26
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-44
ARCHER-DANIELS-MIDLAND COMPANY
(Exact name of registrant as specified in its charter)
Delaware 41-0129150
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
4666 Faries Parkway Box 1470 Decatur, Illinois 62525
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code217-424-5200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, no par value New York Stock Exchange
Chicago Stock Exchange
Swiss Exchange
Tokyo Stock Exchange
Frankfurt Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant.
Common Stock, no par value--$7.3 billion
(Based on the closing price of the New York Stock Exchange on
August 23, 1999)
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Common Stock, no par value-580,565,821 shares
(August 31, 1999)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders' report for the year ended
June 30, 1999 are incorporated by reference into Parts I, II and
IV.
Portions of the annual proxy statement for the year ended June
30, 1999 are incorporated by reference into Part III.
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PART I
Item 1. BUSINESS
(a) General Development of Business
Archer Daniels Midland Company was incorporated
in Delaware in 1923, successor to the Daniels
Linseed Co. founded in 1902.
During the last five years, the Company has
experienced significant growth, spending
approximately $4.6 billion for construction of new
plants, expansions of existing plants and the
acquisitions of plants and transportation equipment.
There have been no significant dispositions during
this period. However, during this period, the
Company has disposed of its Supreme Sugar subsidiary
and its British Arkady bakery ingredient business.
In addition, the Company has contributed malting
operations, formula feed operations, rice milling
operations, Mexican wheat flour mills and masa corn
flour operations to various unconsolidated joint
ventures.
(b) Financial Information About Industry Segments
The Company is in one business segment--
procuring, transporting, storing, processing and
merchandising agricultural commodities and products.
(c) Narrative Description of Business
(i)Principal products
produced and principal markets for and methods of
distribution of such products:
The Company is
engaged in the business of procuring,
transporting, storing, processing and
merchandising agricultural commodities and
products. It is one of the world's largest
processors of oilseeds, corn and wheat. The
Company also processes cocoa beans, milo, oats,
barley and peanuts. Other operations include
transporting, merchandising and storing
agricultural commodities and products. These
operations and processes produce products which
have primarily two end uses: food or feed
ingredients. Each commodity processed is in
itself a feed ingredient as are the by-products
produced during the processing of each commodity.
Production processes of all commodities are
capital intensive and similar in nature. These
processes involve grinding, crushing or milling
with further value added through extraction,
refining and fermenting. Generally, each
commodity can be processed by any of these
methods to generate additional value-added
products.
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Item 1. BUSINESS-Continued
All commodities and related processed products
share the same network of commodity procurement
facilities, transportation services (including
rail, barge, truck and ocean vessels) and storage
facilities. The geographic areas, customers and
marketing methods are basically the same for all
commodities and their related further processed
products. Feed ingredient products and by-
products are sold to farmers, feed dealers and
livestock producers, all of whom purchase
products from across the entire commodity chain.
Food ingredient products are also sold to one
basic group of customers: food and beverage
processors. Any single customer may purchase
products produced from all commodities, and any
single food or feed product could include
ingredients produced from all commodities
processed.
Oilseed Products
Soybeans, cottonseed,
sunflower seeds, canola, peanuts, flaxseed and
corn germ are processed to provide vegetable oils
and meals principally for the food and feed
industries. Crude vegetable oil is sold "as is"
or is further processed by refining and
hydrogenating into margarine, shortening, salad
oils and other food products. Partially refined
oil is sold for use in chemicals, paints and
other industrial products. Lecithin, an
emulsifier produced in the vegetable oil refining
process, is marketed as a food and feed
ingredient. Natural source Vitamin E, an
antioxidant, and distilled monoglycerides, an
emulsifier, are produced from soybeans and other
oilseeds.
Oilseed meals supply
more than one-half of the high protein
ingredients used in the manufacture of commercial
livestock and poultry feeds. Soybean meal is
further processed into soy flour and grits, used
in both food and industrial products, and into
value-added soy protein products. Textured
vegetable protein (TVP), a soy protein product
developed by the Company, is sold primarily to
the institutional food market and, through
others, to the food consumer market. The Company
also produces a wide range of other edible soy
protein products including isolated soy protein,
soy protein concentrate, soy-based milk products,
soy flours and soy protein meat substitutes
(Harvest Burgers and Harvest Burgers for
Recipes). The Company produces and markets a wide
range of consumer and institutional health foods
based on the Company's various soy protein
products, including soy-derived isoflavones. The
Company produces cottonseed flour which is sold
primarily to the pharmaceutical industry. Cotton
cellulose pulp is manufactured and sold to the
chemical, paper and filter markets.
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Item 1. BUSINESS-Continued
Corn Products
The Company is
engaged in dry milling and wet milling corn
operations. Products produced for use by the food
and beverage industry include syrup, starch,
glucose, dextrose, crystalline dextrose, high
fructose sweeteners, crystalline fructose and
grits. Corn gluten feed and distillers grains are
produced for use as feed ingredients. Ethyl
alcohol is produced to beverage grade or for
industrial use as ethanol. In gasoline, ethanol
increases octane and is used as an extender and
oxygenate. Corn germ, a by-product of the milling
process, is further processed as an oilseed.
By fermentation of
dextrose, the Company produces citric and lactic
acids, feed-grade amino acids and vitamins,
lactates, sorbitol, xanthan gum, and food
emulsifiers principally for the food and feed
industries.
Wheat and Other Milled Products
Wheat flour is sold
primarily to large bakeries, durum flour is sold
to pasta manufacturers and bulgur, a gelatinized
wheat food, is sold to both the export and the
domestic food markets. The Company produces wheat
starch and vital wheat gluten for the baking
industry. The Company mills oats into oat bran
and oat flour for institutional and consumer food
customers. The Company also mills milo to produce
industrial flour that is used in the
manufacturing of wall board for the building
industry.
Other Products and Services
The Company buys,
stores and cleans agricultural commodities, such
as oilseeds, corn, wheat, milo, oats and barley,
for resale to other processors worldwide.
The Company grinds cocoa beans and produces cocoa
liquor, cocoa butter, cocoa powder, chocolate and
various compounds for the food processing
industry.
The Company produces
and distributes formula feeds and animal health
and nutrition products to the livestock, dairy
and poultry industries. Many of the feed
ingredients and health and nutrition products are
produced in the Company's other commodity
processing operations.
The Company produces
bakery products and mixes which are sold to the
baking industry.
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Item 1. BUSINESS--Continued
The Company produces
spaghetti, noodles, macaroni, and other consumer
food products. The Company also produces lettuce,
other fresh vegetables and herbs in its
hydroponic greenhouse.
The Company processes
and distributes edible beans for use in many
parts of the food industry.
The Company raises
fish in an aquaculture operation for distribution
to consumer food customers.
Hickory Point Bank
and Trust Co. furnishes public banking and trust
services, as well as cash management and
securities safekeeping services for the Company.
ADM Investor
Services, Inc. is a registered futures commission
merchant and a clearing member of all principal
commodities exchanges. ADM Investor Services
International, Ltd. specializes in futures,
options and foreign exchange in the European
marketplace.
Agrinational
Insurance Company acts as a direct insurer and
reinsurer of a portion of the Company's domestic
and foreign property and casualty insurance
risks.
The Company owns a
57% interest in Heartland Rail Corporation.
Heartland's 80% owned affiliate, Iowa Interstate
Railroad, operates a regional railroad in Iowa
and Illinois.
Alfred C. Toepfer
International (Germany) and affiliates, in which
the Company has a 50% interest, is one of the
world's largest, most respected trading companies
specializing in agricultural commodities and
processed products. Toepfer has forty-three sales
offices worldwide.
Compagnie
Industrielle et Financiere des Produits Amylaces
SA (Luxembourg) and affiliates, of which the
Company has a 41.5% interest, owns European
agricultural processing plants that are primarily
engaged in wet corn milling and wheat starch
production.
Gruma S.A. de C.V.
(Mexico) and affiliates, of which the Company has
a 22% interest, is the world's largest producer
and marketer of corn flour and tortillas with
operations in the U.S., Mexico and Central
America. Additionally, the Company has a 20%
interest in a joint venture which consists of the
combined U.S. corn flour operations of ADM
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and Gruma. The
Company also has a 40% share, through a joint
venture with Gruma, in seven Mexican-based wheat
flour mills.
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Item 1. BUSINESS-Continued
The Company owns a 30% non-voting equity interest
in Minnesota Corn Processors (MCP). MCP operates
wet corn milling plants in Minnesota and
Nebraska.
The Company formed a strategic alliance with
United Grain Growers of Canada (UGG) which
resulted in the Company having approximately 42%
ownership of UGG. UGG, with 173 facilities
located throughout Western Canada, is involved in
grain merchandising, crop input marketing and
distribution, livestock production services and
farm business communications.
Consolidated Nutrition, L.C., a joint venture
between the Company and Ag Processing Inc., is a
supplier of premium animal feeds and animal
health products. The Company has a 50% ownership
interest in this joint venture.
The Company has a 45% interest in Kalama Export
Company, a grain export elevator in Washington.
The Company owns a 28% interest in Acatos &
Hutchinson, a U.K. based company, that processes
and markets edible oil.
Eaststarch C.V. (Netherlands), of which the
Company has a 50% interest, operates wet corn
milling plants in Bulgaria, Hungary, Romania,
Slovakia and Turkey.
Almidones Mexicanos S.A. (Mexico), of which the
Company has a 50% interest, operates a wet corn
milling plant in Mexico.
Golden Peanut Company, a joint venture between
the Company, Gold Kist, Inc. and Alimenta
Processing Corporation, is a major supplier of
peanuts to both the domestic and export markets.
The Company has a 33 1/3% ownership interest in
this joint venture.
ADM-Riceland Partnership, a joint venture between
the Company and Riceland Foods, Inc., is a
processor of rice and rice products for
institutional and consumer food customers. The
Company has a 50% ownership interest in this
joint venture.
The Company owns a 50% interest in Sociedad
Aceitera Oriente, S.A., a Bolivian company that
is in the oilseed crushing, refining and bottling
business.
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Item 1. BUSINESS-Continued
International Malting Company, a joint venture
between the Company and the LeSaffre Company,
operates barley malting plants in the United
States, Australia, Canada and France. The Company
has a 40% ownership interest in this joint
venture.
The Company
participates in various joint ventures that
operate oilseed crushing facilities, oil
refineries and related storage facilities in
China and Indonesia.
The Company is a
limited partner in various private equity funds
which invest primarily in emerging markets that
have agri-processing potential.
The percentage of net
sales and other operating income by classes of
products and services for the last three fiscal
years were as follows:
1999 1998 1997
Oilseed products 59% 63% 64%
Corn products 13 13 16
Wheat and other
milled products 10 9 12
Other products and services 18 15 8
---- ---- ----
100% 100% 100%
==== ==== ====
Methods of Distribution
Since the Company's customers are principally
other manufacturers and processors, its products
are distributed mainly in bulk from processing
plants or storage facilities directly to the
customers' facilities. The Company owns a large
number of trucks and trailers and owns or leases
large numbers of railroad tank cars and hopper
cars to augment those provided by the railroads.
The Company uses the inland waterway systems of
North and South America and functions as a
contract carrier of commodities for its own
operations as well as for other companies. The
Company owns or leases approximately 2,250 river
barges and 52 line-haul towboats.
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Item 1. BUSINESS-Continued
(ii) Status of new products
The Company continues
to expand its business through the development
and production of new, value-added products.
These new products include a wide-range of health
and nutrition products known as nutraceuticals or
functional foods. The Company has entered the
vitamin market with the production of riboflavin
and vitamin E and is currently expanding
production facilities to produce vitamin C. The
Company continues to develop its soy protein meat
substitutes, Harvest Burgers and Harvest Burgers
for Recipes, its soy protein powdered non-dairy
beverage, Nutribev, and its non-dairy frozen
dessert, Dairylike. The Company is developing and
expanding production facilities to produce soy-
derived isoflavones, sterols, granular lecithin,
astaxathin, distilled monoglycerides and xanthan
gum. Additionally, the Company is in the early
stages of development of the antioxidants beta-
carotene and tocotrienols.
(iii) Source and availability of raw materials
Substantially all of
the Company's raw materials are agricultural
commodities. In any single year, the availability
and price of these commodities are subject to
wide fluctuations due to unpredictable factors
such as weather, plantings, government (domestic
and foreign) farm programs, international trade
policies, shifts in global demand created by
population growth, changes in standard of living
and worldwide production of similar and
competitive crops.
(iv) Patents, trademarks and licenses
The Company owns
several valuable patents, trademarks and licenses
but does not consider its business dependent upon
any single or group of patents, trademarks or
licenses.
(v) Extent to which business is seasonal
Since the Company is
so widely diversified in global agribusiness
markets, there are no material seasonal
fluctuations in the manufacture, sale and
distribution of its products and services. There
is a degree of seasonality in the growing season
and procurement of the Company's principal raw
materials: oilseeds, wheat, corn and other
grains. However, the actual physical movement of
the millions of bushels of these crops through
the Company's storage and processing facilities
is reasonably constant
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PAGE 11 throughout the year.
The worldwide need for food is not
Item 1. BUSINESS-Continued
seasonal and is ever
expanding as is the world's population.
(vi) Working capital items
Price variations and
availability of grain at harvest often cause
fluctuations in the Company's inventories and
short-term borrowings.
(vii) Dependence on single customer
No material part of
the Company's business is dependent upon a single
customer or very few customers.
(viii) Amount of backlog
Because of the nature
of the Company's business, the backlog of orders
at year end is not a significant indication of
the Company's activity for the current or
upcoming year.
(ix) Business subject to renegotiation
The Company has no
business with the government that is subject to
renegotiation.
(x) Competitive conditions
Markets for the
Company's products are highly price competitive
and sensitive to product substitution. No single
company competes with the Company in all of its
markets. However, a number of large companies
compete with the Company in one or more markets.
Major competitors in one or more markets include,
but are not limited to, Cargill, Inc., ConAgra,
Inc., Corn Products International, Inc., Eridania
Beghin-Say and Tate & Lyle.
(xi) Research and development expenditures
Practically all of
the Company's technical efforts and expenditures
are concerned with food and feed ingredient
products. Special efforts are being made to find
improvements in food technology to alleviate the
protein malnutrition throughout the world,
utilizing the three largest United States crops:
corn, soybeans and wheat.
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Item 1. BUSINESS-Continued
The need to
successfully market new or improved food and feed
ingredients developed in the Company's research
laboratories led to the concept of technical
support. The Company is staffed with technical
representatives who work closely with customers
and potential customers on the development of
food and feed products which incorporate Company-
produced ingredients. These technical
representatives are an adjunct to both the
research and sales functions.
The Company maintains
a research laboratory in Decatur, Illinois where
product and process development activities are
conducted. To develop new bioproducts and to
improve existing bioproducts, new cultures are
developed using classical mutation and genetic
engineering. Protein research is conducted at
facilities in Decatur where meat and dairy pilot
plants support application research. Starch and
amyolitic enzyme research is done at a laboratory
in Clinton, Iowa. Research to support sales and
development for bakery products is done at a
laboratory in Olathe, Kansas. Research to support
sales and development for cocoa and chocolate
products is done in Milwaukee, Wisconsin and the
Netherlands. The Company maintains research
centers in Quincy, Illinois that conduct swine
and cattle feeding trials to test new formula
feed products and to develop improved feeding
efficiencies.
The amounts spent during the three years ended
June 30, 1999, 1998 and 1997 for such technical
efforts were approximately $22.0 million, $17.1
million and $12.2 million, respectively.
(xii)Material effects of
capital expenditures for environmental protection
During 1999, $16.2
million was spent for equipment, facilities and
programs for pollution control and compliance
with the requirements of various environmental
agencies.
There have been no
material effects upon the earnings and
competitive position of the Company resulting
from compliance with federal, state and local
laws or regulations enacted or adopted relating
to the protection of the environment.
The Company expects
that expenditures for environmental facilities
and programs will continue at approximately the
present rate with no unusual amounts anticipated
for the next two years.
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Item 1. BUSINESS-Continued
(xiii) Number of employees
The number of persons
employed by the Company was 23,603 at June 30,
1999.
(d)Financial Information About Foreign and Domestic
Operations and Export Sales
The Company's foreign operations are principally in
developed countries and do not entail any undue or
unusual business risks. Geographic financial
information is set forth in "Note 10 of Notes to
Consolidated Financial Statements" of the annual
shareholders' report for the year ended June 30,
1999 and is incorporated herein by reference.
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Item 1. BUSINESS--Continued
(e) Executive Officers and Certain Significant
Employees
Name Title Age
G. Allen Andreas Chairman of the Board of
Directors 56
from January 1999. Chief
Executive
Officer from July 1997. President
from July 1997 to February 1999.
Counsel to the Executive
Committee
from September 1994 to July 1997.
Vice President from 1988 to July
1997.
Martin L. Andreas Senior Vice President from 1989.60
Assistant to the Chief Executive
from 1989.
Charles P. Archer Treasurer from October 1992. 43
Ronald S. Bandler Assistant Treasurer from January38
1998. Manager of Treasury
Operations
from 1989 to January 1998.
Lewis W. Batchelder Group Vice President from 54
July 1997. Senior Vice President
of ADM/Growmark. Various grain
merchandising positions since
1971.
Charles T. Bayless Executive Vice President from 64
July 1997. Special Assistant to
the Chief Executive Officer from
February 1999. Group Vice
President
from January 1993 to July 1997.
Howard E. Buoy Group Vice President from 73
January 1993.
William H. Camp Group Vice President and
President, 50
South American Oilseed Processing
Division from March 1999. Vice
President from April 1993 to
March
1999.
Mark J. Cheviron Vice President from July 1997.50
Vice President of Corporate
Security and Administrative
Services since May 1997. Director
of Security since 1980.
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PAGE 15
Item 1. BUSINESS-Continued
Larry H. Cunningham Group Vice President and 55
President of ADM Corn Processing
Division from October 1996.
President of ADM Food Additives
Division from October 1998.
Vice President from July 1993 to
October 1996.
Dennis C. Garceau Vice President from April 1999.52
President of ADM Technical
Services
Department. Various senior
engineering
positions from 1969.
Craig L. Hamlin Group Vice President from 53
October 1994. President of
ADM Milling from 1989.
Edward A. Harjehausen Vice President from October49
1992.
Burnell D Kraft Senior Vice President from 68
July 1997. Group Vice President
from January 1993 to July 1997.
President of ADM/Growmark,
ADM/Countrymark and Tabor Grain
Co.
Paul L. Krug, Jr. Vice President from 1991 and 55
President of ADM Investor
Services.
John E. Long Vice President from July 1996.70
President of ADM Research
Division from 1992. Various
senior research positions from
1975.
Claudia M. Madding Executive Assistant to the
Chairman 48
and Chairman Emeritus from
January
1999. Secretary to the Executive
Committee from September 1997.
Executive Assistant to the
Chairman
from July 1997 to January 1999.
Assistant Secretary from 1993.
Administrative Assistant to the
Chairman from 1984 to 1997.
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Item 1. BUSINESS-Continued
John D. McNamara President from February 1999. 51
Group Vice President and
President of North American
Oilseed Processing Division from
July 1997 to February 1999.
President of ADM Agri-Industries
since 1992.
Steven R. Mills Controller from October 1994. 44
Various senior treasury and
accounting positions from 1979.
Stephen W. Minder Corporate Compliance Officer from
43
July 1997. Various senior
internal
audit positions since 1990.
Paul B. Mulhollem Group Vice President from 50
July 1997. Vice President from
January 1996 to July 1997.
Managing
Director of ADM International,
Ltd.,
from 1993.
Brian F. Peterson Vice President from January 1996.
57
President of ADM Protein
Specialties
Division from February 1999.
President of ADM BioProducts
Division from 1995. Various
merchandising positions from
1980.
Raymond V. Preiksaitis Group Vice President from47
July 1997. Vice President -
Management Information Systems
from 1988 to July 1997.
John G. Reed Vice President from 1982. 69
Richard P. Reising Senior Vice President from July55
1997. Vice President, Secretary
and General Counsel from 1991 to
1997.
John D. Rice Group Vice President and
President, 45
North American Oilseed Processing
Division from February 1999.
Vice President from 1993 to 1999.
President of ADM Food Oils
Division since December 1996.
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PAGE 17
Item 1. BUSINESS-Continued
Scott A. Roberts Assistant Secretary and Assistant
39
General Counsel from July 1997.
Member of the Law Department
since 1985.
Kenneth A. Robinson Vice President from January 1996.
52
Vice President of ADM Processing
Division from 1985.
Douglas J. Schmalz Vice President and Chief 53
Financial Officer from 1986.
Controller from 1985 to 1994.
David J. Smith Vice President, Secretary and 44
General Counsel from July 1997.
Assistant General Counsel from
1995 to 1997. Assistant Secretary
from 1988 to 1997. Member of the
Law
Department since 1981.
Stephen H. Yu Vice President from January 1996.
39
Managing Director of ADM
Asia-Pacific, Ltd., from 1993.
Officers of the registrant are
elected by the Board of Directors for terms of one
year and until their successors are duly elected and
qualified.
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PAGE 18
Item 2. PROPERTIES
(a) Processing Facilities
The Company owns, leases, or has a 50% or greater
interest in the following processing plants:
United Foreign Total
States
Owned 196 91 287
Leased 2 2 4
Joint Venture 49 28 77
____ ____ ____
247 121 368
=== === ===
The Company's operations are such that most products
are efficiently processed near the source of raw
materials. Consequently, the Company has many plants
located strategically in grain producing areas. The
annual volume processed will vary depending upon
availability of raw material and demand for finished
products.
The Company operates thirty-nine domestic and sixteen
foreign oilseed crushing plants with a daily processing
capacity of approximately 105,000 metric tons (3.9
million bushels). The domestic plants are located in
Alabama, Arkansas, Georgia, Illinois, Indiana, Iowa,
Kansas, Louisiana, Minnesota, Missouri, Mississippi,
Nebraska, North Dakota, Ohio, South Carolina, Tennessee
and Texas. The foreign plants are located in Brazil,
Canada, England, Germany, India, Mexico, the
Netherlands and Poland. The Company also has an
interest, through a joint venture, in an oilseed
crushing plant in Bolivia.
The Company operates four wet corn milling and two dry
corn milling plants with a daily grind capacity of
approximately 41,700 metric tons (1.6 million bushels).
These plants and other related properties, including
corn germ extraction and corn gluten pellet plants, are
located in Illinois, Iowa, New York and North Dakota.
The Company also has interests, through joint ventures,
in corn milling plants in Bulgaria, Hungary, Mexico,
Romania, Slovakia and Turkey.
The Company operates twenty-nine domestic wheat and
durum flour mills, a domestic bulgur plant, three
domestic corn flour mills, two domestic milo mills, one
foreign oat mill, and sixteen foreign flour mills with
a total daily milling capacity of approximately 30,800
metric tons (1.1 million bushels). The Company also
operates seven bakery mix and specialty ingredient
plants, two pasta plants, and two starch and gluten
plants. These plants and other related properties are
located in California, Illinois, Indiana, Iowa, Kansas,
Louisiana, Minnesota, Missouri, Nebraska,
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PAGE 19
Item 2. PROPERTIES
New York, North Carolina, Oklahoma, Oregon,
Pennsylvania, Tennessee, Texas, Washington, Wisconsin,
Barbados, Belize, Canada, England and Jamaica. The
Company also has an interest, through a joint venture,
in rice milling plants in Arkansas and Louisiana.
The Company operates sixteen domestic oilseed
refineries in Arkansas, Georgia, Illinois, Indiana,
Iowa, Minnesota, Missouri, Nebraska, North Dakota,
Tennessee and Texas as well as twelve foreign
refineries in Brazil, Canada, Germany, India, the
Netherlands and Poland. The Company also has
interests, through joint ventures, in oilseed
refineries in Texas, Bolivia and England. The Company
produces packaged oils in California, Georgia,
Illinois, Brazil and Germany and has interests, through
joint ventures, in packaged oils plants in Bolivia and
England. Soy protein specialty products are produced
in Illinois and the Netherlands, lecithin products are
produced in Arkansas, Illinois, Iowa, Nebraska, Canada,
Germany and the Netherlands, and Vitamin E is produced
in Illinois. Cotton linter pulp is produced in
Tennessee and cottonseed flour is produced in Texas.
The Company produces feed and food additives at seven
bioproducts plants located in Illinois, North Carolina,
China and Ireland. The Company also operates thirteen
domestic and nine foreign formula feed and animal
health and nutrition plants. The domestic plants are
located in Georgia, Illinois, Indiana, Iowa, Nebraska,
Ohio, Texas and Washington. The foreign plants are
located in Barbados, Belize, Canada, China, Ireland and
Puerto Rico. The Company also has interests, through
joint ventures, in formula feed plants in Arkansas,
Colorado, Georgia, Illinois, Iowa, Indiana, Kansas,
Kentucky, Michigan, Minnesota, Missouri, Nebraska,
Ohio, Pennsylvania, Tennessee, Wisconsin, Canada,
China, Puerto Rico and Trinidad.
The Company operates five domestic and eleven foreign
chocolate and cocoa bean processing plants. The
domestic plants are located in Georgia, Massachusetts,
New Jersey, North Carolina and Wisconsin, and the
foreign plants are located in Brazil, Canada, China,
England, France, Germany, the Netherlands, Poland and
Singapore.
The Company operates forty-nine domestic and four
foreign edible bean processing facilities located in
California, Colorado, Idaho, Kansas, Michigan,
Minnesota, North Dakota, Wyoming and Canada.
The Company operates various other food and food
ingredient plants in England, France, Germany and
Jamaica.
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PAGE 20
Item 2. PROPERTIES
Procurement Facilities
The Company operates two hundred twenty-four domestic
terminal, country, and river elevators covering the
major grain producing states, including one hundred
fifty-seven country elevators and sixty-six terminal
and river loading facilities including four grain
export elevators in Louisiana and Maryland. Elevators
are located in Arkansas, Colorado, Georgia, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland,
Michigan, Minnesota, Missouri, Montana, Nebraska, North
Carolina, North Dakota, Ohio, Oklahoma, South Carolina,
Tennessee and Texas. Domestic grain terminals,
elevators and processing plants have an aggregate
storage capacity of approximately 475 million bushels.
The Company also has interests, through joint ventures,
in seven domestic grain elevators located in Minnesota
and South Dakota. Domestic joint venture grain
terminals and elevators have an aggregate storage
capacity of approximately 5.8 million bushels.
The Company also operates one hundred sixty-four
foreign grain elevators with an aggregate storage
capacity of approximately 136 million bushels,
including four export facilities located in Brazil.
These elevators are located in Argentina, Barbados,
Brazil, Canada, Germany, Paraguay and Uruguay. The
Company also has an interest, through a joint venture,
in fifteen grain elevators in Bolivia with an aggregate
storage capacity of approximately 6.4 million bushels.
Six cotton gins are located in Texas and serve the
cottonseed crushing plants in that area.
20
PAGE 21
Item 3. 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
agreement which is currently before the Illinois Pollution
Control Board for approval. In June 1999, the United
States Environmental Protection Agency issued a Notice of
Violations involving matters covered under the pending
State settlement. In 1998, the Illinois EPA filed an
administrative enforcement proceeding arising out of
certain alleged permit exceedances relating to one of the
Company's production facilities located in Illinois. Also
in 1998, the Company voluntarily reported to the Illinois
EPA certain permit exceedances relating to another Illinois
production facility operated by the Company. Also in 1998,
the State of Illinois filed a civil administrative action
alleging violations of the Illinois Environmental
Protection Act, and regulations promulgated thereunder,
arising from a one time release of denatured ethanol at one
of its Illinois distribution facilities. In management's
opinion the settlements and the remaining proceedings, all
seeking compliance with applicable environmental permits
and regulations, will not, either individually or in the
aggregate, have a material adverse affect on the Company's
financial condition or results of operations.
The 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 and certain of its current and former officers
and directors are currently defendants in various lawsuits
related to alleged anticompetitive practices by the
Company as described in more detail below. The Company and
the individual defendants named in these actions intend to
vigorously defend the actions unless they can be settled
on terms deemed acceptable to the parties. The Company has
paid and intends to continue to pay the legal expenses of
its current and former officers and directors and to
indemnify these persons with respect to these actions in
accordance with Article X of the Bylaws of the Company.
21
PAGE 22
GOVERNMENTAL INVESTIGATIONS
Federal grand juries in the Northern Districts of Illinois,
California and Georgia, under the direction of the United
States Department of Justice ("DOJ"), have been
investigating possible violations by the Company and others
with respect to the sale of lysine, citric acid and high
fructose corn syrup, respectively. In connection with an
agreement with the DOJ in fiscal 1997, the Company paid the
United 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 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.
22
PAGE 23
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 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.
23
PAGE 24
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-two 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 ACTION. 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 plaintiffs seek
C$25,000,000 for violations of the Competition Act,
C$10,000,000 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.
24
PAGE 25
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 eleven putative class action antitrust suits
and two non-class action antitrust suits involving the sale
of citric acid. Except for the action specifically
described below, all such suits have been settled or
dismissed.
STATE ACTIONS. The Company, along with other companies,
has been named as a defendant in one putative class action
antitrust suit filed in Alabama state court involving the
sale of citric acid. This action alleges violations of the
Alabama antitrust laws, including allegations that the
defendants agreed to fix, stabilize and maintain at
artificially high levels the prices of citric acid, and
seeks an injunction against continued alleged illegal
conduct, damages of an unspecified amount, attorneys fees
and costs, and other unspecified relief. The putative
class in the Alabama action comprises certain indirect
purchasers of citric acid in the State of Alabama from
July 1993 until July 1995. This action was filed on July
27, 1995 in the Circuit Court of Walker County, Alabama
and is encaptioned Seven Up Bottling Co. of Jasper, Inc.
v. Archer-Daniels-Midland Co., et al., Civil Action No. 95-
436. On June 25, 1999, the Alabama Supreme Court reversed
the lower court's denial of defendants' motion to dismiss,
and held that the Alabama antitrust laws apply only to
intrastate commerce. Plaintiff subsequently filed a
motion for reconsideration of this decision and that
motion currently is pending before the Alabama Supreme
Court.
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
25
PAGE 26
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 unspecified amount, court
26
PAGE 27
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.
SODIUM GLUCONATE ACTIONS
The Company, along with other companies, has been named as
a defendant in three federal antitrust class actions
involving the sale of sodium gluconate. These actions
allege violations of federal antitrust laws, including
allegations that the defendants agreed to fix, raise and
maintain at artificially high levels the prices of sodium
gluconate, and seek various relief, including treble
damages of an unspecified
27
PAGE 28
amount, attorneys fees and costs, and other unspecified
relief. The putative classes in these cases comprise
certain direct purchasers of sodium gluconate during
periods in the 1990s. One such action was filed on
December 2, 1997, in the United States District Court for
the Northern District of California and is encaptioned
Chemical Distribution, Inc, v. Akzo Nobel Chemicals BV, et
al., No. C -97-4141 (CW). The second action was filed on
December 31, 1997, in the United States District Court for
the District of Massachusetts and is encaptioned Stetson
Chemicals, Inc. v. Akzo Nobel Chemicals BV, 97-CV-1285
RCL. The third action, which was amended on February 12,
1998 to name the Company as a defendant, was filed in the
United States District Court for the Northern District of
Illinois. On April 9, 1998, the Judicial Panel on
Multidistrict Litigation transferred all three sodium
gluconate actions to the United States District Court for
the Northern District of California for coordinated or
consolidated pretrial proceedings. On October 29, 1998,
the Company executed a Settlement Agreement with counsel
for the plaintiff class in which, among other things, the
Company agreed to pay $69,600 to the plaintiff class. On
May 28, 1999, the court granted final approval of the
settlement and dismissed the action.
MONOSODIUM GLUTAMATE ACTION
The Company, along with a least one other company, has
been named as a defendant in one putative class action
antitrust suit filed in California state court involving
the sale of monosodium glutamate. This action alleges
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 seeks 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 in the State of
California from January 1, 1993 until July 1999. This
action originally was filed on June 25, 1999 in the
Superior Court of San Francisco County and is encaptioned
Fu's Garden Restaurant v. Ajinomoto U.S.A., Inc., et al,
Civil Action No. 304471.
OTHER
The Company has made provisions to cover certain legal
proceedings and related costs and expenses as described in
the notes to the 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
consolidated financial statements.
28
PAGE 29
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information responsive to this Item is set forth in
"Common Stock Market Prices and Dividends" of the
annual shareholders' report for the year ended June 30,
1999 and is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Information responsive to this Item is set forth in the
"Ten-Year Summary of Operating, Financial and Other
Data" of the annual shareholders' report for the year
ended June 30, 1999 and is incorporated herein by
reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information responsive to this Item is set forth in
"Management's Discussion of Operations and Financial
Condition" of the annual shareholders' report for the
year ended June 30, 1999 and is incorporated herein by
reference.
Item 7A.QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Information responsive to this Item is set forth in
"Management's Discussion of Operations and Financial
Condition" of the annual shareholders' report for the
year ended June 30, 1999 and is incorporated herein by
reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements and supplementary
data included in the annual shareholders' report for
the year ended June 30, 1999 are incorporated herein by
reference:
Consolidated balance sheets--June 30, 1999 and 1998
Consolidated statements of earnings--Years ended
June 30, 1999, 1998 and 1997
Consolidated statements of shareholders' equity--Years
ended
June 30, 1999, 1998 and 1997
Consolidated statements of cash flows--Years ended
June 30, 1999, 1998 and 1997
Notes to consolidated financial statements--June 30,
1999
Summary of Significant Accounting Policies
Report of Independent Auditors
Quarterly Financial Data (Unaudited)
29
PAGE 30
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to directors and executive
officers is set forth in "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting
Compliance" of the definitive proxy statement for the
Company's annual meeting of Stockholders to be held on
October 21,1999 and is incorporated herein by
reference. Certain information with respect to
executive officers is included in Item 1(e) of this
report.
Item 11. EXECUTIVE COMPENSATION
Information responsive to this Item is set forth in
"Executive Compensation" and "Compensation Committee
Report" of the definitive proxy statement for the
Company's annual meeting of Stockholders to be held on
October 21,1999 and is incorporated herein by
reference.
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information responsive to this Item is set forth in
"Principal Holders of Voting Securities" and "Election
of Directors" of the definitive proxy statement for the
Company's annual meeting of Stockholders to be held on
October 21,1999 and is incorporated herein by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information responsive to this Item is set forth in
"Certain Relationships and Related Transactions" of the
definitive proxy statement for the Company's annual
meeting of Stockholders to be held on October 21,1999
and is incorporated herein by reference.
PART IV
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) The following consolidated
financial statements and other financial data of
the registrant and its subsidiaries, included in
the annual report of the registrant to its
shareholders for the year ended June 30, 1999, are
incorporated by reference in Item 8, and are also
incorporated herein by reference:
Consolidated balance sheets--June 30, 1999 and 1998
Consolidated statements of earnings--Years ended
June 30, 1999, 1998 and 1997
Consolidated statements of shareholders' equity--
Years ended June 30, 1999, 1998 and 1997
30
PAGE 31
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
` --Continued
Consolidated statements of cash flows--Years ended
June 30, 1999, 1998 and 1997
Notes to consolidated financial
statements--June 30, 1999
Summary of Significant Accounting Policies
Quarterly Financial Data (Unaudited)
(a)(2) Schedules are not applicable and
therefore not included in this report.
Financial statements of affiliates accounted for
by the equity method have been omitted because
they do not, considered individually, constitute
significant subsidiaries.
(a)(3) LIST OF EXHIBITS
(3) (i)Composite Certificate of
Incorporation, as amended.
(ii)Bylaws filed on May 14, 1999 as Exhibit 3(ii)
to Form
10Q for the quarter ended March 31, 1999,
are
incorporated herein by reference.
(4) Instruments defining the rights
of security holders, including:
(i)Indenture dated May 1, 1982, between the re
gistrant and Morgan Guaranty Trust Company of
New York, as Trustee (incorporated by reference
to Exhibit 4(c) to Registration Statement No. 2-
77368), relating to the $400,000,000 Zero
Coupon Debentures due May 1, 2002;
(ii)Indenture dated as of March 1, 1984 between
the registrant and The Chase Manhattan Bank,
formerly known as Chemical Bank, as Trustee
(incorporated by reference to Exhibit 4 to the
registrant's Current Report on Form 8-K dated
August 3, 1984 (File No. 1-44)), as
supplemented by the Supplemental Indenture
dated as of January 9, 1986, between the
registrant and Chemical Bank, as Trustee
(incorporated by reference to Exhibit 4 to the
registrant's Current Report on Form 8-K dated
January 9, 1986 (File No. 1-44)), relating to
the $100,000,000 - 10 1/4% Debentures due
January 15, 2006;
31
PAGE 32
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
--Continued
(iii)Indenture dated June 1, 1986 between the
registrant and The Chase Manhattan Bank, formerly
known as Chemical Bank, (as successor to
Manufacturers Hanover Trust Company), as Trustee
(incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-6721), and
Supplemental Indenture dated as of August 1, 1989
between the registrant and Chemical Bank (as
successor to Manufacturers Hanover Trust
Company), as Trustee (incorporated by reference
to Exhibit 4(c) to Post-Effective Amendment No. 3
to Registration Statement No. 33-6721), relating
to
the $300,000,000 - 8 7/8% Debentures due April
15, 2011,
the $300,000,000 - 8 3/8% Debentures due April
15, 2017, the $300,000,000 - 8 1/8% Debentures
due June 1, 2012,
the $250,000,000 - 6 1/4% Notes due May 15,
2003,
the $250,000,000 - 7 1/8% Debentures due March
1, 2013,
the $350,000,000 - 7 1/2% Debentures due March
15, 2027, the $200,000,000 - 6 3/4% Debentures
due December 15, 2027,
the $250,000,000 - 6 7/8% Debentures due December
15, 2097,
the $196,210,000 - 5 7/8% Debentures due November
15, 2010,
and the $300,000,000 - 6 5/8% Debentures due May
1, 2029.
Copies of constituent instruments defining
rights of holders of long-term debt of the
Company and
Subsidiaries, other than the Indentures
specified herein, are not filed herewith,
pursuant to Instruction (b)(4) (iii)(A) to Item
601 of Regulation S-K, because the total amount
of securities authorized under any such
instrument does not exceed 10% of the total
assets of the Company and Subsidiaries on a
consolidated basis. The registrant
hereby agrees that it will, upon request by the
Commission, furnish to the Commission a copy of
each such instrument.
(10)
Material Contracts--Copies of the Company's stock
option
and stock unit plans and its savings and investment
plans,
pursuant to Instruction (10)(iii)(A) to Item 601 of
Regulation S-K, each of which is a management
contract or compensation plan or arrangement
required to be filed as an exhibit pursuant to Item
14(c) of Form 10-K, are incorporated herein by
reference as follows:
(i)Registration Statement No. 2-91811 on Form S-8
dated June 22, 1984 (definitive Prospectus dated
July 16, 1984) relating to the Archer Daniels
Midland 1982 Incentive
Stock Option Plan.
(ii)Registration Statement No. 33-49409 on Form S-
8 dated
March 15, 1993 relating to the Archer Daniels M
idland
1991 Incentive Stock Option Plan and Archer Dan
iels
Midland Company Savings and Investment Plan.
32
PAGE 33
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
--Continued
(iii)Registration Statement No. 333-39605 on Fo
rm S-8 dated November 5, 1997 relating to the
ADM Savings and Investment Plan for Salaried
Employees and the ADM Savings and Investment
Plan for Hourly Employees.
(iv)Registration Statement No. 333-51381 on For
m S-8 dated April 30, 1998 relating to the
Archer-Daniels-Midland Company 1996 Stock
Option Plan.
(v)The Archer-Daniels-Midland Company Stock Uni
t Plan for Nonemployee Directors (incorporated
by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended December 31, 1997).
(vi)Registration Statement No. 333-75073 on For
m S-8 dated March 26, 1999 relating to the ADM
Employee Stock Ownership Plan for Salaried
Employees and the ADM Employee Stock Ownership
Plan for Hourly Employees.
(13)Portions of annual report to
shareholders incorporated by reference
(21)Subsidiaries of the registra
nt
(23)Consent of independent audit
ors
(24) Powers of attorney
(27) Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K was not filed during the quarter ended
June 30, 1999.
33
PAGE 34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: September 22, 1999
ARCHER-DANIELS-MIDLAND COMPANY
By: /s/ D. J. Smith
D. J. Smith
Vice President, Secretary
and General Counsel
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on September 22, 1999,
by the following persons on behalf of the Registrant and in
the capacities indicated.
/s/ G. A. Andreas /s/ M. B. Mulroney
G. A. Andreas*, M. B. Mulroney*,
Chief Executive and Director Director
(Principal Executive Officer)
/s/ R. S. Strauss
/s/D. J. Schmalz R. S. Strauss*,
D. J. Schmalz Director
Vice President and
Chief Financial Officer /s/ J. K. Vanier
(Principal Financial Officer) J. K. Vanier*,
Director
/s/S. R. Mills
S. R. Mills /s/ O. G. Webb
Controller O. G. Webb*,
(Controller Director
/s/ D. O. Andreas /s/ A. Young
D. O. Andreas* A. Young*,
Director Director
/s/ J. R. Block /s/ D. J. Smith
J. R. Block*, Attorney-in-Fact
Director
/s/ R. R. Burt
R. R. Burt*,
Director
/s/ Mrs. M. H. Carter
Mrs. M. H. Carter*,
Director
/s/ G. O. Coan
G. O. Coan*,
Director
/s/ F. R. Johnson
F. R. Johnson*,
Director
*Powers of Attorney authorizing R. P. Reising, D. J. Schmalz and
D. J. Smith and each of them, to sign the Form 10-K on behalf of
the above-named officers and directors of the Company copies of
which are being filed with the Securities and Exchange
Commission.
34