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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 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
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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
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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
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ADM Employee Stock Ownership Plan
for Hourly Employees
Statements of Net Assets Available for Benefits
[CAPTION]
<TABLE>
December 31
1998 1997
<S> <C> <C>
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
</TABLE>
See accompanying notes.
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ADM Employee Stock Ownership Plan
for Hourly 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) $ $
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.
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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.
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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.
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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.
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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:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
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
</TABLE>
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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]
<TABLE>
<S> <C> <C>
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
</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 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.
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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]
<TABLE>
<S> <C> <C> <C>
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
</TABLE>
*Indicates party-in-interest.
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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]
<TABLE>
<S> <C> <C> <C> <C>
<C> <C>
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
</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 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
