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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, 2000
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--$4.8 billion
(Based on the closing price of the New York Stock Exchange on
August 28, 2000)
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-601,601,595 shares
(August 31, 2000)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders' report for the year ended
June 30, 2000 are incorporated by reference into Parts I, II and
IV.
Portions of the annual proxy statement for the year ended June
30, 2000 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 $4.5 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. During this period, the Company has
contributed malting 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
(TVPr), 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 Burgersr
and Harvest Burgersr for RecipesT). 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 also mills milo to produce
industrial flour 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 60%
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 75% interest (25% is held
indirectly through the Company's 50% interest in
Intrade), is one of the world's largest, most
respected trading companies specializing in
agricultural commodities and processed products.
Toepfer has thirty-eight sales offices worldwide.
Compagnie Industrielle
et Financiere des Produits Amylaces SA
(Luxembourg) and affiliates, of which the Company
has a 41.5% interest, is a holding company with
interests primarily in various international agri-
businesses.
Gruma S.A. de C.V.
(Mexico) and affiliates, of which the Company has
a 29% interest, is the world's largest producer
and marketer of corn flour and tortillas with
operations in the U.S., Mexico, Central and South
America. Additionally, the Company has a 20%
interest in a joint venture which consists of the
combined U.S. corn flour operations of ADM and
Gruma. The Company also has a 40% share, through a
joint venture with Gruma, in nine 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 159 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 Pura PLC, a
U.K. based company, that processes and markets
edible oil.
Eaststarch C.V. (Netherlands), of which the
Company has a 50% interest, owns interest in
companies that operate 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 among the
Company, Cargill, Inc., Gold Kist, Inc. and
Alimenta Processing Corporation, is a major
supplier of peanuts to both the domestic and
export markets. The Company has a 25% 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 is in
the oilseed crushing, refining and bottling
business.
The Company owns a 50% interest in ADM Doysan, a
Turkish company 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:
2000 1999 1998
Oilseed products 56% 59% 63%
Corn products 15 13 13
Wheat and other
milled products 11 10 9
Other products and services 18 18 15
____ ____ ____
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 53 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 Burgersr and Harvest Burgersr
for RecipesT, its soy protein powdered non-dairy
beverage, Nutribevr, and its non-dairy frozen
dessert, DairylikeT. 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 standards 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 throughout the year. The
worldwide need for food is not seasonal and is
ever expanding as is the world's population.
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Item 1. BUSINESS-Continued
(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 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
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, 2000, 1999 and 1998 for such technical
efforts were approximately $23.4, $22.0 million
and $17.1 million, respectively.
(xii)Material effects of
capital expenditures for environmental protection
During 2000, $14.7
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 22,753 at June 30,
2000.
(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, 2000
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 57
Directors 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 1989.61
Assistant to the Chief
Executive from 1989.
Charles P. Archer Treasurer from October 1992. 44
Maureen K. Ausura Vice President from June 2000.45
Senior Vice President, Human
Resources, of Giant Eagle, Inc.
from 1996. Various senior
personnel positions with Campbell
Soup Company from 1984.
Ronald S. Bandler Assistant Treasurer from January39
1998. Manager of Treasury
Operations from 1989 to
January 1998.
Lewis W. Batchelder Group Vice President from 55
July 1997. Senior Vice President
of ADM/Growmark. Various grain
merchandising positions since
1971.
Howard E. Buoy Group Vice President from 74
January 1993.
William H. Camp Group Vice President and 51
President, North American
Oilseed Processing Division
from April 2000. Group Vice
President and President, South
American Oilseed Processing
Division from March 1999 to April
2000. Vice President from April
1993 to March 1999.
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Item 1. BUSINESS-Continued
Mark J. Cheviron Vice President from July 1997.51
Vice President of Corporate
Security and Administrative
Services since May 1997. Director
of Security since 1980.
Larry H. Cunningham Senior Vice President from 56
February 2000Consultant for
the Company from October 1999 to
February 2000. Group Vice
President and President of ADM
Corn Processing Division from
October 1996 to October 1999.
President of ADM Food Additives
Division from October 1998 to
October 1999. Vice President from
July 1993 to October 1996.
Anthony P. Delio Vice President from May 2000. 44
President of ADM Protein
Specialties Division from
October 1999. President of ADM
Nutraceutical Division from May
1999. Various senior product
development positions with Mars,
Inc from 1980.
Dennis C. Garceau Vice President from April 1999.53
President of ADM Technical
Services Department. Various
senior engineering positions from
1969.
Craig L. Hamlin Senior Vice President from June 54
2000. Group Vice President from
October 1994 to June 2000.
President of ADM Milling from
1989.
Edward A. HarjehausenPresident of ADM Corn Processing
50
Division from July 2000. President
of ADM BioProducts and Food
Additives From October 1999 to
July 2000. Vice President from
October 1992.
Burnell D Kraft Senior Vice President from 69
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 56
14 President of ADM Investor
Page 15
Services.
Item 1. BUSINESS-Continued
John E. Long Vice President from July 1996.71
President of ADM Research
Division from 1992 to March 2000.
Various senior research positions
from 1975.
Michael Lusk Vice President from November 1999
51
Senior Vice President with
International Risk Management,
Inc. from 1989.
Claudia M. Madding Executive Assistant to the
Chairman 49
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.
John D. McNamara President from February 1999. 52
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 Vice President from February 2000.
45
Controller from October 1994.
Stephen W. Minder Corporate Compliance Officer from
44
July 1997. Various senior internal
audit positions since 1990.
Paul B. Mulhollem Senior Vice President from October
51
1999. Group Vice President from
July 1997 to October 1999. Vice
President from January 1996 to
July 1997. Managing Director of
ADM International, Ltd., from
1993.
Brian F. Peterson Group Vice President and Managing
58
Director of ADM International,
Ltd., from October 1999. Vice
President from January 1996 to
October 1999. President of ADM
Protein Specialties Division from
February 1999 to October 1999.
President of ADM BioProducts
Division from 1995 to October
1999.
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Item 1. BUSINESS-Continued
Raymond V. Preiksaitis Group Vice President from48
July 1997. Vice President -
Management Information Systems
from 1988 to July 1997.
John G. Reed Vice President from 1982. 70
Richard P. Reising Senior Vice President from July56
1997. Vice President, Secretary
and General Counsel from 1991 to
1997.
John D. Rice Senior Vice President from 46
February 2000. Group Vice
President and President, North
American Oilseed Processing
Division from February 1999 to
February 2000. Vice President
from 1993 to 1999. President of
ADM Food Oils Division from
December
1996 to February 2000.
Scott A. Roberts Assistant Secretary and Assistant
40
General Counsel from July 1997.
Member of the Law Department
since 1985.
Kenneth A. Robinson Vice President from January 1996.
53
Vice President of ADM Processing
Division from 1985.
Douglas J. Schmalz Vice President and Chief 54
Financial Officer from 1986.
David J. Smith Vice President, Secretary and 45
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.
40
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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Item 2. PROPERTIES
PROCESSING FACILITIES
The Company owns, leases, or has a 50% or greater
interest in the following processing plants:
United States Foreign
Total
Owned 137 93
230
Leased 2 2
4
Joint Venture 47 31
78
186 126 312
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-three domestic and seventeen
foreign oilseed crushing plants with a daily processing
capacity of approximately 90,000 metric tons (3.3
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 interests, through
joint ventures, in oilseed crushing plants in Bolivia
and Turkey.
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, and
eighteen foreign flour mills with a total daily milling
capacity of approximately 31,800 metric tons (1.1
million bushels). The Company also operates seven
bakery mix and specialty ingredient plants, one pasta
plant, and two starch and gluten plants. These plants
and other related properties are located in California,
Illinois, Indiana, Iowa, Kansas, Louisiana, Minnesota,
Missouri, Nebraska, New York, North Carolina, Oklahoma,
Oregon, Pennsylvania, Tennessee, Texas, Washington,
Wisconsin, Barbados, Belize, Canada, England, Grenada,
Jamaica, and the Netherlands Antilles. The company also
has an interest, through a joint venture, in rice
milling plants in Arkansas and Louisiana.
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Item 2. PROPERTIES-Continued
The Company operates fourteen domestic oilseed
refineries in Georgia, Illinois, Indiana, Iowa,
Minnesota, Missouri, Nebraska, North Dakota, Tennessee
and Texas as well as thirteen 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,
England, and Turkey. The company produces packaged oils
in California, Georgia, Illinois, Brazil and Germany and
has interests, through joint ventures, in packaged oils
plants in Bolivia, England, and Turkey. Soy protein
specialty products are produced in Illinois and the
Netherlands, lecithin products are produced in 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 eleven 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, Grenada,
Ireland, the Netherlands Antilles, 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 four domestic and eleven foreign
chocolate and cocoa bean processing plants. The
domestic plants are located in Georgia, Massachusetts,
New Jersey, and Wisconsin, and the foreign plants are
located in Brazil, Canada, China, England, France,
Germany, the Netherlands, Poland and Singapore.
The Company operates various other food and food
ingredient plants in North Dakota, England, France,
Germany and Jamaica.
18
Page 19
Item 2. PROPERTIES-Continued
PROCUREMENT FACILITIES
The Company owns, leases, or has a 50% or greater
interest in the following procurement facilities:
United States Foreign
Total
Owned 249 80
329
Leased 30 47
77
Joint Venture 8 15
23
287 142
429
The Company operates two hundred twenty-eight domestic
terminal, country, and river elevators covering the
major grain producing states, including one hundred
fifty-six country elevators and seventy-two terminal and
river loading facilities including five grain export
elevators in Louisiana, Maryland, and Texas. 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, Tennessee and
Texas. Domestic grain terminals, elevators and
processing plants have an aggregate storage capacity of
approximately 491 million bushels.
The Company also has interests, through joint ventures,
in eight domestic grain elevators located in Minnesota
and South Dakota. Domestic joint venture grain
terminals and elevators have an aggregate storage
capacity of approximately 6 million bushels.
The Company also operates one hundred twenty-three
foreign grain elevators with an aggregate storage
capacity of approximately 109 million bushels, including
four export facilities located in Brazil. These
elevators are located in Argentina, Barbados, Brazil,
Canada, Germany, Paraguay and Uraguay. The Company also
has an interest, through a joint venture, in fifteen
grain elevators in Bolivia with an aggregate storage
capacity of approximately 6 million bushels.
The Company operates forty-seven domestic and four
foreign edible bean procurement facilities with an
aggregate storage capacity of approximately 22 million
bushels, located in California, Colorado, Idaho,
Michigan, Minnesota, North Dakota, Wyoming and Canada.
Four cotton gins are located in Texas and serve the
cottonseed crushing plants in that area.
19
Page 20
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 settlement agreement which is
currently before the Illinois Pollution Control Board
for approval. However, in June 1999, the United States
Environmental Protection Agency (U.S. EPA) issued a
Notice of Violation involving some of the matters
covered under the pending State settlement and in
January 2000 the United States Department of Justice
("DOJ") issued a Notice of Proposed Civil Enforcement
Action against the Company regarding these same matters.
Further, in 1998, the Illinois EPA filed an
administrative enforcement proceeding arising out of
certain alleged permit exceedances relating to the same
facility. Also in 1998 and 2000, the Company voluntarily
reported to the Illinois EPA certain other permit
exceedances related to other processes at that same
facility, and in 1999 Illinois EPA issued a Notice of
Violation relating to the exceedances disclosed in 1998.
The Company understands that all pending and threatened
enforcement actions at the facility will be consolidated
into two proceedings, one to be brought by the State
which will subsume the settlement presently pending
before the Board and another to be brought by the
Department of Justice. The Company and the DOJ have
agreed to a penalty of approximately $1.5 million in
settlement of the federal action, and the Company has
offered to settle the remaining matters with the State
for approximately $1.1 million. Also in 1998, the State
of Illinois filed a civil administrative action alleging
violations of the Illinois Environmental Protection Act,
and regulations promulgated thereunder, arising from a
one time release of denatured ethanol at one of its
Illinois distribution facilities. In January 2000 U.S.
EPA issued a Notice of Violation to the Company for
another Illinois facility regarding alleged emissions
violations and the failure to obtain proper permits for
various equipment at that facility. In management's
opinion the settlements and the remaining proceedings,
all seeking compliance with applicable environmental
permits and regulations, will not, either individually
or in the aggregate, have a material adverse affect on
the Company's financial condition or results of
operations.
On July 31, 2000, the federal environmental authorities
in Brazil issued an Administrative Notice upon the
Company requiring payment of approximately $5.6 million
for the discharge of an industrial wastewater from its
facility located in Rondonopolis. The Company intends
to appeal this penalty.
20
Page 21
Item 3. LEGAL PROCEEDINGS-Continued
The Company is involved in approximately 25
administrative and judicial proceedings in which it has
been identified as a potentially responsible party (PRP)
under the federal Superfund law and its state analogs
for the study and clean-up of sites contaminated by
material discharged into the environment. In all of
these matters, there are numerous PRPs. Due to various
factors such as the required level of remediation and
participation in the clean-up effort by others, the
Company's future clean-up costs at these sites cannot be
reasonably estimated. However, in management's opinion,
these proceedings will not, either individually or in
the aggregate, have a material adverse affect on the
Company's financial condition or results of operations.
LITIGATION REGARDING ALLEGED ANTICOMPETITIVE PRACTICES
The Company is currently a defendant in various lawsuits
related to alleged anticompetitive practices by the
Company as described in more detail below. The Company
intends to vigorously defend the actions unless they can
be settled on terms deemed acceptable to the parties.
GOVERNMENTAL INVESTIGATIONS
Federal grand juries in the Northern Districts of
Illinois, California and Georgia, under the direction of
the DOJ, have been investigating possible violations by
the Company and others with respect to the sale of
lysine, citric acid and high fructose corn syrup,
respectively. In connection with an agreement with the
DOJ in fiscal 1997, the Company paid the United States
fines of $100 million. This agreement constitutes a
global resolution of all matters between the DOJ and the
Company and brought to a close all DOJ investigations of
the Company. The federal grand juries in the Northern
Districts of Illinois (lysine) and Georgia (high
fructose corn syrup) have been closed.
The Company has received notice that certain foreign
governmental entities were commencing investigations to
determine whether anticompetitive practices occurred in
their jurisdictions. Except for the investigations being
conducted by the Commission of the European Communities,
the Mexican Federal Competition Commission and the
Brazilian Department of Protection and Economic Defense
as described below, all such matters have been resolved
as previously reported.
21
Page 22
Item 3. LEGAL PROCEEDINGS-Continued
In June 1997, the Company and several of its European
subsidiaries were notified that the Commission of the
European Communities had initiated an investigation as
to possible anticompetitive practices in the amino acid
markets, in particular the lysine market, in the
European Union. On October 29, 1998, the Commission of
the European Communities initiated formal proceedings
against the Company and others and adopted a Statement
of Objections. The reply of the Company was filed on
February 1, 1999 and the hearing was held on March 1,
1999. On August 8, 1999, the Commission of the European
Communities adopted a supplementary Statement of
Objections expanding the period of involvement as to
certain other companies. On June 7, 2000, the
Commission of the European Communities adopted a
decision imposing a fine against the Company in the
amount of EUR 47.3 million. The Company intends to
appeal this decision. In September 1997, the Company
received a request for information from the Commission
of the European Communities with respect to an
investigation being conducted by that Commission into
the possible existence of certain agreements and/or
concerted practices in the citric acid market in the
European Union. On March 28, 2000, the Commission of
European Communities initiated formal proceedings
against the Company and others and adopted a Statement
of Objections. In November 1998, a European subsidiary
of the Company received a request for information from
the Commission of the European Communities with respect
to an investigation being conducted by that Commission
into the possible existence of certain agreements and/or
concerted practices in the sodium gluconate market in
the European Union. On May 17, 2000, the Commission of
European Communities initiated formal proceedings
against the Company and others and adopted a Statement
of Objections. On February 11, 1999 a Mexican
subsidiary of the Company was notified that the Mexican
Federal Competition Commission had initiated an
investigation as to possible anticompetitive practices
in the citric acid market in Mexico. On May 8, 2000, a
Brazilian subsidiary of the Company was notified of the
commencement of an administrative proceeding by the
Department of Protection and Economic Defense relative
to possible anticompetitive practices in the lysine
market in Brazil. On July 3, 2000, the Brazilian
subsidiary of the Company filed a Statement of Defense
in this proceeding. The ultimate outcome and
materiality of the proceedings of the Commission of the
European Communities cannot presently be determined. The
Company may become the subject of similar antitrust
investigations conducted by the applicable regulatory
authorities of other countries.
HIGH FRUCTOSE CORN SYRUP ACTIONS
The Company, along with other companies, has been named
as a defendant in thirty-one antitrust suits involving
the sale of high fructose corn syrup in the United
States. Thirty of these actions have been brought as
putative class actions.
22
Page 23
Item 3. LEGAL PROCEEDINGS-Continued
FEDERAL ACTIONS. Twenty-two of these putative class
actions allege violations of federal antitrust laws,
including allegations that the defendants agreed to fix,
stabilize and maintain at artificially high levels the
prices of high fructose corn syrup, and seek injunctions
against continued alleged illegal conduct, treble
damages of an unspecified amount, attorneys fees and
costs, and other unspecified relief. The putative
classes in these cases comprise certain direct
purchasers of high fructose corn syrup during certain
periods in the 1990s. These twenty-two actions have been
transferred to the United States District Court for the
Central District of Illinois and consolidated under the
caption In Re High Fructose Corn Syrup Antitrust
Litigation, MDL No. 1087 and Master File No. 95-1477.
On January 14, 1997, the Company, along with other
companies, was named a defendant in a non-class action
antitrust suit involving the sale of high fructose corn
syrup and corn syrup. This action which is encaptioned
Gray & Co. v. Archer Daniels Midland Co., et al, No. 97-
69-AS, and was filed in federal court in Oregon, alleges
violations of federal antitrust laws and Oregon and
Michigan state antitrust laws, including allegations
that defendants conspired to fix, raise, maintain and
stabilize the price of corn syrup and high fructose corn
syrup, and seeks treble damages, attorneys' fees and
costs of an unspecified amount. This action was
transferred for pretrial proceedings to the United
States District Court for the Central District of
Illinois.
STATE ACTIONS. The Company, along with other companies,
also has been named as a defendant in seven putative
class action antitrust suits filed in California state
court involving the sale of high fructose corn syrup.
These California actions allege violations of the
California antitrust and unfair competition laws,
including allegations that the defendants agreed to fix,
stabilize and maintain at artificially high levels the
prices of high fructose corn syrup, and seek treble
damages of an unspecified amount, attorneys fees and
costs, restitution and other unspecified relief. One of
the California putative classes comprises certain direct
purchasers of high fructose corn syrup in the State of
California during certain periods in the 1990s. This
action was filed on October 17, 1995 in Superior Court
for the County of Stanislaus, California and encaptioned
Kagome Foods, Inc. v Archer-Daniels-Midland Co. et al.,
Civil Action No. 37236. This action has been removed to
federal court and consolidated with the federal class
action litigation pending in the Central District of
Illinois referred to above. The other six California
putative classes comprise certain indirect purchasers of
high fructose corn syrup and dextrose in the State of
California during certain periods in the 1990s. One such
action was filed on July 21, 1995 in the Superior Court
of the County of Los Angeles, California and is
encaptioned Borgeson v. Archer-Daniels-Midland Co., et
al., Civil Action No. BC131940. This action and four
other indirect purchaser actions have been coordinated
before a single court in Stanislaus County, California
under the caption, Food Additives (HFCS) cases, Master
File No. 39693. The other four actions are encaptioned,
Goings v. Archer Daniels Midland Co., et al., Civil
23
Page 24
Item 3. LEGAL PROCEEDINGS-Continued
Action No. 750276 (Filed on July 21, 1995, Orange County
Superior Court); Rainbow Acres v. Archer Daniels Midland
Co., et al., Civil Action No. 974271 (Filed on November
22, 1995, San Francisco County Superior Court); Patane
v. Archer Daniels Midland Co., et al., Civil Action No.
212610 (Filed on January 17, 1996, Sonoma County
Superior Court); and St. Stan's Brewing Co. v. Archer
Daniels Midland Co., et al., Civil Action No. 37237
(Filed on October 17, 1995, Stanislaus County Superior
Court). On October 8, 1997, Varni Brothers Corp. filed a
complaint in intervention with respect to the
coordinated action pending in Stanislaus County Superior
Court, asserting the same claims as those advanced in
the consolidated class action.
The Company, along with other companies, also has been
named a defendant in a putative class action antitrust
suit filed in Alabama state court. The Alabama action
alleges violations of the Alabama, Michigan and
Minnesota antitrust laws, including allegations that
defendants agreed to fix, stabilize and maintain at
artificially high levels the prices of high fructose
corn syrup, and seeks an injunction against continued
illegal conduct, damages of an unspecified amount,
attorneys fees and costs, and other unspecified relief.
The putative class in the Alabama action comprises
certain indirect purchasers in Alabama, Michigan and
Minnesota during the period March 18, 1994 to March 18,
1996. This action was filed on March 18, 1996 in the
Circuit Court of Coosa County, Alabama, and is
encaptioned Caldwell v. Archer-Daniels-Midland Co., et
al., Civil Action No. 96-17. On April 23, 1997, the
court granted the defendants' motion to sever and
dismiss the non-Alabama claims. On March 27, 2000,
defendants moved for summary judgment in light of a
recent Alabama Supreme Court case holding that the
Alabama antitrust laws apply only to intrastate
commerce. That matter is currently pending.
LYSINE ACTIONS
The Company, along with other companies, had been named
as a defendant in twenty-three putative class action
antitrust suits involving the sale of lysine in the
United States. Except for the actions specifically
described below, all such suits have been settled,
dismissed or withdrawn.
CANADIAN ACTIONS. The Company, along with other
companies, has been named as a defendant in one putative
class action antitrust suit filed in Ontario Court
(General Division) in which the plaintiffs allege the
defendants reached agreements with one another as to the
price at which each of them would sell lysine to
customers in Ontario and as to the total volume of
lysine that each company would supply in Ontario in
violation of Sections 45 (1)(c) and 61(1)(b)of the
Competition Act. The putative class is comprised of
certain indirect purchasers in Ontario during the period
from June 1, 1992 to June 27, 1995. The plaintiffs seek
C$25 million for violations of the Competition Act, C$10
million in punitive, exemplary and aggravated damages,
interest and costs of the action. This action was
served upon the Company on June 11, 1999 and is
encaptioned Rein Minnema and
24
Page 25
Item 3. LEGAL PROCEEDINGS-Continued
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 purchasers in Quebec after
June, 1992. The applicants seek at least C$4,460,000,
costs of investigation, attorneys' fees and interest.
This motion is encaptioned Option Consommateurs, et al
v. Archer-Daniels-Midland Company, et al., Court No. 500-
06-000089-991.
STATE ACTION. The Company has been named as a defendant,
along with other companies, in one putative class action
antitrust suit alleging violations of the Alabama
antitrust laws, including allegations that the
defendants agreed to fix, stabilize and maintain at
artificially high levels the prices of lysine, and
seeking an injunction against continued alleged illegal
conduct, damages of an unspecified amount, attorneys
fees and costs, and other unspecified relief. The
putative class in this action comprises certain indirect
purchasers of lysine in the State of Alabama during
certain periods in the 1990s. This action was filed on
August 17, 1995 in the Circuit Court of DeKalb County,
Alabama, and is encaptioned Ashley v. Archer-Daniels-
Midland Co., et al., Civil Action No. 95-336. On March
13, 1998, the court denied plaintiff's motion for class
certification. Subsequently, the plaintiff amended his
complaint to add approximately 300 individual
plaintiffs. On March 23, 2000, defendants filed a motion
for summary judgment in light of a recent Alabama
Supreme Court case holding that the Alabama antitrust
laws apply only to intrastate commerce. That motion is
currently pending.
CITRIC ACID ACTIONS
The Company, along with other companies, had been named
as a defendant in fourteen putative class action
antitrust suits and two non-class action antitrust suits
involving the sale of citric acid in the United States.
Except for the action specifically described below, all
such suits have been settled or dismissed.
25
Page 26
Item 3. LEGAL PROCEEDINGS-Continued
CANADIAN ACTIONS. The Company, along with other
companies, has been named as a defendant in three
actions filed pursuant to the Class Proceedings Act,
1992, in which the plaintiffs allege that the defendants
violated the Competition Act with respect to the sale of
citric acid in Canada. One of these actions was filed
in the Superior Court of Justice, in Newmarket, Ontario,
and encaptioned Ashworth v. Archer-Daniels-Midland
Company, et al., Court file No. 53510/99. The putative
class is comprised of certain indirect purchasers in
Ontario during the period from July 1, 1991 to June 27,
1995. The plaintiffs in this action seek general
damages in the amount of C$30 million and punitive and
exemplary damages in the amount of C$30 million,
interest, costs and fees. The second action was filed in
the Superior Court of Justice in London, Ontario, and
encaptioned Fairlee Fruit Juice Limited v. Archer-
Daniels-Midland Company, et al., Court File No.
32562/99. The plaintiffs in this action seek general
damages in the amount of C$300 million, punitive and
exemplary damages in the amount of C$20 million,
interest, costs and fees. The Company has become aware
of, but has not yet been formally served with, a third
action commenced in Barrie, Ontario in the (Ontario)
Superior Court of Justice under the Class Proceedings
Act. In that action, encaptioned E. D. Smith & Sons,
Limited v. Archer Daniels Midland Company et al., Court
File No. 99-B673, the putative class is persons or
corporations who were resident or carried on business in
Ontario and who were direct and indirect purchasers of
citric acid between July 1, 1991 and July 27, 1995. The
action claims damages in the amount of C$24,000,000 for
breach of the Competition Act, conspiracy and infliction
of economic injury, plus C$10,000,000 for punitive,
exemplary and aggravated damages, plus interest and
costs. All three Ontario actions referred to above have
now been transferred to Toronto, Ontario. The Company,
along with other companies, has been named as a
respondent in a motion seeking authorization to
institute a class action filed in Superior Court in the
Province of Quebec, District of Montreal, in which the
applicants allege the respondents comprised, combined,
agreed or arranged to prevent or lessen, unduly,
competition with respect to the sale of citric acid in
Canada in violation of Section 45(1)(c) of the
Competition Act. The putative class is comprised of
certain indirect purchasers in Quebec since July, 1991.
The applicants seek C$3,115,000, the costs of
investigation, attorneys' fees and interest. This
motion is encaptioned Option Consommateurs, et al. v.
Archer-Daniels-Midland-Company, et al., Court No.500-06-
000094-991.
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
26
Page 27
Item 3. LEGAL PROCEEDINGS-Continued
an unspecified amount, attorneys fees and costs,
restitution and other unspecified relief. The putative
class in one of these California cases comprises certain
direct purchasers of high fructose corn syrup and citric
acid in the State of California during the period
January 1, 1992 until at least October 1995. This action
was filed on October 11, 1995 in the Superior Court of
Stanislaus County, California and is entitled Gangi
Bros. Packing Co. v. Archer-Daniels-Midland Co., et al.,
Civil Action No. 37217. The putative class in the other
California case comprises certain indirect purchasers of
high fructose corn syrup and citric acid in the state of
California during the period October 12, 1991 until
November 20, 1995. This action was filed on November 20,
1995 in the Superior Court of San Francisco County and
is encaptioned MCFH, Inc. v. Archer-Daniels-Midland Co.,
et al., Civil Action No. 974120. The California Judicial
Council has bifurcated the citric acid and high fructose
corn syrup claims in these actions and coordinated them
with other actions in San Francisco County Superior
Court and Stanislaus County Superior Court. As noted in
prior filings, the Company accepted a settlement
agreement with counsel for the citric acid plaintiff
class. This settlement received final court approval and
the case was dismissed on September 30, 1998. The
Company, along with other companies, also has been named
as a defendant in at least one putative class action
antitrust suit filed in West Virginia state court
involving the sale of high fructose corn syrup and
citric acid. This action also alleges violations of the
West Virginia antitrust laws, including allegations that
the defendants agreed to fix, stabilize and maintain at
artificially high levels the prices of high fructose
corn syrup and citric acid, and seeks treble damages of
an unspecified amount, attorneys fees and costs, and
other unspecified relief. The putative class in the West
Virginia action comprises certain entities within the
State of West Virginia that purchased products
containing high fructose corn syrup and/or citric acid
for resale from at least 1992 until 1994. This action
was filed on October 26, 1995, in the Circuit Court for
Boone County, West Virginia, and is encaptioned Freda's
v. Archer-Daniels-Midland Co., et al., Civil Action No.
95-C-125. The Company, along with other companies, also
has been named as a defendant in a putative class action
antitrust suit filed in the Superior Court for the
District of Columbia involving the sale of high fructose
corn syrup and citric acid. This action alleges
violations of the District of Columbia antitrust laws,
including allegations that the defendants agreed to fix,
stabilize and maintain at artificially high levels the
prices of high fructose corn syrup and citric acid, and
seeks treble damages of an unspecified amount, attorneys
fees and costs, and other unspecified relief. The
putative class in the District of Columbia action
comprises certain persons within the District of
Columbia that purchased products containing high
fructose corn syrup and/or citric acid during the period
January 1, 1992 through December 31, 1994. This action
was filed on April 12, 1996 in the Superior Court for
the District of Columbia, and is encaptioned Holder v.
Archer-Daniels-Midland Co., et al., Civil Action No. 96-
2975. On November 13, 1998, plaintiff's motion for class
certification was granted. The Company, along with
other companies, has been named as a defendant in a
putative class action
27
Page 28
Item 3. LEGAL PROCEEDINGS-Continued
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 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,
28
Page 29
Item 3. LEGAL PROCEEDINGS-Continued
1995, Stanislaus County Superior Court) and Ricci v.
Archer Daniels Midland Co., et al., No. 96-AS-00383
(Filed on February 6, 1996, Sacramento County Superior
Court). As noted in prior filings, the plaintiffs in
these actions and the lysine defendants have executed a
settlement agreement that has been approved by the court
and the California Judicial Council has bifurcated the
citric acid and high fructose corn syrup claims and
coordinated them with other actions in San Francisco
County Superior Court and Stanislaus County Superior
Court.
MONOSODIUM GLUTAMATE ACTIONS
The Company, along with other companies, has been named
as a defendant in twelve putative class action antitrust
suits involving the sale of monosodium glutamate and/or
other food flavor enhancers in the United States.
FEDERAL ACTIONS. Eight of these putative class actions
allege violations of federal antitrust laws, including
allegations that the defendants agreed to fix, stabilize
and maintain at artificially high levels the price of
monosodium glutamate, disodium inosinate and disodium
guanylate, and seek various relief, including treble
damages of an unspecified amount, attorneys fees and
costs, and other unspecified relief. The putative
classes in these cases comprise certain direct
purchasers of monosodium glutamate, disodium inosinate
and/or disodium guanylate during certain periods in 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
29
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Item 3. LEGAL PROCEEDINGS-Continued
is encaptioned M. Phil Yen, Inc. v. Ajinomoto Co. Inc.,
et al., No. 99 Div 06514 (EK). The seventh action was
filed on January 27, 2000 in the Northern District of
California and is encaptioned Chicago Ingredients, Inc.
v. Archer-Daniels-Midland Co., et al., No. C 00 0308
(JL). The eighth action was filed on April 12, 2000 in
the Eastern District of Pennsylvania and is encaptioned
Heller Seasonings & Ingredients, Inc. v. Ajinomoto
U.S.A., Inc., et al., No. 00-CV-1905. The Judicial Panel
on Multidistrict Litigation has consolidated these
actions for coordinated pretrial discovery in the United
States District Court of the District of Minnesota.
STATE ACTION. The Company, along with at least one
other company, also has been named as a defendant in
four putative class action antitrust suits filed in
California state court involving the sale of monosodium
glutamate and/or other food flavor enhancers. These
actions allege violations of California antitrust and
unfair competition laws, including allegations that the
defendants agreed to fix, stabilize and maintain at
artificially high levels the price of monosodium
glutamate and/or other food flavor enhancers, and seek
treble damages of an unspecified amount, restitution,
attorneys' fees and costs, and other unspecified relief.
The putative classes in these actions comprise certain
indirect purchasers of monosodium glutamate and/or other
food flavor enhancers in the State of California during
certain periods in the 1990's. The first action
originally was filed on June 25, 1999 in the Superior
Court of San Francisco County and in encaptioned Fu's
Garden Restaurant v. Archer-Daniels-Midland Company, et
al., Civil Action No. 304471. The second action was
filed on January 14, 2000 in the Superior Court of San
Francisco County and is encaptioned JMN Restaurant
Management, Inc. v. Ajinomoto Co., Inc., et al., Civil
Action No. 309236. The third action was filed on May 2,
2000 in the Superior Court of San Francisco County and
is encaptioned Tanuki Restaurant and Lilly Zapanta v.
Archer Daniels Midland Co., et al, Civil Action No.
311871. The fourth action was filed on May 24, 2000 in
the Superior Court of San Francisco County and is
encaptioned Tasty Sunrise Burgers v. Archer Daniels
Midland Co., et al., Civil Action No. 312373. On June
19, 2000, the court consolidated all of these cases for
pretrial and trial purposes.
OTHER
The Company has made provisions to cover certain legal
proceedings and related costs and expenses as described
in the notes to the unaudited consolidated financial
statements and management's discussion of operations and
financial condition. However, because of the early stage
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 audited
consolidated financial statements.
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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, 2000
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, 2000 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, 2000 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, 2000 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, 2000 are incorporated herein by
reference:
Consolidated balance sheets--June 30, 2000 and 1999
Consolidated statements of earnings--Years ended
June 30, 2000, 1999 and 1998
Consolidated statements of shareholders' equity--Years
ended
June 30, 2000, 1999 and 1998
Consolidated statements of cash flows--Years ended
June 30, 2000, 1999 and 1998
Notes to consolidated financial statements--June 30, 2000
Summary of Significant Accounting Policies
Report of Independent Auditors
Quarterly Financial Data (Unaudited)
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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 26, 2000 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 26, 2000 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 26, 2000 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 26, 2000
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, 2000, are
incorporated by reference in Item 8, and are also
incorporated herein by reference:
Consolidated balance sheets--June 30, 2000 and 1999
Consolidated statements of earnings--Years ended
June 30, 2000, 1999 and 1998
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Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM
8-K--Continued
Consolidated statements of shareholders' equity--
Years ended June 30, 2000, 1999 and 1998
Consolidated statements of cash flows--Years ended
June 30, 2000, 1999 and 1998
Notes to consolidated financial statements--June
30, 2000
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, filed as Exhibit (3)(i) to Form 10-K
for the year ended June 30, 1999 (File No. 1-44)
is incorporated herein by reference.
(ii)Bylaws, as amended and restated, filed on May
12, 2000 as Exhibit 3(ii) to Form 10-Q for the
quarter ended March 31, 2000, are incorporated
herein by reference.
(4) Instruments defining the rights of security holders,
including:
(i)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.
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Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM
8-K--Continued
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 on
exhibit pursuant to Item 14(c) of Form 10-K, are
incorporated herein by reference as follows:
(i) Registration Statement No. 33-49409 on Form S-8
dated March 15, 1993 relating to the Archer
Daniels Midland 1991 Incentive Stock Option
Plan and Archer Daniels Midland Company Savings
and Investment Plan.
(ii) Registration Statement No. 333-39605 on Form 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.
(iii) Registration Statement No. 333-51381 on Form
S-8 dated April 30, 1998 relating to the Archer-
Daniels-Midland Company 1996 Stock Option Plan.
(iv) The Archer-Daniels-Midland Company Stock Unit
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, (File No. 1-44)).
(v) Registration Statement No. 333-75073 on Form 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.
(vi) The Archer-Daniels-Midland Company Incentive Compensation
Plan (incorporated by reference to Exhibit A to the Company's
Definitive Proxy Statement filed with the Securities and
Exchange Commission on September 15, 1999 (File No. 1-44)).
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Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM
8-K--Continued
(vii) Registration Statement No. 333-42612 on Form S-
8 dated July 31, 2000 relating to the ADM
401(k) Plan for Salaried Employees and the ADM
401(k) Plan for Hourly Employees, as amended by
Post-Effective No. 1 to Registration Statement
No. 333-42612 on Form S-8 dated August 8, 2000.
(13) Portions of annual report to
shareholders incorporated by reference
(21) Subsidiaries of the registrant
(23) Consent of independent auditors
(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, 2000.
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Page 36
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 27, 2000
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 27, 2000,
by the following persons on behalf of the Registrant and in
the capacities indicated.
/s/ G. A. Andreas /s/ G. O. Coan
G. A. Andreas*, G. O. Coan*,
Chief Executive and Director Director
(Principal Executive Officer)
/s/ F. R. Johnson
/s/D. J. Schmalz F. R. Johnson*,
D. J. Schmalz Director
Vice President and
Chief Financial Officer /s/ D. J. Mimran
(Principal Financial Officer) D. J. Mimran*,
Director
/s/S. R. Mills
S. R. Mills /s/ M. B. Mulroney
Vice President and Controller M. B. Mulroney*,
(Controller) Director
/s/ D. O. Andreas /s/ R. S. Strauss
D. O. Andreas* R. S. Strauss*,
Director Director
/s/ J. R. Block /s/ J. K. Vanier
J. R. Block*, J. K. Vanier*,
Director Director
/s/ R. R. Burt /s/ O. G. Webb
R. R. Burt*, O. G. Webb*,
Director Director
/s/ Mrs. M. H. Carter /s/ A. Young
Mrs. M. H. Carter*, A. Young*,
Director Director
/s/ D. J. Smith
Attorney-in-Fact
*Powers of Attorney authorizing D. J. Schmalz, S. R. Mills 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.
36