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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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 - 607,167,224 shares
(January 31, 2000)
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PART I - FINANCIAL INFORMATION
ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
1999
1998
----------------------
---
(In thousands, except
per share amounts)
<S> <C> <C>
Net sales and other operating income $3,420,34
6 $3,911,5
39
Cost of products sold and other
operating 3,014,073
costs 3,490,20
9
_________
________
_
Gross Profit 406,273
421,330
Selling, general and administrative 199,476
expenses 182,246
_________
________
_
Earnings From Operations 206,797
239,084
Other expense (53,534)
(69,191)
_________
________
_
Earnings Before Income Taxes and
Extraordinary Loss 153,263
169,893
Income taxes 51,343
59,459
_________
________
_
Earnings Before Extraordinary 101,920
Loss 110,434
Extraordinary loss, net of tax, on
debt -
repurchase (15,324)
_________
________
_
Net Earnings $ 101,9 $ 95,11
20 0
========= =========
Average number of shares outstanding 608,772 623,259
Basic and diluted earnings per common
share
Before extraordinary loss $.17 $.1
7
Extraordinary loss on debt - (.0
repurchase 2)
____
____
After Extraordinary Loss $.17 $.1
5
==== ====
Dividends per common share $.05 $.04
8
</TABLE>
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1999
1998
----------------------
---
(In thousands, except
per share amounts)
<S> <C> <C>
Net sales and other operating income $6,641,32
6 $7,712,9
60
Cost of products sold and other
operating 5,962,733
costs 6,997,99
4
_________
________
_
Gross Profit 678,593
714,966
Selling, general and administrative 370,211
expenses 349,062
_________
________
_
Earnings From Operations 308,382
365,904
Other expense (100,433)
(17,607)
_________
________
_
Earnings Before Income Taxes and
Extraordinary Loss 207,949
348,297
Income taxes 69,662
121,008
_________
________
_
Earnings Before Extraordinary 138,287
Loss 227,289
Extraordinary loss, net of tax, on
debt -
repurchase (15,324)
_________
________
_
Net Earnings $ 138,2 $ 211,96
87 5
========= =========
Average number of shares outstanding 609,990 625,141
Basic and diluted earnings per common
share
Before extraordinary loss $.23 $.3
6
Extraordinary loss on debt - (.0
repurchase 2)
____
____
After Extraordinary Loss $.23 $.3
4
==== ====
Dividends per common share $.098 $.09
4
</TABLE>
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
------------------------
-----
(In thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 571,561 $ 681,378
Marketable securities 420,764 222,191
Receivables 2,236,800 1,922,163
Inventories 3,066,596 2,732,694
Prepaid expenses 204,041 231,162
___________ ___________
Total Current Assets 6,499,762 5,789,588
Investments and Other Assets
Investments in and advances to 1,733,347 1,484,980
affiliates
Long-term marketable securities 685,814 779,916
Other assets 475,972 408,236
___________ ___________
2,895,133 2,673,132
Property, Plant and Equipment
Land 167,816 163,607
Buildings 2,083,288 1,949,211
Machinery and equipment 8,640,358 8,384,865
Construction in progress 520,516 675,870
Less allowances for depreciation (5,895,607) (5,606,392)
___________ ___________
5,516,371 5,567,161
___________ ___________
$14,911,266 $14,029,881
=========== ===========
</TABLE>
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
------------------------
----
(In thousands)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $1,621,002 $1,241,369
Accounts payable 2,450,301 2,004,396
Accrued expenses 632,223 567,593
Current maturities of long-term debt 30,464 26,907
__________ __________
Total Current Liabilities 4,733,990 3,840,265
Long-term Debt 3,273,176 3,191,883
Deferred Credits
Income taxes 586,425 619,752
Other 138,584 137,341
__________ __________
725,009 757,093
Shareholders' Equity
Common stock 5,018,320 5,081,320
Reinvested earnings 1,497,648 1,419,321
Accumulated other comprehensive income (336,877) (260,001)
(loss)
__________ __________
6,179,091 6,240,640
__________ __________
$14,911,266 $14,029,881
========== ==========
</TABLE>
See notes to consolidated financial statements.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1999
1998
-------------------------
-----
(In thousands)
<S> <C> <C>
Operating Activities
Net earnings $ 138,287 $ 211,965
Adjustments to reconcile to net cash
provided by
operations
Depreciation and amortization 302,677 285,517
Deferred income taxes 9,416 25,757
Amortization of long-term debt discount 20,980 17,535
(Gain) loss on marketable securities
transactions (12,677) (101,674)
Extraordinary loss on debt repurchase - 15,324
Other 64,977 99,455
Changes in operating assets and
liabilities
Receivables (325,538) 134,012
Inventories (338,151) (448,298)
Prepaid expenses 27,192 (8,065)
Accounts payable and accrued expenses 502,527 294,532
________ ________
Total Operating Activities 389,690 526,060
Investing Activities
Purchases of property, plant and equipment (255,055) (359,797)
Net assets of businesses acquired (6,670) (60,316)
Investments in and advances to affiliates, (241,983) (91,378)
net
Purchases of marketable securities (595,620) (377,995)
Proceeds from sales of marketable 396,943 774,179
securities
Increase in other assets (50,000) -
________ ________
Total Investing Activities (752,385) (115,307)
Financing Activities
Long-term debt borrowings 103,548 83,020
Long-term debt payments (43,874) (65,509)
Net borrowings (payments) under line of
credit 378,050 (103,848)
agreements
Purchases of treasury stock (124,911) (137,445)
Cash dividends and other (59,935) (56,939)
________ ________
Total Financing Activities 252,878 (280,721)
________ ________
Increase (Decrease) in Cash and Cash (109,817) 130,032
Equivalents
Cash and Cash Equivalents Beginning of 681,378 346,325
Period
________ ________
Cash and Cash Equivalents End of Period $ 571,561 $ 476,357
======== ========
</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 and six months ended December 31, 1999 are
not necessarily indicative of the results that may be
expected for the year ending June 30, 2000. 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, 1999.
Note 2.New Accounting Standards
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, 2000, 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 20, 1999.
Note 4.Comprehensive Income (Loss)
Comprehensive income (loss) was $(5) million and $171
million for the quarter ended December 31, 1999 and
1998, respectively. Comprehensive income was $61 million
and $188 million for the six months ended December 31,
1999 and 1998, respectively.
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ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Note 5. Other Expense
Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Investment income $ 31,237 $ 27,274 $ 62,084 $ 56,411
Interest expense (99,519) (84,512) (184,958) (164,539)
Net gain on
marketable 6,685 1,972 12,677 101,685
securities
transactions
Equity in earnings
(losses) of 5,634 (15,032) 5,474 (11,190)
affiliates
Other 2,429 1,107 4,290 26
_______ _______ _______ _______
$(53,534 $(69,191 $(100,43 $
) ) 3) (17,607)
======= ======= ======= =======
</TABLE>
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 juries in the Northern Districts of
Illinois (lysine) and Georgia (high fructose corn syrup)
have 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,
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 of $21 million in fiscal
1999, $48 million in fiscal 1998 and $200 million in
fiscal 1997 to cover the fines, litigation settlements
related to the federal lysine class action, federal
securities class action, the federal citric class
action, the federal sodium gluconate class action, and
certain state actions filed by indirect purchasers of
lysine, certain actions filed by parties that opted out
of the class action
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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.
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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>
Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
(in millions) (in millions)
<S> <C> <C> <C> <C>
Oilseed products $1,873
$2,314 $3,700 $4,639
Corn products 520 475 980 988
Wheat and other milled 359 353 720 714
products
Other products and 668 770
services 1,241 1,372
_____
_____ _____ _____
$3,420
$3,912 $6,641 $7,713
===== =====
===== =====
</TABLE>
Net sales and other operating income decreased 13 percent to
$3.4 billion for the quarter and decreased 14 percent to $6.6
billion for the six months due principally to decreases in
average selling prices of 12 percent and 15 percent,
respectively. Sales of oilseed products decreased 19 percent to
$1.9 billion for the quarter and decreased 20 percent to $3.7
billion for the six months due primarily to lower average
selling prices reflecting the lower cost of raw materials. In
addition, sales volumes of oilseed products decreased for both
the quarter and six months due to weak demand from Asia for both
protein meals and vegetable oils. Sales of corn products
increased 9 percent for the quarter due principally to an
increase in sales volume of the Company's fuel alcohol as there
was good demand from existing sales markets and expansion into
new markets. Corn products sales for the quarter also increased
due to higher average selling prices of the Company's amino acid
products. Sales of corn products decreased 1 percent for the
six months due principally to decreases in sales volumes of the
Company's sweetener, amino acid and citric acid products as
excess industry production capacities resulted in difficult
market conditions. These decreases were partially offset by
increased sales volumes of the Company's alcohol products and
higher average selling prices of the Company's sweetener
products. Sales of wheat and other milled products increased 2
percent to $359 million for the quarter and increased 1 percent
to $720 million for the six months as sales attributable to
recently acquired operations more than offset slight decreases
in average selling prices. The decreases in sales of other
products and services for both the quarter and six months were
due principally to decreased sales volumes of the Company's
cocoa and formula feed products and to lower average selling
prices of cocoa products. These decreases were partially
offset by increased grain merchandising revenues.
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Cost of products sold and other operating costs decreased $476
million to $3 billion for the quarter and decreased $1 billion
to $6 billion for the six months due primarily to lower average
raw material costs arising from an abundant world-wide supply of
agricultural commodities and, to a lesser extent, lower sales
volumes.
Gross profit decreased $15 million to $406 million for the
quarter and decreased $36 million to $679 million for the six
months due principally to selling price declines exceeding
declines in lower average raw material costs and, to a lesser
extent, lower volumes of products sold. These decreases were
partially offset by gross profit attributable to increased grain
merchandising margins.
Selling, general and administrative expenses increased $17
million for the quarter to $199 million and increased $21
million for the six months to $370 million due primarily to
increased salary-related costs associated with facility closures
and consolidations, increased bad debt expense and expenses
attributable to recently acquired operations. These increases
were partially offset by decreased advertising expenses.
Other expense decreased $16 million for the quarter to $54
million due principally to increased equity in earnings of
unconsolidated affiliates resulting primarily from higher
valuations of the Company's private equity funds. This increase
was partially offset by increased interest expense due to higher
average borrowing levels. Other expense increased $83 million
for the six months to $100 million due principally to decreased
gains on marketable securities transactions.
The decrease in income taxes for the quarter and six months
resulted primarily from lower pretax earnings. The Company's
effective income tax rate for the quarter was 33.5% compared to
an effective rate of approximately 35% for the comparable
periods of a year ago.
During the second quarter of fiscal 1999, the Company incurred
an extraordinary charge, net of tax, of $15 million resulting
from the repurchase of a portion of its outstanding 7%
debentures due may 2011.
Liquidity and Capital Resources
At December 31, 1999, the Company continued to show substantial
liquidity with working capital of $1.8 billion. Capital
resources remained strong as reflected in the Company's net
worth of $6.2 billion. The Company's ratio of long-term debt to
total capital at December 31, 1999 was approximately 32%.
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
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,
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sodium gluconate, and securities, and certain state actions
filed by indirect purchasers of lysine. The Company has made
provisions of $21 million in fiscal 1999, $48 million in fiscal
1998 and $200 million in fiscal 1997 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
The Company satisfactorily completed its year 2000 readiness
work. Since entering the year 2000, the Company has not
experienced any major disruptions to its business nor is it
aware of any significant year 2000-related disruptions impacting
its customers or suppliers. The Company will continue to monitor
its critical systems over the next several months but does not
anticipate any significant impacts due to year 2000 exposures
from its internal systems or from the activities of its
suppliers and customers. Costs incurred to achieve year 2000
readiness were not material.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
There were no material changes during the quarter ended
December 31, 1999.
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 an 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 Violations 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, the Company voluntarily reported to the
Illinois EPA certain other permit exceedances and in 1999
Illinois EPA issued a Notice of Violation relating to those
exceedances from another process at that same facility. 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. Also in 1998, the
State
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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.
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
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 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. On
August 8, 1999, the Commission of the
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PAGE 14
European Communities adopted a supplementary Statement of
Objections expanding the period of involvement as to certain
other companies. 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.
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 currently appealing certain
discovery rulings to the United States Court of Appeals for the
Seventh Circuit.
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
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fructose corn syrup, and seek treble damages of an unspecified
amount, attorneys fees and costs, restitution and other
unspecified relief. One of the California putative classes
comprises certain direct purchasers of high fructose corn syrup
in the State of California during certain periods in the 1990s.
This action was filed on October 17, 1995 in Superior Court for
the County of Stanislaus, California and encaptioned Kagome
Foods, Inc. v Archer-Daniels-Midland Co. et al., Civil Action
No. 37236. This action has been removed to federal court and
consolidated with the federal class action litigation pending
in the Central District of Illinois referred to above. The
other six California putative classes comprise certain indirect
purchasers of high fructose corn syrup and dextrose in the
State of California during certain periods in the 1990s. One
such action was filed on July 21, 1995 in the Superior Court of
the County of Los Angeles, California and is encaptioned
Borgeson v. Archer-Daniels-Midland Co., et al., Civil Action
No. BC131940. This action and four other indirect purchaser
actions have been coordinated before a single court in
Stanislaus County, California under the caption, Food Additives
(HFCS) cases, Master File No. 39693. The other four actions are
encaptioned, Goings v. Archer Daniels Midland Co., et al.,
Civil Action No. 750276 (Filed on July 21, 1995, Orange County
Superior Court); Rainbow Acres v. Archer Daniels Midland Co.,
et al., Civil Action No. 974271 (Filed on November 22, 1995,
San Francisco County Superior Court); Patane v. Archer Daniels
Midland Co., et al., Civil Action No. 212610 (Filed on January
17, 1996, Sonoma County Superior Court); and St. Stan's Brewing
Co. v. Archer Daniels Midland Co., et al., Civil Action No.
37237 (Filed on October 17, 1995, Stanislaus County Superior
Court). 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-three putative class action antitrust suits
involving the sale of lysine. 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
15
PAGE 16
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 certain
indirect purchases 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.
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. Except for the action specifically described below,
all such suits have been settled or dismissed.
CITRIC
CANADIAN ACTIONS. The Company, along with other companies, has
been named as a defendant in two 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
16
PAGE 17
million, interest, costs and fees. The other 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, 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 in 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.
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
17
PAGE 18
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 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
18
PAGE 19
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 eight putative class action antitrust suits
involving the sale of monosodium glutamate and/or other food
flavor enhancers.
FEDERAL ACTIONS. Six 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 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). Various motions have been filed with
the Judicial Panel on Multidistrict Litigation requesting that
these actions be consolidated and coordinated for pretrial
discovery, and argument on these motions was held on January
29, 2000.
19
PAGE 20
STATE ACTION. The Company, along with at least one other
company, also has been named as a defendant in two 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 class in
this action comprises 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.
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 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.
Item 4. Submission of matters to a vote of Security
Holders:
The Annual Meeting of Shareholders was held on
October 21, 1999. Proxies for the Annual Meeting were
solicited pursuant to Regulation 14. There was no
solicitation in opposition to the Board of Director
nominees as listed in the proxy statement and all of
such nominees were elected as follows:
Nominee Shares Cast
Shares
For
Withheld
D. O. Andreas 506,391,046 14,457,198
G. O. Coan 509,452,163 11,396,081
G. A. Andreas 507,354,809 13,493,435
J. K. Vanier 508,947,907 11,900,337
A. Young 509,089,375 11,758,869
R. Burt 509,461,058 11,387,186
O. G. Webb 509,497,556 11,350,688
F. Ross Johnson 508,406,457 12,441,787
R. S. Strauss 508,621,359 12,226,885
M. B. Mulroney 507,877,002 12,971,242
J. R. Block 509,321,281 11,526,963
M. H. Carter 509,553,356 11,294,888
D. J. Mimran 509,398,384 11,449,860
20
PAGE 21
There were no abstentions or broker non-votes
regarding the election of directors.
The appointment by the Board of Directors of Ernst & Young
LLP as Independent Accountants to audit the accounts of the
Company for the fiscal year ending June 30, 2000 was ratified as
follows:
For 514,035,168
Against 4,670,138
Abstain 2,142,938
The Incentive Compensation Plan was approved as follows:
For 473,801,869
Against 41,414,588
Abstain 5,631,787
The Stockholder's Proposal relative to cumulative voting
was defeated as follows:
For 153,732,154
Against 279,422,076
Abstain 14,499,457
21
PAGE 22
The Stockholder's Proposal relative to a post-meeting
report was defeated as follows:
For 22,992,506
Against 415,794,287
Abstain 8,866,894
The Stockholder's Proposal relative to confidential voting
was defeated as follows:
For 205,054,406
Against 233,445,036
Abstain 9,154,245
Item 6. Exhibits and Reports on Form 8-K
a)Exhibits
(3)(i) Articles of Incorporation
Composite Certificate of Incorporation, as
amended, filed on September 22, 1999 as Exhibit
(3)(i) to Form 10K for the year ended June 30,
1999, is incorporated herein by reference.
(3)(ii)Bylaws, as amended and restated, filed on May
14, 1999 as
Exhibit (3)(ii) to Form 10Q for the quarter
ended March 31, 1999, are incorporated herein by
reference.
(27) Financial Data Schedules
b)A Form 8-K was not filed during the quarter ended
December 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: February 11, 2000
22
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<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
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