-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uk6sM2DzBnzahS8Z6nHpaLl51bPp3H0YcUS2oh8YBYhZI3Y7zKFXtrrQFyN6NNVA GteE+zy2kpd0Vowlw5T1Jg== 0000007084-98-000007.txt : 19980218 0000007084-98-000007.hdr.sgml : 19980218 ACCESSION NUMBER: 0000007084-98-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980213 FILED AS OF DATE: 19980213 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARCHER DANIELS MIDLAND CO CENTRAL INDEX KEY: 0000007084 STANDARD INDUSTRIAL CLASSIFICATION: FATS & OILS [2070] IRS NUMBER: 410129150 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00044 FILM NUMBER: 98540146 BUSINESS ADDRESS: STREET 1: 4666 FARIES PKWY CITY: DECATUR STATE: IL ZIP: 62526 BUSINESS PHONE: 2174245200 10-Q 1 10-Q FOR 12/31/97 PAGE 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ________________________ TO ________________________ Commission file number 1-44 ARCHER-DANIELS-MIDLAND COMPANY (Exact name of registrant as specified in its charter) Delaware 41- 0129150 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 4666 Faries Parkway Box 1470 Decatur, Illinois 62525 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code217- 424-5200 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ___. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value - 571,429,962 shares (January 31, 1998) 1 PAGE 2 PART I - FINANCIAL INFORMATION ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
THREE MONTHS ENDED DECEMBER 31, 1997 1996 -------------- ----------- (In thousands, except per share amounts) Net sales and other operating income $4,130,29 8 $3,514,9 38 Cost of products sold and other operating costs 3,767,939 3 , 1 2 8 , 4 7 5 _________ ____ ____ _ Gross Profit 362,359 386,463 Selling, general and administrative 136,745 expenses 114,061 _________ ____ ____ _ Earnings From Operations 225,614 272,402 Other income (expense) (16,209) 15,386 _________ ________ _ Earnings Before Income Taxes 209,405 287,788 Income taxes 70,197 97,847 _________ ________ _ Net Earnings $ 139,2 $ 189,94 08 1 ========= ========= Average number of shares outstanding 557,806 571,258 Basic and diluted earnings per common $.25 $.33 share Dividends per common share $.05 $.048
See notes to consolidated financial statements. 2 PAGE 3 ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
SIX MONTHS ENDED DECEMBE R 31, 1997 1996 -------------- ----------- (In thousands, except per share amounts) Net sales and other operating income $7,781,60 0 $6,845,4 13 Cost of products sold and other operating costs 7,094,073 6 , 0 8 8 , 9 5 0 _________ ____ ____ _ Gross Profit 687,527 756,463 Selling, general and administrative 271,731 expenses 425,393 _________ ____ ____ _ Earnings From Operations 415,796 331,070 Other income (expense) (7,376) 34,827 _________ ________ _ Earnings Before Income Taxes 408,420 365,897 Income taxes 137,862 172,403 _________ ________ _ Net Earnings $ 270,5 $ 193,49 58 4 ========= ========= Average number of shares outstanding 557,753 571,810 Basic and diluted earnings per common $.49 $.34 share Dividends per common share $.098 $.094
See notes to consolidated financial statements. 3 PAGE 4 ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudi ted)
DECEMBER 31, JUNE 30, 1997 1997 ------------- -- -- -- -- -- - -- (In thousands) ASSETS Current Assets Cash and cash equivalents $ 447,412 $ 397,788 Marketable securities 407,980 330,208 Receivables 1,924,924 1,329,350 Inventories 2,560,249 2,094,092 Prepaid expenses 191,689 132,897 __________ __________ Total Current Assets 5,532,254 4,284,335 Investments and Other Assets Investments in and advances to 1,381,484 1,102,420 affiliates Long-term marketable securities 1,141,223 987,665 Other assets 377,809 271,352 __________ __________ 2,900,516 2,361,437 Property, Plant and Equipment Land 125,198 118,898 Buildings 1,567,456 1,448,945 Machinery and equipment 7,246,904 6,841,225 Construction in progress 919,545 765,720 Less allowances for depreciation (4,705,680) (4,466,193) __________ __________ 5,153,423 4,708,595 __________ __________ $13,586,193 $11,354,367 =========== ===========
See notes to consolidated financial statements. 4 PAGE 5 ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
DECEMBER 31, JUNE 30, 1997 1997 ------------ -- -- -- -- -- - -- (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term debt $1,473,857 $ 604,831 Accounts payable 1,480,771 1,126,313 Accrued expenses 502,740 493,944 Current maturities of long-term debt 31,414 23,667 __________ __________ Total Current Liabilities 3,488,782 2,248,755 Long-term Debt 2,860,781 2,344,949 Deferred Credits Income taxes 613,128 597,514 Other 138,667 113,020 __________ __________ 751,795 710,534 Shareholders' Equity Common stock 4,477,298 4,192,321 Reinvested earnings 2,007,537 1,857,808 __________ __________ 6,484,835 6,050,129 __________ __________ $13,586,193 $11,354,367 ========== ==========
See notes to consolidated financial statements. 5 PAGE 6 ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED DECEMB ER, 31 1997 1996 ------------- ------- ----(In thousan ds) Operating Activities Net earnings $ 270,558 $ 193,494 Adjustments to reconcile to net cash provided by operations Depreciation and amortization 241,530 215,135 Deferred income taxes 11,667 (24,350) Amortization of long-term debt discount 16,063 14,056 (Gain)loss on marketable securities transactions (36,147) (48,272) Other (8,393) 14,177 Changes in operating assets and liabilities Receivables (302,148) (159,998) Inventories (135,479) (405,795) Prepaid expenses (46,531) (28,496) Accounts payable and accrued expenses 144,188 355,598 ________ ________ Total Operating Activities 155,308 125,549 Investing Activities Purchases of property, plant and equipment (320,081) (400,249) Net assets of businesses acquired (368,371) (44,091) Investments in and advances to affiliates (253,142) (334,164) Purchases of marketable securities (696,257) (688,349) Proceeds from sales of marketable 489,413 1,105,50 securities 0 ________ ________ Total Investing Activities (1,148,438) (361,353 ) Financing Activities Long-term debt borrowings 441,464 - Long-term debt payments (7,316) (18,024) Net borrowings under line of credit 703,214 171,914 agreements Purchases of treasury stock (42,135) (63,212) Cash dividends and other (52,473) (52,322) ________ ________ Total Financing Activities 1,042,754 38,356 ________ ________ (Increase) Decrease In Cash and Cash 49,624 (197,448 Equivalents ) Cash and Cash Equivalents Beginning of 397,788 534,702 Period ________ ________ Cash and Cash Equivalents End of Period $ 447,412 $ 337,254 ======== ======== Supplemental Cash Flow Information Noncash Investing and Financing Activities Common stock issued in purchase $ 298,244 $ - acquisition
See notes to consolidated financial statements. 6 PAGE 7 ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1.The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter and six months ended December 31, 1997 are not necessarily indicative of the results that may be expected for the year ending June 30, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended June 30, 1997. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards Number 128 (SFAS 128) "Earnings per Share." This statement, which is required to be adopted for financial statements issued for the first period ended after December 15, 1997 replaces the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to the SFAS 128 requirements. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards Number 130 (SFAS 130) "Reporting Comprehensive Income." This statement, which is required to be adopted for financial statements issued for periods beginning after December 15, 1997, establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. At that time, ADM will be required to report total comprehensive income, an amount that will include net income as well as other comprehensive income. Other comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles have previously been reported as separate components of equity in ADM's Consolidated Statements of Earnings. 7 PAGE 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards Number 131 (SFAS 131) "Disclosures about Segments of an Enterprise and Related Information." This statement, which is required to be adopted for financial statements issued for periods beginning after December 15, 1997, establishes standards for the way that public business enterprises report information about operating segments in financial reports issued to shareholders. ADM has not yet determined the financial statement disclosure impact of SFAS 131. Certain items in prior year financial statements have been reclassified to conform to the current year's presentation. Note 2. Other Income (expense)
THREE MONTHS SIX MONTHS ENDED ENDED DECEMBER 31, DECEMBER 31, 1997 1996 1997 1996 ________________ ________________ ___ ___ (In thousands) (In thousands) Investment income $ 25,602 $30,34 $ $69,21 8 53,804 5 Interest expense (72,334) (48,13 (127,75 (94,26 3) 3) 0) Gain on marketable securities transactions 12,449 17,983 36,150 48,284 Equity in earnings of 16,397 13,666 26,954 11,675 affiliates Other 1,677 1,522 3,469 (87) ______ ______ ______ ______ $(16,20 $15,38 $ $34,82 9) 6 (7,376) 7 ====== ====== ====== ======
Note 3. Per Share Data All references to share and per share information have been adjusted for the 5 percent stock dividend paid September 15, 1997. 8 PAGE 9 ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 4.Antitrust Investigation and Related Litigation Federal grand juries in the Northern Districts of Illinois, California and Georgia, under the direction of the United States Department of Justice ("DOJ"), have been investigating possible violations by the Company and others with respect to the sale of lysine, citric acid and high fructose corn syrup, respectively. In connection with an agreement with the DOJ, the Company has paid the United States a fine of $100 million. This agreement constitutes a global resolution of all matters between the DOJ and the Company and brings to a close all DOJ investigations of the Company. Following public announcement in June 1995 of these investigations, the Company and certain of its then current directors and executive officers were named as defendants in a number of putative class action suits for alleged violations of federal securities laws on behalf of all purchasers of securities of the Company during the period between certain dates in 1992 and 1995. The Company, along with other domestic and foreign companies, was named as a defendant in a number of putative class action antitrust suits and other proceedings involving the sale of lysine, citric acid, and high fructose corn syrup. The plaintiffs generally request unspecified compensatory damages, costs, expenses and unspecified relief. The Company and the individuals named as defendants intend to vigorously defend these actions and proceedings unless they can be settled on terms deemed acceptable by the parties. These matters have resulted and could result in the Company being subject to monetary damages, other sanctions and expenses. The Company has made provisions of $200 million in fiscal 1997 and $31 million in fiscal 1996 to cover the fine, litigation settlements related to the federal lysine class action, federal securities class action, the federal citric class action and certain state actions filed by indirect purchasers of lysine, certain actions filed by parties that opted-out of the class action settlements, and related costs and expenses associated with the litigation described in the proceeding paragraph. Because of the early stage of other putative class actions and proceedings, including those related to high fructose corn syrup, the ultimate outcome and materiality of these matters cannot presently be determined. Accordingly, no provision for any liability that may result therefrom has been made in the unaudited consolidated financial statements. The Company and its directors have also been named as defendants in a putative class action suit which alleges violations of Delaware state law and seeks invalidation of the election of the Company's directors on the basis of alleged omissions from the proxy statement issued by the Company prior to its 1995 Annual Meeting of Shareholders. This case was dismissed, appealed and remanded to provide the plaintiffs an opportunity to replead. The plaintiffs filed an amended complaint on November 21, 1997. 9 PAGE 10 ARCHER DANIELS MIDLAND COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION OPERATIONS The Company is in one business segment - procuring, transporting, storing, processing and merchandising agricultural commodities and products. A summary of net sales and other operating income by classes of products and services is as follows:
THREE MONTHS SIX MONTHS ENDED ENDED DECEMBER 31, DECEMBER 31, 1997 1997 1996 1996 --------------- ----- ----------- -- (In millions) (In millions) Oilseed products $2,587 $2,259 $4,896 $4,365 Corn products 556 574 1,091 1,123 Wheat and other 393 423 780 872 milled products Other products and 594 259 1,015 485 services ----- ----- ----- ----- $4,130 $3,515 $7,782 $6,845 ===== ===== ===== =====
Net sales and other operating income increased 18 percent for the quarter to $4.1 billion and increased 14 percent for the six months to $7.8 billion due primarily to sales attributable to recently acquired operations. Sales of oilseed products increased 15 percent for the quarter and 12 percent for the six months due principally to higher sales volumes reflecting strong worldwide protein meal and vegetable oil demand. Oilseed product sales also increased due to sales attributable to recently acquired operations. These increases were partially offset by lower average selling prices reflecting the lower cost of raw materials. Sales of corn products decreased 3 percent for both the quarter and six months due primarily to lower average selling prices for the Company's sweetener, fuel alcohol, and amino acid products. These decreases were partially offset by increased sales volumes of these same products. Sales of wheat and other milled products decreased 7 percent for the quarter and 11 percent for the six months due principally to lower average selling prices reflecting the lower cost of raw materials. These decreases were partially offset by sales attributable to recently acquired operations. The increase in other products and services for both the quarter and six months was due principally from sales related to the Company's recently acquired cocoa business. Cost of products sold and other operating costs increased $639 million for the quarter to $3.8 billion and increased $1 billion for the six months to $7.1 billion due principally to costs related to recently acquired operations. To a lesser extent, costs increased due to higher sales volumes partially offset by lower average raw material costs. 10 PAGE 11 Gross profit declined $24 million to $362 million for the quarter and declined $69 million to $688 million for the six months due primarily to the net effect of decreased sales prices versus lower raw material costs. For the six months, gross profit was also reduced due to decreased merchandising and transportation margins. These decreases were partially offset by increased sales volumes and gross profits of recently acquired operations. Selling, general and administrative expenses increased $23 million for the quarter to $137 million due primarily to $15 million of expenses attributable to recently acquired operations. Selling, general and administrative expenses decreased $154 million for the six months to $272 million due principally to decreased legal and litigation related costs of $200 million arising out of the United States Department of Justice antitrust investigation of the Company's lysine and citric acid products as well as a securities suit brought by shareholders (see note 4 to the financial statements). Partially offsetting this decrease for the six months was $28 million of selling, general and administrative expenses attributable to recently acquired operations. The decrease in other income for the quarter and six months was due to decreased investment income due to lower invested funds, increased interest expense due to higher borrowing levels and decreased gains on marketable securities transactions. These decreases were partially offset by increased equity in earnings of unconsolidated affiliates. The decrease in income taxes for the quarter was due principally to lower pretax earnings. The Company's effective income tax rate of 34 percent for the quarter was comparable to the same period a year ago. The decrease in income taxes for the six months was a result of a lower effective tax rate partially offset by higher pretax earnings. The decrease in the Company's effective income tax rate to 34 percent for the six months compared to an effective tax rate of 47 percent last year is due primarily to the non-deductibility for income tax purposes in fiscal 1997 of a portion of the Company's litigation settlements and fines. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1997, the Company continued to show substantial liquidity with working capital of $2 billion. The Company's total cash and marketable securities net of short-term debt was $523 million. Capital resources remained strong as reflected in the Company's net worth of $6.5 billion. During the quarter, the Company issued $200 million of 6.75 percent debentures due in 2027, $250 million of 6.95 percent debentures due in 2097 and $298 million of common stock in a business acquisition. The Company's ratio of long-term debt to total capital at September 30, 1997 was approximately 28 percent. As discussed in Note 4 to the unaudited consolidated financial statements, various grand juries under the direction of the United States Department of Justice ("DOJ") have been conducting investigations into possible violations by the Company and others of federal antitrust laws and related matters with respect to the sale of lysine, citric acid and high fructose corn syrup. In connection with an agreement with the DOJ, the Company has paid the United States a fine of $100 million. This agreement constitutes a global resolution of all matters between the DOJ and the Company and brings to a close all DOJ investigations of the Company. In addition, related civil class actions and other proceedings have been filed against the Company, which could result in the Company being subject to monetary damages, other sanctions and expenses. As also discussed in Note 4 to the unaudited consolidated financial statements, the Company has settled certain civil federal class action suits involving lysine, citric acid, and securities, and certain state actions filed by indirect purchasers of lysine. The Company made provisions of $231 million in prior years to cover such fines and settlements and related costs and expenses. Because of the early stage of other putative class actions and proceedings, including those related to high fructose corn syrup, the ultimate outcome and materiality of these matters cannot presently be determined. Accordingly, no provision for any liability that may result therefrom has been made in the unaudited consolidated financial statements. 11 PAGE 12 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS ENVIRONMENTAL MATTERS In 1993, the State of Illinois Environmental Protection Agency ("IEPA") brought administrative enforcement proceedings arising out of the Company's alleged failure to obtain permits for certain pollution control equipment at certain of the Company's processing facilities in Illinois. The Company and IEPA have executed a settlement agreement with respect to one of these proceedings. That agreement is currently before the Illinois Pollution Control Board for approval. The Company believes it has meritorious defenses to the remaining proceeding. In management's opinion this settlement and the remaining proceeding will not, either individually or in the aggregate, have a material adverse effect on the Company's financial condition or results of operations. The Company is involved in approximately 35 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 effect 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. 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, the Company has paid the United States a fine 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 Company has received notice that certain foreign governmental entities were commencing investigations to determine whether anticompetitive practices occurred in their jurisdictions. In February 1997, the Company's three Mexican subsidiaries were notified that the Mexican Federal Competition Commission commenced an investigation as to whether the Company's marketing and sale of lysine in Mexico resulted in violations of that country's federal antitrust laws. In June 1997, the Company and several of its European subsidiaries were notified that the Commission of the European Communities initiated an investigation as to their possible anticompetitive practices in the amino acid markets, in particular the lysine market, in the European Union. 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 within the European Union. In December, 1997, the Company was notified by the Canadian Competition Bureau that it is among the subjects of a formal inquiry into an alleged conspiracy to fix prices and sales volumes in the production, sale and supply of lysine. Each of these investigations is in the early stages and, accordingly, their ultimate outcome and materiality cannot presently be determined. The Company may become the subject of similar antitrust investigations conducted by the applicable regulatory authorities of other countries. HIGH FRUCTOSE CORN SYRUP ACTIONS The Company, along with other companies, has been named as a defendant in thirty-one antitrust suits involving the sale of high fructose corn syrup. Thirty of these actions have been brought as putative class actions. FEDERAL ACTIONS. Twenty-two of these putative class actions allege violations of federal antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup, and seek injunctions against continued alleged illegal conduct, treble damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative classes in these cases comprise certain direct purchasers of high fructose corn syrup during certain periods in the 1990s. These twenty-two actions have been transferred to the United States District Court for the Central District of Illinois and consolidated under the caption In Re High Fructose Corn Syrup Antitrust Litigation, MDL No. 1087 and Master File No. 95-1477. The parties are in the midst of discovery in this action. 12 PAGE 13 On January 14, 1997, the Company, along with other companies, was named a defendant in a non-class action antitrust suit involving the sale of high fructose corn syrup and corn syrup. This action which is encaptioned Gray & Co. v. Archer Daniels Midland Co., et al, No. 97-69 AS, and was filed in federal court in Oregon, alleges violations of federal antitrust laws and Oregon and Michigan state antitrust laws, including allegations that defendants conspired to fix, raise, maintain and stabilize the price of corn syrup and high fructose corn syrup, and seeks treble damages, attorneys' fees and costs of an unspecified amount. The parties are in the midst of discovery in this action. STATE ACTIONS. The Company, along with other companies, also has been named as a defendant in seven putative class action antitrust suits filed in California state court involving the sale of high fructose corn syrup. These California actions allege violations of the California antitrust and unfair competition laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup, and seek treble damages of an unspecified amount, attorneys fees and costs, restitution and other unspecified relief. One of the California putative classes comprises certain direct purchasers of high fructose corn syrup in the State of California during certain periods in the 1990s. This action was filed on October 17, 1995 in Superior Court for the County of Stanislaus, California and encaptioned Kagome Foods, Inc. v Archer-Daniels-Midland Co. et al., Civil Action No. 37236. This action has been removed to federal court and consolidated with the federal class action litigation pending in the Central District of Illinois referred to above. The other six California putative classes comprise certain indirect purchasers of high fructose corn syrup and dextrose in the State of California during certain periods in the 1990s. One such action was filed on July 21, 1995 in the Superior Court of the County of Los Angeles, California and is encaptioned Borgeson v. Archer-Daniels-Midland Co., et al., Civil Action No. BC131940. This 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). The parties are in the midst of discovery in the coordinated action. 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. 13 PAGE 14 The Company, along with other companies, also has been named a defendant in a putative class action antitrust suit filed in Alabama state court. The Alabama action alleges violations of the Alabama, Michigan and Minnesota antitrust laws, including allegations that defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup, and seeks an injunction against continued illegal conduct, damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative class in the Alabama action comprises certain indirect purchasers in Alabama, Michigan and Minnesota during the period March 18, 1994 to March 18, 1996. This action was filed on March 18, 1996 in the Circuit Court of Coosa County, Alabama, and is encaptioned Caldwell v. Archer-Daniels-Midland Co., et al., Civil Action No. 96- 17. On April 23, 1997, the court granted the defendants' motion to sever and dismiss the non-Alabama claims. The remaining parties are in the midst of discovery in this action. LYSINE ACTIONS The Company, along with other companies, had been named as a defendant in twenty-one putative class action antitrust suits involving the sale of lysine. Except for several plaintiffs that opted out of the federal class action settlement and the actions specifically described below, all such suits have been settled, dismissed or withdrawn. STATE ACTIONS. The Company has been named as a defendant, along with other companies, in two putative class action antitrust suits and one non-class action suit filed in Alabama state court, one putative class action antitrust suit filed in Tennessee state court and one putative class action antitrust suit filed in Michigan state court involving the sale of lysine. The two putative Alabama class actions allege 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 seek an injunction against continued alleged illegal conduct, damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The two putative classes in the Alabama actions comprise certain indirect purchasers of lysine in the State of Alabama during certain periods in the 1990s. One such 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. The parties are in the midst of discovery in this action. The other Alabama action, encaptioned Bailey v. Archer Daniels Midland Co., et al., Civil Action No. 95-165, and filed on December 11, 1995 in the Circuit Court of Tallapoosa County, has been placed on the court's administrative docket pending the outcome of the Ashley action. The non-class action, encaptioned Kent v. Archer Daniels Midland Co., et al, No. CV 9701108, and filed on February 21, 1997 in the Circuit Court of Jefferson County, Alabama, includes allegations that are similar to these contained in the putative class actions and seeks monetary relief in the amount of $670,000, injunctive relief against alleged illegal conduct, attorneys fees and costs, punitive damages and other unspecified relief. This action was removed to federal court in the Northern District of Alabama and dismissed on December 15, 1997 pursuant to a settlement agreement that did not result in the Company paying plaintiff any consideration. The Tennessee action, encaptioned McCormack Farms v. Archer Daniels Midland Co., et al., Civil Action No. 96C-2190, and filed on June 11, 1996 in Davidson County Circuit Court, alleges a restraint of trade in violation of the Tennessee Trade Practices Act and Tennessee Consumer Protection Act. This action includes allegations that defendants conspired to fix, maintain or stabilize the prices of lysine and seeks an injunction against continued illegal conduct, treble damages of an unspecified amount, attorneys' fees and costs, and other unspecified relief. The putative class in this case comprises certain indirect purchasers of lysine within the State of Tennessee during the period June 10, 1992 through June 10, 1996. The Company has not yet filed a responsive pleading. The Michigan action alleges a restraint of trade in violation of the Michigan Antitrust Reform Act and include allegations that defendants conspired to fix, raise, maintain and stabilize the price of lysine and seeks an injunction against continued illegal conduct, treble damages of an unspecified amount, attorneys' fees and costs, and other unspecified relief. The putative class in this case comprises certain indirect purchasers of lysine within the State of Michigan during certain periods in the 1990s. This action, encaptioned Michigan Pork Producers Assn, et al. v. Archer Daniels Midland Co., et al., No. 906-10696-CZ, was filed on September 25, 1996 in Kent County Circuit Court. The Company has not yet filed a responsive pleading in this action. 14 PAGE 15 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 several plaintiffs that opted out of the federal class action settlement and the actions specifically described below, all such suits have been settled or dismissed. FEDERAL ACTIONS. On February 4, 1997, a class action complaint, encaptioned Galavan Supplements Ltd. v. Archer Daniels Midland Co., et al., No. 97-0704 JGD (VAPx), was filed in the United States District Court for the Central District of California. The Company, along with other companies, was named a defendant in this putative class action brought on behalf of a class consisting of all persons and entities outside of the United States who purchased citric acid directly from any defendants through their foreign facilities during the time period July 1, 1991 through June 30, 1995. This action alleges violations of the federal antitrust laws, including allegations that the defendants conspired to fix, maintain and stabilize the price of citric acid and to allocate amongst themselves their major citric acid customers, accounts and market shares on a worldwide basis. On November 18, 1997, the Court granted the defendants' motion to dismiss. The Company, along with other companies, also has been named as a defendant in a non-class action federal antitrust suit involving the sale of citric acid filed on June 9, 1997 in the United States District Court for the Northern District of California, encaptioned The Proctor & Gamble Manufacturing Co., et al. v. Archer-Daniels-Midland Company, et al., Civil Action No. 97-2155 (VRW).. This action alleges violations of federal antitrust laws, including allegations that defendants agreed to fix, raise and maintain the price of citric acid, and seek an injunction against continued alleged illegal conduct, treble damages of an unspecified amount, attorney's fees and costs, and other unspecified relief. This action was brought by entities that opted-out of a previously settled federal class action. The parties are in the midst of discovery in this action. STATE ACTIONS. The Company, along with other companies, also has been named as a defendant in one putative class action antitrust suit filed in Alabama state court involving the sale of citric acid. This action alleges violations of the Alabama antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of citric acid, and seeks an injunction against continued alleged illegal conduct, damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative class in the Alabama action comprises certain indirect purchasers of citric acid in the State of Alabama from July 1993 until July 1995. This action was filed on July 27, 1995 in the Circuit Court of Walker County, Alabama and is encaptioned Seven Up Bottling Co. of Jasper, Inc. v. Archer-Daniels-Midland Co., et al., Civil Action No. 95-436. The Company currently is seeking appellate review of the denial of its motion to dismiss this action. The Company, along with other companies, also has been named as a defendant in two putative class action antitrust suits filed in California state court involving the sale of citric acid. These actions allege violations of the California antitrust and unfair competition laws, including allegations that the defendants conspired to fix, maintain or stabilize the price of citric acid, and seek injunctions against continued illegal conduct, treble damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative classes in these cases comprise certain indirect purchasers of citric acid within the State of California during certain periods in the 1990s. One such action was filed on June 12, 1996 in the Superior Court of the County of San Francisco, California and is encaptioned Bianco v. Archer Daniels Midland Co., et al., Civil Action No. 978912. The second action was filed on June 28, 1996 in San Francisco County Superior Court and is encaptioned Wignall v. Archer Daniels Midland Co., et al., Civil Action No. 979360. These actions have been coordinated before a single court in San Francisco County, California under the caption, Food Additives (Lysine/Citric Acid) cases, Coordination Proceeding No. 3265. The Company, along with other companies, also has been named as a defendant in one putative class action antitrust suit filed in Wisconsin state court involving the sale of citric acid. This action alleges violations of the laws of Wisconsin, Minnesota, Alabama, Arizona, California, District of Columbia, Florida, Tennessee, West Virginia, Mississippi, New Mexico, North Carolina, South Dakota, North Dakota, Kansas, Louisiana, Michigan and Maine, including allegations that defendants conspired to maintain the price of citric acid at artificially high levels and seeks injunctive relief, treble damages of an unspecified amount, attorneys fees and costs and other unspecified relief. The putative class in this case comprises certain indirect purchasers of citric acid in the above referenced states during the period July 1, 1991 through June 27, 1995. This action was filed on December 20, 1996 in the Circuit Court for Milwaukee County, Wisconsin and is encaptioned Raz, et al. v. Archer-Daniels-Midland Co., et al., No. 96-CV-9729. 15 PAGE 16 HIGH FRUCTOSE CORN SYRUP/CITRIC ACID STATE CLASS ACTIONS The Company, along with other companies, has been named as a defendant in six putative class action antitrust suits involving the sale of both high fructose corn syrup and citric acid. Two of these actions allege violations of the California antitrust and unfair competition laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup and citric acid, and seek treble damages of an unspecified amount, attorneys fees and costs, restitution and other unspecified relief. The putative class in one of these California cases comprises certain direct purchasers of high fructose corn syrup and citric acid in the State of California during the period January 1, 1992 until at least October 1995. This action was filed on October 11, 1995 in the Superior Court of Stanislaus County, California and is entitled Gangi Bros. Packing Co. v. Archer-Daniels- Midland Co., et al., Civil Action No. 37217. The putative class in the other California case comprises certain indirect purchasers of high fructose corn syrup and citric acid in the state of California during the period October 12, 1991 until November 20, 1995. This action was filed on November 20, 1995 in the Superior Court of San Francisco County and is encaptioned MCFH, Inc. v. Archer-Daniels-Midland Co., et al., Civil Action No. 974120. The California Judicial Council has bifurcated the citric acid and high fructose corn syrup claims in these actions and coordinated them with other actions in San Francisco County Superior Court and Stanislaus County Superior Court. 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-C125. The Company, along with other companies, also has been named as defendant in a putative class action antitrust suit filed in Michigan state court involving the sale of high fructose corn syrup and citric acid. This action alleges violations of the Michigan 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 Michigan action comprises certain persons within the State of Michigan that purchased products containing high fructose corn syrup and/or citric acid during the period January 1993 through June 27, 1995. This action was filed on February 26, 1996 in the Circuit Court for Ingham County, Michigan, and is encaptioned Wilcox v. Archer- Daniels-Midland Co., et al., Civil Action No. 9682473-CP. The parties are in the midst of discovery in this action. On September 29, 1997, the court denied the plaintiff's motion for class certification. 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. 962975. The parties are in the midst of discovery in this action. The Company, along with other companies, has been named as a defendant in a putative class action antitrust suit filed in Kansas state court involving the sale of high fructose corn syrup and citric acid. This action alleges violations of the Kansas antitrust laws, including allegations that the defendants agreed to fix, stabilize and maintain at artificially high levels the prices of high fructose corn syrup and citric acid, and seeks treble damages of an unspecified amount, court costs and other unspecified relief. The putative class in the Kansas action comprises certain persons within the State of Kansas that purchased products containing high fructose corn syrup and/or citric acid during at least the period January 1, 1992 through December 31, 1994. This action was filed on May 7, 1996 in the District Court of Wyandotte County, Kansas and is encaptioned Waugh v. Archer-Daniels Midland Co., et al., Case No. 96-C-2029. The parties are in the midst of discovery in this action. 16 PAGE 17 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 two federal antitrust class actions involving the sale of sodium gluconate. These actions allege violations of federal antitrust laws, including allegations that the defendants agreed to fix, raise and maintain at artificially high levels the prices of sodium gluconate, and seek various relief, including treble damages of an unspecified amount, attorneys fees and costs, and other unspecified relief. The putative classes in these cases comprise certain direct purchasers of sodium gluconate during periods in the 1990s. One such action was filed on December 2, 1997, in the United States District Court for the Northern District of California and is encaptioned Chemical Distribution, Inc, v. Akzo Nobel Chemicals BV, et al., No. C -97-4141 (CW). The other 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 Company has not yet filed a responsive pleading in either action. SHAREHOLDER DERIVATIVE ACTIONS Following the public announcement of the grand jury investigations in June 1995 discussed above, three shareholder derivative suits were filed against certain of the Company's then current directors and executive officers and nominally against the Company in the United States District Court for the Northern District of Illinois and fourteen similar shareholder derivative suits were filed in the Delaware Court of Chancery. The derivative suits filed in federal court in Illinois were consolidated under the name Felzen, et al. v. Andreas, et al., Civil Action No. 95C-4006, 95-C-4535, and a consolidated amended derivative complaint was filed on September 29, 1995. This complaint names all then current directors of the Company (except Mr. Coan) and one former director as defendants and names the Company as a nominal defendant. It alleges breach of fiduciary duty, waste of corporate assets, abuse of control and gross mismanagement, based on the antitrust allegations described above, as well as other alleged wrongdoing. On October 31, 1995, the Court granted the defendants' motion to transfer the Illinois consolidated derivative action to the Central District of Illinois, wherein it now bears the case number 95- 2279. On April 26, 1996, the court dismissed the suit without prejudice and permitted the plaintiffs twenty-one days to refile it. The plaintiffs refiled the complaint on May 17, 1996. The defendants again moved to dismiss the complaint on June 1, 1996. Plaintiffs have supplemented the complaint to include the antitrust settlements and guilty plea described above. The fourteen shareholder derivative suits filed in the Delaware Court of Chancery have been consolidated as In Re Archer Daniels Midland Derivative Litigation, Consolidated No. 14403. An amended and consolidated complaint was filed on November 19, 1996. ADM moved to dismiss the complaint on December 12, 1996. On May 29, 1997, the Company executed a Memorandum of Understanding with counsel for both the Illinois and Delaware shareholder derivative plaintiffs. This Memorandum of Understanding provides for, among other things, $8 million to be paid by or on behalf of certain defendants in these actions to the Company and certain changes in the structure and policies of the Company's Board of Directors. On May 30, 1997, the United States District Court for the Central District of Illinois preliminarily approved this settlement and on July 7, 1997 final approval was granted. Certain entities appealed the final settlement approval order to the United States Court of Appeals for the Seventh Circuit. On January 21, 1998 the Court of Appeals dismissed the appeal. The parties will jointly seek dismissal of the Delaware actions with prejudice once the federal action, including any further appeals, is concluded. 17 PAGE 18 DELAWARE STATE LAW ACTION The Company and certain of its current and former directors also have been named as defendants in a putative class action suit encaptioned Loudon v. Archer-DanielsMidland Co., et al., Civil Action No. 14638, filed in the Delaware Court of Chancery on October 20, 1995. This action alleges violations of Delaware state law and seeks invalidation of the 1995 election of the Company's directors and damages on the basis of alleged omissions from the proxy statement issued by the Company prior to its October 19, 1995 annual meeting of shareholders. The Delaware Court of Chancery dismissed this action on February 20, 1996. On September 17, 1997, the Supreme Court of Delaware affirmed the lower court's judgment and remanded the case to provide the plaintiffs an opportunity to replead. The revised complaint was filed on November 21, 1997. OTHER As described in the notes to the unaudited consolidated financial statements and management's discussion of operations and financial condition, the Company has made provisions to cover assessed fines, litigation settlements and related costs and expenses described above. 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. Item 4. Submission of matters to a vote of Security Holders: The Annual Meeting of Shareholders was held on October 16, 1997. Proxies for the Annual Meeting were solicited pursuant to Regulation 14. There was no solicitation in opposition to the Board of Director nominees as listed in the proxy statement and all of such nominees were elected as follows: Nominee Shares Cast Shares For Withheld D. O. Andreas 457,802,414 16,933,111 G. O. Coan 459,614,826 15,120,699 G. A. Andreas 458,493,047 16,242,478 S. M. Archer, Jr. 458,932,277 15,803,248 J. K. Vanier 459,533,892 15,201,633 R. Burt 459,388,806 15,346,719 A. Young 458,722,047 16,013,478 O. G. Webb 459,590,378 15,145,147 F. Ross Johnson 459,179,222 15,556,303 R. S. Strauss 458,978,561 15,756,964 M. B. Mulroney 458,952,914 15,782,611 J. R. Block 459,420,032 15,315,493 M. H. Carter 459,616,407 15,119,118 18 PAGE 19 There were no abstentions or broker non-votes regarding the election of directors. The appointment by the Board of Directors of Ernst & Young LLP as Independent Accountants to audit the accounts of the Company for the fiscal year ending June 30, 1998 was ratified as follows: For Against Abstain 471,604,072 2,112,483 1,018,970 Item 6. Exhibits and Reports on Form 8-K a) Exhibits (3) Articles of Incorporation and Bylaws Composite Certificate of Incorporation and Bylaws filed on November 7, 1986 as Exhibits 3(a) and 3(b), respectively, to Post Effective amendment No. 1 to Registration Statement on Form S-3, Registration No. 33-6721, are incorporated herein by reference. (10) Material Contracts Archer-Daniels-Midland Company Stock Unit Plan For Nonemployee Directors As Amemded. (27) Financial Data Schedules b) Reports on Form 8-K A Form 8-K was not filed during the quarter ended December 31, 1997. 19 PAGE 20 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ARCHER-DANIELS-MIDLAND COMPANY /s/ D. J. Schmalz D. J. Schmalz Vice President and Chief Financial Officer /s/ D. J. Smith D. J. Smith Vice President, Secretary and General Counsel Dated: February 13, 1998 20 EX-27 2 FINANCIAL DATA SCHEDULE FOR 10-Q 12/31/97
5 6-MOS JUN-30-1998 DEC-31-1997 447,412 407,980 1,924,924 0 2,560,249 5,532,254 9,859,103 4,705,680 13,586,193 3,488,782 2,860,781 0 0 4,477,298 2,007,537 13,586,193 7,781,600 7,781,600 7,094,073 7,094,073 0 0 127,753 408,420 137,862 270,558 0 0 0 270,558 .49 .49
EX-10 3 STOCK UNIT PLAN FOR NONEMPLOYEE DIRECTORS PAGE 1 EXHIBIT 10 ARCHER-DANIELS-MIDLAND COMPANY STOCK UNIT PLAN FOR NONEMPLOYEE DIRECTORS AS AMENDED 1. INTRODUCTION The Archer-Daniels-Midland Company Stock Unit Plan for Nonemployee Directors, as amended, is intended to promote the interests of the Company and its Stockholders by paying part or all of the compensation of the Company's nonemployee directors in the form of an economic equivalent of an equity interest in the Company, thereby providing appropriate incentives and rewards to encourage nonemployee directors to take a long-term outlook when formulating policy applicable to the Company and encouraging them to remain on the Board. In general, the Plan provides for the conversion of at least 50 percent and up to 100 percent of a nonemployee director's fees for each calendar year into units of measurement relating to the value of the Company's common stock, and for payment to the director of the value of such units five full calendar years later (or upon termination from service on the Board, if earlier), so that a director will normally receive payment under the Plan each successive year in respect of the fees originally converted into units in the year preceding the fifth calendar year prior to the year of payment. A nonemployee director will participate in the Plan for all periods of service on the Board following the effective date of the Plan, notwithstanding any future payments to the director of any part of his interest under the Plan. The original Plan was approved by the Stockholders of the Company at its 1996 Annual Meeting and become effective on January 1, 1997. In July, 1997, the Board of Directors amended the original Plan by increasing the minimum portion of the nonemployee directors' fees to be converted into units from 25 percent to 50 percent. 2. DEFINITIONS (a) "Board" means the Board of Directors of the Company. (b) "Committee" means the Benefit Plans Committee of the Company, or any successor committee thereto. (c) "Common Stock" means the common stock of the Company, without par value. (d) "Company" means Archer-Daniels-Midland Company, a Delaware corporation. (e) "Director's Fees" means the annual retainer fee and all meeting fees, committee fees and other Director's fees earned by the Participant for his service on the Board. 1 PAGE 2 (f) "Fair Market Value" means, with respect to a share of the Common Stock, the average of the high and low reported sales price regular way per share of the Common Stock on the New York Stock Exchange Composite Tape for the relevant day, or, in the absence thereof, on the most recent prior day for which such sales are reported. If the Common Stock is not listed on the New York Stock Exchange as of any date that Fair Market Value is to be determined, Fair Market Value shall be determined by the Committee in its discretion in a manner consistently applied. (g) "Mandatory Conversion" means the required conversion of 50 percent of a Participant's Director's Fees into a Stock Unit Award pursuant to Section 4 hereof. (h) "Participant" means a member of the Board who is not an employee of the Company or any of its affiliates. (i) "Plan" means this Archer-Daniels- Midland Company Stock Unit Plan for Nonemployee Directors. (j) "Realization Date" means, with respect to each Stock Unit allocated to a Participant's Stock Unit Account, the first business day following the earlier of (i) the date five years after the end of the calendar year that includes the calendar quarter for which such Stock Unit is awarded to the Participant or in which such stock unit is credited to the Participant as a dividend equivalent, or (ii) the date the Participant ceases to be a member of the Board. (k) "Stock Unit" means a non-voting unit of measurement that is deemed for valuation and bookkeeping purposes to be equivalent to an outstanding share of Common Stock, and shall include fractional units. (l) "Stock Unit Account" means a book account maintained by the Company reflecting the Stock Units allocated to a Participant pursuant to Section 4 hereof as a result of the Participant's Mandatory Conversions and Voluntary Conversions and such additional Stock Units as shall be credited thereto in respect of dividends paid on the Common Stock. (m) "Stock Unit Award" means an award under Section 4(c) hereof of Stock Units as a result of a Participant's Mandatory Conversion and Voluntary Conversion for a calendar quarter. (n) "Voluntary Conversion" means the conversion based on the election of the Participant of all or part of a Participant's Director's Fees otherwise payable to the Participant in cash into a Stock Unit Award pursuant to Section 4 hereof. 2 PAGE 3 3. ADMINISTRATION The Plan shall be administered by the Committee. The Committee shall have full authority to administer the Plan, including the discretionary authority to interpret and construe all provisions of the Plan, to resolve all questions of fact arising under the Plan, and to adopt such rules and regulations for administering the Plan as it may deem necessary or appropriate. Decisions of the Committee shall be final and binding on all parties. The Committee may delegate administrative responsibilities under the Plan to appropriate officers or employees of the Company. All expenses of the Plan shall be borne by the Company. 4. CREDITING OF STOCK UNITS (a) Mandatory Conversions For each calendar quarter in which the Plan is in effect, 50 percent of the aggregate dollar amount of a Participant's Director's Fees payable for such quarter shall be converted into a Stock Unit Award pursuant to Section 4(c) hereof. (b) Voluntary Conversions For each calendar quarter in which the Plan is in effect, a Participant may elect to convert all or any portion of his Director's Fees payable for such quarter (in addition to those required to be converted under Section 4(a) hereof) into a Stock Unit Award pursuant to Section 4(c) hereof. Each Voluntary Conversion shall be made on the basis of a Participant's written election stating the amount by which such Director's Fees shall be converted to a Stock Unit Award. Each such election shall be made in the form required by the Committee, shall be delivered to the Company no later than December 31 of the calendar year immediately preceding the calendar year for which the election is made, and shall be effective for each calendar quarter of such calendar year. In the case of a member of the Board who first becomes a Participant during a calendar year, such election for such year must be made within 30 days following such member becoming a Participant, and shall apply only to calendar quarters that begin following the date such election is made. (c) Stock Unit Awards A Participant shall receive a Stock Unit Award for each calendar quarter in respect of his Mandatory Conversion and any Voluntary Conversion applicable to such quarter. Such Stock Unit Award shall equal the number of the Stock Units determined by dividing (A) the aggregate dollar amount of the Participant's Director's Fees that are converted to a Stock Unit Award for the quarter by his Mandatory Conversion and Voluntary Conversion, by (B) the Fair Market Value of the Common Stock on the last business day of such calendar quarter. Each Stock Unit Award shall be credited to the Participant's Stock Unit Account as of the first day following the end of the calendar quarter for which such Stock Unit Award is granted. (d) Dividend Equivalents As of any date that cash dividends are paid with respect to the Common Stock from time to time, each Participant's Stock Unit Account shall be credited with an additional number of Stock Units determined by dividing (A) the aggregate dollar amount of the dividends that would have been paid on the Stock Units credited to the Participant's Stock Unit Account as of the record date for such dividend had such Stock Units been actual shares of Common Stock by (B) the Fair Market Value of the Common Stock on the dividend payment date. (e) Certain Adjustments In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger or consolidation, or the sale, conveyance, lease or other transfer by the Company of all or substantially all of its property, or any other change in the corporate structure or shares of the Company, pursuant to any of which events the then outstanding shares of the Common Stock are split up or combined or are changed into, become exchangeable at the holder's election for, or entitle the holder thereof to, other shares of stock, or similar change in the Common Stock or other similar event that the Committee, in its discretion, deems appropriate, each Participant's Stock Unit Account shall be adjusted as determined by the Committee in its sole discretion to reflect such change or other event. It is intended that in making such adjustments, the Committee will seek to treat each Participant as if he were a stockholder of the Common Stock of the number of Stock Units credited to his Stock Unit Account (but without duplication of any benefits that may be provided under Section 4(d) hereof). Except as is expressly provided in this Section, Participants shall have no rights as a result of any such change in the Common Stock or other event. 5. DISTRIBUTIONS OF BENEFITS (a) Valuation and Payment of Units Subject to Section 6 hereof, a Participant shall be entitled to a benefit under the Plan with respect to each Stock Unit Award upon the Realization Date for such Stock Unit Award. Such benefit shall be equal to the cash amount determined by multiplying (A) the number of Stock Units credited to the Participant's Stock Unit Account in respect of the Stock Unit Award for which the Realization Date has occurred (including additional Stock Units credited to the Participant's Stock Unit Account with respect thereto pursuant to Section 4(d) hereof) by (B) the Fair Market Value of the Common Stock on the Realization Date. Each such amount shall be paid to the Participant in cash within 30 days after the applicable Realization Date. 3 PAGE 4 (b) Payment of Additional Dividends Subject to Section 6 hereof, if, pursuant to Section 4(d) hereof, additional Stock Units are required to be credited to a Participant's Stock Unit Account in respect of Stock Units that were held in the Participant's Stock Unit Account as of the record date for dividends paid on the Common Stock that were paid after the payment to the Participant of a benefit in respect of such Stock Units, the Company shall pay to the Participant a cash amount in respect of such dividends equal to the dollar amount of such dividends. Such amount shall be paid to the Participant within 30 days after the dividend payment date. (c) Payment of Nonconverted Fees Subject to Section 6 hereof, in the event that a Participant ceases to be a member of the Board prior to the time that Stock Units are credited to his Stock Unit Account pursuant to Section 4(c) hereof in respect of his Mandatory Conversion or Voluntary Conversion for a calendar quarter, the amount of all Director's Fees earned by the Participant during such quarter shall be paid to the Participant in cash within 30 days after his termination of service as a director. (d) Section 16 Restrictions Notwithstanding any other provision hereof, if and to the extent required in order for Stock Units to meet the requirements for exemption under Rule 16b-3 (or any successor thereto) promulgated under the Securities Exchange Act of 1934, no amount in respect of any Stock Unit Award (including any additional Stock Units allocated to a Participant's Stock Unit Account pursuant to Section 4(d) hereof) shall be paid to a Participant until the expiration of 6 months after the Stock Units in respect of which the payment is to be made have been allocated to the Participant's Stock Unit Account, and the amount of such payment shall be determined based on the Fair Market Value of the Common Stock on the date such 6-month period expires. 6. FORFEITURE OF BENEFITS Each Participant's benefits hereunder shall be nonforfeitable, except that a Participant shall forfeit all rights to all benefits hereunder in respect of Mandatory Conversions, Voluntary Conversions and Stock Units credited to the Participant's Stock Unit Account if the Participant's status as a director of the Company is (or is deemed to have been) terminated for Cause. For purposes hereof, a Participant's status as a director shall have been terminated for "Cause" upon the voluntary or involuntary termination of the individual's service as a director on account of (i) the willful violation by the Participant of any federal or state law or any rule or regulation of any regulatory body to which the Company or its affiliates is subject, which violation would materially reflect on the Participant's character, competence or integrity or (ii) a breach by the Participant of the Participant's duty of loyalty to the Company and its affiliates. If, subsequent to the termination of a Participant's status as a director of the Company, it is determined by the Committee that the Participant's status as a director of the Company could have been terminated for Cause, such Participant's status as a director of the Company may be deemed to have been terminated for Cause. 4 PAGE 5 7. BENEFICIARIES Any payment required to be made to a Participant hereunder that cannot be made to the Participant because of his death shall be made to the Participant's beneficiary or beneficiaries, subject to applicable law. Each Participant shall have the right to designate in writing from time to time a beneficiary or beneficiaries by filing a written notice of such designation with the Committee. In the event a beneficiary designated by the Participant does not survive the Participant and no successor beneficiary is selected, or in the event no valid designation has been made, such Participant's beneficiary shall be such Participant's estate. 8. UNFUNDED STATUS OF THE PLAN The Plan shall be unfunded, and Mandatory Conversions, Voluntary Conversions, Stock Units credited to each Participant's Stock Unit Account and all benefits payable to Participants under the Plan represent merely unfunded, unsecured promises of the Company to pay a sum of money to the Participant in the future. 9. ALIENATION OF BENEFITS PROHIBITED No transfer (other than pursuant to Section 7 hereof) by a Participant of any right to any payment hereunder, whether voluntary or involuntary, by operation of law or otherwise, and whether by means of alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge, or encumbrance of any kind, shall vest the transferee with any interest or right, and any attempt to so alienate, sell, transfer, assign, pledge, attach, charge, or otherwise encumber any such amount, whether presently or thereafter payable, shall be void and of no force or effect. 10. NO SPECIAL RIGHTS Nothing contained in the Plan shall confer upon any Participant any right with respect to the continuation of the Participant's status as a director of the Company. 11. TERMINATION AND AMENDMENT The Plan may be terminated at any time by the Board. The Plan may be amended by the Board from time to time in any respect; provided, however, that no such amendment may reduce the number of Stock Units theretofore credited or creditable to a Participant's Stock Unit Account without the affected Participant's prior written consent. 12. CHOICE OF LAW The Plan and all rights hereunder shall be subject to and interpreted in accordance with the laws of the State of Illinois, without reference to the principles of conflicts of laws, and to applicable federal securities laws. 5 -----END PRIVACY-ENHANCED MESSAGE-----