounting Standards Number 128
(SFAS 128) "Earnings per Share." This
statement, which is required to be adopted
for financial statements issued for the
first period ended after December 15, 1997
replaces the previously reported primary and
fully diluted earnings per share with basic
and diluted earnings per share. Unlike
primary earnings per share, basic earnings
per share excludes any dilutive effects of
options, warrants, and convertible
securities. Diluted earnings per share is
very similar to the previously reported
fully diluted earnings per share. All
earnings per share amounts for all periods
have been presented, and where necessary,
restated to conform to the SFAS 128
requirements.
In June 1997, the Financial Accounting
Standards Board issued Statement of
Financial Accounting Standards Number 130
(SFAS 130) "Reporting Comprehensive Income."
This statement, which is required to be
adopted for financial statements issued for
periods beginning after December 15, 1997,
establishes standards for reporting and
display of comprehensive income and its
components in a full set of general-purpose
financial statements. At that time, ADM will
be required to report total comprehensive
income, an amount that will include net
income as well as other comprehensive
income. Other comprehensive income refers to
revenues, expenses, gains and losses that
under generally accepted accounting
principles have previously been reported as
separate components of equity in ADM's
Consolidated Statements of Earnings.
7
PAGE 8
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited)
In June 1997, the Financial Accounting
Standards Board issued Statement of
Financial Accounting Standards Number 131
(SFAS 131) "Disclosures about Segments of an
Enterprise and Related Information." This
statement, which is required to be adopted
for financial statements issued for periods
beginning after December 15, 1997,
establishes standards for the way that
public business enterprises report
information about operating segments in
financial reports issued to shareholders.
ADM has not yet determined the financial
statement disclosure impact of SFAS 131.
Certain items in prior year financial
statements have been reclassified to conform
to the current year's presentation.
Note 2. Other Income (expense)
<TABLE>
<CAPTION>
THREE MONTHS SIX
MONTHS ENDED
ENDED
DECEMBER 31,
DECEMBER 31, 1997
1996 1997 1996
________________
________________ ___
___
(In thousands) (In
thousands)
<S> <C> <C> <C> <C>
Investment income $ 25,602 $30,34 $ $69,21
8
53,804 5
Interest expense (72,334) (48,13
(127,75 (94,26
3) 3) 0)
Gain on marketable
securities transactions 12,449 17,983
36,150 48,284
Equity in earnings of 16,397 13,666
26,954 11,675
affiliates
Other 1,677 1,522
3,469 (87)
______ ______
______ ______
$(16,20 $15,38 $ $34,82
9) 6
(7,376) 7
====== ======
====== ======
</TABLE>
Note 3. Per Share Data
All references to share and per share
information have
been adjusted for the 5 percent stock dividend paid
September 15, 1997.
8
PAGE 9
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited)
Note 4.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, certain actions filed by parties that
opted-out of the class action settlements, 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 unaudited
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, appealed and remanded to provide the
plaintiffs an opportunity to replead. The plaintiffs
filed an amended complaint on November 21, 1997. 9
PAGE 10
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL
CONDITION
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>
THREE MONTHS
SIX MONTHS
ENDED
ENDED
DECEMBER 31,
DECEMBER 31,
1997
1997
1996
1996
--------------- -----
----------- --
(In millions) (In
millions)
<S> <C> <C> <C> <C>
Oilseed products $2,587 $2,259 $4,896 $4,365
Corn products 556 574 1,091 1,123
Wheat and other 393 423 780 872
milled products
Other products and 594 259 1,015 485
services
----- ----- ----- -----
$4,130 $3,515 $7,782 $6,845
===== ===== ===== =====
</TABLE>
Net sales and other operating income increased 18
percent for the quarter to $4.1 billion and
increased 14 percent for the six months to $7.8
billion due primarily to sales attributable to
recently acquired operations. Sales of oilseed
products increased 15 percent for the quarter and 12
percent for the six months due principally to higher
sales volumes reflecting strong worldwide protein
meal and vegetable oil demand. Oilseed product sales
also increased due to sales attributable to recently
acquired operations. These increases were partially
offset by lower average selling prices reflecting
the lower cost of raw materials. Sales of corn
products decreased 3 percent for both the quarter
and six months due primarily to lower average
selling prices for the Company's sweetener, fuel
alcohol, and
amino acid products. These decreases were partially
offset by increased sales volumes of these same
products. Sales of wheat and other milled products
decreased 7 percent for the quarter and 11 percent
for the six months due principally to lower average
selling prices reflecting the lower cost of raw
materials. These decreases were partially offset by
sales attributable to recently acquired operations.
The increase in other products and services for both
the quarter and six months was due principally from
sales related to the Company's recently acquired
cocoa business.
Cost of products sold and other operating costs
increased $639 million for the quarter to $3.8
billion and increased $1 billion for the six months
to $7.1 billion due principally to costs related to
recently acquired operations. To a lesser extent,
costs increased due to higher sales volumes
partially offset by lower average raw material
costs.
10
PAGE 11
Gross profit declined $24 million to $362 million
for the quarter and declined $69 million to $688
million for the six months due primarily to the net
effect of decreased sales prices versus lower raw
material costs. For the six months, gross profit was
also reduced due to decreased merchandising and
transportation margins. These decreases were
partially offset by increased sales volumes and
gross profits of recently acquired operations.
Selling, general and administrative expenses
increased $23 million for the quarter to $137
million due primarily to $15 million of expenses
attributable to recently acquired operations.
Selling, general and administrative expenses
decreased $154 million for the six months to $272
million due principally to decreased legal and
litigation related costs of $200 million 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 4 to the financial
statements). Partially offsetting this decrease for
the six months was $28 million of selling, general
and administrative expenses attributable to recently
acquired operations.
The decrease in other income for the quarter and six
months was due to decreased investment income due to
lower invested funds, increased interest expense due
to higher borrowing levels and decreased gains on
marketable securities transactions. These decreases
were partially offset by increased equity in
earnings of unconsolidated affiliates.
The decrease in income taxes for the quarter was due
principally to lower pretax earnings. The Company's
effective income tax rate of 34 percent for the
quarter was comparable to the same period a year
ago. The decrease in income taxes for the six months
was a result of a lower effective tax rate partially
offset by higher pretax earnings. The decrease in
the Company's effective income tax rate to 34
percent for the six months compared to an effective
tax rate of 47 percent last year is due primarily to
the non-deductibility for income tax purposes in
fiscal 1997 of a portion of the Company's litigation
settlements and fines.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company continued to show
substantial liquidity with working capital of $2
billion. The Company's total cash and marketable
securities net of short-term debt was
$523 million. Capital resources remained strong as
reflected in the Company's net worth of $6.5
billion. During the quarter, the Company issued $200
million of 6.75 percent debentures due in 2027, $250
million of 6.95 percent debentures due in 2097 and
$298 million of common stock in a business
acquisition. The Company's ratio of long-term debt
to total capital at September 30, 1997 was
approximately 28 percent.
As discussed in Note 4 to the unaudited 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 4
to the unaudited 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 $231 million in prior years 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 unaudited
consolidated financial statements.
11
PAGE 12
PART II - OTHER INFORMATION
Item 1. 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.
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 has 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. In December, 1997, the Company was
notified by the Canadian Competition Bureau that it is among
the subjects of a formal inquiry into an alleged conspiracy
to fix prices and sales volumes in the production, sale and
supply of lysine. Each of these investigations is in the
early stages and, accordingly, their ultimate outcome and
materiality cannot presently be determined. The Company may
become the subject of similar antitrust investigations
conducted by the applicable regulatory authorities of other
countries.
HIGH FRUCTOSE CORN SYRUP ACTIONS
The Company, along with other companies, has been named as a
defendant in thirty-one antitrust suits involving the sale
of high fructose corn syrup. Thirty of these actions have
been brought as putative class actions.
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.
12
PAGE 13
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 seven 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 six 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 four other indirect
purchaser 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 the coordinated
action. On October 8, 1997, Varni Brothers Corp. filed a
complaint in intervention with respect to the coordinated
action pending in Stanislaus County Superior Court,
asserting the same claims as those advanced in the
consolidated class action.
13
PAGE 14
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.
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. This action was
removed to federal court in the Northern District of Alabama
and dismissed on December 15, 1997 pursuant to a settlement
agreement that did not result in the Company paying
plaintiff any consideration. 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 this
action.
14
PAGE 15
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. 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. On November 18, 1997, the Court
granted the defendants' motion to dismiss. The Company,
along with other companies, also has been named as a
defendant in a non-class action federal antitrust suit
involving the sale of citric acid filed on June 9, 1997 in
the United States District Court for the Northern District
of California, encaptioned The Proctor & Gamble
Manufacturing Co., et al. v. Archer-Daniels-Midland Company,
et al., Civil Action No. 97-2155 (VRW).. This action
alleges 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. This action was brought by entities
that opted-out of a previously settled federal class action.
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 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 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.
15
PAGE 16
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-C125. 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. 9682473-CP. The
parties are in the midst of discovery in this action. On
September 29, 1997, the court denied the plaintiff's motion
for class certification. 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. 962975. 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.
16
PAGE 17
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 in prior filings, 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.
SODIUM GLUCONATE ACTIONS
The Company, along with other companies, has been named as a
defendant in two federal antitrust class actions involving
the sale of sodium gluconate. These actions allege
violations of federal antitrust laws, including allegations
that the defendants agreed to fix, raise and maintain at
artificially high levels the prices of sodium gluconate, and
seek various relief, including 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 sodium gluconate during
periods in the 1990s. One such
action was filed on December 2, 1997, in the United States
District Court for the Northern District of California and is
encaptioned Chemical Distribution, Inc, v. Akzo Nobel
Chemicals BV, et al., No. C -97-4141 (CW). The other action
was filed on December 31, 1997, in the United States District
Court for the District of Massachusetts and is encaptioned
Stetson Chemicals, Inc. v. Akzo Nobel Chemicals BV, 97-CV-
1285 RCL. The Company has not yet filed a responsive
pleading in either action.
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. 95C-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. On January 21, 1998 the Court of Appeals dismissed
the appeal. The parties will jointly seek dismissal of the
Delaware actions with prejudice once the federal action,
including any further appeals, is concluded.
17
PAGE 18
DELAWARE STATE LAW ACTION
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-DanielsMidland
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 and damages 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
plaintiffs an opportunity to replead. The revised
complaint was filed on November 21, 1997.
OTHER
As described in the notes to the unaudited 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:
The Annual Meeting of Shareholders was held on October 16,
1997. Proxies for the Annual Meeting were solicited pursuant to
Regulation 14. There was no solicitation in opposition to the
Board of Director nominees as listed in the proxy statement and
all of such nominees were elected as follows:
Nominee Shares Cast Shares
For Withheld
D. O. Andreas 457,802,414 16,933,111
G. O. Coan 459,614,826 15,120,699
G. A. Andreas 458,493,047 16,242,478
S. M. Archer, Jr. 458,932,277 15,803,248
J. K. Vanier 459,533,892 15,201,633
R. Burt 459,388,806 15,346,719
A. Young 458,722,047 16,013,478
O. G. Webb 459,590,378 15,145,147
F. Ross Johnson 459,179,222 15,556,303
R. S. Strauss 458,978,561 15,756,964
M. B. Mulroney 458,952,914 15,782,611
J. R. Block 459,420,032 15,315,493
M. H. Carter 459,616,407 15,119,118
18
PAGE 19
There were no abstentions or broker non-votes regarding
the election of directors.
The appointment by the Board of Directors of Ernst & Young
LLP as Independent Accountants to audit the accounts of the
Company for the fiscal year ending June 30, 1998 was ratified
as follows:
For Against Abstain
471,604,072 2,112,483 1,018,970
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(3) Articles of Incorporation and
Bylaws
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.
(10) Material Contracts
Archer-Daniels-Midland Company
Stock Unit Plan For Nonemployee Directors As
Amemded.
(27) Financial Data Schedules
b) Reports on Form 8-K
A Form 8-K was not filed during the quarter ended
December 31,
1997.
19
PAGE 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ARCHER-DANIELS-MIDLAND COMPANY
/s/ D. J. Schmalz
D. J. Schmalz
Vice President
and Chief Financial Officer
/s/ D. J. Smith
D. J. Smith
Vice President, Secretary and
General Counsel
Dated: February 13, 1998
20
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 447,412
<SECURITIES> 407,980
<RECEIVABLES> 1,924,924
<ALLOWANCES> 0
<INVENTORY> 2,560,249
<CURRENT-ASSETS> 5,532,254
<PP&E> 9,859,103
<DEPRECIATION> 4,705,680
<TOTAL-ASSETS> 13,586,193
<CURRENT-LIABILITIES> 3,488,782
<BONDS> 2,860,781
0
0
<COMMON> 4,477,298
<OTHER-SE> 2,007,537
<TOTAL-LIABILITY-AND-EQUITY> 13,586,193
<SALES> 7,781,600
<TOTAL-REVENUES> 7,781,600
<CGS> 7,094,073
<TOTAL-COSTS> 7,094,073
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,753
<INCOME-PRETAX> 408,420
<INCOME-TAX> 137,862
<INCOME-CONTINUING> 270,558
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 270,558
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
PAGE 1
EXHIBIT 10
ARCHER-DANIELS-MIDLAND
COMPANY
STOCK UNIT PLAN
FOR NONEMPLOYEE DIRECTORS
AS AMENDED
1. INTRODUCTION
The Archer-Daniels-Midland Company
Stock Unit Plan for Nonemployee Directors, as
amended, is intended to promote the interests of
the Company and its Stockholders by paying part
or all of the compensation of the Company's
nonemployee directors in the form of an economic
equivalent of an equity interest in the Company,
thereby providing appropriate incentives and
rewards to encourage nonemployee directors to
take a long-term outlook when formulating policy
applicable to the Company and encouraging them
to remain on the Board. In general, the Plan
provides for the conversion of at least 50
percent and up to 100 percent of a nonemployee
director's fees for each calendar year into
units of measurement relating to the value of
the Company's common stock, and for payment to
the director of the value of such units five
full calendar years later (or upon termination
from service on the Board, if earlier), so that
a director will normally receive payment under
the Plan each successive year in respect of the
fees originally converted into units in the year
preceding the fifth calendar year prior to the
year of payment. A nonemployee director will
participate in the Plan for all periods of
service on the Board following the effective
date of the Plan, notwithstanding any future
payments to the director of any part of his
interest under the Plan. The original Plan was
approved by the Stockholders of the Company at
its 1996 Annual Meeting and become effective on
January 1, 1997. In July, 1997, the Board of
Directors amended the original Plan by
increasing the minimum portion of the
nonemployee directors' fees to be converted into
units from 25 percent to 50 percent.
2. DEFINITIONS
(a) "Board" means the Board of
Directors of the Company.
(b) "Committee" means the Benefit
Plans Committee of the Company, or any successor
committee thereto.
(c) "Common Stock" means the common
stock of the Company, without par value.
(d) "Company" means Archer-Daniels-Midland
Company, a Delaware corporation.
(e) "Director's Fees" means the
annual retainer fee and all meeting fees,
committee fees and other Director's fees earned
by the Participant for his service on the Board.
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(f) "Fair Market Value" means, with
respect to a share of the Common Stock, the
average of the high and low reported sales price
regular way per share of the Common
Stock on the New York Stock Exchange Composite
Tape for the relevant day, or, in the absence
thereof, on the most recent prior day for which
such sales are reported. If the Common Stock is
not listed on the New York Stock Exchange as of
any date that Fair Market Value is to be
determined, Fair Market Value shall be
determined by the Committee in its discretion in
a manner consistently applied.
(g) "Mandatory Conversion" means the
required conversion of 50 percent of a
Participant's Director's Fees into a Stock Unit
Award pursuant to Section 4 hereof.
(h) "Participant" means a member of
the Board who is not an employee of the Company
or any of its affiliates.
(i) "Plan" means this Archer-Daniels-
Midland Company Stock Unit Plan for Nonemployee
Directors.
(j) "Realization Date" means, with
respect to each Stock Unit allocated to a
Participant's Stock Unit Account, the first
business day following the earlier of (i) the
date five years after the end of the calendar
year that includes the calendar quarter for
which such Stock Unit is awarded to the
Participant or in which such stock unit is
credited to the Participant as a dividend
equivalent, or (ii) the date the Participant
ceases to be a member of the Board.
(k) "Stock Unit" means a non-voting
unit of measurement that is deemed for valuation
and bookkeeping purposes to be equivalent to an
outstanding share of Common Stock, and shall
include fractional units.
(l) "Stock Unit Account" means a book
account maintained by the Company reflecting the
Stock Units allocated to a Participant pursuant
to Section 4 hereof as a result of the
Participant's Mandatory Conversions and
Voluntary Conversions and such additional Stock
Units as shall be credited thereto in respect of
dividends paid on the Common Stock.
(m) "Stock Unit Award" means an award
under Section 4(c) hereof of Stock Units as a
result of a Participant's Mandatory Conversion
and Voluntary Conversion for a calendar quarter.
(n) "Voluntary Conversion" means the
conversion based on the election of the
Participant of all or part of a Participant's
Director's Fees otherwise payable to the
Participant in cash into a Stock Unit Award
pursuant to Section 4 hereof.
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3. ADMINISTRATION
The Plan shall be administered by the
Committee. The Committee shall have full
authority to administer the Plan, including the
discretionary authority to interpret and
construe all provisions of the Plan, to resolve
all questions of fact arising under the Plan,
and to adopt such rules and regulations for
administering the Plan as it may deem necessary
or appropriate. Decisions of the Committee
shall be final and binding on all parties. The
Committee may delegate administrative
responsibilities under the Plan to appropriate
officers or employees of the Company. All
expenses of the Plan shall be borne by the
Company.
4. CREDITING OF STOCK UNITS
(a) Mandatory Conversions
For each calendar quarter in which the
Plan is in effect, 50 percent of the aggregate
dollar amount of a Participant's Director's Fees
payable for such quarter shall be converted into
a Stock Unit Award pursuant to Section 4(c)
hereof.
(b) Voluntary Conversions
For each calendar quarter in which the
Plan is in effect, a Participant may elect to
convert all or any portion of his Director's
Fees payable for such quarter (in addition to
those required to be converted under Section
4(a) hereof) into a Stock Unit Award pursuant to
Section 4(c) hereof. Each Voluntary Conversion
shall be made on the basis of a Participant's
written election stating the amount by which
such Director's Fees shall be converted to a
Stock Unit Award. Each such election shall be
made in the form required by the Committee,
shall be delivered to the Company no later than
December 31 of the calendar year immediately
preceding the calendar year for which the
election is made, and shall be effective for
each calendar quarter of such calendar year. In
the case of a member of the Board who first
becomes a Participant during a calendar year,
such election for such year must be made within
30 days following such member becoming a
Participant, and shall apply only to calendar
quarters that begin following the date such
election is made.
(c) Stock Unit Awards
A Participant shall receive a Stock
Unit Award for each calendar quarter in respect
of his Mandatory Conversion and any Voluntary
Conversion applicable to such quarter. Such
Stock Unit Award shall equal the number of the
Stock Units determined by dividing (A) the
aggregate dollar amount of the Participant's
Director's Fees that are converted to a Stock
Unit Award for the quarter by his Mandatory
Conversion and Voluntary Conversion, by (B) the
Fair Market Value of the Common Stock on the
last business day of such calendar quarter.
Each Stock Unit Award shall be credited to the
Participant's Stock Unit Account as of the first
day following the end of the calendar quarter
for which such Stock Unit Award is granted.
(d) Dividend Equivalents
As of any date that cash dividends are
paid with respect to the Common Stock from time
to time, each Participant's Stock Unit Account
shall be credited with an additional number of
Stock Units determined by dividing (A) the
aggregate dollar amount of the dividends that
would have been paid on the Stock Units credited
to the Participant's Stock Unit Account as of
the record date for such dividend had such Stock
Units been actual shares of Common Stock by (B)
the Fair Market Value of the Common Stock on the
dividend payment date.
(e) Certain Adjustments
In the event of a reorganization,
recapitalization, stock split, stock dividend,
combination
of shares, merger or consolidation, or the sale,
conveyance, lease or other transfer by the
Company of all or substantially all of its
property, or any other change in the corporate
structure or shares of the Company, pursuant to
any of which events the then outstanding shares
of the Common Stock are split up or combined or
are changed into, become exchangeable at the
holder's election for, or entitle the holder
thereof to, other shares of stock, or similar
change in the Common Stock or other similar
event that the Committee, in its discretion,
deems appropriate, each Participant's Stock Unit
Account shall be adjusted as determined by the
Committee in its sole discretion to reflect such
change or other event. It is intended that in
making such adjustments, the Committee will seek
to treat each Participant as if he were a
stockholder of the Common Stock of the number of
Stock Units credited to his Stock Unit Account
(but without duplication of any benefits that
may be provided under Section 4(d) hereof).
Except as is expressly provided in this Section,
Participants shall have no rights as a result of
any such change in the Common Stock or other
event.
5. DISTRIBUTIONS OF BENEFITS
(a) Valuation and Payment of Units
Subject to Section 6 hereof, a
Participant shall be entitled to a benefit under
the Plan with respect to each Stock Unit Award
upon the Realization Date for such Stock Unit
Award. Such benefit shall be equal to the cash
amount determined by multiplying (A) the number
of Stock Units credited to the Participant's
Stock Unit Account in respect of the Stock Unit
Award for which the Realization Date has
occurred (including additional Stock Units
credited to the Participant's Stock Unit Account
with respect thereto pursuant to Section 4(d)
hereof) by (B) the Fair Market Value of the
Common Stock on the Realization Date. Each such
amount shall be paid to the Participant in cash
within 30 days after the applicable Realization
Date.
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(b) Payment of Additional Dividends
Subject to Section 6 hereof, if,
pursuant to Section 4(d) hereof, additional
Stock Units are required to be credited to a
Participant's Stock Unit Account in respect of
Stock Units that were held in the Participant's
Stock Unit Account as of the record date for
dividends paid on the Common Stock that were
paid after the payment to the Participant of a
benefit in respect of such Stock Units, the
Company shall pay to the Participant a cash
amount in respect of such dividends equal to the
dollar amount of such dividends. Such amount
shall be paid to the Participant within 30 days
after the dividend payment date.
(c) Payment of Nonconverted Fees
Subject to Section 6 hereof, in the
event that a Participant ceases to be a member
of the Board prior to the time that Stock Units
are credited to his Stock Unit Account pursuant
to Section 4(c) hereof in respect of his
Mandatory Conversion or Voluntary Conversion for
a calendar quarter, the amount of all Director's
Fees earned by the Participant during such
quarter shall be paid to the Participant in cash
within 30 days after his termination of service
as a director.
(d) Section 16 Restrictions
Notwithstanding any other provision
hereof, if and to the extent required in order
for Stock Units to meet the requirements for
exemption under Rule 16b-3 (or any successor
thereto) promulgated under the Securities
Exchange Act of 1934, no amount in respect of
any Stock Unit Award (including any additional
Stock Units allocated to a Participant's Stock
Unit Account pursuant to Section 4(d) hereof)
shall be paid to a Participant until the
expiration of 6 months after the Stock Units in
respect of which the payment is to be made have
been allocated to the Participant's Stock Unit
Account, and the amount of such payment shall be
determined based on the Fair Market Value of the
Common Stock on the date such 6-month period
expires.
6. FORFEITURE OF BENEFITS
Each Participant's benefits hereunder
shall be nonforfeitable, except that a
Participant shall forfeit all rights to all
benefits hereunder in respect of Mandatory
Conversions, Voluntary Conversions and Stock
Units credited to the Participant's Stock Unit
Account if the Participant's status as a
director of the Company is (or is deemed to have
been) terminated for Cause. For purposes
hereof, a Participant's status as a director
shall have been terminated for "Cause" upon the
voluntary or involuntary termination of the
individual's service as a director on account of
(i) the willful violation by the Participant of
any federal or state law or any rule or
regulation of any regulatory body to which the
Company or its affiliates is subject, which
violation would materially reflect on the
Participant's character, competence or integrity
or (ii) a breach by the Participant of the
Participant's duty of loyalty to the Company and
its affiliates. If, subsequent to the
termination of a Participant's status as a
director of the Company, it is determined by the
Committee that the Participant's status as a
director of the Company could have been
terminated for Cause, such Participant's status
as a director of the Company may be deemed to
have been terminated for Cause.
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7. BENEFICIARIES
Any payment required to be made to a
Participant hereunder that cannot be made to the
Participant because of his death shall be made
to the Participant's beneficiary or
beneficiaries, subject to applicable law. Each
Participant shall have the right to designate in
writing from time to time a beneficiary or
beneficiaries by filing a written notice of such
designation with the Committee. In the event a
beneficiary designated by the Participant does
not survive the Participant and no successor
beneficiary is selected, or in the event no
valid designation has been made, such
Participant's beneficiary shall be such
Participant's estate.
8. UNFUNDED STATUS OF THE PLAN
The Plan shall be unfunded, and
Mandatory Conversions, Voluntary Conversions,
Stock Units credited to each Participant's Stock
Unit Account and all benefits payable to
Participants under the Plan represent merely
unfunded, unsecured promises of the Company to
pay a sum of
money to the Participant in the future.
9. ALIENATION OF BENEFITS PROHIBITED
No transfer (other than pursuant to
Section 7 hereof) by a Participant of any right
to any payment hereunder, whether voluntary or
involuntary, by operation of law or otherwise,
and whether by means of alienation by
anticipation, sale, transfer, assignment,
bankruptcy, pledge, attachment, charge, or
encumbrance of any kind, shall vest the
transferee with any interest or right, and any
attempt to so alienate, sell, transfer, assign,
pledge, attach, charge, or otherwise encumber
any such amount, whether presently or thereafter
payable, shall be void and of no force or
effect.
10. NO SPECIAL RIGHTS
Nothing contained in the Plan shall
confer upon any Participant any right with
respect to the continuation of the Participant's
status as a director of the Company.
11. TERMINATION AND AMENDMENT
The Plan may be terminated at any time
by the Board. The Plan may be amended by the
Board from time to time in any respect;
provided, however, that no such amendment may
reduce the number of Stock Units theretofore
credited or creditable to a Participant's Stock
Unit Account without the affected Participant's
prior written consent.
12. CHOICE OF LAW
The Plan and all rights hereunder shall be
subject to
and interpreted in accordance with the laws of
the State of Illinois, without reference to the
principles of conflicts of laws, and to
applicable federal securities laws.
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