-----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, D98OuNh5g0pP9VNeykYha26pagS6DpYPVgXgGyzxGaidHFx+D6AuoKDXLJFAff5e kdK3UDg+wHoz8DN1bbHyiw== 0000007084-99-000016.txt : 19990630 0000007084-99-000016.hdr.sgml : 19990630 ACCESSION NUMBER: 0000007084-99-000016 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 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: 11-K SEC ACT: SEC FILE NUMBER: 001-00044 FILM NUMBER: 99654494 BUSINESS ADDRESS: STREET 1: 4666 FARIES PKWY CITY: DECATUR STATE: IL ZIP: 62526 BUSINESS PHONE: 2174244798 11-K 1 HOURLY 11K Page 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K [X]Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1998 or [ ]Transition Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the transition period from ___________________ to _________________ Commission file number 1-44 A.Full title of the plan and the address of the plan, if different from that of the issuer named below: ADM EMPLOYEE STOCK OWNERSHIP PLAN FOR HOURLY EMPLOYEES B.Name of the issuer of the securities held pursuant to the Plan and the address of its principal executive office: ARCHER DANIELS MIDLAND COMPANY BOX 1470 DECATUR, IL 62525 1 Page 2 ADM Employee Stock Ownership Plan for Hourly Employees Financial Statements and Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 3 Financial Statements and Schedules Statements of Net Assets Available for Benefits 4 Statements of Changes in Net Assets Available for Benefits5 Notes to Financial Statements 6 Item 27(a) - Schedule of Assets Held for Investment Purposes 12 Item 27(d) - Schedule of Reportable Transactions 13 2 Page 3 Report of Independent Auditors Administrative Committee ADM Employee Stock Ownership Plan for Hourly Employees We have audited the accompanying statements of net assets available for benefits of the ADM Employee Stock Ownership Plan for Hourly Employees as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1998, and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in the relation to the basic financial statements taken as a whole. /s/ Ernst & Young LLP Minneapolis, Minnesota June 21, 1999 3 Page 4 ADM Employee Stock Ownership Plan for Hourly Employees Statements of Net Assets Available for Benefits [CAPTION] December 31 1998 1997 Assets Cash $ $ 66 53 Investments (Note 1): Cash equivalents 30,298 110,887 Archer Daniels Midland Company common 43,094,771 42,164,474 stock Pfizer Incorporated common stock 7,479,625 5,676,108 Balanced Fund 255,424 323,288 Equity mutual funds 990,520 691,940 Stable Value Fund 1,779,667 193,303 Participant loans 441,898 277,651 54,072,203 49,437,651 Contributions receivable from employer 884,427 338,590 Contributions receivable from employees 1,441,179 515,508 Loan repayments receivable 19,565 - Net assets available for benefits $56,417,44 $50,291,80 0 2
See accompanying notes. 4 Page 5 ADM Employee Stock Ownership Plan for Hourly Employees Statements of Changes in Net Assets Available for Benefits [CAPTION] Year ended December 31 1998 1997 Additions: Contributions from Archer Daniels Midland Company (Note 2) $ $ 5,454,619 3,426,203 Contributions from participating employees (Note 2) 8,125,492 5,907,860 Transfer of assets from Qualified Merged 1,767,654 390,069 Plan Dividend and interest income 2,369,170 2,582,368 17,716,935 12,306,500 Deductions: Benefit payments: Common stock 2,382,966 1,313,699 Cash 3,514,220 2,828,525 5,897,186 4,142,224 11,819,749 8,164,276 Net realized and unrealized (depreciation) (5,694,111 2,201,215 appreciation in fair value of ) investments Net increase 6,125,638 10,365,491 Net assets available for benefits at beginning of year 50,291,802 39,926,311 Net assets available for benefits at end $56,417,44 $50,291,80 of year 0 2 See accompanying notes. 5 Page 6 ADM Employee Stock Ownership Plan For Hourly Employees Notes to Financial Statements December 31, 1998 1. Significant Accounting Policies Basis of Accounting The accounting records of the Plan are maintained on the accrual basis. Investments Investments are carried at fair value. Common stocks are valued at the quoted market price on the last business day of the Plan year. Investments in commingled and mutual funds are stated at the reported net asset value on the last day of the Plan year. Unallocated funds are invested in a short- term money market account as deemed appropriate by the trustee. The participant loans are valued at cost which approximates fair value. Plan Expenses Brokerage commissions, transfer taxes and other charges and expenses in connection with the purchase or sale of securities are charged against the trust fund and added to the cost of such securities, or deducted from the sale proceeds, as the case may be. Any remaining costs of administering the plan are currently paid by ADM and its affiliates. While it is anticipated that ADM and its affiliates will continue to pay these costs, the Plan does permit the reasonable expenses of administering the Plan to be paid from the trust fund. There are no charges or deductions, other than taxes, that may be made against the trust fund other than those described in this summary. Plan Year The Plan year is the twelve-month period ending December 31, corresponding to the tax year of the company. 6 Page 7 ADM Employee Stock Ownership Plan For Hourly Employees Notes to Financial Statements (continued) 1. Significant Accounting Policies (continued) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain 1997 amounts have been reclassified to conform with the 1998 presentation. 2. Description of the Plan General The Plan is a defined contribution plan available to all hourly employees of the Company who have completed one year of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. The Company converted the Plan, formerly called the ADM Savings and Investment Plan for Hourly Employees, to an employee stock ownership plan (ESOP), effective April 1, 1998. Most features of the Plan, including employee and employer contributions, loans and withdrawals, and distribution options remained unchanged. IRS regulations require ESOPs to offer investment options to employees age 55 and older with ten or more years of service. All plan assets are held and managed by Hickory Point Bank & Trust, FSB (trustee of the Plan as of October 1, 1998). The former trustee was National City Bank of Minneapolis. The trust will continue for an indefinite period of time as provided by the Plan. Hickory Point Bank & Trust, FSB is a subsidiary of ADM. 7 Page 8 ADM Employee Stock Ownership Plan For Hourly Employees Notes to Financial Statements (continued) 2. Description of the Plan (continued) Contributions Under the terms of the Plan, employees electing to participate can generally contribute from 1% up to as much as 10% of their compensation as defined by the Plan document to the Plan, the maximum determined by the participant's participating location. The Company match varies by location. Substantially all contributions are received from the Company in the form of Archer Daniels Midland Company common stock as determined by location and all contributions are immediately vested to the participant. Employees should refer to the appendix to the Plan applicable to their participating location for more complete information regarding employee contribution and employer match limitations. Participant Loans Effective January 1, 1997, participants may borrow from their fund accounts a minimum of $1,000 up to the lesser of $50,000 or 50% of their account balance. Loan transactions are treated as a transfer from (to) the investment fund. A maximum of one loan may be outstanding to a participant at one time. Loans are allowed only for education, medical expenses and primary home purchases. An education loan or a medical expense loan is available for up to five years, and a home purchase loan is available for up to ten years. The loans are secured by the balance in the participant's account and bear interest at a rate equal to the prime rate plus one percent. Principal and interest is repaid ratably through payroll deductions, with payments taken from each paycheck. Withdrawal The full value of an employee's account is payable following termination of employment. Withdrawals by active employees are permitted for two reasons: upon reaching age 59 1/2 and for only specific hardship circumstances, and only after receiving all loans available to the participant under the participant loan program. Withdrawal of shares acquired under 401(k) provisions is subject to hardship restrictions. 8 Page 9 ADM Employee Stock Ownership Plan For Hourly Employees Notes to Financial Statements (continued) 2. Description of the Plan (continued) Plan Mergers During the years ended December 31, 1998 and 1997, the assets and liabilities of certain savings plans covering the hourly employees of recently acquired ADM subsidiaries were merged into the Plan, as is the policy of ADM. 3. Investments The Plan's investments are held by a bank-administered trust fund. During 1998 and 1997, the Plan's investments (including investments bought, sold, as well as held during the year) appreciated (depreciated) in fair value as follows:
Net Appreciation (Depreciatio Fair n)in Fair Value Value During At Year End of Year Year ended December 31, 1998: Cash equivalents $ - $ 30,298 Archer Daniels Midland Company common stock (9,066,049) 43,094,771 Pfizer Incorporated common stock 3,303,180 7,479,625 Balanced Fund 4,315 255,424 Equity mutual funds 57,199 990,520 Stable Value Fund 7,244 1,779,667 Participant loans - 441,898 $(5,694,111) $54,072,20 3 Year ended December 31, 1997: Cash equivalents $ - $ 110,887 Archer Daniels Midland Company common stock (495,194) 42,164,474 Pfizer Incorporated common stock 2,678,724 5,676,108 Balanced Fund 1,160 323,288 Equity mutual funds 3,736 691,940 Stable Value Fund 12,789 193,303 Participant loans - 277,651 $ 2,201,215 $49,437,65 1
9 Page 10 ADM Employee Stock Ownership Plan For Hourly Employees Notes to Financial Statements (continued) 3. Investments (continued) At December 31, 1998 and 1997, the fair value of the Archer Daniels Midland Company common stock and the Pfizer Incorporated common stock each represented 5% or more of the Plan's net assets. 4. Transactions with Parties-in-Interest During the two years ended December 31, 1998, the Plan had the following transactions related to Archer Daniels Midland Company common stock: [CAPTION] 1998 1997 Number of common shares contributed 632,764 451,784 Number of common shares purchased 23,931 17,898 Cost of common shares purchased $447,271 $367,240 Cash dividends received $425,950 $350,175 Shares received through stock dividends 110,973 88,251 Number of common shares sold 122,546 103,132 Market value of common shares sold $2,366,977 $2,129,733 Cost of common shares sold $1,575,291 $1,324,138
5. Plan Terminations Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time. Upon termination, all amounts in participants' accounts are 100% vested. 10 Page 11 ADM Employee Stock Ownership Plan For Hourly Employees Notes to Financial Statements (continued) 6. Income Tax Status The Plan has received a determination letter from the Internal Revenue Service, dated April 5, 1996, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt. Subsequent amendments have been structured to, and are intended to, maintain the Plan's qualified status. Distributions of benefits to participants, their estates or beneficiaries, generally are subject to federal income tax as either ordinary income or capital gain depending on the event giving rise to the distribution and the method used. 7. Year 2000 Issue (Unaudited) The Plan Sponsor has developed a plan to modify its internal information technology to be ready for the Year 2000 and has begun converting critical data processing systems. The project also includes determining whether third party service providers have reasonable plans in place to become Year 2000 compliant. The Plan Sponsor currently expects the project to be substantially complete in 1999. The Plan Sponsor does not expect this project to have a significant effect on plan operations. 8. Subsequent Event The investment option that allows participants age 55 with 10 years of service to reinvest their ESOP accounts into the various investment funds maintained under the Plan became available January 1, 1999. Shares of ADM stock added to the participants' accounts after April 1, 1998 may be applied. 11 Page 12 ADM Employee Stock Ownership Plan for Hourly Employees EIN: 41-0129150 Plan #027 Item 27(a) - Schedule of Assets Held for Investment Purposes December 31, 1998 [CAPTION] Description of Investment Including Identity of Issue, Borrower, Maturity Date, Current Lessor or Similar Party Rate of Interest, Cost Value Par or Maturity Value Cash equivalents: Vista Premier U.S. Government 18,169 units $ $ 18,169 Money Market Fund 18,169 Frank Russell--Short-term Investment Fund 12,129 units 12,129 12,129 30,298 30,298 Archer Daniels Midland Company* 2,516,483 shares of common stock 41,049,80 43,094,77 2 1 Pfizer Incorporated 59,837 shares of common stock 679,221 7,479,625 Invesco--Stable Value Fund 1,779,667 units 1,779,667 1,779,667 Vanguard--Balanced Fund 8,703 units 255,598 255,424 Equity Mutual Funds: Vangard--S & P 500 Index Fund 5,759 units 657,567 656,249 Dreyfus A BDS Plus Fund 842 units 12,220 11,789 Dreyfus New Leader Fund 326 units 14,121 13,483 Dreyfus Appreciation Fund 247 units 8,535 10,412 Janus Fund 775 units 21,407 26,080 Templeton Foreign Fund CLI 2,031 units 20,365 17,042 Vista Balanced Fund A 1,460 units 21,899 23,361 Vista Capital Growth Fund CLA 973 units 41,863 40,702 Vista Growth & Income Fund CLA 892 units 38,341 38,056 Vista U.S. Treasury Income Fund 850 units 9,607 9,797 A Frank Russell-- Global Balanced 1,006 units 21,803 25,669 Fund Frank Russell--Domestic Conservative Balanced Fund 555 units 6,894 7,954 Frank Russell--Aggressive Balanced Fund 3,855 units 50,226 57,802 Frank Russell--Global Equity 1,818 units 45,696 52,124 Fund 970,544 990,520 Participant loans Various notes bearing interest at 9.25% to 9.50% 0 441,898 Total Assets Held for $44,765,1 $54,072,2 Investment Purposes 30 03
*Indicates party-in-interest. 11 Page 12 ADM Employee Stock Ownership Plan for Hourly Employees EIN: 41-0129150 Plan #027 Item 27(d) - Schedule of Reportable Transactions Year ended December 31, 1998 [CAPTION] Current Value Purchase Selling Cost of Asset on Net Identity of Party Description of Price Price of Asset Transaction Gain/ Involved Asset/Transaction Date (Loss) Category (iii)-- Series of Transactions in Excess of 5% of Net Assets National City Bank Prime Cash Money Market Fund: Purchased 2,368,165 shares $2,368,16 $2,368,1 $ 2,368,165 in 93 transactions 5 65 Sold 2,462,238 shares in 57 transactions $2,462,23 2,462,238 $ 8 2,462,23 - 8 Archer Daniels Midland Archer Daniels Midland Company Company common stock: Sold 122,546 shares in 54 transactions 1,575,29 2,366,977 791,686 2,366,977 1 Purchased 23,931 shares in 6 transactions 447,271 447,271 447,271
There were no category (i), (ii) or (iv) transactions for the year ended December 31, 1998. 12 Page 13 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed by the undersigned thereunto duly authorized. ARCHER DANIELS MIDLAND COMPANY /s/Douglas J. Schmalz Douglas J. Schmalz Vice President and Chief Financial Officer Dated: June 28, 1999 13 EX-23 2 E&Y CONSENT Page 14 Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-58387 dated April 3, 1995) pertaining to the ADM Savings and Investment Plan for Hourly Employees of our report dated June 21, 1999 with respect to the financial statements and schedules of the ADM Employee Stock Ownership Plan for Hourly Employees (formerly the ADM Savings and Investment Plan for Hourly Employees) included in this Annual Report (Form 11-K) for the year ended December 31, 1998. /s/ Ernst & Young LLP Minneapolis, Minnesota June 21, 1999 14 -----END PRIVACY-ENHANCED MESSAGE-----