<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 SEPTEMBER 30, 1995
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
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 43-0420020
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
800 NORTH LINDBERGH BLVD., ST. LOUIS, MISSOURI 63167
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(314) 694-1000
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(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
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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS SEPTEMBER 30, 1995
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<S> <C>
COMMON STOCK, $2 PAR VALUE 116,277,792 SHARES
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</TABLE>
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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 nine months ended September 30,
1995 and 1994, the Statement of Consolidated Financial Position as of
September 30, 1995 and December 31, 1994, the Statement of Consolidated
Cash Flow for the nine months ended September 30, 1995 and 1994 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales.................................................... $2,048 $1,912 $6,848 $6,182
Cost of Goods Sold........................................... 1,180 1,179 3,862 3,511
------ ------ ------ ------
Gross Profit................................................. 868 733 2,986 2,671
Marketing Expenses........................................... 302 269 923 871
Administrative Expenses...................................... 139 151 440 415
Technological Expenses....................................... 173 162 508 478
Amortization of Intangible Assets............................ 30 20 85 60
------ ------ ------ ------
Operating Income............................................. 224 131 1,030 847
Interest Expense............................................. (47) (37) (143) (104)
Interest Income.............................................. 18 49 46 68
Other Income (Expense)-Net................................... 8 10 22 12
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Income Before Income Taxes................................... 203 153 955 823
Income Taxes................................................. 63 37 296 255
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Net Income................................................... $ 140 $ 116 $ 659 $ 568
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Earnings per Share........................................... $ 1.18 $ 0.99 $ 5.71 $ 4.81
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Dividends per Share.......................................... $ 0.69 $ 0.63 $ 2.01 $ 1.84
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Weighted Average Number of Common and Common Equivalent
Shares (in millions)........................................ 115.4 118.0
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</TABLE>
1
<PAGE> 3
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
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ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents.................................................................. $ 144 $ 507
Trade receivables, net of allowances of $51 in 1995 and $57 in 1994........................ 1,852 1,530
Miscellaneous receivables and prepaid expenses............................................. 415 313
Deferred income tax benefit................................................................ 329 321
Inventories................................................................................ 1,439 1,212
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Total Current Assets................................................................... 4,179 3,883
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Property, Plant and Equipment................................................................ 7,707 7,555
Less Accumulated Depreciation................................................................ 4,707 4,738
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Net Property, Plant and Equipment.......................................................... 3,000 2,817
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Investments in Affiliates.................................................................... 529 279
Intangible Assets, net of accumulated amortization of $607 in 1995 and
$522 in 1994................................................................................ 2,038 1,134
Other Assets................................................................................. 829 778
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Total Assets................................................................................. $10,575 $ 8,891
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<CAPTION>
LIABILITIES AND SHAREOWNERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable........................................................................... $ 538 $ 629
Accrued liabilities........................................................................ 1,622 1,494
Short-term debt............................................................................ 804 312
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Total Current Liabilities.............................................................. 2,964 2,435
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Long-Term Debt............................................................................... 1,685 1,405
Deferred Income Taxes........................................................................ 75 65
Postretirement Liabilities................................................................... 1,397 1,341
Other Liabilities............................................................................ 823 697
Shareowners' Equity:
Common stock (authorized, 200,000,000 shares, par value $2)
Issued, 164,394,194 shares in 1995 and 1994.............................................. 329 329
Additional contributed capital........................................................... 861 849
Treasury stock, at cost (49,730,523 shares in 1995 and
52,859,031 shares in 1994).............................................................. (2,587) (2,744)
Reserve for ESOP debt retirement........................................................... (187) (199)
Net unrealized investment holding gains.................................................... 8 19
Accumulated currency adjustment............................................................ 114 33
Reinvested earnings........................................................................ 5,093 4,661
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Total Shareowners' Equity.............................................................. 3,631 2,948
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Total Liabilities and Shareowners' Equity.................................................... $10,575 $ 8,891
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</TABLE>
2
<PAGE> 4
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOW
(DOLLARS IN MILLIONS)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1995 1994
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<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Operating Activities:
Net income................................................................................. $ 659 $ 568
Add income taxes........................................................................... 296 255
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Income before income taxes................................................................. 955 823
Adjustments to reconcile to Cash Provided by Operations:
Income tax payments...................................................................... (258) (151)
Items that did not use (provide) cash:
Depreciation and amortization.......................................................... 445 404
Other.................................................................................. (7) 41
Working capital changes that provided (used) cash:
Accounts receivable.................................................................... (259) (167)
Inventories............................................................................ (171) (11)
Accounts payable and accrued liabilities............................................... (133) (149)
Other.................................................................................. (43) 79
Other items.............................................................................. 107 82
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Total Cash Provided by Operations............................................................ 636 951
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Investing Activities:
Property, plant and equipment purchases.................................................... (341) (256)
Acquisition of Kelco and pharmaceutical product line....................................... (1,293)
Investment payments........................................................................ (116) (116)
Investment and property disposal proceeds.................................................. 43 181
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Cash Used in Investing Activities............................................................ (1,707) (191)
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Financing Activities:
Net change in short-term financing......................................................... 492 (9)
Long-term debt proceeds.................................................................... 656 46
Long-term debt reductions.................................................................. (383) (114)
Treasury stock purchases................................................................... (308)
Dividend payments.......................................................................... (226) (217)
Other financing activities................................................................. 169 98
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Cash Provided by (Used in) Financing Activities.............................................. 708 (504)
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Increase (Decrease) in Cash and Cash Equivalents............................................. (363) 256
Cash and Cash Equivalents:
Beginning of year.......................................................................... 507 273
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End of period.............................................................................. $ 144 $ 529
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</TABLE>
The effect of exchange rate changes on cash and cash equivalents was
not material.
Cash payments for interest (net of amounts capitalized) were $122
million in 1995 and $97 million in 1994.
3
<PAGE> 5
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
1. On February 20, 1995, Monsanto completed its acquisition of the
worldwide business of Kelco, the specialty chemicals division of Merck
and Co., Inc., for a purchase price of approximately $1,075 million.
The acquisition was accounted for as a purchase and, accordingly, the
results of operations for Kelco were included in the Statement of
Consolidated Income from the date of acquisition. The estimated fair
value of assets acquired and liabilities assumed totaled approximately
$1.15 billion and $75 million, respectively. The allocation of the
purchase price is based on preliminary assumptions and is subject to
revision. The excess of the purchase price over the estimated fair
value of net assets acquired is being amortized over 30 years. On an
unaudited, proforma basis, assuming the acquisition of Kelco had
occurred at the beginning of 1994, net sales, net income and earnings
per share for the three months and nine months ended September 30, 1995
and 1994 would not have been significantly different from the reported
amounts.
In conjunction with the acquisition of Kelco, Monsanto issued
approximately $975 million in commercial paper. Monsanto has the
ability and intent to renew a certain portion of these obligations past
September 1996 and into future periods or to replace these borrowings
with long- or intermediate-term debt. Accordingly, commercial paper
balances of $400 million as of September 30, 1995, have been classified
as long-term. On April 5, 1995, Monsanto issued $150 million in 8.20%
debentures due 2025. The proceeds were used to pay down commercial
paper balances related to the Kelco acquisition.
In September 1995, Searle acquired the women's health care assets,
primarily product rights, of the former Syntex Corporation, a
subsidiary of Roche Holding Ltd., for approximately $240 million. The
acquisition was accounted for as a purchase and, accordingly, the
results of operations for the acquired products were included in the
Statement of Consolidated Income from the date of acquisition. The
product rights are being amortized over 10 years.
On November 14, 1995, Monsanto announced that it had reached an
agreement in principle with Bayer A. G., Leverkusen, Germany, outlining
the terms under which Bayer would purchase Monsanto's worldwide styrenics
plastics business for approximately $580 million. Completion of the
transaction is subject to approval by various governmental authorities
around the world. In a separate announcement, Monsanto indicated that it
had reached an agreement in principle with one of its joint venture
partners, Premier Enterprise Public Company Limited (``Premier''), whereby
Premier would acquire Monsanto's shares in Monsanto Premier Kasei Company,
Ltd., a styrenics plastics manufacturing joint venture in Thailand. This
transaction will occur as soon as definitive documents can be completed.
The net effect of these sales is expected to result in a gain at closing.
2. In December 1994, Monsanto agreed to merge its rubber chemicals
and instruments businesses with the rubber chemicals business of Akzo
Nobel N. V. to form a 50/50 joint venture. In the first quarter of
1995, final governmental approvals were granted, and on April 12, 1995,
the joint venture, known as Flexsys L.P., was formed. The joint venture
began operations on May 1, 1995. Accordingly, Monsanto's share of
Flexsys' earnings after that date were reflected in other income
(expense)- net in the Statement of Consolidated Income. Upon formation,
each partner agreed to bear the one-time cost to integrate its
contribution into the operations of the joint venture. For Monsanto,
this cost totaled a pretax charge of $40 million ($25 million aftertax,
or $0.22 per share), primarily for the cost of workforce reductions
related to approximately 120 people and for special termination
benefits for approximately 300 people transferring employment from
Monsanto to the joint venture. This reserve was recorded in the first
quarter in cost of goods sold in the Statement of Consolidated Income.
3. In March 1995, Monsanto received payments from several insurance-
related settlements with Talegen Holdings, Inc. (previously Crum &
Forster, Inc.) and several related entities. The settlements resulted
in a $40 million gain ($25 million aftertax, or $0.22 per share). The
settlements were recorded in cost of goods sold in the Statement of
Consolidated Income.
In September 1995, Monsanto received payments from various insurers
for the settlement of environmental insurance litigation. The
settlement resulted in a $52 million gain ($32 million aftertax, or
$0.28 per share) and was recorded in cost of goods sold in the
Statement of Consolidated Income.
4
<PAGE> 6
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. In June 1995, Monsanto announced that it had signed a letter of
intent to acquire a 49.9 percent interest in Calgene, Inc. ("Calgene")
for approximately $30 million in cash, certain intellectual property,
and 100 percent of the partnership interests in Gargiulo L.P. and
Gargiulo G.P. (jointly "Gargiulo"). In addition, Monsanto will provide
long-term credit facilities for the general business needs of Calgene
and Gargiulo. The Calgene transaction is subject to the approval of
the shareowners of Calgene and is anticipated to close early in 1996.
5. Earnings per share were computed using the weighted average number
of common shares and common share equivalents outstanding each period
(115,358,150 and 117,987,508 in 1995 and 1994, respectively). Common
share equivalents (2,489,532 and 2,546,946 in 1995 and 1994,
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>
6. Components of inventories at September 30, 1995 and December 31,
1994 were as follows:
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
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<S> <C> <C>
Finished goods............................................. $ 960 $ 751
Goods in process........................................... 312 285
Raw materials and supplies................................. 439 459
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Inventories, at FIFO cost.................................. 1,711 1,495
Excess of FIFO over LIFO cost.............................. (272) (283)
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Total.................................................... $1,439 $1,212
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</TABLE>
7. On July 31, 1995, the Company settled a lawsuit related to a
Superfund site in La Marque, Texas. The suit was brought by IT
Corporation ("IT"), a subsidiary of International Technology
Corporation, and claimed, among other things, breach of a contract
calling for IT to perform incineration and remediation work at the
site. The suit was settled for $41 million ($25 million aftertax, or
$0.22 per share), and the payment was recorded in cost of goods sold in
the Statement of Consolidated Income during the third quarter of 1995.
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.
<TABLE>
8. Segment data for the three months and nine months ended September
30, 1995 and 1994 were as follows:
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------
1995 1994
----------------------- ----------------------
OPERATING OPERATING
NET INCOME NET INCOME
SALES (LOSS) SALES (LOSS)
----- -------- ----- --------
<S> <C> <C> <C> <C>
Segment:
Agricultural Products...................................... $ 472 $ 41 $ 424 $ 28
Chemicals.................................................. 871 90 933 68
Pharmaceuticals............................................ 435 62 372 21
Food Ingredients........................................... 270 42 183 29
Corporate.................................................. (11) (15)
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Total........................................................ $2,048 $224 $1,912 $131
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</TABLE>
5
<PAGE> 7
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------------
1995 1994
----------------------- ----------------------
OPERATING OPERATING
NET INCOME NET INCOME
SALES (LOSS) SALES (LOSS)
----- -------- ----- --------
<S> <C> <C> <C> <C>
Segment:
Agricultural Products...................................... $2,074 $ 568 $1,812 $494
Chemicals.................................................. 2,783 278 2,712 256
Pharmaceuticals............................................ 1,223 109 1,085 26
Food Ingredients........................................... 768 118 573 115
Corporate.................................................. (43) (44)
------ ------- ------ -----
Total........................................................ $6,848 $1,030 $6,182 $847
------ ------ ------ ----
</TABLE>
As of February 1, 1995, Monsanto created a new organization structure
that assigns primary business responsibilities to individual business
units. As a result of those changes and the acquisition of Kelco,
Monsanto has realigned its segment structure. The Food Ingredients
segment now reflects the operations of the following business units:
NutraSweet Consumer Products, comprised of Equal(R), Canderel(R),
NutraSweet(R) Spoonful(TM) tabletop sweeteners, and other consumer
products; NutraSweet Ingredient, comprised of NutraSweet(R) brand
sweetener and other consumer products; and Kelco. The Pharmaceutical
segment reflects the operations of Searle, after the transfer of the
Canderel tabletop sweetener business to NutraSweet Consumer Products.
Segment information for prior periods has been reclassified to conform
to the current presentation.
Financial information for the first nine months of 1995 should not be
annualized. Monsanto's sales and operating income are historically
higher during the first nine months of the year, primarily because of
the concentration of generally more profitable sales from the
Agricultural Products segment in the first nine months of the year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Note 8 of the Notes to Financial Statements indicates operating
results by operating unit, including the concentration of the generally
more profitable sales of Agricultural Products in the first nine months
of the year.
RESULTS OF OPERATIONS-THIRD QUARTER 1995 COMPARED WITH THE THIRD
QUARTER 1994
Net income for the third quarter of 1995 was $140 million, a third
quarter record of $1.18 per share, compared with net income of $116
million, or $0.99 per share, in the third quarter of last year. Third-
quarter results for 1995 included a net, nonrecurring, aftertax gain of
$7 million, or $0.06 per share, comprised of a gain from the settlement
of insurance-related litigation and an expense from the settlement of
the environmental-related litigation discussed in Note 3 and Note 7,
respectively, of the Notes to Financial Statements. In 1994, third-
quarter net income included an aftertax gain of $21 million, or $0.18
per share, from interest income related to an income tax settlement.
Net sales for the quarter of $2,048 million were 7 percent higher than
the comparable figure in 1994.
Third quarter net sales for Agricultural Products increased 11
percent over those in the third quarter of the prior year to a record
level of $472 million. The increase was fueled by higher global sales
of Roundup(R) herbicide. The practice of conservation tillage continues
to be the primary driver behind growth in worldwide sales volume. Also
contributing to the sales increase were higher sales of lawn-and-garden
products of the Solaris group, the result of increased volume.
Operating income for the segment was up $13 million, or
6
<PAGE> 8
46 percent, over the prior year, primarily due to the increased sales
volume and a favorable sales mix, partially offset by higher
technological expenses for biotechnological research.
Net sales for Chemicals declined $62 million from its third quarter
performance last year. However, net sales in the third quarter of 1994
include those from the Company's rubber chemicals and instruments
businesses. After the commencement of operations at the Flexsys L.P.
joint venture on May 1, 1995, these sales are no longer included in
consolidated totals. Excluding the sales of these businesses,
Chemicals' sales for the third quarter of 1995 would have increased 3
percent over those in the comparable period last year, primarily
because of higher selling prices. Operating income increased to $90
million, or 32 percent over the comparable period last year. Excluding
the net effect of one-time insurance settlements and the operating
results of the rubber chemicals and instruments businesses from the
prior year's third quarter totals, operating income would have
increased by approximately $20 million. The increase was primarily the
result of lower raw material costs experienced in the quarter and the
impact of selected price increases.
Pharmaceuticals' net sales increased 17 percent, or $63 million over
the third quarter of 1994. This increase was primarily attributed to
the continued strong sales performances of Ambien(R), a short-term
treatment for insomnia, and Daypro(R) and Arthrotec(R) arthritis
treatments. The sales increase also reflects the impact of
approximately $20 million in favorable adjustments under certain sales
rebate programs in the United States for product sales made in prior
years. Pharmaceuticals' operating income increased by $41 million over
the same period last year primarily because of the higher sales but was
partially offset by higher research and development expenses and higher
marketing expenditures used to support the sales growth in key products.
Higher income from alliances in 1995 also benefited operating results.
Food Ingredients' net sales for the third quarter of 1995 were up 48
percent over the same period last year; however, 1995 results include
sales from the acquired Kelco business. Excluding these sales, net
sales for Food Ingredients increased modestly, reflecting higher sales
volumes of tabletop products over those in the same period a year
earlier. Operating income increased $13 million versus the third
quarter of 1994 to $42 million as a result of the higher tabletop sales
and the addition of income from Kelco, offset in part, by higher
operating expenses.
For Monsanto, marketing expenses for the third quarter of 1995 were
higher than the comparable period in 1994, primarily because of the
aforementioned higher spending on key growth products by the
Pharmaceuticals segment. The increase in third quarter technological
expenses over the third quarter of last year was principally the result
of higher biotechnological research expenses for Agricultural Products,
higher research and development expenses for Pharmaceuticals and the
addition of Kelco, which was not part of Monsanto in 1994. Interest
expense for Monsanto increased because of higher short-term debt levels
in 1995 associated with the acquisition of Kelco and certain product rights.
RESULTS OF OPERATIONS-FIRST NINE MONTHS 1995 COMPARED WITH FIRST NINE
MONTHS 1994
Net income for the first nine months of 1995 was a record $659
million, or $5.71 per share, compared with net income of $568 million,
or $4.81 per share, in the first nine months of last year. Nine-month
results for 1995 included a net, nonrecurring, aftertax gain of $7
million, or $0.06 per share. This amount is the combination of a gain
from a settlement of insurance-related litigation and an expense from
the settlement of the environmental-related litigation discussed in
Note 3 and Note 7, respectively, of the Notes to Financial Statements.
Earnings in 1994 included an aftertax gain of $21 million, or $0.18 per
share, from interest income related to an income tax settlement. Net
sales of $6,848 million were 11 percent higher than the comparable
figure in 1994.
Net sales for Agricultural Products increased 14 percent, or $262
million, during the first three quarters of 1995 compared to the same
period in 1994. Net sales in 1995 benefited from higher worldwide sales
volumes of Roundup(R) herbicide, with all world areas posting double-
digit increases in sales volume. Partially offsetting the sales
increase were lower sales of lawn-and-garden products of the Solaris
group. Operating income in 1995 increased $74 million, or 15 percent,
compared with the results for the first three quarters of 1994,
primarily the result of increased sales of herbicide products. The
increase in operating income was partially offset by the effect of the
lower sales for Solaris.
7
<PAGE> 9
Net sales for Chemicals increased 3 percent compared with those in
the same period last year. However, net sales for the first nine months
of 1995 and 1994 include those from the Company's rubber chemicals and
instruments businesses through April 30, 1995. The Flexsys L.P. joint
venture began operations on May 1, 1995. Excluding sales from these
businesses, Chemicals' sales for the first nine months of 1995 would
have increased 8 percent over those in the comparable period last year,
principally the result of higher selling prices for plastics and for
fibers. Operating income for the segment increased $22 million, or 9
percent, over the results for the first nine months of 1994. Excluding
the impact of one-time items described in Notes 2, 3 and 7 to the Notes
to Financial Statements, and the operating results of the rubber
chemicals and instruments businesses, operating income would have
increased by 3 percent. Operating income benefited from the effect of
the higher selling prices but was hurt by the effect of higher raw
material costs. Competitive pressures on a worldwide basis have limited
the ability to fully recover the increased costs through increased
selling prices.
Pharmaceuticals' sales for the first nine months of 1995 increased 13
percent over the first nine months of the prior year. The increase can
be attributed to sales of the key growth products Ambien(R), Daypro(R)
and Arthrotec(R), as well as the impact of favorable adjustments under
certain sales rebate programs in the United States from prior years.
Partially offsetting this increase were lower sales of Calan(R), a
calcium channel blocker. Operating income increased significantly
through the first nine months of 1995 versus the comparable period in
1994 on the strength of increased sales and higher income from alliances.
Net sales for Food Ingredients were 34 percent higher compared with
those in the first nine months of 1994. However, sales in 1995 include
sales from the acquired Kelco business. After excluding these sales,
net sales for Food Ingredients were approximately even with sales for
the same period in 1994. Operating income for the period increased
slightly, primarily due to the addition of Kelco income and the benefit
of higher sales of tabletop products. Partially offsetting the increase
were the effects of lower aspartame sales and higher operating
expenses.
For Monsanto, interest expense increased because of higher short-term
debt levels in 1995 related to the acquisitions of Kelco and certain product
rights.
CHANGES IN FINANCIAL CONDITION-SEPTEMBER 30, 1995 COMPARED WITH
DECEMBER 31, 1994
Working capital at September 30, 1995 decreased to $1,215 million
from $1,448 million at December 31, 1994, primarily because of higher
short-term debt related to the Kelco and Syntex acquisitions offset, in
part, by a seasonal increase in trade receivables and higher
inventories for the Chemicals segment. The current ratio was 1.4 at
September 30, 1995 and 1.6 at year-end 1994. The percent of total debt
to total capitalization increased to 41 percent at September 30, 1995
versus 37 percent at year-end 1994 because of the increase in
acquisition-related debt. However, this ratio has declined from a level
of 47 percent at March 31 and 45 percent at June 30, 1995. The
Statement of Consolidated Financial Condition at September 30, 1995
includes the estimated fair value of assets acquired and liabilities
assumed of Kelco and Syntex, totaling approximately $1.4 billion and
$85 million, respectively. The allocation of the purchase price is based on
preliminary assumptions and is subject to revision. The increase in
intangibles is primarily due to the excess of the purchase price for
Kelco over the estimated fair value of net assets acquired and the
acquisition of product rights. The increase in investments in
affiliates is primarily due to the Company's investment in the Flexsys
L.P. joint venture.
Cash provided by operations totaled a net $636 million in 1995,
compared with $951 million in 1994. The decrease in cash flow from
operations resulted primarily from higher seasonal working capital
requirements for Agricultural Products. Investing activities in 1995
used $1,707 million, principally for the purchase of Kelco and Syntex.
Short-term and long-term financing increased primarily to fund the
Kelco and Syntex acquisitions and the higher seasonal working capital
levels for Agricultural Products.
Monsanto has filed with the Securities and Exchange Commission a
shelf registration statement for the issuance of up to $300 million of
debt securities, the proceeds of which are intended for general
corporate purposes. Management continues to expect that cash provided
by operations, supplemented by periodic borrowings, will be adequate
to fund its future operating requirements.
8
<PAGE> 10
PART II. OTHER INFORMATION
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 September 30, 1995.
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: November 14, 1995
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 Omitted - Inapplicable
11 Omitted - Inapplicable; see Note 5 of Notes to Financial Statements on page 5
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 Financial Data Schedule
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
designated on each page by the letter "R" in a circle or by the letters
"TM".
<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.
33-60189) of the reference to Company counsel in Note 7 to the Notes to
Financial Statements in the Company's Form 10-Q Report for the quarter
ended September 30, 1995. 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
November 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF CONSOLIDATED INCOME OF MONSANTO COMPANY AND SUBSIDIARIES FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1995, AND THE STATEMENT OF CONSOLIDATED
FINANCIAL POSITION AS OF SEPTEMBER 30, 1995. SUCH INFORMATION IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 144
<SECURITIES> 0
<RECEIVABLES> 1,852
<ALLOWANCES> 0
<INVENTORY> 1,439
<CURRENT-ASSETS> 4,179
<PP&E> 7,707
<DEPRECIATION> 4,707
<TOTAL-ASSETS> 10,575
<CURRENT-LIABILITIES> 2,964
<BONDS> 1,685
<COMMON> 329
0
0
<OTHER-SE> 3,302
<TOTAL-LIABILITY-AND-EQUITY> 10,575
<SALES> 6,848
<TOTAL-REVENUES> 6,848
<CGS> 3,862
<TOTAL-COSTS> 3,862
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 143
<INCOME-PRETAX> 955
<INCOME-TAX> 296
<INCOME-CONTINUING> 659
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 659
<EPS-PRIMARY> 5.71
<EPS-DILUTED> 0
<FN>
RECEIVABLES ARE STATED NET OF ALLOWANCES OF $51.
</TABLE>
<PAGE> 1
EXHIBIT 99
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income from continuing operations
before provision for income
taxes........................... $ 955 $823 $ 895<F*> $729<F*> $(174)<F*> $354<F*> $716
Add
Fixed charges.................. 182 143 182 184 231 233 248
Less capitalized interest...... (8) (7) (10) (12) (16) (24) (29)
Dividends from affiliated
companies..................... - 2 2 5 5 5 6
Less equity income (add equity
loss) of affiliated companies... (24) (11) (21) (20) (1) (3) 11
------ ----- ------- ----- ----- ----- ----
Income as adjusted........... $1,105 $950 $1,048 $886 $ 45 $565 $952
------ ---- ------ ---- ----- ---- ----
Fixed charges
Interest expense............... $ 143 $104 $ 131 $129 $ 169 $166 $176
Capitalized interest........... 8 7 10 12 16 24 29
Portion of rents representative
of interest factor............ 31 32 41 43 46 43 43
------ ---- ------ ---- ----- ---- ----
Fixed charges................ $ 182 $143 $ 182 $184 $ 231 $233 $248
------ ---- ------ ---- ----- ---- ----
Ratio of earnings to fixed
charges......................... 6.07 6.64 5.76 4.82 0.19 2.42 3.84
---- ---- ---- ---- ---- ---- ----
<FN>
- -----
<F*>Includes restructuring and other unusual items of $7 million, $(30)
million, $699 million and $457 million in 1994, 1993, 1992 and 1991,
respectively. Excluding the restructuring and other unusual items, the
ratio of earnings to fixed charges would have been 5.80, 4.65, 3.22
and 4.39, respectively.
</TABLE>
