25
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 March 31, 1999
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 - 588,111,381 shares
(April 30, 1999)
1
PAGE 2
PART I - FINANCIAL INFORMATION
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
--------------------------
(In thousands, except
per share amounts)
<S> <C>
<C>
Net sales and other operating income $3,378,12
6 $4,280,2
79
Cost of products sold and other
operating costs 3,139,203
3,895,80
8
_________
________
_
Gross Profit 238,923
384,471
Selling, general and administrative 173,753
expenses 228,119
_________
________
_
Earnings From Operations 65,170
156,352
Other income (expense) (47,244)
(49,832)
_________
________
_
Earnings Before Income Taxes 17,926
106,520
Income taxes 6,184
36,217
_________
________
_
Net Earnings $ 11,7 $ 70,30
42 3
========= =========
Average number of shares outstanding 590,377 600,154
Basic and diluted earnings per common $.02 $.1
share 2
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>
NINE MONTHS ENDED
MARCH 31,
1999 1998
--------------------------
(In thousands, except
per share amounts)
<S> <C>
<C>
Net sales and other operating income $11,091,0 $12,061,8
86 79
Cost of products sold and other
operating costs 10,137,19 10,989,88
7 1
_________ _________
Gross Profit 953,889 1,071,998
Selling, general and administrative 522,815 499,850
expenses
_________ _________
Earnings From Operations 431,074 572,148
Other income (expense) (64,851) (57,208)
_________ _________
Earnings Before Income Taxes and
Extraordinary Loss 366,223 514,940
Income taxes 127,192 174,079
_________ _________
Earnings Before Extraordinary 239,031 340,861
Loss
Extraordinary loss, net of tax, on
debt (15,324) -
repurchase
_________ _________
Net Earnings $ 223,7 $ 340,86
07 1
========= =========
Average number of shares outstanding 593,729 590,391
Basic and diluted earnings per common
share
Before extraordinary loss $.41
$.58
Extraordinary loss on debt (.03) -
repurchase
____ __
_ __
After Extraordinary Loss $.38
$.58
==== ==
==
Dividends per common share $.148
$.142
</TABLE>
See notes to consolidated financial statements.
3
PAGE 4
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, JUNE 30,
1999 1998
-------------------------
--
(In thousands)
ASSETS
Current Assets
Cash and cash equivalents $ 573,978 $ 346,325
Marketable securities 278,238 379,169
Receivables 1,867,436 1,990,686
Inventories 3,008,085 2,562,650
Prepaid expenses 152,909 172,884
___________ ___________
Total Current Assets 5,880,646 5,451,714
Investments and Other Assets
Investments in and advances to 1,449,189 1,473,364
affiliates
Long-term marketable securities 690,351 1,168,380
Other assets 389,400 417,372
___________ ___________
2,528,940 3,059,116
Property, Plant and Equipment
Land 160,372 148,135
Buildings 1,935,253 1,777,146
Machinery and equipment 8,256,756 7,901,309
Construction in progress 679,034 613,792
Less allowances for depreciation (5,495,173) (5,117,678)
___________ ___________
5,536,242 5,322,704
___________ ___________
$13,945,828 $13,833,534
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
PAGE 5
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, JUNE 30,
1999 1998
------------------------
--
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $1,661,377 $1,545,276
Accounts payable 1,784,434 1,634,681
Accrued expenses 624,644 516,287
Current maturities of long-term debt 22,620 21,059
__________ __________
Total Current Liabilities 4,093,075 3,717,303
Long-term Debt 2,900,280 2,847,130
Deferred Credits
Income taxes 565,251 632,893
Other 136,314 131,296
__________ __________
701,565 764,189
Shareholders' Equity
Common stock 4,750,970 4,936,649
Reinvested earnings 1,798,369 1,662,563
Accumulated other comprehensive loss (298,431) (94,300)
__________ __________
6,250,908 6,504,912
__________ __________
$13,945,828 $13,833,534
========== ==========
</TABLE>
See notes to consolidated financial statements.
5
PAGE 6
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
1999 1998
-------------------------
(In thousands)
<S> <C> <C>
Operating Activities
Net earnings $ 223,707 $ 340,861
Adjustments to reconcile to net cash
provided
by operations
Depreciation and amortization 434,811 373,819
Deferred income taxes 27,149 17,365
Amortization of long-term debt discount 27,182 24,490
Gain on marketable securities (101,465) (36,147)
transactions
Extraordinary loss on debt repurchase 15,324 -
Other 130,528 656
Changes in operating assets and
liabilities
Receivables 133,582 (247,083)
Inventories (342,484) (113,793)
Prepaid expenses 15,585 (80,585)
Accounts payable and accrued expenses 186,267 (34,706)
________ ________
Total Operating Activities 750,186 244,877
Investing Activities
Purchases of property, plant and equipment (552,185) (517,729)
Net assets of businesses acquired (61,326) (359,510)
Investments in and advances to affiliates (121,461) (307,793)
Purchases of marketable securities (546,089) (932,833)
Proceeds from sales of marketable 1,001,631 749,096
securities
________ ________
Total Investing Activities (279,430) (1,368,76
9)
Financing Activities
Long-term debt borrowings 84,127 441,464
Long-term debt payments (77,710) (18,821)
Net borrowings under line of credit 68,987 709,790
agreements
Purchases of treasury stock (233,998) (42,135)
Cash dividends and other (84,509) (80,753)
________ ________
Total Financing Activities (243,103) 1,009,545
________ ________
Increase (Decrease) in Cash and Cash 227,653 (114,347)
Equivalents
Cash and Cash Equivalents Beginning of 346,325 397,788
Period
________ ________
Cash and Cash Equivalents End of Period $ 573,978 $ 283,441
======== ========
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.Basis of Presentation
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 nine months ended March 31, 1999 are not
necessarily indicative of the results that may be
expected for the year ending June 30, 1999. 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, 1998.
Note 2.New Accounting Standards
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 annual 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.
The Company has not yet determined the financial
statement disclosure impact of SFAS 131.
In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards
Number 133 (SFAS 133) "Accounting for Derivative
Instruments and Hedging Activities." This statement,
which is required to be adopted for annual periods
beginning after June 15, 1999, establishes standards for
recognition and measurement of derivatives and hedging
activities. The Company has not yet determined the
financial statement impact of SFAS 133.
Note 3. Per Share Data
All references to share and per share information have
been adjusted for the 5 percent stock dividend paid
September 21, 1998.
7
PAGE 8
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4.Comprehensive Income
As of July 1, 1998, the Company adopted Statement of Financial
Accounting Standards Number 130 (SFAS 130) "Reporting
Comprehensive Income." SFAS 130 establishes standards for the
reporting and display of comprehensive income and its
components. SFAS 130 requires foreign currency translation
adjustments and unrealized gains or losses on the Company's
available-for-sale marketable securities to be included in
"other comprehensive income." Prior to the adoption of SFAS
130, the Company reported such adjustments and unrealized gains
or losses as components of reinvested earnings. Amounts in
prior year financial statements have been reclassified to
conform to SFAS 130. Comprehensive income (net income plus
other comprehensive income) was $(169) million and $48 million
for the quarter ended March 31, 1999 and 1998, respectively.
Comprehensive income was $20 million and $252 million for the
nine months ended March 31, 1999 and 1998, respectively.
Note 5. Other Income (Expense)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
__________________ __________________
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Investment income $ 26,922 $ 32,782 $ 83,333 $ 86,586
Interest expense (86,230) (80,274) (250,769 (208,027
) )
Gain (loss) on marketable
securities transactions (546) - 101,139 36,150
Equity in earnings of 13,741 (5,919) 2,551 21,035
affiliates
Other (1,131) 3,579 (1,105) 7,048
______ ______ ______ ______
$(47,244 $(49,832 $(64,851 $
) ) ) (57,208)
====== ====== ====== ======
</TABLE>
8
PAGE 9
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6.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 in fiscal 1997, the
Company paid the United States fines 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. The federal grand jury in the
Northern District of Illinois (lysine) has been closed.
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. These actions
and proceedings generally involve claims for unspecified
compensatory damages, fines, costs, expenses and unspecified
relief. The Company intends 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 $48 million in fiscal 1998,
$200 million in fiscal 1997 and $31 million in fiscal 1996 to
cover the fines, 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, certain other
proceedings, and the related costs and expenses associated with
the litigation described above. 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.
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 NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1999 1999
1998 1998
---------------- ----------------
--- -
(In millions) (In millions)
<S> <C> <C> <C>
Oilseed products $1,997 $2,726 $6,636 $7,622
Corn products 429 542 1,417 1,633
Wheat and other milled 330 358 1,044 1,138
products
Other products and 622 654 1,994 1,669
services
----- ----- ----- -----
$3,378 $4,280 $11,091 $12,062
===== ===== ===== =====
</TABLE>
Net sales and other operating income decreased 21 percent to
$3.4 billion for the quarter and decreased 8 percent for the
nine months to $ 11.1 billion due principally to decreases in
average selling prices of 13 percent and 10 percent,
respectively. Sales of oilseed products decreased 27 percent to
$2 billion for the quarter and decreased 13 percent to $6.6
billion for the nine months due primarily to lower average
selling prices reflecting the lower cost of raw materials. Sales
volumes of oilseed products also decreased for both the quarter
and nine months as weak demand from Asia and Eastern Europe for
both protein meals and vegetable oils as well as new industry
production capacity has more than offset good domestic demand
for oilseed products. For both the quarter and nine months,
these decreases were partially offset by sales attributable to
recently acquired operations. Sales of corn products decreased
21 percent for the quarter and 13 percent for the nine months as
lower average selling prices for the Company's alcohol and amino
acid products more than offset the increase in average selling
price of the Company's sweetener products. Low gasoline prices
have negatively affected average sales prices of fuel alcohol.
Excess production capacity in the amino acid industry as well as
low protein meal and corn prices have depressed selling prices
of the Company's amino acid products to historically low levels.
Sales volumes of both the Company's alcohol and sweetener
products have also decreased for both the quarter and the nine
months. Sales of wheat and other milled products decreased 8
percent for both the quarter and the nine months due principally
to lower average selling prices reflecting the lower cost of raw
materials. The decrease in other products and services for the
quarter was due primarily to lower average selling prices for
the Company's feed and cocoa products reflecting the lower cost
of raw materials. For the nine months, the increase in sales of
other products and services was due principally to the Company's
recently acquired feed and cocoa businesses as well as increased
grain merchandising and transportation revenues.
10
PAGE 11
Cost of products sold and other operating costs decreased $757
million for the quarter to $3.1 billion and decreased $853
million for the nine months to $10.1 billion due primarily to
lower average raw material costs arising from an abundant world-
wide supply of agricultural commodities. For both the quarter
and nine months, these decreases were partially offset by
increased costs related to recently acquired operations.
Gross profit decreased $146 million to $239 million for the
quarter and decreased $118 million to $954 million for the nine
months as lower average raw material costs were more than offset
by lower average selling prices. These decreases were partially
offset by gross profit attributable to recently acquired
operations and to increased grain merchandising and
transportation margins.
Selling, general and administrative expenses decreased $54
million for the quarter to $174 million due principally to
decreased legal and litigation related costs. For the nine
months, selling, general and administrative expenses increased
$23 million to $523 million due primarily to $76 million of
expenses attributable to recently acquired operations. This
increase was partially offset by a decline in on-going expenses,
principally legal and litigation related costs.
Other expense decreased $3 million to $47 million for the
quarter as increased equity in earnings of unconsolidated
affiliates more than offset lower investment income, due to
decreased invested funds, and higher interest expense, due to
increased borrowing levels. For the nine months, other expense
increased $8 million to $65 million due primarily to increased
interest expense due to higher average borrowing levels and to
decreased equity in earnings of unconsolidated affiliates due
primarily to lowered valuations of the Company's private equity
fund investments. Partially offsetting this increased expense
for the nine months were gains on marketable securities
transactions.
The decrease in income taxes for the quarter and nine months
resulted primarily from lower pretax earnings. The Company's
effective income tax rate for the quarter and nine months was 35
percent compared to an effective rate of 34 percent for the
comparable periods of a year ago.
During the second quarter of the fiscal year, the Company
incurred an extraordinary charge, net of tax, of $15 million
resulting from the repurchase of a portion of its 7 percent
debentures due May 2011.
Liquidity and Capital Resources
At March 31, 1999, the Company continued to show substantial
liquidity with working capital of approximately $1.8 billion.
Capital resources remained strong as reflected in the Company's
net worth of $6.3 billion. The Company's ratio of long-term debt
to total capital at March 31, 1999 was approximately 29%.
Subsequent to March 31, 1999, the Company issued $300 million of
6 5/8% Debentures due in 2029.
As described in Note 6 to the unaudited consolidated financial
statements, various grand juries 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 11
PAGE 12
corn syrup. In connection with an agreement with the DOJ in
fiscal 1997, the Company paid the United States fines 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 described in Note 6 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 has made provisions of $48 million in fiscal 1998,
$200 million in fiscal 1997 and $31 million in fiscal 1996 to
cover the fines, 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, certain other
proceedings, and the related costs and expenses associated with
the litigation described above. 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.
Year 2000 Issues
Readiness
The Company's centralized corporate business and technical
information systems have been fully assessed as to year 2000
compliance and functionality. Presently, these systems are
nearly complete with respect to required software changes,
tests, and migration to the production environment. The
Company's internal business and technical information system
year 2000 compliance issues are substantially remediated. Any
remaining remediation is expected to occur during 1999.
The Company has satisfactorily completed the identification and
review of computer hardware and software suppliers and is in the
process of verifying year 2000 preparedness of general business
partners, suppliers, vendors, and/or service providers that the
Company has identified as critical. This verification process is
expected to be completed by the third quarter of 1999.
Cost
The total historical or anticipated remaining costs for year
2000 remediation activity are not material.
Risks and Contingency Plans
Considering the substantial progress made to date, the Company
does not anticipate delays in finalizing internal year 2000
remediation within remaining time schedules. However, third
parties having a material relationship with the Company may be a
potential risk based on their
12
PAGE 13
individual year 2000 preparedness which may not be within the
Company's reasonable control. The Company is in the process of
identifying and reviewing the year 2000 preparedness of critical
third parties. This identification and review process is
expected to be completed by the third quarter of 1999.
Pending the results of that review, the Company will then
determine what course of action and contingencies may need to be
made.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
There were no material changes during the quarter ended
March 31, 1999.
13
PAGE 14
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
In 1993, the State of Illinois Environmental Protection
Agency ("Illinois EPA") brought administrative enforcement
proceedings arising out of the Company's alleged failure to
obtain proper permits for certain pollution control
equipment at two of the Company's processing facilities in
Illinois. The Company and Illinois EPA executed settlement
agreements with respect to both of these proceedings. One
of the settlements has now been concluded and the Company
paid a penalty of $75,000. The other agreement is
currently before the Illinois Pollution Control Board for
approval. In 1998, the Illinois EPA filed an
administrative enforcement proceeding arising out of
certain alleged permit exceedances relating to one of the
Company's production facilities located in Illinois. Also
in 1998, the Company voluntarily reported to the Illinois
EPA certain permit exceedances relating to another Illinois
production facility operated by the Company. Also in 1998,
the State of Illinois filed a civil administrative action
alleging violations of the Illinois Environmental
Protection Act, and regulations promulgated thereunder,
arising from a one time release of denatured ethanol at one
of its Illinois distribution facilities. In management's
opinion the settlements and the remaining proceedings, all
seeking compliance with applicable environmental permits
and regulations, will not, either individually or in the
aggregate, have a material adverse affect on the Company's
financial condition or results of operations.
The United States Environmental Protection Agency ("USEPA")
filed a civil administrative action in September 1998
seeking a $240 thousand civil penalty for violations of
Section 16(a) of the Toxic Substances Control Act, 15
U.S.C. 2601, et seq. ("TSCA"), which requires persons who
annually manufacture or import certain chemicals for
commercial purposes to file reports with USEPA every four
years. USEPA alleged that the Company's reports were not
timely filed. ADM and USEPA reached a settlement requiring
the appropriate reports to be filed. That settlement has
now been concluded without any penalty being imposed, and
the reports have been filed.
The Company is involved in approximately 30 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 affect on the
Company's financial condition or results of operations.
LITIGATION REGARDING ALLEGED ANTICOMPETITIVE PRACTICES
14
PAGE 15
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 in fiscal 1997, the Company paid the
United State fines 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 federal grand jury in
the Northern District of Illinois (lysine) has been closed.
The Company has received notice that certain foreign
governmental entities were commencing investigations to
determine whether anticompetitive practices occurred in
their jurisdictions. Except for the investigations being
conducted by the Commission of the European Communities and
the Mexican Federal Competition Commission as described
below, all such matters have been resolved as previously
reported. In June 1997, the Company and several of its
European subsidiaries were notified that the Commission of
the European Communities had initiated an investigation as
to possible anticompetitive practices in the amino acid
markets, in particular the lysine market, in the European
Union. On October 29, 1998, the Commission of the European
Communities initiated formal proceedings against the
Company and others and adopted a Statement of Objections.
The reply of the Company was filed on February 1, 1999 and
the hearing was held on March 1, 1999. 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 in the European Union.
In November 1998, a European subsidiary of 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 sodium gluconate market in the European Union. On
February 11, 1999 a Mexican subsidiary of the Company was
notified that the Mexican Federal Competition Commission
had initiated an investigation as to possible
anticompetitive practices in the citric acid market in
Mexico. The ultimate outcome and materiality of the
proceedings of the Commission of the European Communities
cannot presently be determined. The Company may become the
subject of similar antitrust investigations conducted by
the applicable regulatory authorities of other countries.
15
PAGE 16
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.
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
16
PAGE 17
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). 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. The parties are in the midst of discovery in the
coordinated 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 the action
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 one putative class action
antitrust suit alleging 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 seeking an injunction
against continued alleged illegal conduct, damages of an
unspecified amount, attorneys fees and costs, and other
unspecified relief. The putative class in this action
comprises certain indirect purchasers of lysine in the
State of Alabama during certain periods in the 1990s. This
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. On March 13, 1998, the court denied plaintiff's
motion for class certification. Subsequently, the
plaintiff amended his complaint to add approximately 300
individual plaintiffs.
17
PAGE 18
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 the action specifically
described below, all such suits have been settled or
dismissed.
STATE ACTIONS. The Company, along with other companies,
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.
HIGH FRUCTOSE CORN SYRUP/CITRIC ACID STATE CLASS ACTIONS
The Company, along with other companies, has been named as
a defendant in five 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. As noted in prior
filings, the Company accepted a settlement agreement with
counsel for the citric acid plaintiff class. This
settlement received final court approval and the case was
dismissed on September 30, 1998. The Company, along with
other companies, also has been named as a defendant in at
least one putative class action antitrust suit filed 18
PAGE 19
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 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. On November 13, 1998,
Plaintiff's motion for class certification was granted.
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. Plaintiff's
motion for class certification is currently pending.
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
19
PAGE 20
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 three 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 second
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 third action, which was
amended on February 12, 1998 to name the Company as a
defendant, was filed in the United States District Court
for the Northern District of Illinois. On April 9, 1998,
the Judicial Panel on Multidistrict Litigation transferred
all three sodium gluconate actions to the United States
District Court for the Northern District of California for
coordinated or consolidated pretrial proceedings. On
October 29, 1998, the Company executed a Settlement
Agreement with counsel for the plaintiff class in which,
20
PAGE 21
among other things, the Company agreed to pay $69,600 to
the plaintiff class. On March 15, 1999, plaintiffs moved
the court for preliminary approval of the settlement.
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. On January 21, 1998 the
Court of Appeals dismissed the appeal. On January 20, 1999,
the judgement of the Court of Appeals was affirmed by an
equally divided United States Supreme Court. On February
17, 1999, the Delaware court dismissed the case.
OTHER
The Company has made provisions to cover certain legal
proceedings and related costs and expenses as described in
the notes to the unaudited consolidated financial
statements and management's discussion of
21
PAGE 22
operations and financial condition. 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 unaudited consolidated financial
statements.
22
PAGE 23
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(3)(i) Articles of Incorporation
Composite Certificate of Incorporation filed
on November 7, 1986 as Exhibit 3(a) to Post
Effective Amendment No. 1 to Registration
Statement on Form S-3, Registration No. 33-
6721, is incorporated herein by reference.
(3)(ii) Bylaws, as Amended
and Restated
(27) Financial Data Schedules
b) A Form 8-K was not filed during the
quarter ended March 31,
1999.
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: May 14, 1999
23
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 573,978
<SECURITIES> 278,238
<RECEIVABLES> 1,867,436
<ALLOWANCES> 0
<INVENTORY> 3,008,085
<CURRENT-ASSETS> 5,880,646
<PP&E> 11,031,415
<DEPRECIATION> 5,495,173
<TOTAL-ASSETS> 13,945,828
<CURRENT-LIABILITIES> 4,093,075
<BONDS> 2,900,280
0
0
<COMMON> 4,750,970
<OTHER-SE> 1,499,938
<TOTAL-LIABILITY-AND-EQUITY> 13,945,828
<SALES> 11,091,086
<TOTAL-REVENUES> 11,091,086
<CGS> 10,137,197
<TOTAL-COSTS> 10,137,197
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 250,769
<INCOME-PRETAX> 366,223
<INCOME-TAX> 127,192
<INCOME-CONTINUING> 239,031
<DISCONTINUED> 0
<EXTRAORDINARY> (15,324)
<CHANGES> 0
<NET-INCOME> 223,707
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
</TABLE>
PAGE 1
Exhibit 3 (ii)
BYLAWS
of
Archer-Daniels-
Midland Company
(giving effect to all amendments
through April 28, 1999)
ADM
PRINTED MAY 1999
BYLAWS
OF
ARCHER-DANIELS-MIDLAND COMPANY
(Giving Effect to All Amendments through April 28, 1999)
ARTICLE 1.
MEETINGS OF STOCKHOLDERS.
SECTION 1. Annual Meeting of Stockholders. The annual meeting of
stockholders of the Corporation shall be held at the offices of
the Corpora-
tion in the City of Decatur, Illinois on the third Thursday of
October (or if
this is a legal holiday, on the next business day) in each year at
2:00 P.M. or
at such other place, date or hour stated in the notice of the
meeting as the
Board of Directors may determine.
SECTION 2. Special Meetings of Stockholders. Special meetings of
the
stockholders of the Corporation may be held upon the call of the
Board of
Directors, of the Executive Committee, if one is selected, or of
the Presi-
dent, and shall be called by the President or the Secretary at the
request in
writing of stockholders owning a majority in amount of the capital
stock of
the Corporation entitled to vote at the meeting. Such meetings
shall be held
at such time and at such place within or without the State of
Delaware as
may be stated in the notice of the meeting.
SECTION 3. Notice of Stockholders' Meetings. At least 10 days'
writ-
ten notice of every meeting of the stockholders of the Corporation
shall be
mailed to each stockholder of record and entitled to vote at the
meeting, at
his address appearing upon the books of the Corporation, and in
case of
special meetings the business transacted thereat shall be confined
to the ob-
jects stated in the notice of meeting and matters related thereto.
SECTION 4. Waiver of Notice of Stockholders' Meetings. Meetings
of
stockholders of the Corporation may be held without notice if all
stockholders entitled to vote thereat are present in person or by
proxy or if
notice is waived by those not present.
SECTION 5. Quorum. A majority in interest of all stockholders of
the
1
PAGE 2
Corporation entitled to vote, represented in person or by proxy,
shall con-
stitute a quorum at any meeting of the stockholders. If there be
no such
quorum a majority in interest of those present or represented may
adjourn
the meeting from time to time.
SECTION 6. Judges of Election. For all meetings of stockholders
of the
Corporation, two Judges of Election shall be appointed by the
directors or
if the directors fail to do so then by the meeting, which Judges
shall have
charge of the polls and after the balloting shall make a
certificate of the
result of votes cast. No candidate for the office of director
shall be ap-
pointed as a Judge of Election.
SECTION 7. Conduct of Stockholders' Meetings. Meetings of the
stockholders shall be presided over by the Chairman of the Board,
or if he is
not present, by the President, or in his absence, a Vice
President; provided,
however, if none of the foregoing is present, the meetings of the
stockholders shall be presided over by a chairman to be elected by
the
meeting. At each meeting of the stockholders every stockholder
having the
right to vote shall be entitled to vote in person or by proxy
appointed by an
instrument in writing, subscribed by such stockholder and bearing
a date
not more than three years prior to said meeting, unless said
instrument pro-
vides for a longer period. Each stockholder shall have one vote
for each
share of stock having voting power registered in his name on the
books of
the Corporation, except that no share of stock shall be voted on
at any elec-
tion for Directors which has been transferred on the books of the
Corpora-
tion within 20 days next preceding such election. The vote for
Directors,
and upon the demand of any stockholder the vote upon any question
before
the meeting, shall be by ballot. All elections shall be determined
and all
questions decided by vote of a majority of a quorum.
A complete list of the stockholders entitled to vote at every
election, ar-
ranged in alphabetical order, shall be prepared and made by the
Secretary
and filed in the office where the election is to be held at least
10 days before
every election. Such list shall at all times during the usual
hours for business
be open to the examination of any stockholders, and shall be
produced and
kept at the time and place of election during the whole time
thereof and sub-
ject to the inspection of any stockholder who may be present.
SECTION 8. The Board of Directors shall have the right, power and
authority to fix in advance a date, not exceeding 60 days
preceding the date
of any meeting of stockholders, or the date for the payment of any
divi-
dend, or the date for the allotment of rights, or the date when
any change or
conversion or exchange of capital stock shall go into effect, or a
date in con-
nection with obtaining such consent, as a record date for the
determination
of the stockholders entitled to notice of, and to vote at any such
meeting
and any adjournment thereof, or entitled to receive payment of any
such
dividend or to any such allotment of rights or to exercise the
rights in
respect of any such change, conversion or exchange of capital
stock, or to
give such consent, and in such cases, stockholders and only such
stockholders as shall be stockholders of record on the date so
fixed shall be
entitled to such notice of and to vote at such meetings and any
adjournment
thereof or to receive payment of such dividend or to receive such
allotment
of rights or to exercise such rights, or to give such consent, as
the case may
be, notwithstanding any transfer of any stock on the books of the
corpora-
tion after any such record date fixed as aforesaid.
2
PAGE 3
ARTICLE II.
BOARD OF DIRECTORS.
SECTION 1. Number of Directors. The business and property of the
Corporation are to be managed and controlled by a Board of
Directors. The
number of Directors which shall constitute the whole Board shall
be such
number, not more than 21 and not less than 7, as may from year to
year be
determined at each annual meeting of stockholders. It shall not be
necessary
to be a stockholder in order to be a Director. The number of
Directors may
be increased or decreased, but not below the number required by
law, and
this Bylaw correspondingly amended, by the vote of the holders of
a majori-
ty in interest of all of the stock entitled to vote and issued and
outstanding,
at a meeting of stockholders called pursuant to these Bylaws, if
notice of the
proposed increase or reduction is contained in the notice of the
meeting.
SECTION 2. Election of Directors. Directors shall be elected at
the an-
nual meeting of the stockholders of the Corporation by vote of a
majority
of a quorum, and, except as provided in the Certificate of
Incorporation of
the Corporation, shall hold office until the next annual meeting
of the
stockholders and until their successors have been duly elected.
SECTION 3. Vacancies in the Board of Directors. Any vacancy in
the
Board of Directors, including any vacancy caused by an increase in
the
number of Directors, shall be filled by a majority of the
Directors then in
office, though less than a quorum, and the Directors so chosen
shall, except
as provided in the Certificate of Incorporation of the
Corporation, hold of-
fice until the next annual meeting of the stockholders of the
Corporation
and until their successors shall be duly elected.
SECTION 4. Meetings of the Board of Directors. The Directors may
hold their meetings and have one or more offices and keep the
books of the
Corporation, except the original or duplicate stock ledger,
outside the State
of Delaware, at such place or places as they may from time to time
deter-
mine.
The annual meeting of the Board of Directors shall be held as soon
as
practicable after the adjournment of the annual meeting of the
stockholders
of the Corporation, and such meeting may be held without notice im-
mediately after the annual meeting of the stockholders, at the
same place at
which such meeting was held.
Regular meetings of the Board of Directors may be held at such
times and
at such places, either within or without the State of Delaware, as
may be fix-
ed, from time to time, by resolution of the Board of Directors;
and in case a
time and a place for such regular meetings are so fixed, it shall
not be
necessary to give notice of regular meetings of the Board of
Directors.
Special meetings of the Board of Directors may be held at any time
upon
call of the President, of the Executive Committee, if chosen, or
of any three
Directors, at the time and place specified in the call.
SECTION 5. Notice of Directors' Meetings. Oral, telegraphic or
written
notice of every meeting of the Board of Directors (except as
hereinbefore
specified in respect to the annual and regular meetings) shall be
served on,
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PAGE 4
sent or mailed to each Director not less than five days before
such meeting,
but meetings of the Board may be held at any time without notice
if all the
Directors are present or if those not present waive notice of the
meeting in
writing or by telegraph or cable.
SECTION 5a. Compensation. Each director who is not a salaried of-
ficer or employee of the Corporation shall be paid such
compensation for
his services as director or as a member of any committee appointed
by the
Board of Directors as the Board of Directors may from time to time
deter-
mine and each director, whether or not a salaried officer or
employee of the
Corporation, shall be reimbursed for such transportation and other
ex-
penses as shall be incurred by him in the performance of his
duties.
SECTION 6. Quorum of the Board of Directors. A majority of the
Board of Directors shall constitute a quorum for the transaction
of
business, and the act of a majority of the Directors present at
any meeting at
which there is a quorum shall be the act of the Board of
Directors, except as
may be otherwise specifically required by statute or by the
Certificate of In-
corporation or by these Bylaws.
SECTION 7. Board Structure and Policies. The Board of Directors
shall
have appropriate structures and policies to ensure that the Board
acts at all
times in the best interests of the Company and its shareholders.
The Com-
pany looks to independent directors to provide an independent view
of the
performance of the Company and its management. Accordingly, to
ensure
the highest standards of independent judgment and accountability,
a major-
ity of the Board shall be comprised of independent directors.
Independent Director Defined. An "independent director" means a
director who:
(a) is neither a current employee nor a former member of Senior
Man-
agement of the Company or an Affiliate;
(b) is not employed by a provider of professional services to the
Com-
pany;
(c) does not have any business relationship with the Company,
either
personally or through a company of which the director is an
officer or a con-
trolling shareholder, that is material to the Company or to the
director;
(d) does not have a close family relationship, by blood, marriage
or
otherwise with any member of Senior Management of the Company or
one
of the Company's Affiliates;
(e) is not an officer of a company of which the Company's chairman
or
chief executive officer is also a board member;
(f) is not personally receiving compensation from the Company in
any
capacity other than as a director; or
(g) does not personally receive or is not an employee of a
foundation,
university, or other institution that receives grants or
endowments from the
Company, that are material to the Company or to either the
recipient and/or
the foundation, university, or institution.
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PAGE 5
Management and the Board. The Chief Executive Officer should be a
mem-
ber of the Board of Directors. In order to ensure the greatest
number of
independent directors on a board of manageable size, other direct
manage-
ment representation should be kept to a minimum and should in no
event
exceed two other management directors.
The Board of Directors shall make clear to Senior Management of
the Com-
pany that board membership is neither necessary to their present
positions
nor a prerequisite to a higher management position in the Company.
Atten-
dance of management staff at Board Meetings should be at the
discretion of
the Chairman but should be encouraged by the Board. The Board
shall have
full and direct access to members of Senior Management and should
be
encouraged to request reports directly to the Board by any member
of
Senior Management. Board members should use judgment in dealings
with
management so that they do not distract management from the
business
operations of the Company.
Conflicts of Interest. A director's personal financial or family
relationships
may occasionally give rise to that director's material personal
interest in a
particular issue. There will be times when a director's material
personal
interest in an issue will limit that director's ability to vote on
that issue. The Governance Committee of the Board of Directors
shall determine whether
such a conflict of interest exists on a case-by-case basis,
including the deter-
mination as to materiality under items (c) and (g) of this Section
7. The
Governance Committee shall take appropriate steps to identify such
poten-
tial conflicts and to ensure that a majority of the directors
voting on an issue
are both disinterested and independent with respect to that issue.
A determination by the Governance Committee on any issue of
indepen-
dence or conflict of interest shall be final and not subject to
review.
"Senior Management" includes the chief executive, chief operating,
chief
financial, chief legal and chief accounting officers, president,
vice presi-
dent(s), treasurer, secretary and the controller of the Company.
"Affiliate" includes any person or entity which, alone or by
contractual
obligation, owns or has the power to vote more than twenty-five
(25) per-
cent of the equity interest in another, unless some other person
or entity act-
ing alone or with another by contractual obligation owns or has
the power
to vote a greater percentage of the equity interest. A subsidiary
is consid-
ered an affiliate if it is at least eighty (80) percent owned by
the Company
and accounts for at least twenty-five (25) percent of the
Company's con-
solidated sales or assets.
ARTICLE III.
COMMITTEES OF THE BOARD OF DIRECTORS.
SECTION 1. Executive Committee. The Board of Directors may in
each
year elect from their number an Executive Committee to Consist of
such
number of Directors (not less than three) as the Board may from
time to
time determine. The Board of Directors shall have power at any
time to
change the number of the Executive Committee, and may fill
vacancies in
the Committee by election from the members of the Board of
Directors.
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PAGE 6
SECTION 2. Powers of Executive Committee. When the Board of Dir-
ectors is not in session, the Executive Committee, if chosen,
shall have and
may exercise the powers of the Board of Directors in the
management of the
business and affairs of the Corporation, and shall have power to
authorize
the seal of the Corporation to be affixed to all papers which may
require it.
All action of the Executive Committee, if chosen, shall be
reported to the
Board of Directors at its meeting next succeeding such action,
provided,
however, that such report need not be made to the Board of
Directors if
prior to such meeting copies of the written minutes of the
meetings of the
Executive Committee at which such action has been taken shall have
been
mailed or delivered to all members of the Board of Directors.
The Executive Committee shall fix its own rules of procedure and
shall
meet when and as provided by such rules or by resolution of the
Board of
Directors, but in every case the presence of a majority of the
Executive
Committee shall be necessary to constitute a quorum, provided,
however, in
the event of a national emergency rendering it impractical for a
majority of
the Executive Committee to meet, only two members of the Executive
Com-
mittee shall be necessary to constitute a quorum.
SECTION 3. Other Committees. The Board of Directors may appoint
other committees, which shall have and may exercise such powers as
shall be
conferred or authorized by the resolutions appointing them. A
majority of
any such committee composed of more than two members shall
constitute a
quorum, and may determine its action and may fix the time and
place of its
meetings.
ARTICLE IV.
OFFICERS.
SECTION 1. Election of Officers. The Board of Directors, at their
an-
nual meeting and as soon as may be after their election in each
year, may
elect from their number a Chairman of the Board, and shall elect a
Presi-
dent of the Corporation, and may also, from time to time,
designate and
elect a Chief Executive, elect one or more Vice Presidents, a
Secretary, a
Controller, a Treasurer, one or more Assistant Secretaries and one
or more
Assistant Treasurers, and, from time to time, may appoint such
other of-
ficers, agents and employees as they may deem necessary. The same
person
may be elected or appointed to one or more offices, except as
provided by
statute.
The Board of Directors in their discretion may elect or appoint a
Vice
President and an Assistant Secretary or an Assistant Treasurer,
whose
authority, which shall be specified at the time of their election
or in the
resolution appointing them, shall be confined to the execution of
cer-
tificates of stock of the Corporation.
SECTION 2. Term of Office of Officers. The term of office of all
of-
ficers shall extend from the date of their election or appointment
to the next
annual meeting of the Directors of the Corporation and until their
suc-
cessors are elected or appointed, subject to the provisions of the
Certificate
of Incorporation for the earlier termination thereof. If any
office becomes
vacant by reason of death, resignation, removal or other cause,
the Board
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PAGE 7
of Directors may choose a successor or successors, who shall hold
office
during the unexpired term in respect of which such vacancy
occurred.
SECTION 3. General Powers of Officers. In general, the officers
of the
Corporation shall have such powers and duties as generally pertain
to their
offices respectively, as well as such powers and duties as, from
time to time,
shall be conferred or imposed upon them by the Board of Directors
or the
Executive Committee, if chosen.
ARTICLE V.
SIGNATURE OF INSTRUMENTS FOR THE PAYMENT OF MONEY.
SECTION 1. Signature of Checks, etc. All checks and drafts on
the
bank accounts of the Corporation, and all bills of exchange and
promissory
notes, and all acceptances, obligations and other instruments for
the pay-
ment of money shall be signed by such officer or officers, or
agent or
agents, as shall be thereunto authorized, from time to time, by
the Board of
Directors or the Executive Committee, if chosen.
ARTICLE VI.
SHARES OF STOCK.
SECTION I. Issue and Transfer of Shares of Stock. The interest of
each
stockholder of the Corporation shall be evidenced by a certificate
or cer-
tificates of shares of stock in such form as the Board of
Directors may,
from time to time, prescribe. Such shares of stock shall be
transferable or
assignable on the books of the Corporation by the respective
holders in per-
son or by attorney, on surrender of the certificate or
certificates therefor
properly endorsed.
No certificate shall be valid unless it is executed by the persons
designated
by the Board of Directors in accordance with the Statutes of the
State of
Delaware, and unless countersigned and registered in such manner,
if any,
as the Board of Directors shall by resolution prescribe.
The transfer books of the Company, at the option of the Board of
Direc-
tors, may be closed for a period not exceeding 50 days preceding
the date of
any meeting of stockholders, or the date for payment of any
dividend, or
the date for the allotment of rights, or the date when any change
or conver-
sion or exchange of capital stock shall go into effect, or for any
other pur-
pose. In lieu of the closing of the transfer books, the Board of
Directors
may fix in advance a date, not exceeding 50 days preceding the
date of any
meeting of stockholders, or the date for the payment of any
dividend, or the
date for the allotment of rights, or the date when any change,
conversion or
exchange of capital stock shall go into effect, as a record date
for the deter-
mination of the stockholders entitled to notice of, and to vote
at, any such
meeting, or entitled to receive payment of any such dividend, or
to any such
allotment of rights, or to exercise the rights in respect of any
such change,
conversion or exchange of capital stock.
SECTION 2. Lost Certificates. Any person claiming a certificate
of
stock to be lost, stolen or destroyed, shall make an affidavit or
affirmation
of that fact and shall advertise the same in such manner as the
Board of
Directors or the Executive Committee, if chosen, may require, and
shall, if
7
PAGE 8
the Board of Directors or Executive Committee, if chosen, shall so
require,
give the Corporation a bond of indemnity in form and with one or
more
sureties satisfactory to the Board of Directors or the Executive
Committee,
if chosen, and to the Transfer Agent and the Registrar, if
appointed, in an
amount satisfactory to the Corporation, to indemnify the
Corporation and
the Transfer Agent and the Registrar, if appointed, against any
claim that
may be made against them or any of them, and thereupon the Board
of
Directors or the Executive Committee, if chosen, may in their
discretion
issue a new certificate of the same tenor and for the same number
of shares
as the certificate or certificates alleged to have been lost,
destroyed or
stolen.
ARTICLE VII.
FISCAL YEAR.
SECTION 1. Fiscal Year. The fiscal year of the Corporation shall
begin
on the first day of July each year and shall end on the succeeding
30th day
of June.
ARTICLE VIII.
CORPORATE SEAL.
SECTION 1. Seal. The corporate seal of the Corporation shall have
in-
scribed thereon the name of the Corporation, the year of its
organization,
and the words "Corporate Seal, Delaware" arranged in such manner
as the
Directors shall approve.
ARTICLE IX.
AMENDMENT OF BYLAWS.
SECTION 1. Amendment of Bylaws. The Bylaws of the Corporation may
be amended, added to, rescinded or repealed (1) at any meeting of
the
Board of Directors by the affirmative vote of a majority of all of
the Direc-
tors, if notice of the proposed change is contained in the notice
of the
meeting, or (2) by the stockholders of the Corporation at any
meeting, by
the vote of the holders of a majority in interest of all of the
stock of the Corporation entitled to vote, present either in
person or by proxy, at any such
meeting, if notice of the proposed change is contained in the
notice thereof.
Bylaws made by the Board of Directors may be altered, amended,
rescinded
or repealed by the stockholders. No change of the time or place
for the an-
nual meeting of the stockholders for the election of Directors
shall be made
except in accordance with the statutes of the State of Delaware in
such case
made and provided.
ARTICLE X.
INDEMNIFICATION OF DIRECTORS, OFFICERS OR OTHER
PERSONS.
As used in this Bylaw, the term "Corporation" means Archer-Daniels-
Midland Company and the term "pertinent corporation" means the cor-
poration, partnership, joint venture, trust or other enterprise of
which the
person is or was a director, officer, employee or agent.
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PAGE 9
SECTION 1. The Corporation shall indemnify any person who was or
is
a party or is threatened to be made a party to any threatened,
pending or
completed action, suit or proceeding, whether civil, criminal,
administrative
or investigative (other than an action by or in the right of the
pertinent cor-
poration) by reason of the fact that he is or was a director or
officer of the
Corporation, or is or was serving at the request of the
Corporation as a
director or officer of another corporation, partnership, joint
venture, trust
or other enterprise against expenses (including attorneys' fees),
judgments,
fines and amounts paid in settlement actually and reasonably
incurred by
him in connection with such action, suit, or proceeding if he
acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the
best interest of the pertinent corporation, and, with respect to
any criminal
action or proceeding, has no reasonable cause to believe his
conduct was
unlawful. The termination of any action, suit or proceeding by
judgment,
order, settlement, conviction, or upon a plea of nolo contendere
or its
equivalent, shall not, of itself, create a presumption that the
person did not
act in good faith and in a manner which he reasonably believed to
be in or
not opposed to the best interests of the pertinent corporation,
and, with
respect to any criminal action or proceeding, had reasonable cause
to
believe that his conduct was unlawful.
SECTION 2. The Corporation shall indemnify any person who was or
is
a party or is threatened to be made a party to any threatened,
pending or
completed action or suit by or in the right of the pertinent
corporation to
procure a judgment in its favor by reason of the fact that he is
or was a
director or officer of the corporation, or is or was serving at
the request of
the Corporation as a director or officer of another corporation,
partner-
ship, joint venture, trust or other enterprise, against expenses
(including at-
torneys' fees) actually and reasonably incurred by him in
connection with
the defense or settlement of such action or suit if he acted in
good faith and
in a manner he reasonably believed to be in or not opposed to the
best in-
terest of the pertinent corporation and except that no
indemnification shall
be made in respect of any claim, issue or matter as to which such
person
shall have been adjudged to be liable to the pertinent corporation
unless and
only to the extent that the Court of Chancery of the State of
Delaware or
the court in which such action or suit was brought shall determine
upon ap-
plication that despite the adjudication of liability but in view
of all the cir-
cumstances of the case, such person is fairly and reasonably
entitled to in-
demnity for such expenses which such Court of Chancery or such
other
court shall deem proper.
SECTION 3. To the extent that a director or officer has been
successful
on the merits or otherwise in defense of any action, suit or
proceeding refer-
red to in sections (1) or (2) of this Bylaw, or in defense of any
claim, issue or
matter therein, he shall be indemnified against expenses
(including at-
torneys' fees) actually and reasonably incurred by him in
connection
therewith.
SECTION 4. Any indemnification under sections (1) or (2) of this
Bylaw
(unless ordered by a court) shall be made by the Corporation only
upon a
determination that indemnification of the director or officer is
proper in the
circumstances because he has met the applicable standards of
conduct set
forth in said sections (1) and (2). Such determination shall be
made (1) by
9
PAGE 10
the Board of Directors of the Corporation by a majority vote of a
quorum
consisting of directors who were not parties to such action, suit
or pro-
ceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable, a
quorum of disinterested directors so directs, by independent legal
counsel
(who may be regular counsel for the Corporation or pertinent
corporation)
in a written opinion, or (3) by the stockholders of the
Corporation.
SECTION 5. Expenses incurred by any person who may have a right
of
indemnification under this Bylaw in defending a civil or criminal
action,
suit or proceeding may be paid by the Corporation in advance of
the final
disposition of such action, Suit or proceeding upon receipt of an
undertak-
ing by or on behalf of such person, to repay such amount if it
shall ultimate-
ly be determined that he is not entitled to be indemnified by the
Corporation
pursuant to this Bylaw.
SECTION 6. The indemnification and advancement of expenses provid-
ed by, or granted pursuant to, this Bylaw are in addition to and
independent
of and shall not be deemed exclusive of any other rights to which
any person
may be entitled under any certificate of incorporation, articles
of incorpora-
tion, articles of association, by law, agreement, vote of
stockholders or
disinterested directors, or otherwise, both as to action in his
official capaci-
ty and as to action in another capacity while holding such office,
and shall
continue as to a person who has ceased to a director or officer
and shall in-
ure to the benefit of the heirs, executors and administrators of
such a per-
son; provided, that any indemnification realized other than under
this
Bylaw shall apply as a credit against any indemnification provided
by this
Bylaw.
SECTION 7. The Corporation may purchase and maintain insurance
on
behalf of any person who is or was a director, officer, employee
or agent of
the Corporation, or is or was serving at the request of the
Corporation as a
director, officer, employee or agent of another corporation,
partnership,
joint venture, trust or other enterprise, against any liability
asserted against
him and incurred by him in any such capacity, or arising out of
his status as
such, whether or not the Corporation would have the power to
indemnify
him against such liability under the provisions of this Bylaw or
of applicable
law, if and whenever the Board of Directors of the Corporation
deems it to
be in the best interest of the Corporation to do so.
SECTION 8. For the purposes of this Bylaw and indemnification
hereunder, any person who is or was a director or officer of any
other cor-
poration of which the Corporation owns or controls or at the time
owned or
controlled directly or indirectly a majority of the shares of
stock entitled to
vote for election of directors of such other corporation shall be
conclusively
presumed to be serving or to have served as such director or
officer at the re-
quest of the Corporation.
SECTION 9. The Corporation may provide indemnification under this
Bylaw to any employee or agent of the Corporation or of any other
cor-
poration of which the Corporation owns or controls or at the time
owned or
controlled directly or indirectly a majority of the shares of
stock entitled to
vote for election of directors or to any director, officer,
employee or agent
of any other corporation, partnership, joint venture, trust or
other enter-
prise in which the Corporation has or at the time had an interest
as an
10
PAGE 11
owner, creditor or otherwise, if and whenever the Board of
Directors of the
Corporation deems it in the best interest of the Corporation to do
so.
SECTION 10. The Corporation may, to the fullest extent permitted
by
applicable law from time to time in effect, indemnify any and all
persons
whom the Corporation shall have power to indemnify under said law
from
and against any and all of the expenses, liabilities or other
matters referred
to in or covered by said law, if and whenever the Board of
Directors of the
Corporation deems it to be in the best interest of the Corporation
to do so.
11
