UNITED STATES
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, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ________________________ 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 Salaried Employees
B. Name of the issuer of the securities held pursuant to the Plan and the address of its principal executive officer:
Archer-Daniels-Midland Company
4666 Faries Parkway
PO Box 1470
Decatur, Illinois 62525
Audited Financial Statements
ADM Employee Stock Ownership Plan for Salaried Employees
Years Ended December 31, 2002 and 2001
ADM Employee Stock Ownership Plan
for Salaried Employees
Audited Financial Statements
Years Ended December 31, 2002 and 2001
Contents
Report of Independent Auditors 1
Audited Financial Statements
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
Report of Independent Auditors
The 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, 2002 and 2001, 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 auditing standards generally accepted in the United States. 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, 2002 and 2001, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
May 30, 2003
St. Louis, Missouri
ADM Employee Stock Ownership Plan
for Salaried Employees
Statements of Net Assets Available for Benefits
|
December 31 |
|
|
2002 |
2001 |
Assets |
|
|
Interest in Master Trust |
$234,573,632 |
$276,135,213 |
Contributions receivable from employer |
1,220,931 |
1,135,458 |
Net assets available for benefits |
$235,794,563 |
$277,270,671 |
See accompanying notes.
ADM Employee Stock Ownership Plan
for Salaried Employees
Statements of Changes in Net Assets Available for Benefits
|
Year Ended December 31 |
|
|
2002 |
2001 |
Additions: |
|
|
Contributions from employer |
$ 15,014,540 |
$ 13,550,954 |
Dividend and interest income |
4,181,624 |
5,696,624 |
|
19,196,164 |
19,247,578 |
|
|
|
Deductions: |
|
|
Benefit payments |
(17,697,503) |
(16,659,357) |
Transfer of assets to another plan |
(5,713,342) |
(3,607,688) |
|
(23,410,845) |
(20,267,045) |
|
|
|
Net realized and unrealized appreciation (depreciation) in fair value of common stock |
(37,261,427) |
828,510 |
|
|
|
Net decrease |
(41,476,108) |
(190,957) |
|
|
|
Net assets available for benefits at beginning of year |
277,270,671 |
277,461,628 |
Net assets available for benefits at end of year |
$235,794,563 |
$277,270,671 |
See accompanying notes.
1. Description of the Plan
General
The ADM Employee Stock Ownership Plan for Salaried Employees (the Plan), as amended, is a defined contribution plan available to all eligible salaried employees of Archer Daniels Midland Company (ADM or the Company) who have completed six months 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 designed the Plan to operate in cooperation with the ADM 401(k) Plan for Salaried Employees (ADM 401(k) Plan). The Plan provides eligible employees with a means to acquire ADM common stock through participant and Company matching contributions. Company matching contributions are based on participant contributions to the ADM 401(k) Plan.
All plan assets are held and managed by Hickory Point Bank & Trust, FSB (HPB), a wholly owned subsidiary of the Company, through a master trust established for the Plan and certain other ADM benefit plans (Master Trust).
Contributions
As described above, Company matching contributions are based on participant contributions remitted to the ADM 401(k) Plan. The Company matches 100% of the first 4% of compensation contributed and 50% of the next 2% of compensation contributed to the ADM 401(k) Plan in the form of ADM common stock contributed to the Plan. All Company contributions are fully vested to the participant.
1. Description of the Plan (continued)
Investment Options
Effective July 1, 2002, participants may elect at any time to convert all or any number of the shares of ADM common stock credited to their Company matching account balance to cash and have the cash transferred to the ADM 401(k) Plan to be invested in the investment options available under the ADM 401(k) Plan.
Withdrawals
The full value of an employee's account is payable following termination of employment. Withdrawals by active employees are only permitted upon reaching age 59 1/2 or for specific hardship circumstances.
2. Significant Accounting Policies
Basis of Accounting
The accounting records of the Plan are maintained on the accrual basis.
Investments
Investments in the Master Trust 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 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.
2. Significant Accounting Policies (continued)
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 the Plan's sponsor, ADM. While it is anticipated ADM will continue to pay these costs, the Plan does permit the reasonable expenses of administering the Plan to be paid from the trust fund.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.
Reclassifications
Certain items in the prior year financial statements have been reclassified to conform to the current year's presentation.
3. Master Trust Investment Information
The Plan's investments are held in the Master Trust. The Plan's interest in the Master Trust is fully allocated to ADM common stock. Investments and the income therefrom are allocated to participating plans based on each plan's participation in investment options within the Master Trust. At December 31, 2002 and 2001, the Plan's interest in the net assets of the Master Trust was approximately 54.7% and 60.1%, respectively.
3. Master Trust Investment Information (continued)
The following table presents the fair value of investments for the Master Trust:
|
December 31 |
|
|
2002 |
2001 |
Assets |
|
|
Cash equivalents |
$ 240,053 |
$ - |
Investment securities: |
|
|
ADM common stock |
304,988,738 |
349,016,405 |
Mutual funds |
114,105,194 |
98,163,615 |
Other common stock |
9,268,253 |
12,233,351 |
Net assets available for benefits |
$428,602,238 |
$459,413,371 |
Summarized financial information with respect to the Master Trust's investment income is as follows:
|
Year Ended December 31 |
||
|
2002 |
2001 |
|
Net realized and unrealized appreciation (depreciation) on investments: |
|
|
|
ADM common stock |
$(47,713,753) |
$ 1,540,661 |
|
Mutual funds |
(13,499,444) |
(1,316,567) |
|
Other common stock |
(2,677,367) |
(1,493,113) |
|
|
$(63,890,564) |
$ (1,269,019) |
|
|
|
|
|
Dividend and interest income |
$ 8,445,989 |
$ 8,852,339 |
4. Plan Termination
Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time.
5. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service, dated July 18, 1996, stating 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 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.
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
Senior Vice President and Chief Financial Officer
Dated: June 27, 2003
Exhibit Index
Exhibit Description
23 Consent of Ernst & Young LLP.
99.1 Certificate of the Vice President - Human Resources pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
99.2 Certificate of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).