23
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 September 30, 2000
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 - 633,223,369 shares
(October 31, 2000)
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PART I - FINANCIAL INFORMATION
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
THREE MONTHS ENDED
SEPTEMBER 30
2000 1999
(In thousands,
except
per share amounts)
Net sales and other operating income $4,634,78 $4,611,26
4 6
Cost of products sold and other operating 4,350,876 4,338,946
costs
_________ _________
_ _
Gross Profit 283,908 272,320
Selling, general and administrative expenses 169,323 170,735
_________ _________
_ _
Earnings From Operations 114,585 101,585
Other income (expense) 1,604 (46,899)
_________ _________
_ _
Earnings Before Income Taxes 116,189 54,686
Income taxes 6,760 18,319
_________ _________
_ _
Net Earnings $ $
109,429 36,367
= = = = = = = = = =
= =
Average number of shares outstanding 632,582 641,768
Basic and diluted earnings per common share $.17 $.06
Dividends per common share $.048 $.046
</TABLE>
See notes to consolidated financial statements.
2
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER JUNE 30,
30,
2000 2000
(In thousands)
ASSETS
Current Assets
Cash and cash equivalents $ $
523,170 477,226
Marketable securities 388,159 454,223
Receivables 2,281,250 2,139,896
Inventories 2,736,077 2,856,884
Prepaid expenses 261,242 234,138
__________ __________
Total Current Assets 6,189,898 6,162,367
Investments and Other Assets
Investments in and advances to 1,957,277 1,876,633
affiliates
Long-term marketable securities 619,517 617,633
Other assets 495,411 489,386
__________ __________
3,072,205 2,983,652
Property, Plant and Equipment
Land 161,424 163,722
Buildings 2,053,508 2,098,124
Machinery and equipment 8,662,467 8,702,639
Construction in progress 429,231 416,546
Less allowances for depreciation (6,132,027) (6,103,950
)
__________ __________
5,174,603 5,277,081
__________ __________
$14,436,706 $14,423,10
0
= = = = = = = = = = =
= = =
</TABLE>
See notes to consolidated financial statements.
3
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER JUNE 30,
30,
2000 2000
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 1,281,778 $
1,550,571
Accounts payable 2,214,981 2,139,744
Accrued expenses 737,550 610,735
Current maturities of long-term debt 31,485 31,895
__________ __________
Total Current Liabilities 4,265,794 4,332,945
Long-term Debt 3,298,169 3,277,218
Deferred Credits
Income taxes 582,514 560,772
Other 144,216 141,922
__________ __________
726,730 702,694
Shareholders' Equity
Common stock 5,238,821 5,232,597
Reinvested earnings 1,404,354 1,325,323
Accumulated other comprehensive loss (497,162) (447,677)
__________ __________
6,146,013 6,110,243
__________ __________
$14,436,706 $14,423,10
0
= = = = = = = = = = =
= = =
</TABLE>
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
<C>
THREE MONTHS ENDED
SEPTEMBER 30,
2000 1999
(In thousands)
Operating Activities
Net earnings $ 109,429 $ 36,367
Adjustments to reconcile to net cash
provided by operations
Depreciation and amortization 147,431 148,581
Deferred income taxes (6,558) 3,132
Amortization of long-term debt 11,717 10,261
discount
(Gain) loss on marketable securities 25,710 (5,992)
transactions
Other (22,465) 34,772
Changes in operating assets and
liabilities
Receivables (164,591) (174,695)
Inventories 92,069 (75,275)
Prepaid expenses (28,817) (25,242)
Accounts payable and accrued 223,168 342,981
expenses
_________ _________
Total Operating Activities 387,093 294,890
Investing Activities
Purchases of property, plant and (76,740) (148,743)
equipment
Net assets of businesses acquired (3,129) 104
Investments in and advances to (36,508) (89,651)
affiliates, net
Purchases of marketable securities (127,204) (341,544)
Proceeds from sales of marketable 204,783 161,489
securities
_________ _________
Total Investing Activities (38,798) (418,345)
Financing Activities
Long-term debt borrowings 25,000 1,414
Long-term debt payments (11,580) (9,362)
Net borrowings (payments) under line of (267,844) 259,659
credit agreements
Purchases of treasury stock (17,502) (63,417)
Cash dividends and other (30,425) (29,505)
_________ _________
Total Financing Activities (302,351) 158,789
_________ _________
Increase (Decrease) in Cash and Cash 45,944 35,334
Equivalents
Cash and Cash Equivalents Beginning of 477,226 681,378
Period
_________ _________
Cash and Cash Equivalents End of Period $ 523,170 $ 716,712
= = = = = = = = = = = =
</TABLE>
See notes to consolidated financial statements.
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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 ended September 30, 2000 are not necessarily
indicative of the results that may be expected for the
year ending June 30, 2001. 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, 2000.
Note 2. New Accounting Standards
Effective July 1, 2000, the Company adopted Statement of
Financial Accounting Standards Number 133 (SFAS 133),
"Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 establishes standards for
recognition and measurement of derivatives and hedging
activities. As a result of this adoption, the Company
recorded in the first quarter of fiscal 2001 the
cumulative effect of change in accounting principle to
other comprehensive income (loss) of $(32 million), net
of a $19 million tax benefit, for derivatives which hedge
the variable cash flows of certain forecasted
transactions. The fair value of these derivative
instruments was previously classified in inventory.
Effective July 1, 2000, the Company adopted Emerging
Issues Task Force Issue 99-19, "Reporting Revenue Gross
as a Principal Versus Net as an Agent". The adoption of
this issue results in the Company reporting the total
sales value of grain merchandised, in lieu of net margins
from grain merchandised, in the "Net sales and operating
income" category. The "Gross profit" category is
unchanged as costs related to the grain merchandised are
now reported in the "Cost of products sold and other
operating costs" category. Prior year amounts have been
reclassified to conform to this change.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3.Inventory and Related Contracts
To reduce price risk caused by market fluctuations, the
Company generally follows a policy of using exchange-
traded futures contracts to minimize its net position of
merchandisable agricultural commodity inventories,
forward cash purchase and sale contracts, and certain
related value-added products. Inventories of
merchandisable agricultural commodities and certain
related value-added products are stated at market value.
Exchange-traded futures contracts, forward cash purchase
contracts and forward cash sale contracts are valued at
market price as required for derivative contracts by SFAS
133. Changes in the market value of inventories of
merchandisable agricultural commodities, certain value-
added products, forward cash purchase and sale contracts
and exchange-traded futures contracts are recognized in
earnings immediately. Unrealized gains on forward cash
purchase contracts, forward cash sale contracts and
exchange-traded futures contracts are classified on the
Company's balance sheet as receivables. Unrealized
losses on forward cash purchase contracts, forward cash
sale contracts and exchange-traded futures contracts are
classified on the Company's balance sheet as accounts
payable.
In addition, the Company from time to time will hedge
portions of its production requirements. The instruments
used are readily marketable exchange-traded futures
contracts, which are designated as cash flow hedges. The
changes in the market value of such futures contracts has
historically been, and is expected to continue to be,
highly effective at offsetting changes in price movements
of the hedged item. Gains and losses arising from open
and closed hedging transactions are deferred in other
comprehensive income, net of applicable taxes, and
recognized in the statement of earnings when the finished
goods produced from the hedged item are sold.
The Company also values certain inventories using the
last-in, first-out (LIFO) and first-in, first-out (FIFO)
method.
Note 4. Per Share Data
All references to share and per share information have
been adjusted for the 5 percent stock dividend paid
September 25, 2000.
Note 5.Comprehensive Income
Comprehensive income was $92 million and $67 million for
the quarters ended September 30, 2000 and 1999,
respectively.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
<S <C> <C>
Note 6.Other Income (Expense)
THREE MONTHS ENDED
SEPTEMBER 30
2000 1999
(In thousands)
Investment income $ 36,318 $ 30,847
Interest expense (101,200) (85,439)
Net gain (loss) on marketable (25,710) 5,992
securities transactions
Equity in earnings (losses) of 85,156 (160)
affiliates
Other 7,040 1,861
_________ _________
$ 1,604 $
(46,899)
= = = = = = = = = =
</TABLE>
Note 7.Antitrust Investigation and Related Litigation
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,
sodium gluconate, monosodium glutamate 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 to cover the fines,
litigation settlements and costs related to certain of
the aforementioned suits and proceedings. 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.
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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>
<S> <C> <C>
THREE MONTHS ENDED
September 30,
2000 1999
(in millions)
Oilseed products $1,682
$1,827
Grain Merchandised 1,625
1,442
Corn products 519 460
Wheat and other milled 332 361
products
Other products and 477
services 521
$4,635
$4,611
</TABLE>
Net sales and other operating income increased 1 percent to $4.6
billion for the quarter. Sales of oilseed products decreased 8
percent to $1.7 billion for the quarter due primarily to
decreased sales volumes and, to a lesser extent, to lower average
selling prices. The decrease in sales volume is principally a
result of permanently closing several oilseed crushing facilities
as well as indefinitely closing several other facilities. Record
vegetable oil stocks continue to put downward pressure on
vegetable oil selling prices. Sales of merchandised grain
increased 13 percent for the quarter to $1.6 billion due
principally to increased sales volumes attributable to South
American operations and to newly-established Latin American
merchandising offices. Lower average selling prices of grain
merchandised partially offset these volume increases. Sales of
corn products increased 13 percent to $519 million for the
quarter due primarily to increased sales volumes and higher
average selling prices of the Company's fuel alcohol arising from
good demand from existing sales markets, expansion into new
markets and to higher gasoline prices.These increases more than
offset decreases in sales volume and average selling price of the
Company's sweetener products as cool and wet weather hurt sales
in the soft drink industry and thus impacted the demand for
sweetener products. Sales of wheat and other milled products
decreased 8 percent to $332 million for the quarter due to both
decreased sales volumes and lower average selling prices relating
to flat growth in the demand for the products, customer
consolidations and industry production overcapacity. The decrease
in sales of other products and services was due primarily to
lower average selling prices of the Company's cocoa products
reflecting the lower cost of raw materials
Cost of products sold and other operating costs increased $12
million to $4.4 billion primarily due to increased volumes of
grain merchandised and to higher manufacturing costs resulting
principally from increases in energy and fuel related costs.
These increases were partially offset by lower average raw
material costs and to lower sales volumes of processed products.
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Gross profit increased $12 million to $284 million for the
quarter due primarily to increased grain merchandising margins
and to declines in average raw material costs compared to
unchanged average selling prices. These increases in gross
profit were partially offset by lower volumes of products sold
and higher manufacturing costs due principally to increases in
energy and fuel related costs.
Selling, general and administrative expenses decreased $1 million
for the quarter to $169 million.
Other income (expense) increased $49 million to $2 million for
the quarter due principally to increased equity in earnings of
unconsolidated affiliates. This increase resulted primarily from
a gain of $95 million representing the Company's equity share of
the gain reported by the Company's unconsolidated affiliate,
Compagnie Industrelle et Financiere des Produits Amylaces SA
(CIP), upon the sale of its interests in wet corn milling and
wheat starch production businesses. This increase was partially
offset by realized losses on marketable securities transactions
and by increased interest expense due principally to higher short-
term borrowing rates.
Income taxes decreased for the quarter primarily due to lower
pretax earnings, excluding the gain from the aforementioned CIP
transaction. No taxes have been provided on the gain related to
the CIP transaction as CIP is a corporate joint venture and the
intent is to permanently reinvest the proceeds from the sale. The
Company's effective income tax rate for the quarter, excluding
the effect of the CIP transaction, was 32.5% compared to an
effective rate of 33.5% for the comparable period of a year ago.
Liquidity and Capital Resources
At September 30, 2000, the Company continued to show substantial
liquidity with working capital of $1.9 billion. Capital resources
remained strong as reflected in the Company's net worth of $6.1
billion. The Company's ratio of long-term debt to total capital
at September 30, 2000 is approximately 32%.
As described in Note 7 to the unaudited consolidated financial
statements, the Company has made provisions to cover fines,
litigation settlements and costs related to certain putative
class action antitrust suits and other proceedings. 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.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
There were no material changes during the quarter ended
September 30, 2000.
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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 one of the Company's processing facilities in
Illinois. The Company and Illinois EPA executed a
settlement agreement which is currently before the Illinois
Pollution Control Board for approval. However, in June
1999, the United States Environmental Protection Agency
(U.S. EPA) issued a Notice of Violation involving some of
the matters covered under the pending State settlement and
in January 2000 the United States Department of Justice
("DOJ") issued a Notice of Proposed Civil Enforcement Action
against the Company regarding these same matters. Further,
in 1998, the Illinois EPA filed an administrative
enforcement proceeding arising out of certain alleged permit
exceedances relating to the same facility. Also in 1998 and
2000, the Company voluntarily reported to the Illinois EPA
certain other permit exceedances related to other processes
at that same facility, and in 1999 Illinois EPA issued a
Notice of Violation relating to the exceedances disclosed in
1998. The Company understands that all pending and
threatened enforcement actions at the facility will be
consolidated into two proceedings, one to be brought by the
State which will subsume the settlement presently pending
before the Board and another to be brought by the Department
of Justice. The Company and the DOJ have agreed to a penalty
of approximately $1.5 million in settlement of the federal
action, and the Company has offered to settle the remaining
matters with the State for approximately $1.1 million. 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 January 2000
U.S. EPA issued a Notice of Violation to the Company for
another Illinois facility regarding alleged emissions
violations and the failure to obtain proper permits for
various equipment at that facility. 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.
On July 31, 2000, the federal environmental authorities in
Brazil issued an Administrative Notice upon the Company
requiring payment of approximately $5.6 million for the
discharge of an industrial wastewater from its facility
located in Rondonopolis. The Company has appealed this
penalty.
The Company is involved in approximately 25 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.
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LITIGATION REGARDING ALLEGED ANTICOMPETITIVE PRACTICES
The Company is currently a defendant in various lawsuits
related to alleged anticompetitive practices by the Company
as described in more detail below. The Company intends to
vigorously defend the actions unless they can be settled on
terms deemed acceptable to the parties.
GOVERNMENTAL INVESTIGATIONS
Federal grand juries in the Northern Districts of Illinois,
California and Georgia, under the direction of the 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 brought to a close all DOJ
investigations of the Company. The federal grand juries in
the Northern Districts of Illinois (lysine) and Georgia
(high fructose corn syrup) have 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, the
Mexican Federal Competition Commission and the Brazilian
Department of Protection and Economic Defense 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. On August 8, 1999, the
Commission of the European Communities adopted a
supplementary Statement of Objections expanding the period
of involvement as to certain other companies. On June 7,
2000, the Commission of the European Communities adopted a
decision imposing a fine against the Company in the amount
of EUR 47.3 million. The Company has appealed this
decision. 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. On March 28, 2000, the
Commission of European Communities initiated formal
proceedings against the Company and others and adopted a
Statement of Objections. The reply of the Company was filed
on June 9, 2000. 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 May 17, 2000, the Commission of European
Communities initiated formal proceedings against the Company
and others and adopted a Statement of Objections. The reply
of Company was filed on September 1, 2000. 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. On May 8, 2000, a
Brazilian subsidiary of the Company was notified of the
commencement of an administrative proceeding by the
Department of Protection and Economic Defense relative to
possible anticompetitive practices in the lysine market in
Brazil. On July 3, 2000, the Brazilian subsidiary of the
Company filed a
12
PAGE 13
Statement of Defense in this proceeding. 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.
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 in the United States.
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.
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. This action was transferred for
pretrial proceedings to the United States District Court
for the Central District of Illinois.
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.
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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 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. On March 27, 2000, defendants moved for
summary judgment in light of a recent Alabama Supreme Court
case holding that the Alabama antitrust laws apply only to
intrastate commerce. On June 28, 2000 and August 11, 2000,
plaintiffs filed amended complaints. On September 6, 2000,
defendants moved to dismiss or in the alternative to strike
plaintiffs' amended complaints. These motions are
currently pending.
LYSINE ACTIONS
The Company, along with other companies, had been named as a
defendant in twenty-three putative class action antitrust
suits involving the sale of lysine in the United States.
Except for the actions specifically described below, all
such suits have been settled, dismissed or withdrawn.
CANADIAN ACTIONS. The Company, along with other companies,
has been named as a defendant in one putative class action
antitrust suit filed in Ontario Court (General Division) in
which the plaintiffs allege the defendants reached
agreements with one another as to the price at which each of
them would sell lysine to customers in Ontario and as to the
total volume of lysine that each company would supply in
Ontario in violation of Sections 45 (1)(c) and 61(1)(b)of
the Competition Act. The putative class is comprised of
certain indirect purchasers in Ontario during the period
from June 1, 1992 to June 27, 1995. The plaintiffs seek
C$25 million for violations of the Competition Act, C$10
million in punitive, exemplary and aggravated damages,
interest and costs of the action. This action was served
upon the Company on June 11, 1999 and is encaptioned Rein
Minnema and Minnema Farms Ltd. v. Archer-Daniels-Midland
Company, et al., Court File No. G23495-99. The Company,
along with other companies, has been named as a respondent
in a motion seeking authorization to institute a class
action filed in Superior Court in the Province of Quebec,
District of Montreal, in which the applicants allege the
respondents conspired, combined, agreed or arranged to
prevent or lessen, unduly, competition with respect to the
sale of lysine in Canada in violation of Section 45(1)(c) of
the Competition Act. The putative class is comprised of
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PAGE 15
certain indirect purchasers in Quebec after June, 1992. The
applicants seek at least C$4,460,000, costs of
investigation, attorneys' fees and interest. This motion is
encaptioned Option Consommateurs, et al v. Archer-Daniels-
Midland Company, et al., Court No. 500-06-000089-991.
STATE ACTION. 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. On March 23, 2000, defendants filed a motion
for summary judgment in light of a recent Alabama Supreme
Court case holding that the Alabama antitrust laws apply
only to intrastate commerce. On August 11, 2000,
plaintiffs filed an amended complaint. On September 15,
2000, defendants moved to dismiss or in the alternative to
strike plaintiffs' amended complaint. These motions are
currently pending.
CITRIC ACID ACTIONS
The Company, along with other companies, had been named as a
defendant in fourteen putative class action antitrust suits
and two non-class action antitrust suits involving the sale
of citric acid in the United States. Except for the action
specifically described below, all such suits have been
settled or dismissed.
CANADIAN ACTIONS. The Company, along with other companies,
has been named as a defendant in three actions filed
pursuant to the Class Proceedings Act, 1992, in which the
plaintiffs allege that the defendants violated the
Competition Act with respect to the sale of citric acid in
Canada. One of these actions was filed in the Superior
Court of Justice, in Newmarket, Ontario, and encaptioned
Ashworth v. Archer-Daniels-Midland Company, et al., Court
file No. 53510/99. The putative class is comprised of
certain indirect purchasers in Ontario during the period
from July 1, 1991 to June 27, 1995. The plaintiffs in
this action seek general damages in the amount of C$30
million and punitive and exemplary damages in the amount of
C$30 million, interest, costs and fees. The second action
was filed in the Superior Court of Justice in London,
Ontario, and encaptioned Fairlee Fruit Juice Limited v.
Archer-Daniels-Midland Company, et al., Court File No.
32562/99. The plaintiffs in this action seek general
damages in the amount of C$300 million, punitive and
exemplary damages in the amount of C$20 million, interest,
costs and fees. The Company has become aware of, but has
not yet been formally served with, a third action commenced
in Barrie, Ontario in the (Ontario) Superior Court of
Justice under the Class Proceedings Act. In that action,
encaptioned E. D. Smith & Sons, Limited v. Archer Daniels
Midland Company et al., Court File No. 99-B673, the
putative class is persons or corporations who were resident
or carried on business in Ontario and who were direct and
indirect purchasers of citric acid between July 1, 1991 and
July 27, 1995. The action claims damages in the amount of
C$24,000,000 for breach of the Competition Act, conspiracy
and infliction of economic injury, plus C$10,000,000 for
punitive, exemplary and aggravated damages, plus interest
and costs. All three Ontario actions referred to above
have now been transferred to Toronto, Ontario. The Company,
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PAGE 16
along with other companies, has been named as a respondent
in a motion seeking authorization to institute a class
action filed in Superior Court in the Province of Quebec,
District of Montreal, in which the applicants allege the
respondents comprised, combined, agreed or arranged to
prevent or lessen, unduly, competition with respect to the
sale of citric acid in Canada in violation of Section
45(1)(c) of the Competition Act. The putative class is
comprised of certain indirect purchasers in Quebec since
July, 1991. The applicants seek C$3,115,000, the costs of
investigation, attorneys' fees and interest. This motion
is encaptioned Option Consommateurs, et al. v. Archer-
Daniels-Midland-Company, et al., Court No.500-06-000094-
991.
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PAGE 17
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 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
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PAGE 18
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 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.
MONOSODIUM GLUTAMATE ACTIONS
The Company, along with other companies, has been named as
a defendant in twelve putative class action antitrust suits
involving the sale of monosodium glutamate and/or other
food flavor enhancers in the United States.
FEDERAL ACTIONS. Eight 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 price of
monosodium glutamate, disodium inosinate and disodium
guanylate, 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
monosodium glutamate, disodium inosinate and/or disodium
guanylate during certain periods in
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PAGE 19
the 1990's to the present. The Company has never produced
or sold disodium inosinate or disodium guanylate. One such
action was filed on October 27, 1999 in the United States
District Court for the Northern District of California and
is encaptioned Thorp, Inc. v. Archer-Daniels-Midland
Company, et al., NoC99 4752 (VRW). The second action was
filed on October 27, 1999 in the United States District
Court for the Northern District of California and is
encaptioned Premium Ingredients, Ltd. v. Archer-Daniels-
Midland Co., et al., No. C 99 4742(MJJ). The third action
was filed on October 28, 1999 in the United States District
Court for the Northern District of California and is
encaptioned Felbro Food Products v. Archer-Daniels-Midland
Company, et al., No.C99 4761(MJJ). The fourth action was
filed on November 17, 1999 in the United States District
Court for the Northern District of California and is
encaptioned First Spice Mixing Co., Inc. v. Archer Daniels
Midland Co., et al., No. C 99 4977 (PJH). The fifth action
was filed on November 23, 1999 in the United States
District Court for the District of New Jersey and is
encaptioned Diversified Foods and Seasonings, Inc. v.
Archer Daniels Midland Co., Inc. et al., No. 99 CV 5501.
The sixth action was filed on December 16, 1999 in the
United States District Court for the Eastern District of
New York and is encaptioned M. Phil Yen, Inc. v. Ajinomoto
Co. Inc., et al., No. 99 Div 06514 (EK). The seventh action
was filed on January 27, 2000 in the Northern District of
California and is encaptioned Chicago Ingredients, Inc. v.
Archer-Daniels-Midland Co., et al., No. C 00 0308 (JL).
The eighth action was filed on April 12, 2000 in the
Eastern District of Pennsylvania and is encaptioned Heller
Seasonings & Ingredients, Inc. v. Ajinomoto U.S.A., Inc.,
et al., No. 00-CV-1905. The Judicial Panel on Multidistrict
Litigation has consolidated these actions for coordinated
pretrial discovery in the United States District Court of
the District of Minnesota.
STATE ACTION. The Company, along with at least one other
company, also has been named as a defendant in four
putative class action antitrust suits filed in California
state court involving the sale of monosodium glutamate
and/or other food flavor enhancers. These actions allege
violations of California antitrust and unfair competition
laws, including allegations that the defendants agreed to
fix, stabilize and maintain at artificially high levels the
price of monosodium glutamate and/or other food flavor
enhancers, and seek treble damages of an unspecified
amount, restitution, attorneys' fees and costs, and other
unspecified relief. The putative classes in these actions
comprise certain indirect purchasers of monosodium
glutamate and/or other food flavor enhancers in the State
of California during certain periods in the 1990's. The
first action originally was filed on June 25, 1999 in the
Superior Court of San Francisco County and in encaptioned
Fu's Garden Restaurant v. Archer-Daniels-Midland Company,
et al., Civil Action No. 304471. The second action was
filed on January 14, 2000 in the Superior Court of San
Francisco County and is encaptioned JMN Restaurant
Management, Inc. v. Ajinomoto Co., Inc., et al., Civil
Action No. 309236. The third action was filed on May 2,
2000 in the Superior Court of San Francisco County and is
encaptioned Tanuki Restaurant and Lilly Zapanta v. Archer
Daniels Midland Co., et al, Civil Action No. 311871. The
fourth action was filed on May 24, 2000 in the Superior
Court of San Francisco County and is encaptioned Tasty
Sunrise Burgers v. Archer Daniels Midland Co., et al.,
Civil Action No. 312373. On June 19, 2000, the court
consolidated all of these cases for pretrial and trial
purposes.
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 operations and financial
condition. However, because of the early stage
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PAGE 20
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.
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Item 2. Changes in Securities
In July 2000, the Board of Directors declared a 5
percent stock dividend which was paid on September 25,
2000 to shareholders of record on August 28, 2000.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
(3)(i) Composite Certificate of
Incorporation, as amended, filed as Exhibit
(3)(i) to Form 10K for the year ended June
30, 1999 (File No.1-44) is incorporated
herein by reference.
(ii) Bylaws, as amended and
restated, filed on May 12, 2000 as Exhibit
3(ii) to Form 10-Q for the quarter ended
March 31, 2000, are incorporated herein by
reference.
b) A Form 8-K was not filed during the quarter
ended September 30, 2000.
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: November 14, 2000
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