<PAGE> 1
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-2516
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MONSANTO COMPANY
----------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 43-0420020
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
800 NORTH LINDBERGH BLVD., ST. LOUIS, MISSOURI 63167
----------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(314) 694-1000
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 TWELVE 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.
OUTSTANDING AT
CLASS JUNE 30, 1994
----- --------------
COMMON STOCK, $2 PAR VALUE 117,876,051 SHARES
- - -------------------------- ------------------
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<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Statement of Consolidated Income of Monsanto Company and
subsidiaries for the three months and six months ended June 30, 1994
and 1993, the Statement of Consolidated Financial Position as of June
30, 1994 and December 31, 1993, the Statement of Consolidated Cash Flow
for the six months ended June 30, 1994 and 1993 and related Notes to
Financial Statements follow. In the opinion of management, these
unaudited consolidated financial statements contain all adjustments
necessary to present fairly the financial position, results of
operations and cash flows for the interim periods reported.
Unless otherwise indicated by the context, "Monsanto" means Monsanto
Company and consolidated subsidiaries, and "the Company" means Monsanto
Company only.
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales.................................................... $2,269 $2,230 $4,270 $4,171
Cost of Goods Sold........................................... 1,224 1,271 2,332 2,377
------ ------ ------ ------
Gross Profit................................................. 1,045 959 1,938 1,794
Marketing Expenses........................................... 326 326 602 620
Administrative Expenses...................................... 137 121 264 250
Technological Expenses....................................... 165 167 316 330
Amortization of Intangible Assets............................ 20 19 40 37
------ ------ ------ ------
Operating Income............................................. 397 326 716 557
Interest Expense............................................. (35) (34) (67) (66)
Interest Income.............................................. 13 10 19 18
Other Income (Expense)-Net................................... 1 13 2 16
------ ------ ------ ------
Income Before Income Taxes................................... 376 315 670 525
Income Taxes................................................. 118 115 218 184
------ ------ ------ ------
Net Income................................................... $ 258 $ 200 $ 452 $ 341
------ ------ ------ ------
Earnings per Share........................................... $ 2.19 $ 1.66 $ 3.82 $ 2.83
------ ------ ------ ------
Dividends per Share.......................................... $ 0.63 $ 0.58 $ 1.21 $ 1.14
------ ------ ------ ------
Weighted Average Number of Common and Common Equivalent
Shares (in millions)........................................ 118.5 120.8
------ ------
</TABLE>
1
<PAGE> 3
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
-------- ------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents.................................................................. $ 269 $ 273
Trade receivables, net of allowances of $47 in 1994 and $51 in 1993........................ 2,064 1,445
Miscellaneous receivables and prepaid expenses............................................. 351 388
Deferred income tax benefit................................................................ 338 342
Inventories................................................................................ 1,207 1,224
------- -------
Total Current Assets................................................................... 4,229 3,672
------- -------
Property, Plant and Equipment................................................................ 7,471 7,382
Less Accumulated Depreciation................................................................ 4,695 4,580
------- -------
Net Property, Plant and Equipment.......................................................... 2,776 2,802
------- -------
Investments in Affiliates.................................................................... 235 227
Intangible Assets, net of accumulated amortization of $490 in 1994 and $450 in 1993.......... 1,172 1,189
Other Assets................................................................................. 772 750
------- -------
Total Assets................................................................................. $ 9,184 $ 8,640
------- -------
<CAPTION>
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Accounts payable........................................................................... $ 535 $ 538
Accrued liabilities........................................................................ 1,558 1,534
Short-term debt............................................................................ 379 223
------- -------
Total Current Liabilities.............................................................. 2,472 2,295
------- -------
Long-Term Debt............................................................................... 1,476 1,502
Deferred Income Taxes........................................................................ 63 54
Postretirement Liabilities................................................................... 1,317 1,256
Other Liabilities............................................................................ 660 678
Shareowners' Equity:
Common stock (authorized, 200,000,000 shares, par value $2)
Issued, 164,394,194 shares in 1994 and 1993.............................................. 329 329
Additional contributed capital........................................................... 831 826
Treasury stock, at cost (49,008,493 shares in 1994 and 48,418,545 shares in 1993)........ (2,434) (2,348)
Reserve for ESOP debt retirement........................................................... (214) (218)
Net unrealized investment holding gains.................................................... 26
Accumulated currency adjustment............................................................ 23 (59)
Reinvested earnings........................................................................ 4,635 4,325
------- -------
Total Shareowners' Equity.............................................................. 3,196 2,855
------- -------
Total Liabilities and Shareowners' Equity.................................................... $ 9,184 $ 8,640
------- -------
</TABLE>
2
<PAGE> 4
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOW
(DOLLARS IN MILLIONS)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1994 1993
---- ----
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Operating Activities:
Net income................................................................................. $ 452 $ 341
Add income taxes........................................................................... 218 184
----- -----
Income before income taxes................................................................. 670 525
Adjustments to reconcile to Cash Provided by Continuing Operations:
Income tax payments...................................................................... (123) (130)
Items that did not use (provide) cash:
Depreciation and amortization.......................................................... 271 280
Other.................................................................................. 27 9
Working capital changes that provided (used) cash:
Accounts receivable.................................................................... (622) (411)
Inventories............................................................................ 15 59
Accounts payable and accrued liabilities............................................... (176) (63)
Other.................................................................................. 83 13
Other items.............................................................................. 30 (80)
----- -----
Cash Provided by Continuing Operations....................................................... 175 202
Cash Used in Discontinued Operations......................................................... (291)
----- -----
Total Cash Provided by (Used in) Operations.................................................. 175 (89)
----- -----
Investing Activities:
Property, plant and equipment purchases.................................................... (155) (199)
Acquisition and investment payments........................................................ (65) (457)
Investment and property disposal proceeds.................................................. 142 99
----- -----
Cash Used in Investing Activities............................................................ (78) (557)
----- -----
Financing Activities:
Net change in short-term financing......................................................... 156 268
Long-term debt proceeds.................................................................... 41 216
Long-term debt reductions.................................................................. (74) (208)
Treasury stock purchases................................................................... (149) (48)
Dividend payments.......................................................................... (142) (137)
Other financing activities................................................................. 67 13
----- -----
Cash Provided by (Used in) Financing Activities.............................................. (101) 104
----- -----
Increase (Decrease) in Cash and Cash Equivalents............................................. (4) (542)
Cash and Cash Equivalents:
Beginning of year.......................................................................... 273 729
----- -----
End of period.............................................................................. $ 269 $ 187
----- -----
<FN>
The effect of exchange rate changes on cash and cash equivalents was
not material.
Cash payments for interest (net of amounts capitalized) were $66
million in 1994 and $67 million in 1993.
In October 1992, Monsanto sold the worldwide Fisher Controls business.
Cash used for discontinued operations in 1993 was for income taxes
related to the sale of Fisher Controls.
</TABLE>
3
<PAGE> 5
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
1. Effective January 1, 1994, Monsanto adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The adoption of this
standard resulted in an increase to investment balances and
shareowners' equity. Net income and cash flow were unaffected by this
adoption. SFAS No. 115 requires that certain investments, primarily
equity securities, are recorded at their market values. The aggregate
fair value and the net unrealized holding gain of these equity
securities at January 1, 1994, were $105 million and $22 million,
respectively.
Debt securities held by Monsanto are generally recorded at amortized
cost, as the Company has the intent and ability to hold those
securities to their maturity date. The total amortized cost of these
securities was $173 million at January 1, 1994. The majority of these
securities mature in less than 5 years.
2. In February 1994, the Company established a grantor trust to hold
shares of Monsanto common stock to be used to satisfy compensation and
benefit arrangements and obligations, including the issuance of shares
upon the exercise of performance stock options. Monsanto contributed
2.5 million shares of treasury stock to the grantor trust in February
1994. These shares, with an aggregate cost of $121 million, have been
restricted for use in the grantor trust.
3. Earnings per share were computed using the weighted average number
of common shares and common share equivalents outstanding each period
(118,517,416 and 120,825,866 in 1994 and 1993, respectively). Common
share equivalents (2,566,435 and 805,214 in 1994 and 1993,
respectively) consist of common stock issuable upon exercise of
outstanding stock options. Earnings per share assuming full dilution
were not significantly different from the primary amounts.
<TABLE>
4. Components of inventories at June 30, 1994 and December 31, 1993
were as follows:
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
-------- ------------
<S> <C> <C>
Finished goods............................................. $ 720 $ 734
Goods in process........................................... 312 319
Raw materials and supplies................................. 437 430
------ ------
Inventories, at FIFO cost.................................. 1,469 1,483
Excess of FIFO over LIFO cost.............................. (262) (259)
------ ------
Total.................................................... $1,207 $1,224
------ ------
</TABLE>
5. On April 20, 1994, a federal court jury verdict was returned
against Monsanto in a lawsuit related to a Superfund site in La Marque,
Texas. The lawsuit was brought by IT Corporation ("IT"), a subsidiary
of International Technologies, claiming fraud, negligent
misrepresentation and breach of a contract calling for IT to perform
incineration and remediation work at the site. The verdict awarded to
IT $52.8 million in compensatory damages, $28.6 million in punitive
damages and $2.6 million in fees. No provision has been made in the
Company's consolidated financial statements with respect to this
verdict. The Company intends to vigorously pursue all available means
to set the verdict aside.
6. Monsanto is a party to a number of lawsuits and claims, which it
is vigorously defending. Such matters arise out of the normal course of
business and relate to product liability, government regulation,
including environmental issues, and other issues. Certain of the
lawsuits and claims seek damages in very large amounts. While the
results of litigation cannot be predicted with certainty, management
believes, based upon the advice of Company counsel, that the final
outcome of such litigation will not have a material adverse effect on
Monsanto's consolidated financial position, profitability or liquidity
in any one year.
4
<PAGE> 6
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
7. Operating unit segment data for the three months and six months
ended June 30, 1994 and 1993 were as follows:
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------------------------------------
1994 1993
-------------------------- --------------------------
OPERATING OPERATING
NET INCOME NET INCOME
SALES (LOSS) SALES (LOSS)
----- -------- ----- --------
<S> <C> <C> <C> <C>
Operating Unit:
The Agricultural Group..................................... $ 753 $260 $ 743 $258
The Chemical Group......................................... 926 103 933 75
Searle..................................................... 415 3 368 (37)
The NutraSweet Company..................................... 175 47 186 42
Corporate.................................................. (16) (12)
------ ----- ------ -----
Total........................................................ $2,269 $397 $2,230 $326
------ ---- ------ ----
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------------------------------
1994 1993
-------------------------- --------------------------
OPERATING OPERATING
NET INCOME NET INCOME
SALES (LOSS) SALES (LOSS)
----- -------- ----- --------
Operating Unit:
The Agricultural Group..................................... $1,388 $466 $1,255 $443
The Chemical Group......................................... 1,779 188 1,831 125
Searle..................................................... 795 15 729 (64)
The NutraSweet Company..................................... 308 76 356 76
Corporate.................................................. (29) (23)
------ ----- ------ -----
Total........................................................ $4,270 $716 $4,171 $557
------ ---- ------ ----
</TABLE>
Financial information for the first six months of 1994 should not be
annualized. Monsanto's sales and operating income are historically
higher during the first half of the year, primarily because of the
concentration of generally more profitable sales of The Agricultural
Group in the first half of the year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Note 7 of the Notes to Financial Statements indicates operating
results by operating unit, including the concentration of the generally
more profitable sales of The Agricultural Group in the first half of
the year.
RESULTS OF OPERATIONS-SECOND QUARTER 1994 COMPARED WITH THE SECOND
QUARTER 1993
Net income for the second quarter of 1994 was a record $258 million,
or $2.19 per share, compared with net income of $200 million, or $1.66
per share, in the second quarter of last year. Net sales of $2,269
million were 2 percent higher than the comparable figure in 1993.
Net sales for The Agricultural Group were slightly higher compared
with the second quarter of 1993. Net sales for the quarter benefited
from sales from the Ortho lawn-and-garden business, acquired in May
1993, and from sales of new-product introductions, such as Posilac(R)
bovine somatotropin. However, these factors were partially offset by
lower net sales of Roundup(R) herbicide and from the acetanilide family
of herbicides, which include Lasso(R) herbicide and newly-introduced
Harness(R) Plus herbicide. Worldwide sales volumes for Roundup improved
modestly over the same period last year. However, sales volumes for
Roundup in the second quarter of 1993 were favorably affected by
unusually wet weather during March 1993 in several U.S.
5
<PAGE> 7
markets, which delayed the onset of the peak agricultural season into
the second quarter. Sales volumes of Lasso(R) herbicide declined compared
with those in the same period last year; however, sales of newly-
introduced Harness(R) Plus herbicide have replaced those of Lasso in some
U.S. markets. Operating income in the second quarter of 1994 was a
record $260 million compared with 1993's strong second-quarter results
of $258 million. Operating income in the second quarter of 1994
benefited from inclusion of Ortho results and from sales of new
products. These factors were offset, in part, by the effect of lower
acetanilide sales volumes into the Commonwealth of Independent States ("CIS").
Net sales of The Chemical Group were slightly lower than those for
the same period last year; however, 1993 sales included those from
businesses later divested as part of the previously announced
restructuring program. Excluding net sales from these divested
businesses, 1994 net sales for the second quarter would have increased
4 percent over those in the second quarter of 1993. Net sales benefited
from continuing strong demand in North America. Operating income
increased $28 million, or 37 percent, compared with the same period in
1993. Operating income continued to benefit from increased sales
volumes to the North American and certain Western European automotive
markets, strong demand for nylon carpet fibers resulting from the continued
strength in U.S. housing starts and resales, improved worldwide
capacity utilization levels, and savings from continuing cost reduction
efforts. Partially offsetting these gains were higher raw material
costs and global pricing pressures, particularly in the Plastics
Division and the Rubber Chemicals business.
Searle's net sales for the second quarter of 1994 were 13 percent
higher compared with last year primarily because of increased sales of
recently-introduced products, led by Ambien(R), a short-term treatment for
insomnia, and Daypro(R), a once-daily arthritis treatment. Sales of Calan(R)
brand calcium channel blocker in the second quarter of 1994 were
essentially the same as those in the same period last year. The 1994
improvement in operating results was largely due to sales of
recently-introduced products, lower new-product introduction costs, and cost
savings from restructuring actions.
The NutraSweet Company's net sales decreased 6 percent compared with
the amounts for the second quarter of 1993. Sales volumes of aspartame
for the quarter decreased slightly compared with those of last year's
second quarter, due primarily to the timing of shipments to major
customers. However, net sales of tabletop sweeteners, which include
NutraSweet(R) Spoonful(R) and Equal(R) brand tabletop sweeteners,
were higher compared with those in the same period last
year. Operating income increased $5 million, or 12 percent, from that
in the same period in 1993, primarily due to lower operating expenses
and increased sales of tabletop sweeteners.
For Monsanto, other income decreased compared with that in the second
quarter of 1993, primarily due to lower income from equity affiliates.
The effective income tax rate for the second quarter of 1994 was lower
than the rate for the comparable period of 1993 principally because of
lower effective ex-U.S. tax rates.
RESULTS OF OPERATIONS-FIRST SIX MONTHS 1994 COMPARED WITH FIRST SIX
MONTHS 1993
Net income for the first six months of 1994 was $452 million, or a record
$3.82 per share, compared with net income of $341 million, or $2.83 per
share, in the first six months of last year. Net sales of $4,270
million were 2 percent higher than the comparable figure in 1993.
Net sales for The Agricultural Group were 11 percent higher compared
with those in the first half of 1993. Net sales in 1994 benefited from
higher worldwide sales volumes for Roundup(R) herbicide, higher sales
of lawn-and-garden products, and from sales of new products. However,
these factors were partially offset by lower net sales from the
acetanilide family of herbicides, which include Lasso herbicide and
newly-introduced Harness Plus herbicide. Sales volumes of Lasso
herbicide declined compared with those in the same period last year;
however, sales of newly-introduced Harness Plus herbicide have replaced
those of Lasso in some U.S. markets. This trend is expected to continue
in future periods with some incremental growth anticipated. Operating
income in 1994 increased $23 million, or 5 percent, compared with
results for the first six months of 1993. Operating income in 1993 was
increased by $35 million, or 18 cents per share aftertax, resulting
from reimbursement by insurance companies of various costs
incurred in 1992 from damage to a manufacturing site that produces
a key raw material for Roundup herbicide. These costs had been
expensed in 1992 pending resolution of the claim. Worldwide
sales volume for Roundup herbicide improved
6
<PAGE> 8
16 percent over the same period last year, reflecting strong demand in
most key worldwide markets. Operating income of the Solaris lawn-and-
garden group increased from that in the prior year, primarily due to
inclusion of Ortho results. Operating income in 1994 also benefited
from sales of new products. These factors were offset, in part, by the
effect of lower acetanilide sales volumes into the CIS.
Net sales of The Chemical Group decreased 3 percent compared with
those in the same period last year, solely because 1993 sales included
those from businesses later divested as part of the previously
announced restructuring program. Excluding net sales from these
divested businesses, net sales for the first six months of 1994 would
have increased 2 percent over those for the comparable period in 1993.
Operating income improved 50 percent compared with operating income in
the first half of 1993. Operating income benefited from increased
demand in the North American automotive markets, increases in U.S.
housing starts and resales, improved worldwide capacity utilization
levels, lower raw material costs, and savings from continuing cost
reduction efforts. Partially offsetting these gains were global pricing
pressures, particularly in the Plastics Division and the Rubber
Chemicals business.
Searle's net sales for the first six months of 1994 were 9 percent higher
than those in the same period last year. Increased sales of recently-introduced
products, such as Ambien(R), a short-term treatment for insomnia, and
Daypro(R) and Arthrotec(R) arthritis treatments, more than offset a
small decline in sales of Calan(R) brand calcium channel blocker. Sales
of Calan for the first six months of 1994 declined 3 percent compared
with those in 1993, reflecting primarily the effect of generic
competition in the United States. Operating income was $15 million for
the first six months of 1994, compared with an operating loss of $64
million for the same period in 1993. The improvement in operating
income was attributed principally to increased sales of recently-introduced
products, lower new-product introduction costs in 1994, and cost savings from
restructuring actions.
The NutraSweet Company's net sales decreased 13 percent compared with
the amount for the first six months of 1993. Aspartame sales volumes
for the period decreased 12 percent compared with those in the same
period last year, due primarily to the timing of shipments to major
customers. Net sales of tabletop sweeteners, which include
NutraSweet(R) Spoonful(R) and Equal(R) brand tabletop sweeteners,
were higher compared with those in the same period last year.
Operating income was level, however, compared with that in the same
period last year due largely to lower overall operating costs resulting
from cost reduction efforts and increased sales of tabletop sweeteners.
CHANGES IN FINANCIAL CONDITION-JUNE 30, 1994 COMPARED WITH DECEMBER 31,
1993
Working capital at June 30, 1994 increased to $1,757 million from
$1,377 million at December 31, 1993, primarily due to a seasonal
increase in trade receivables offset, in part, by higher short-term
debt. The current ratio was 1.7 at June 30, 1994 and 1.6 at year-end
1993. The percent of total debt to total capitalization declined to 37
percent at quarter-end compared with 38 percent at year-end 1993,
primarily because of the increase in shareowners' equity from year-end
1993.
Operating activities from continuing operations provided a net $175
million of cash in 1994, compared with a net $202 million of cash
provided by 1993 continuing operations. The decline in cash provided by
continuing operations resulted primarily from higher seasonal working
capital levels for The Agricultural Group, offset by higher net income.
Cash used in discontinued operations in 1993 was for income tax
payments related to the sale of Fisher Controls. Investing activities
in 1994 used $78 million, principally for property, plant and equipment
purchases. The increase in short-term financing was due primarily to
the higher seasonal working capital levels for The Agricultural Group.
Throughout the first six months of 1994, Monsanto purchased in the
market 1.9 million shares of its stock for $149 million, the market
value on the dates of the purchases.
7
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's Report on Form 10-K for the year ended December 31,
1993, and the Company's Report on Form 10-Q for the quarter ended March
31, 1994, described a number of lawsuits resulting from alleged
exposure to substances present at or emanating from the Brio Superfund
site near Houston, Texas. Developments have occurred in the following
cases: (a) The Company is one of a number of defendants in 14 cases
brought in Harris County District Court on behalf of 1,012 plaintiffs
who own homes or live in the Southbend or Sageglen subdivisions,
attended school in the Southbend subdivision, or used nearby
recreational baseball facilities. (b) The Company is a defendant in a
case brought in Harris County District Court on behalf of the Clear
Creek Independent School District for property damage and consequential
damages. On May 16, 1994, an order of dismissal without prejudice was
entered against the Company and certain other of the defendants in this
matter. The Company will continue to vigorously defend remaining
actions.
The Company's Report on Form 10-K for the year ended December 31,
1993, and the Company's Report on Form 10-Q for the quarter ended March
31, 1994, described a number of product liability lawsuits arising out
of sales by G. D. Searle & Co. ("Searle"), a subsidiary of the Company
acquired in 1985, of the Cu-7(R), an intrauterine device. As of July 1,
1994, there were approximately 97 cases pending in various state and
federal courts in the United States and approximately 345 cases filed
outside the United States (the vast majority in Australia). Searle
believes it has meritorious defenses and is vigorously defending each
of these lawsuits.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of stockholders on April 22, 1994,
seven matters were submitted to a vote of stockholders.
<TABLE>
1. The following directors were elected, each to hold office until
the next Annual Meeting or until a successor is elected and has
qualified or until his or her earlier death, resignation, or
removal. Votes were cast as follows:
<CAPTION>
VOTES
VOTES "WITHHOLD
NAME "FOR" AUTHORITY"
---- ----- ----------
<S> <C> <C>
Joan T. Bok................................................ 101,424,229 1,487,832
Robert M. Heyssel.......................................... 101,458,763 1,453,298
Gwendolyn S. King.......................................... 101,319,023 1,593,038
Philip Leder............................................... 96,172,880 6,739,181
Howard M. Love............................................. 100,569,987 2,342,074
Richard J. Mahoney......................................... 101,119,741 1,792,320
Frank A. Metz, Jr. ........................................ 101,412,827 1,499,234
Buck Mickel................................................ 101,425,044 1,487,017
Jacobus F. M. Peters....................................... 96,657,362 6,254,699
Nicholas L. Reding......................................... 100,616,327 2,295,734
John S. Reed............................................... 101,474,567 1,437,494
William D. Ruckelshaus..................................... 101,474,028 1,438,033
Robert B. Shapiro.......................................... 101,338,145 1,573,916
John B. Slaughter.......................................... 101,435,225 1,476,836
</TABLE>
2. The Monsanto Management Incentive Plan of 1994 was ratified by the
stockholders. A total of 72,840,114 votes were cast in favor of
it, a total of 21,931,023 votes were cast against it, a total of
1,234,379 votes were counted as abstentions, and a total of
6,906,545 votes were counted as broker non-votes.
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<PAGE> 10
3. The Searle/Monsanto Stock Plan of 1994 was ratified by the
stockholders. A total of 71,639,899 votes were cast in favor of
it, a total of 22,999,284 votes were cast against it, a total of
1,366,333 votes were counted as abstentions, and a total of
6,906,545 votes were counted as broker non-votes.
4. The NutraSweet/Monsanto Stock Plan of 1994 was ratified by the
stockholders. A total of 83,099,571 votes were cast in favor of
it, a total of 11,514,952 votes were cast against it, a total of
1,390,993 votes were counted as abstentions, and a total of
6,906,545 votes were counted as broker non-votes.
5. The annual incentive program for executive officers was ratified
by the stockholders. A total of 79,278,379 votes were cast in
favor of it, a total of 22,483,058 votes were cast against it, and
a total of 1,150,624 votes were counted as abstentions.
6. The long-term incentive program for executive officers was
ratified by the stockholders. A total of 80,313,134 votes were
cast in favor of it, a total of 21,357,768 votes were cast against
it, and a total of 1,241,159 votes were counted as abstentions.
7. The appointment by the Board of Directors of Deloitte & Touche as
principal independent auditors for the year 1994 was ratified by
the stockholders. A total of 100,831,482 votes were cast in favor
of ratification, a total of 1,263,568 votes were cast against it,
and a total of 817,011 votes were counted as abstentions.
Brokers were permitted to vote on the election of directors,
incentive programs, and ratification of auditors in the absence of
instructions from street-name holders; therefore broker non-votes did
not occur in those matters.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits-See the Exhibit Index at page 10 of this report.
(b) No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1994.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
MONSANTO COMPANY
--------------------------------------
(Registrant)
BRUCE R. SENTS
......................................
Bruce R. Sents
Vice President and Controller
(On behalf of the Registrant and
as Principal Accounting Officer)
Date: July 22, 1994
9
<PAGE> 11
<TABLE>
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of
Item 601 of Regulation S-K.
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<C> <S>
2 Omitted - Inapplicable
4 Omitted - Inapplicable
10 1. Monsanto Management Incentive Plan of 1994 (incorporated herein by reference to Appendix A of the Monsanto
Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994)
2. Searle/Monsanto Stock Plan of 1994 (incorporated herein by reference to and filed with the Monsanto
Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994)
3. NutraSweet/Monsanto Stock Plan of 1994 (incorporated herein by reference to and filed with the Monsanto
Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994)
4. Annual Incentive Program for Executive Officers (incorporated herein by reference to the description on
pages 22-23 of the Monsanto Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994)
5. Long-Term Incentive Program for Executive Officers (incorporated herein by reference to the description on
page 23 of the Monsanto Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994)
6. G. D. Searle & Co. Deferred Compensation Plan, as amended in 1994
7. G. D. Searle & Co. Executive Relocation Plan, as amended in 1994
8. Acquisition Agreement dated as of September 11, 1992, between Emerson Electric Co. and Monsanto Company
relating to the purchase and sale of Fisher Controls International, Inc. and related businesses, plus
identification of contents of omitted schedules and agreement to furnish supplementally a copy of any
omitted schedule to the Securities and Exchange Commission upon request (incorporated herein by reference
to Form 8-K dated as of October 1, 1992 and filed on October 9, 1992)
11 Omitted - Inapplicable; see Note 3 of Notes to Financial Statements on page 4
12 Statement re Computation of the Ratio of Earnings to Fixed Charges-See Exhibit 99 below
15 Omitted - Inapplicable
18 Omitted - Inapplicable
19 Omitted - Inapplicable
22 Omitted - Inapplicable
23 Consent of Company Counsel
24 Omitted - Inapplicable
27 Not required
99 Computation of the Ratio of Earnings to Fixed Charges for Monsanto Company and Subsidiaries
</TABLE>
10
<PAGE> 12
APPENDIX TO FORM 10-Q
Throughout the narrative of the printed Form 10-Q, trademarks are
initially designated on each page by the letter "R" in a circle.
<PAGE> 1
EXECUTIVE BENEFITS PROGRAM
DEFERRED COMPENSATION PLAN
JUNE, 1994
SEARLE
<PAGE> 2
<TABLE>
SEARLE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
Overview . . . . . . . . . . . . . . . . . . . . . . . . 2
Eligibility. . . . . . . . . . . . . . . . . . . . . . . 3
How The Plan Works
What Am I Deferring . . . . . . . . . . . . . . . . 3
Deferral Choices. . . . . . . . . . . . . . . . . . 4
Interest. . . . . . . . . . . . . . . . . . . . . . 5
What If I Want My Money Early . . . . . . . . . . . 6
Things To Consider. . . . . . . . . . . . . . . . . 6
Pension Impact. . . . . . . . . . . . . . . . . . . 7
Taxes . . . . . . . . . . . . . . . . . . . . . . . 7
What To Do Now. . . . . . . . . . . . . . . . . . . 8
Beneficiary Designation . . . . . . . . . . . . . . 9
Legal Information . . . . . . . . . . . . . . . . . 9
</TABLE>
June, 1994
<PAGE> 3
SEARLE DEFERRED COMPENSATION PLAN OVERVIEW*
FEATURE OVERVIEW
- - ------- --------
PURPOSE Provide participants an opportunity for additional
timing choices for receiving incentive awards.
ELIGIBILITY Employees in grades 8004/9014 or above are eligible to
participate in the Searle Deferred Compensation Plan.
DEFERRAL ELECTION @ Before June 30 of the applicable performance year
for amounts that would otherwise be distributed
after the end of the performance year.
@ Before June 30, 1994, for amounts banked for 1994,
1995 and 1996, as well as any adjustments to the
bank.
MINIMUM DEFERRAL $1,000 per deferral election.
MAXIMUM DEFERRAL Entire amount of award (including the banked amount)
and any performance adjustments to the bank.
INTEREST EQUIVALENTS
CREDITING RATE Based on Moody's BAA Bonds.
PAYMENT DATE Two options are available:
@ A "date certain" election - you specify the month
and year when you will receive amounts deferred,
@ A "retirement" election - you may elect to receive
payment after retirement in one lump sum or in
annual installments over a specified number of years
(maximum 15).
PAYMENT FORM There are two options:
@ A lump sum payment,
@ Payment in annual installments over a specified
number of years.
IN CASE OF In the event of termination of employment with Searle
TERMINATION for any reason other than transfer to another Monsanto
unit or retirement while you have a "retirement" election
in effect, you or your beneficiary will receive a lump
sum after your termination.
INDIVIDUAL TAX @ Taxed as ordinary income at the time the award is
distributed.
@ FICA tax on deferred awards must be collected at the
time the award would otherwise be payable, absent a
deferral.
*This overview is intended as a general reference. Please read the entire
booklet carefully for some important details of the terms and conditions
affecting deferrals.
2
<PAGE> 4
The purpose of the Searle Deferred Compensation
Plan is to provide participants with additional
choices for receiving incentive awards under the
Management Incentive Plan.
ELIGIBILITY Employees eligible to participate in the
Management Incentive Plan are also eligible for
this plan, if they are in grade 9014 or above and
are also U.S. citizens residing in the U.S. or
citizens of other countries permanently assigned
to and residing in the U.S. Citizens of the U.S.
on international assignment and citizens of other
countries not permanently assigned to the U.S. are
not eligible to participate in the Deferred
Compensation Plan.
The plan will be administered by the Pension
Committee. The Pension Committee has chosen to
delegate day-to-day administration of the Deferred
Compensation Plan to the Pension Administration
Committee. All references to "the Committee"
refer to the Pension Committee or the Pension
Administration Committee, as appropriate.
HOW THE
PLAN WORKS WHAT AM I DEFERRING?
Each year, you have the opportunity to defer some
or all of any bonus you are awarded under the
Searle Management Incentive Plan of 1994-1996.
This deferral election relates only to the annual
amount that would be distributed after the end of
the performance year. This annual deferral
election does not apply to any amounts for the
performance year that are "banked".
To meet U.S. tax rules, you must decide whether or
not to make this annual deferral election no later
than June 30 of the applicable performance year:
June 30, 1994 for the 1994 performance year;
June 30, 1995 for the 1995 performance year;
and June 30, 1996 for the 1996 performance year.
In addition to the annual deferral election, the
Searle Deferred Compensation plan also provides
you the opportunity to defer some or all of any
award under the Searle Management Incentive Plan
for 1994-1996 that is "banked", as well as any
adjustments to the banked amount.
3
<PAGE> 5
To meet U.S. tax rules, you must decide no later
than June 30, 1994 whether or not to defer the
banked amounts for 1994, 1995 and 1996, as well as
any adjustments to the banked amounts -- all of
which would otherwise be payable after the end of
the three year cycle (first quarter 1997).
Whether you elect to defer or not, you must
complete and return the Deferral Election form to
your Human Resources Department.
WHAT ARE MY DEFERRAL CHOICES?
YOUR ELECTION IS IRREVOCABLE.
First of all, you will have three choices as to
how much you defer. Thus, you can defer:
------------------
@ A cash amount specified by you, but not less
than $1,000, or
@ All of your incentive payment in excess of an
amount you specify. No deferral will be made
if the amount deferred turns out to be less
than $1,000.
@ A specified percentage of your incentive
award from 10% to 100%. Again, no deferral
will be made if the amount deferred turns out
to be less than $1,000.
Second, you will have two choices as to when you
--------
will receive the deferred payment. You can
----------------------------------
specify:
@ The month and year when you want to receive
the payment - a "date certain" election -
which must be later than March of the year
following the performance year, when you
would normally receive your payment (or, with
respect to banked amounts which are deferred,
later than March, 1997), or
@ You want to receive the payment in January
following the year in which you retire.
Finally, you have two choices as to the form of
----
your distribution. You must specify whether you
want your distribution to be paid:
@ In the form of a lump sum cash payment, or
@ In annual payments over a specified number of
years, not in excess of 15.
4
<PAGE> 6
If prior to the time of payment which you have
specified you terminate employment with Searle for
any reason (e.g., retirement prior to a "date
certain" date, death, termination*, disability),
you or, in the event of your death, your
beneficiary will receive a cash lump sum payment
within a reasonable time. If you die after
retirement, but before you have received all of
your deferred payment(s), the remaining balance
will be paid to your beneficiary within a
reasonable time.
If you defer, you will need to designate a
beneficiary(ies). This designation will apply to
all future deferrals and all amounts in your
account. You can change your beneficiary at any
time.
The deferral election will not advance the normal
payment date of any award.
The term of deferral may be changed by the
Committee to enable the Company to comply with
wage controls, guidelines, or other governmental
requirements.
WILL I RECEIVE INTEREST ON THE DEFERRED MONEY?
The deferred amount will accumulate "interest
equivalents" at an annually adjusted rate as
determined by the Committee. The current rate
is the average yield during the preceding calendar
year for Moody's BAA Bonds. This index is
composed of investment grade securities with a
twenty-year maturity. Normally, interest
equivalents will begin to accumulate April 1,
following your March award. They will be credited
monthly and will be paid at the end of the
deferral period. If you elect to receive annual
installments, you'll be credited with interest
equivalents on the declining balance.
The rate and amount of interest equivalents will
be communicated to you annually in a statement
showing your year-end account balance.
*Termination for cause will result in forfeiture of all amounts which you have
banked.
5
<PAGE> 7
WHAT HAPPENS IF I WANT MY MONEY EARLIER THAN I
SPECIFY?
All elections to defer awards (including the
amount, time and method of payment) are
irrevocable. However, on the request of you or
your legal representative, the Committee may allow
withdrawal of deferred awards or acceleration of
post-retirement installments for cases of severe
hardship (as determined by the Committee), death,
or total and permanent disability (as determined
by the Committee).
You or your legal representative must submit a
request for withdrawal in writing to the
Committee.
WHAT ARE SOME OF THE THINGS I SHOULD CONSIDER?
If you defer an incentive award:
@ You will not have the use of your money
during the deferral period,
@ You can't transfer your money to other types
of investments, or use it as collateral for a
loan,
@ Deferral may not fit with your retirement and
estate plans,
@ Tax laws on deferred payments such as these
may change,
@ You must pay FICA taxes on the amounts
deferred in the year the amounts would
otherwise be payable,
@ Your deferred compensation and interest
equivalents will not be put into a trust;
---
payment will be made from the general funds
of the Company.
On the other hand,
@ You will be credited with compounded interest
equivalents on the full pre-tax amount of
your cash award during the deferral period,
@ You don't pay income taxes until you receive
payment, but then you'll pay ordinary income
tax on both the deferred amount and interest,
as it is received,
6
<PAGE> 8
@ You can defer payments until after retirement
as part of your election and can then receive
annual installments as supplemental income,
@ This will not disqualify you from Social
Security benefits to which you would
otherwise be entitled after you retire.
Refer to the section on taxes for more
information.
IS THERE ANY EFFECT ON MY PENSION IF I DEFER?
Deferral of management incentive awards may impact
the amount of benefits you receive under the tax-
qualified Retirement Plan, but not the total
amount of your pension.
"Pensionable earnings" includes base salary
and any annual award received, as well as the
portion of any award that would have been received
had it not been banked.
For the year of deferral, IRS regulations will not
allow deferred compensation to be considered as
"pensionable earnings" under a qualified plan like
the Retirement Plan. Consequently, deferring all
or a portion of your management incentive award
may impact the amount you receive under the
Retirement Plan. The key question, however, is:
Will the amount of your total pension be less?
The answer is "no". To make up the difference--in
other words, to ensure that you receive exactly
the same pension whether you defer or not-- Searle
has established a non-qualified, unfunded
retirement plan (a "non-qualified supplemental"
retirement plan). Thus, you can defer your award
prior to retirement and there will be no effect on
your pension amount.
WHAT ABOUT TAXES?
Electing to defer cash incentive award payments
has certain tax considerations. If you are
considering deferral, we recommend you review the
following information with your tax or estate
planning advisor.
As noted above, ordinary income tax will be due on
the deferred amount and interest equivalents in
the year of payment.
7
<PAGE> 9
If you die before receiving all deferred amounts,
the value of the unpaid balance will be included
in your gross estate for federal estate tax
purposes.
If you request and receive a lump sum distribution
of your pension benefits at retirement, the amount
coming from the non-qualified supplemental plan is
not eligible for long-term capital gains or
special averaging treatment available to certain
distributions from qualified plans. Also, the
non-qualified portion of the lump sum distribution
cannot be rolled over to an Individual Retirement
Account (IRA).
Finally, the value of any post-death payments to
your estate from either the qualified or the non-
qualified retirement plan will be included in your
gross estate for federal estate tax purposes.
In addition, FICA tax is due at the time the award
is granted, whether you defer or not. The maximum
wage base for the old-age, survivor and disability
insurance portion (6.2%) will be $60,600 for 1994.
Effective January 1, 1994, the dollar limit on
compensation subject to the Medicare portion of
FICA has been eliminated. Thus, beginning in
1994, the 1.45% Medicare tax will apply to all of
an employee's compensation.
WHAT DO I NEED TO DO NOW?
Once you have made your decision, complete and
return the attached transmittal memo. If you wish
to defer, also include signed "Deferral Election"
form(s).
Specifically, if you wish to defer some or all of
any annual cash award, complete the 1994 Cash
Portion of Annual Incentive Award Deferral
Election" form for the annual incentive award by
June 30, 1994.
In addition, if you wish to defer some or all of
any award that is "banked" for 1994, 1995 and
1996, as well as any adjustments to the bank,
complete the Banked Portion of Annual Incentive
Award: 1994-1996 Deferral Election" form by
June 30, 1994.
8
<PAGE> 10
BENEFICIARY DESIGNATION FORM
If you have previously made a beneficiary
designation under the Searle Deferred Compensation
Plan, that designation will continue to be in
effect. However, if you elect for the first time
to defer an incentive award, or if you wish to
change your beneficiary designation from a
previous incentive award deferral election, this
form must be completed and returned.
When you have completed the Deferral Election and
Beneficiary Designation forms, return a copy to
your Human Resources Representative and retain a
copy for your personal records. The deferral form
for the annual award must be completed and
received no later than June 30 of the performance
year or June 30, 1994 in the case of the "banked"
awards.
LEGAL INFORMATION
In all events, whether any award is made to a
participant and the amount of the award will be
dependent on management's recommendation and the
decision of the Executive Compensation and
Development Committee (ECDC). If in any
performance year, the regular common stock cash
dividend is reduced, all awards for that year will
be reviewed by the ECDC to determine whether
changes, if any, are appropriate. All awards are
subject to the sole discretion of the Committee,
and nothing in this Deferred Compensation Plan or
any booklet or other document describing or
referring to this Deferred Compensation Plan shall
confer any right whatsoever on any person to be
considered for any incentive commitments or
awards.
Nothing in this Deferred Compensation Plan or any
booklet or other document describing or referring
to this Deferred Compensation Plan shall confer on
any employee or participant the right to continue
in the employ of the Company or affect the right
of the Company to terminate the employment of any
such person with or without cause.
Nothing contained herein shall require the Company
to segregate any monies from its general funds or
to create any trusts, or to make any special
deposits for any immediate or deferred amounts
payable to any participant.
9
<PAGE> 11
Neither an incentive commitment nor an unpaid
incentive award shall be pledged or transferred
except as provided for herein in the case of
death. If any participant makes such a pledge or
transfer in violation hereof, any obligation of
the Company shall terminate.
The Company will withhold any federal, state or
local, domestic or foreign taxes as required by
law or regulation or as the Company deems
appropriate from any payments that they make to
participants hereunder.
This Deferred Compensation Plan and all actions
taken hereunder shall be governed by the laws of
the State of Illinois.
This Deferred Compensation Plan may be amended or
terminated by the Committee at any time. However,
no such action will reduce the amount which you
have deferred or the interest equivalents with
which you have been credited.
10
<PAGE> 1
SEARLE. . .
THE RIGHT MOVE
<PAGE> 2
SEARLE. . .THE RIGHT MOVE
<TABLE>
CONTENTS
<S> <C>
G.D. Searle Real Estate Co..........................p. 2
Sale of Former Residence ...........................p. 2
Marketing Assistance................................p. 3
Guaranteed Offer....................................p. 3
Amended Value ......................................p. 4
Equity Advances.....................................p. 4
Home Maintenance....................................p. 4
Relocation Expense Budget Payment...................p. 5
Homefinding ........................................p. 5
Home Purchase.......................................p. 6
For Renters.........................................p. 6
Shipment of Household Goods.........................p. 7
Transporting Family.................................p. 8
Tax Assistance .....................................p. 8
Expense Reports Handling............................p. 8
Benefit At A Glance.................................p. 9
</TABLE>
This handbook is designed to guide an employee in managing the relocation
process as set forth by SEARLE Corporate Relocation Policy. It does not
constitute a contract of employment. Policy administration will be
consistent with all Federal tax laws as regulated by the Internal Revenue
Service. Relocation policy is administered solely for the benefit of SEARLE
full-time, exempt employees who are asked to relocate by the Company.
1
<PAGE> 3
SEARLE. . .THE RIGHT MOVE
The decision to relocate is never a simple one. Coordinating the
elements of a relocation is a complex and challenging process.
Searle provides you with a comprehensive relocation benefit that
is designed to reduce the process to simplicity. Further supporting you
is a dedicated, professional, relocation staff whose experience will
prove invaluable to you in managing your move. This handbook will guide
you through the various features of your relocation benefit. You may
direct any questions to your Relocation Administrator at Searle. Our aim
is to make your transition from community to community as smooth and
problem free as possible. A move with Searle is. . .The Right Move.
REAL ESTATE ASSISTANCE
G. D. SEARLE REAL ESTATE COMPANY
Real estate assistance is provided to our relocating employees through a
unique subsidiary of Searle. The real estate subsidiary operates as a
corporate brokerage of referrals to the real estate community. If you are
selling a home as a result of your move and/or you are planning to
purchase a home in your new location, you must contact us BEFORE you talk
with a Realtor. We work on a national basis with excellent real estate
companies and would be happy to recommend a professional agent to you. If
you do not require a recommendation, simply tell us the name and
telephone number of the Realtor you wish to work with, and we'll get the
process started for you.
SALE OF FORMER RESIDENCE
If you own a home now, its sale will be one of your primary
considerations. Our specialized Relocation Staff works with people on the
move every day, so we understand the concern you may have about dealing
with the complexities of selling your home.
Preparing your home for showings, selecting the best listing agent, and
implementing a focused, marketing strategy should be your first priority.
While it remains your responsibility to sell your home, Searle's
relocation benefit provides you with a comprehensive homesale program to
assist you.
2
<PAGE> 4
SEARLE. . .THE RIGHT MOVE
MARKETING ASSISTANCE
The first component of your homesale program is professional assistance
in listing and marketing your home. Choosing the most qualified listing
agent can be compared to interviewing candidates for employment. It
should be an objective process based on a Realtor's past performance,
knowledge of your local market, compatibility with your work style, and
willingness to work harder than usual to sell your home for you.
A Relocation Counselor will manage the Realtor interview and selection
process for you. Even if you have predetermined the Realtor you'd like to
use, it is recommended that you interview at least one other Realtor to
be sure.
Your Relocation Counselor will review detailed marketing information
about your home that the Realtors provide to formulate a marketing
strategy for you. Recommendations will be given to you regarding a
realistic list price and how best to prepare your home for showings.
Your Counselor will monitor your agent's performance, give you feedback
on showings, and help you negotiate offers.
The overriding objective of the marketing assistance program is to give
you specialized guidance in selling your home for the most money possible
while minimizing cost for Searle in avoiding the expense of acquiring
your property.
You are required to list your home in order to qualify for the guaranteed
offer component of the homesale program.
GUARANTEED OFFER
The second component of the homesale program is a "guaranteed offer" to
purchase your home if your marketing efforts are unsuccessful. You must
have actively listed your home for no less than two weeks to qualify for
initiation of these services through our provider, Coldwell Banker
Relocation Services (CBRS).
CBRS is in the third party equity business. They provide the service of
buying transferees' homes on behalf of corporations at a price determined
by independent appraisals. They share our mutual goal of helping you sell
your home for the most money possible.
A "Relocation Counselor" at CBRS will work with you to coordinate the
appraisal process that will formulate your guarantee. You will choose
independent fee appraisers who will evaluate your home and predict its
most probable sales price based on comparable market data and current
market conditions. Two appraisals are ordered, and providing they are
within acceptable guidelines (no more than 5% apart), they are averaged
to determine your guaranteed offer. You have sixty (60) days to consider
the offer and may accept it at any time. Once you do, CBRS will
distribute your equity based on your contract and vacate date. CBRS then
assumes responsibility for the resale on behalf of Searle.
3
<PAGE> 5
SEARLE. . .THE RIGHT MOVE
AMENDED VALUE
If you are able to obtain a sale through your marketing efforts, CBRS
will "amend" their offer to match your sales price once they are sure
that any contingencies will likely be met. You will receive your equity
based on your sales price and can move to your new location free of
further financial responsibility for your home, or the inconvenience of
dealing with the details of closing. If something unforeseen happens to
the sale and it doesn't close, your guarantee is unaffected. You have
essentially "sold" the house to CBRS at the higher, sales price.
The real estate commission and normal Seller's costs associated with your
sale will be paid by Searle on your behalf.
EQUITY ADVANCES
CBRS can provide an early equity advance to you while you are marketing
your home if you require funds for purchase of your new residence. Up to
90% of your equity in your old home based on the appraised price can be
advanced to you interest-free for this purpose. Contact your Relocation
Counselor at CBRS if you need to request an advance.
HOME MAINTENANCE
Should the timing of closing on your new home overlap with ownership of
your old home, this feature of the benefit protects you from paying
duplicate expenses for up to a period of three months. Mortgage interest,
real estate taxes, the cost to maintain (lawn care, utilities, etc.) and
the cost to insure your former home will be reimbursed to you during the
period of duplication.
This means that with the availability of equity advances through CBRS,
you may close on your new home without discontinuing your efforts to
market your old home for the maximum price.
As a result you have a great deal of flexibility in utilizing the program
to your benefit.
TOGETHER. . .
All aspects of the homesale program combined allow you the opportunity to
aggressively test the market with professional guidance while retaining
the assurances of a guaranteed offer. The guarantee represents Searle's
commitment to you to purchase your home at the appraised price for a
period of up to sixty days. With the safety net of your guaranteed offer
firmly in place you will have powerful leverage to negotiate the highest
price possible with potential buyers.
4
<PAGE> 6
SEARLE. . .THE RIGHT MOVE
If you sell your home and the contract contains terms that preclude CBRS'
involvement, or reject the guaranteed offer and subsequently secure a
sale, the costs to sell your home will be directly reimbursed to you.
Such costs would include:
[ ] Licensed real estate broker's commission in accordance with local
custom
[ ] Advertising expense on sale of home if sale is not handled by broker
[ ] Unavoidable expense resulting from mortgage cancellation penalties
[ ] State and local transfer taxes
[ ] Attorney's fee for closing the sale
[ ] Tax stamps
[ ] Title policy fee or legal fee for title guarantee
[ ] Abstract fees
[ ] Survey of lot
Your Relocation Administrator can offer you further guidance in this
area.
The real estate assistance your Relocation benefit provides presents you
with many options in coordinating your move. The Relocation staff will
help you select the best options and make The Right Move with Searle.
EXPENSE BUDGET PAYMENT
You will be provided a payment of $20,000.00 to manage expenses involved
with homefinding trips, temporary living and other miscellaneous
relocation expenses. You are not required to account for your use of the
expense budget payment. If your expense control efforts result in partial
use of the allowance, the remainder is yours to keep. The expense budget
payment will be distributed through the payroll system and the applicable
Federal and State taxes will be withheld.
HOMEFINDING
One of your first visits to your new hometown will probably be a
homefinding expedition. Ideally you should know the sales price of your
former home before committing to purchase a new home. If your home has
not yet sold, or you have not received your guaranteed offer, and wish to
contract on a new home, make any offers contingent on the sale of your
former home to protect yourself from buying beyond your means.
The staff in the Relocation Department will contact a Realtor to work
with you in finding a new home. Even if you have a preference for a real
estate company or agent, you must allow your Searle Relocation
Administrator to call the agent on your behalf.
5
<PAGE> 7
SEARLE. . .THE RIGHT MOVE
HOME PURCHASE
If you are a homeowner in your old location, the Company will assist you
in covering expenses to purchase a home in your new location. These
expenses would include:
[ ] Costs to finance the new home, up to 2% of the borrowed amount, to
cover points or loan origination fees
[ ] State and local transfer taxes
[ ] Attorney's fee for closing the sale, including any fee for recording
of the deed
[ ] Tax stamps
[ ] Title policy fee or legal fee for title insurance
[ ] Survey of lot
[ ] Abstract fee
[ ] Loan application fee
[ ] Appraisal fee
[ ] Home inspection costs
We have preferred relationships with several mortgage providers, and will
be happy to provide you with their names.
Within days of making loan application to finance your new home, you will
be provided a statement estimating your closing costs by your lender.
This statement is generally referred to as the "Good Faith Estimate of
Closing Costs". The Relocation Department can advance against the
expenses covered by the relocation policy upon receipt of a copy of this
statement. Please allow sufficient processing time to be sure you have
your money in time for your closing. Once your closing is complete,
submit a copy of your final closing statement to reconcile the advance.
FOR RENTERS
If you currently rent your home, there may be a penalty associated with
the cancellation of your lease. The Relocation Benefit provides for
reimbursement to you of reasonable expenses related to lease
cancellation.
Ask your landlord to provide you with a receipt for the payment of the
penalty, and simply submit it to the Relocation Department along with a
completed Relocation Expense Voucher.
6
<PAGE> 8
SEARLE. . .THE RIGHT MOVE
SHIPMENT OF HOUSEHOLD GOODS
If you can point your finger, you can pack and move with Searle. The
Company provides you with a full service move through a carefully
selected van-line. Full service includes packing, crating, appliance
service, van transportation, unpacking and insurance.
Insurance is provided for your goods at replacement value. It is
recommended that you do not ship items of unusual worth or irreplaceable
nature.
Appliance service will be provided for you through the carrier if needed.
This would include disconnection at your old home and reconnection at
destination. Be sure the mover is aware of your needs so this can be
coordinated with your moving service.
One car will be shipped along with the household goods shipment and
mileage expenses at the prevailing corporate mileage rate will be
reimbursed to drive a second car to your new location. Shipment will not
be made of items commonly disallowed by the carrier such as:
[ ] Perishable plants and food
[ ] Combustible items
[ ] Articles whose contents could cause damage to other articles in the
shipment (i.e. paint, caustic substances, cleaning fluid, etc.)
Additionally the policy will not cover:
[ ] In transit pickups
[ ] Alterations to carpets and drapes
[ ] Cleaning of old or new residence
[ ] Shipment of horses, livestock, pets, boats, tractors, airplanes,
antennas and construction materials
[ ] Shipment of hobby or recreational equipment of unusual weight, bulk
or value (i.e. above-ground swimming pools, rock gardens, large
playground equipment, etc.)
If storage becomes a consideration in your move, the Company will pay
storage charges for up to sixty (60) days. Ultimate delivery out of
storage is also paid for by the Company.
7
<PAGE> 9
SEARLE. . .THE RIGHT MOVE
TRANSPORTING FAMILY
One round trip is provided for you to accomplish your move to the new
location. Transportation charges are paid for each of your family members
to travel to your new home. If you decide to drive rather than fly on
your final trip, mileage reimbursement will be made for the most direct
route at the corporate mileage rate. Meals and lodging expenses en route
will be reimbursed if you drive at least 350 miles daily.
Hotel and meals charges are also covered for you and your family during
the packing process, if applicable.
TAX ASSISTANCE
The Internal Revenue Service requires that certain relocation expenses
which are either reimbursed to you or paid by Searle on your behalf, be
reported as gross income in the year in which the relocation activity
occurred.
The Company will provide tax protection, based on your earnings, for the
incremental Federal and State tax increase resulting from the addition of
relocation expenses to your income. No tax protection is provided when it
is reasonable to assume that the expense may be claimed as a deduction.
Any tax liability resulting from automobile or bonus buy-outs will be
your responsibility.
Should you leave the Company in a year where relocation expenses have
been paid, any tax liability resulting from the addition of these
expenses to your earnings will be your responsibility.
Itemization of these expenses will be provided to you via Internal
Revenue Service Form #4782 to aid in the computation of taxes. The
Company offers no interpretation of the IRS regulations applicable to
your expenses. You should consult your personal tax advisor regarding
these issues.
EXPENSE REPORTS
All relocation expenses will be reimbursed to you after receipt and
review of a completed Relocation Expense Voucher. Attach all original
receipts and submit to the Relocation Department. If you are making
interim business trips for the company while relocating, be sure to keep
these receipts separate to submit as regular business expenses. If you
are doubtful about the categorization of any expense, contact your
Relocation Administrator.
LAST BUT NOT LEAST
Whether this is your first or a consecutive move, we hope to make it
your best. You and SEARLE are a great combination.
8
<PAGE> 10
SEARLE. . .THE RIGHT MOVE
YOUR RELOCATION BENEFIT AT A GLANCE
[ ] Real estate referral network nationwide
[ ] Marketing Assistance Program
[ ] Guaranteed offer to purchase your old residence
[ ] Duplicate Home Maintenance Costs
[ ] Relocation Expense Budget Payment for Homefinding,
Temporary Living and Miscellaneous Expenses
[ ] New Home Closing Costs
[ ] Reimbursement of Lease Cancellation Penalty for Renters
[ ] Shipment of Household Goods
[ ] One round trip for you to transport family, one one-way for each
family member to move to your new home
[ ] Storage charges paid for up to sixty days
[ ] Tax Assistance for taxable relocation expenses
9
<PAGE> 1
EXHIBIT 23
CONSENT OF COMPANY COUNSEL
I hereby consent to the incorporation by reference in Monsanto
Company's Registration Statements on Form S-8 (Nos. 2-36636, 2-76696,
2-90152, 33-13197, 33-21030, 33-39704, 33-39705, 33-39706, 33-39707,
33-49717, 33-53363, 33-53365, and 33-53367) and on Form S-3 (No.
33-46845) of the reference to Company counsel in Note 6 to the Notes to
Financial Statements in the Company's Form 10-Q Report for the quarter
ended June 30, 1994. In giving this consent I do not thereby admit that
I am within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933.
RICHARD W. DUESENBERG
RICHARD W. DUESENBERG
General Counsel
Monsanto Company
Saint Louis, Missouri
July 22, 1994
<PAGE> 1
EXHIBIT 99
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income from continuing operations
before provision for income
taxes........................... $670 $525* $729* $(174)* $354* $716 $ 954
Add
Fixed charges.................. 94 95 184 231 233 248 233
Less capitalized interest...... (5) (6) (12) (16) (24) (29) (22)
Dividends from affiliated
companies..................... - - 5 5 5 6 7
Less equity income (add equity
loss) of affiliated companies... (4) (14) (20) (1) (3) 11 (1)
---- ---- ---- ----- ---- ---- ------
Income as adjusted............... $755 $600 $886 $ 45 $565 $952 $1,171
---- ---- ---- ----- ---- ---- ------
Fixed charges
Interest expense............... $ 67 $ 66 $129 $ 169 $166 $176 $ 176
Capitalized interest........... 5 6 12 16 24 29 22
Portion of rents representative
of interest factor............ 22 23 43 46 43 43 35
---- ---- ---- ----- ---- ---- ------
Fixed charges.................... $ 94 $ 95 $184 $ 231 $233 $248 $ 233
---- ---- ---- ----- ---- ---- ------
Ratio of earnings to fixed
charges......................... 8.03 6.32 4.82 0.19 2.42 3.84 5.03
---- ---- ---- ---- ---- ---- ----
<FN>
- - -----
*Includes unusual gain of $35 million for the first six months of 1993,
restructuring expense and other unusual items of $(61) million, $699
million and $457 million for the full-year 1993, 1992 and 1991,
respectively.
Excluding this restructuring expense and other unusual items, the
ratio of earnings to fixed charges would have been 5.95 for the six
months ended June 30, 1993 and 4.48, 3.22 and 4.39 for the full-year
1993, 1992 and 1991, respectively.
</TABLE>
