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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 address of the plan, if
different from that of the issuer named below:
ADM EMPLOYEE STOCK OWNERSHIP PLAN FOR SALARIED 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
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ADM Employee Stock Ownership Plan
for Salaried 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
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Report of Independent Auditors
Administrative Committee
ADM Employee Stock Ownership Plan
for Salaried Employees
We have audited the accompanying statements of net assets
available for benefits of the ADM Employee Stock Ownership
Plan for Salaried 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
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ADM Employee Stock Ownership Plan
for Salaried Employees
Statements of Net Assets Available for Benefits
[CAPTION]
<TABLE>
December 31
1998 1997
<S> <C> <C>
Assets
Cash $ $
175 $75,681
Investments (Note 1):
Cash equivalents - 33,762
Archer Daniels Midland Company common 244,252,419 278,906,131
stock
Pfizer Incorporated common stock 7,053,000 4,453,573
Balanced Fund 1,603,183 1,698,057
Equity mutual funds 5,309,524 4,696,152
Stable Value Fund 2,347,591 1,798,212
Participant loans 1,287,636 895,239
261,853,353 292,481,126
Contributions receivable from employer 1,940,436 752,971
Contributions receivable from 2,837,125 1,087,943
employees
Loan repayment receivable 47,297 -
Net assets available for benefits $266,678,38 $294,397,72
6 1
</TABLE>
See accompanying notes.
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ADM Employee Stock Ownership Plan
for Salaried Employees
Statements of Changes in Net Assets Available for Benefits
[CAPTION]
<TABLE>
Year ended December 31
1998 1997
<S> <C> <C>
Additions:
Contributions from Archer Daniels
Midland Company (Note 2) $ $
12,689,676 8,332,945
Contributions from participating
employees (Note 2) 17,149,765 12,078,729
Transfer of assets from Qualified
Merged Plan 1,228,370 2,093,336
Dividend and interest income 13,578,824 17,382,699
44,646,635 39,887,709
Deductions:
Benefit payments:
Common stock 12,158,907 9,023,935
Cash 8,442,674 7,970,984
20,601,581 16,994,919
24,045,054 22,892,790
Net realized and unrealized
depreciation in fair value of (51,764,389 (2,462,569)
investments )
Net (decrease) increase (27,719,335 20,430,221
)
Net assets available for benefits at
beginning of year
294,397,721 273,967,500
Net assets available for benefits at
end of year $266,678,38 $294,397,72
6 1
</TABLE>
See accompanying notes.
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ADM Employee Stock Ownership Plan
For Salaried 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.
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ADM Employee Stock Ownership Plan
For Salaried 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
salaried 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, 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.
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ADM Employee Stock Ownership Plan
For Salaried Employees
Notes to Financial Statement (continued)
2. Description of the Plan (continued)
Contributions
Under the terms of the Plan effective July 1, 1997,
employees electing to participate can contribute from 1% to
10% of their current covered compensation to the Plan. In
addition, the Company will match 100% of the first 4%
employee contribution and 50% of the next 2% employee
contribution. Prior to July 1, 1997, employees were allowed
to contribute from 1% to 6% of their compensation. All
contributions are received from the Company in the form of
Archer Daniels Midland Company common stock and are fully
vested to the participant.
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 to
(from) the loan 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.
Withdrawals
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 the 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.
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ADM Employee Stock Ownership Plan
For Salaried 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
salaried 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:
[CAPTION]
<TABLE>
Net
Appreciation
(Depreciatio Fair Value
n) in Fair At
Value During End of Year
Year
<S> <C> <C>
Year ended December 31, 1998:
Archer Daniels Midland Company common
stock $(54,931,570 $244,252,41
) 9
Pfizer Incorporated common stock 2,922,243 7,053,000
Balanced Fund 27,392 1,603,183
Equity mutual funds 156,070 5,309,524
Stable Value Fund 61,476 2,347,591
Participant loans - 1,287,636
$(51,764,389 $261,853,35
) 3
Year ended December 31, 1997:
Cash equivalents $ - $
33,762
Archer Daniels Midland Company common (4,708,595) 278,906,131
stock
Pfizer Incorporated common stock 2,049,216 4,453,573
Balanced Fund (279) 1,698,057
Equity mutual funds 85,771 4,696,152
Stable Value Fund 111,318 1,798,212
Participant loans - 895,239
$ $292,481,12
(2,462,569) 6
</TABLE>
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ADM Employee Stock Ownership Plan
For Salaried 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 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]
<TABLE>
<S> <C> <C>
1998 1997
Number of common shares contributed 1,404,803 944,082
Number of common shares purchased 144,251 123,337
Cost of common shares purchased $2,710,468 $2,521,433
Cash dividends received $2,611,681 $2,453,353
Shares received through stock dividends 643,564 600,215
Number of common shares sold 378,539 312,113
Market value of common shares sold $7,473,031 $6,356,629
Cost of common shares sold $1,808,559 $1,450,345
</TABLE>
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.
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ADM Employee Stock Ownership Plan
For Salaried Employees
Notes to Financial Statements (continued)
6. Income Tax Status
The Plan has received a determination letter from the
Internal Revenue Service, dated April 10, 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 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.
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ADM Employee Stock Ownership Plan
for Salaried Employees
EIN: 41-0129150
Plan #020
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1998
[CAPTION]
<TABLE>
<S> <C> <C> <C>
Description of
Identity of Issue, Investment Current
Borrower, Including Maturity Cost Value
Lessor or Similar Party Date, Rate of
Interest, Par or
Maturity Value
Archer Daniels Midland 14,262,915 shares
Company* of common stock $101,567,5 $244,252,41
51 9
Pfizer Incorporated 56,424 shares of
common stock
1,216,121 7,053,000
Equity Mutual Funds:
Vanguard--S&P 500 Index
Fund 46,460 units
5,304,776 5,294,115
T. Rowe Price--Mid-Small
Cap Equity Fund 452 units
15,409 15,409
Total Equity Mutual Fund
5,320,185 5,309,524
Invesco--Stable Value 2,347,591 shares of
Fund common stock
2,347,591 2,347,591
Vanguard--Balanced Fund 54,623 units
1,604,275 1,603,183
Participant loans Various notes
bearing interest at
9.25% to 9.50%
0 1,287,636
Total Assets Held for Investment Purposes $112,055,7 $261,853,35
23 3
</TABLE>
*Indicates party-in-interest.
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ADM Employee Stock Ownership Plan
for Salaried Employees
EIN: 41-0129150
Plan #020
Item 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1998
[CAPTION]
<TABLE>
<S> <C> <C> <C> <C>
<C> <C>
Current
Value
Purchase Selling Cost of Asset on Net
Identity of Party Description of Asset/ Price Price of Asset Transaction Gain/
Involved Transaction Date (Loss
)
Category (iii)-- Series of Transactions in
Excess
of 5% of Net Assets
National City Bank Prime Cash Money Market
Fund:
Purchased 10,160,392
shares $10,160,39 $10,160,39 $10,160,392
in 110 transactions 2 2
Sold 10,194,153 shares
in $10,194,15 10,194,153 $ -
75 transactions 3 10,194,153
</TABLE>
There were no category (i), (ii) or (iv) transactions for the year ended
December 31, 1998.
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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
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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 of our report dated June
21, 1999 with respect to the financial statements and schedules
of the ADM Employee Stock Ownership Plan for Salaried Employees
(formerly the ADM Savings and Investment Plan) included in this
Annual Report (Form 11-K) for the year ended December 31, 1998.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
June 21, 1999
15
