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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
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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, MO. 63167
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (314) 694-1000
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK $2 PAR VALUE NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
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 12 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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE
CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY
OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS
FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X]
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NONAFFILIATES OF THE REGISTRANT: APPROXIMATELY $9.0 BILLION AS OF THE
CLOSE OF BUSINESS ON FEBRUARY 28, 1995.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: 114,097,214
SHARES OF COMMON STOCK, $2 PAR VALUE, OUTSTANDING AT FEBRUARY 28, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
1. PORTIONS OF MONSANTO COMPANY ANNUAL REPORT TO SECURITY HOLDERS FOR
THE YEAR ENDED DECEMBER 31, 1994. (PARTS I AND II OF FORM 10-K.)
2. PORTIONS OF MONSANTO COMPANY NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT DATED MARCH 16, 1995. (PART III OF FORM 10-K.)
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PART I
ITEM 1. BUSINESS.
Monsanto Company and its subsidiaries are engaged in the worldwide
manufacture and sale of a widely diversified line of agricultural
products; chemical products, including plastics and manufactured
fibers; pharmaceuticals; and food products, including low-calorie
sweeteners. Monsanto Company was incorporated in 1933 under Delaware
law and is the successor to a Missouri corporation, Monsanto Chemical
Works, organized in 1901. Unless otherwise indicated by the context,
"Monsanto" means Monsanto Company and consolidated subsidiaries, and
the "Company" means Monsanto Company only.
RECENT DEVELOPMENTS
On February 20, 1995, Monsanto completed its acquisition of the
worldwide business of Kelco, a division of Merck & Co., Inc., for
approximately $1,075 million. See "Review of Changes in Financial
Position" and "Principal Acquisitions and Divestitures" on pages 42 and
49, respectively, of the Company's Annual Report to shareowners for the
year ended December 31, 1994 (the "1994 Annual Report").
In December 1994, the Company's Board of Directors approved a plan to
eliminate redundant staff activities across Monsanto and to consolidate
certain staff and administrative business functions. In addition,
Monsanto will close or exit certain facilities and programs. See
"Review of Consolidated Results of Operations" and "Restructuring and
Other Actions" on pages 29 and 48 of the 1994 Annual Report.
In 1995, The Chemical Group intends to merge its rubber chemicals and
instruments businesses with the rubber chemicals business of Akzo Nobel
N.V. to form a joint venture. See "Chemical Group Outlook" and
"Principal Acquisitions and Divestitures" on pages 37 and 49,
respectively, of the 1994 Annual Report.
INDUSTRY SEGMENTS; PRINCIPAL PRODUCTS
For 1994, Monsanto reported its business under four industry
segments: The Agricultural Group, The Chemical Group, Searle, and
NutraSweet. The tabular information appearing under "Operating Unit
Segment Data" and "Geographic Data" on pages 33 and 40 of the 1994
Annual Report is incorporated herein by reference.
<TABLE>
The following is a list of principal products categorized by major
end-use markets within each industry segment:
<CAPTION>
THE AGRICULTURAL GROUP
Major End-Use Manufacturing Major Raw Materials
Major End-Use Markets Major Products Products & Applications Locations & Components
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<S> <C> <C> <C> <C>
Agricultural, Roundup(R) herbicide Multipurpose, non- Alvin, TX; Antwerp, Belgium; Disodiumiminodiacetate;
industrial, turf and and other glyphosate- selective agricultural Fayetteville, NC; Luling, Phosphorus Trichloride
ornamental based herbicides and industrial LA; Sao Jose dos Campos,
applications applications Brazil
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Lasso(R) and Harness(R) Corn, soybean, peanut Muscatine, IA Chloroacetyl Chloride;
herbicides and other and milo (sorghum) Diethylaniline
acetanilide-based crops
herbicides
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Avadex(R) BW herbicide; Wheat crops Antwerp, Belgium; Ammonium Thiocyanate;
Far-Go(R) herbicide Muscatine, IA Diisopropylamine;
Trichloropropane
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Animal agricultural Posilac(R) bovine Increase efficiency of Toll manufactured No major raw materials
applications somatotropin milk production in
dairy cows
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Residential Roundup herbicide; Herbicides, Fort Madison, IA Acephate; Chlorpyrifos;
applications Ortho(R) lawn-and- insecticides, Diazinon; Glyphosate;
garden products fungicides and Malathion; Triforine
fertilizers
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<CAPTION>
THE CHEMICAL GROUP
Fibers
Major End-Use Manufacturing Major Raw Materials
Major End-Use Markets Major Products Products & Applications Locations & Components
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<S> <C> <C> <C> <C>
Construction & Home Nylon carpet staple; Broadloom carpet; Decatur, AL; Greenwood, SC; Acrylonitrile; Ammonia;
Furnishings nylon bulk continuous upholstery; blankets Pensacola, FL Cyclohexane; Propylene
filament; Acrilan(R)
acrylic fiber
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Personal Products Acrilan acrylic fiber Sweaters; half-hose; Decatur, AL Acrylonitrile
active wear; hand-knit
yarns
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Vehicles Nylon filament; nylon Tires; molding resins Pensacola, FL Acrylonitrile; Ammonia;
polymer for auto grilles, Cyclohexane; Propylene
bumpers and gears
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<CAPTION>
Industrial Products
<S> <C> <C> <C> <C>
Vehicles Santocure(R) CBS, Tires; tubes; belts; Antwerp, Belgium; Newport, Aniline; Carbon Disulfide;
Santocure MOR, hoses; retreads; mats United Kingdom; Nitro, WV; Para-Nitrochlorobenzene;
Santocure NS, Ruabon, United Kingdom; Tertiary-Butylamine
Santocure TBSI Sauget, IL
vulcanization
accelerators;
Santoflex(R) 13
antidegradant;
Santogard(R) PVI
prevulcanization
inhibitor
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Specialty resins; Automotive coatings and Addyston, OH; Antwerp, Butanol; Chlorine;
polymer modifiers sealants Belgium; Bridgeport, NJ; Formaldehyde; Melamine;
LaSalle, Quebec, Canada; Methanol; Phthalic
Springfield, MA Anhydride; Toluene
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Skydrol(R) aviation Hydraulic fluids for St. Louis, MO Phosphorus Oxychloride
hydraulic fluids; commercial aircraft
lubricants
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Chemicals Industrial phosphates; Metal treating, Augusta, GA; Luling, LA; Ammonia; Chlorine;
phosphoric acid; cleaning and etching; St. Louis, MO; Sauget, IL; Phosphorus; Soda Ash;
phosphorus plant food fertilizers; Trenton, MI Sulphur
pentasulfide; oil additives
phosphorus trichloride
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Nitrochlorobenzene Dyes; pigments; rubber Anniston, AL; Nitro, WV; Benzene; Caustic Soda;
derivatives; Sodium MBT preservatives; Sauget, IL; Ruabon, United Chlorine
engineering; Kingdom; Sauget, IL
thermoplastics;
antifreeze; water
treatment
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Capital Equipment Sulfuric acid and Process plants On-Site Construction Various Construction
process plants (design Components
and construction); air
emission control
systems
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Therminol(R) heat Heat transfer fluids Alvin, TX; Anniston, AL; Benzene; Phenol
transfer fluids; Newport, United Kingdom
diphenyl oxide
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Dequest(R) water Scale inhibitors; oil Newport, United Kingdom Phosphorus Trichloride
treatment chemicals field chemicals
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<CAPTION>
THE CHEMICAL GROUP (CONT'D)
Industrial Products (Cont'd)
Major End-Use Manufacturing Major Raw Materials
Major End-Use Markets Major Products Products & Applications Locations & Components
--------------------- -------------- ----------------------- ----------- -------------------
<S> <C> <C> <C> <C>
Construction & Home Polymer modifiers Vinyl flooring; caulks Antwerp, Belgium; Butanol; Chlorine;
Furnishings and sealants; Bridgeport, NJ; LaSalle, 2-Ethylhexanol; Phenol;
adhesives; coatings; Quebec, Canada Phthalic Anhydride; Toluene
wall covering; vinyl
upholstery; insulation;
furniture
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Flectol(R) rubber Roofing; flooring; Antwerp, Belgium; Nitro, WV; Aniline; Carbon Disulfide;
preservative, tape; industrial hose Ruabon, United Kingdom; Tertiary-Butylamine
Santocure(R) CBS, Sauget, IL
Santocure MOR,
Santocure NS,
Santocure TBSI
vulcanization
accelerators
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Specialty resins Coatings and adhesives Addyston, OH; Alvin, TX; Acrylate Esters; Butanol;
LaSalle, Quebec, Canada; Formaldehyde; Melamine;
Springfield, MA; Trenton, MI Methanol; Vinyl Acetate
Monomer
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Doormats Doormats Ghent, Belgium; Polyethylene
St. Louis, MO
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Ammonium polyphosphate Fire retardant Phosphorus
coatings; polymer
additives
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Food Food additives Bakery; dairy; meat St. Louis, MO; Sao Jose dos Caustic Soda; Lime;
Campos, Brazil; Trenton, MI Phosphorus
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Personal Products Dental phosphates; Dentifrices; dish Augusta, GA; Newport, United Benzene; Caustic Soda;
industrial phosphates detergents; water Kingdom; Ruabon, United Phosphorus; Soda Ash
conditioners Kingdom; St. Louis, MO; Sao
Jose dos Campos, Brazil;
Soda Springs, ID; Trenton,
MI
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Polymer modifiers Packaging Antwerp, Belgium; Butanol; Chlorine; Phthalic
Bridgeport, NJ; LaSalle, Anhydride; Toluene
Quebec, Canada
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Other A variety of resin Electronics; paper; Addyston, OH; Earth City, Acrylate Esters;
products; Flectron(R) graphics; packaging MO; LaSalle, Quebec, Canada; Formaldehyde; Maleic
metalized materials Trenton, MI Anhydride; Melamine;
Methanol
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<CAPTION>
Plastics and Saflex(R)
<S> <C> <C> <C> <C>
Vehicles Saflex(R) plastic Windshields Ghent, Belgium; Sao Jose dos Butyraldehyde; Ethanol;
interlayer Campos, Brazil; Springfield, Polyvinyl Alcohol; Vinyl
MA; Trenton, MI Acetate Monomer
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Lustran(R) ABS and Automotive interior and Addyston, OH; Antwerp, Acrylonitrile; Butadiene;
Lustran SAN exterior molded parts; Belgium; LaSalle, Quebec, Maleic Anhydride; Nylon
thermoplastics; under-the-hood Canada; Muscatine, IA; Salt; Styrene
Vydyne(R) nylon molding applications; Pensacola, FL
resins; Cadon(R) automotive aftermarket;
thermoplastics; transportation
Triax(R) thermoplastic
alloys; Centrex(R)
polymers
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<CAPTION>
THE CHEMICAL GROUP (CONT'D)
Plastics and Saflex(R) (Cont'd)
Major End-Use Manufacturing Major Raw Materials
Major End-Use Markets Major Products Products & Applications Locations & Components
--------------------- -------------- ----------------------- ----------- ---------------
<S> <C> <C> <C> <C>
Personal Products Centrex(R) polymers; Toys; boats; tools; Addyston, OH; Antwerp, Acrylonitrile; Butadiene;
Lustran(R) ABS and housewares; consumer Belgium; LaSalle, Quebec, Maleic Anhydride; Nylon
Lustran SAN electronics; business Canada; Muscatine, IA; Salt; Styrene
thermoplastics; machines; cosmetic Pensacola, FL
Triax(R) thermoplastic packaging; personal
alloys; Vydyne(R) nylon care items; spas and
molding resins hot tubs; food
processing; medical
appliances
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Construction & Home Lustran ABS Drain pipe; Addyston, OH; Antwerp, Acrylonitrile; Butadiene;
Furnishings thermoplastics; Triax refrigeration; Belgium; LaSalle, Quebec, Maleic Anhydride; Styrene
thermoplastic alloys telecommunications Canada; Muscatine, IA
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Saflex(R) plastic Architectural glass Ghent, Belgium; Sao Jose dos Butyraldehyde; Ethanol;
interlayer Campos, Brazil; Springfield, Polyvinyl Alcohol; Vinyl
MA; Trenton, MI Acetate Monomer
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<CAPTION>
SEARLE
<S> <C> <C> <C> <C>
Pharmaceuticals Maxaquin(R) Anti-infective Augusta, GA; Caguas, Puerto Trifluoroaniline
(Lomefloxacin HCl) Rico; Evreux, France
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Daypro(R) (Oxaprozin); Anti-inflammatory Augusta, GA; Caguas,Puerto Benzoin; Diclofenac;
Arthrotec(R) Rico; Morpeth, United Misoprostol
(Misoprostol/ Kingdom
Diclofenac)
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Aldactone(R) Cardiovascular Augusta, GA; Caguas, Puerto Androstenedione;
(Spironolactone); Rico; Evreux, France; Hydrochlorothiazide;
Aldactazide(R) Morpeth, United Kingdom Verapamil HCl
(Spironolactone/
Hydrochlorothiazide);
Calan(R) formulations
(Verapamil HCl)
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Oral contraceptives Fertility control Caguas, Puerto Rico; Ethynodiol Diacetate
Morpeth, United Kingdom
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Cytotec(R) Gastrointestinal Caguas, Puerto Rico; Coapa, Norprostol
(Misoprostol) Mexico; Morpeth, United
Kingdom
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Ambien(R) (Zolpidem Central nervous system Caguas, Puerto Rico Zolpidem
Tartrate)
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Food (ex-U.S. only) Canderel(R) and Low-calorie tabletop Evreux, France; Morpeth, Aspartame
Equal(R) tabletop sweetener United Kingdom
sweeteners
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<CAPTION>
NUTRASWEET
<S> <C> <C> <C> <C>
Food NutraSweet(R) brand High-intensity Augusta, GA; Harbor Beach, Aspartic Acid;
sweetener sweetener available MI; University Park, IL L-Phenylalanine
primarily in beverages,
dessert products and
tabletop sweeteners
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Equal and NutraSweet(R) Low-calorie tabletop Manteno, IL Aspartame
Spoonful(TM) tabletop sweeteners
sweeteners
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Simplesse(R) all All natural fat Toll manufactured Whey protein concentrate
natural fat substitute substitute for use
primarily in dairy
products and baked
goods
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</TABLE>
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SALE OF PRODUCTS
Monsanto's products are sold directly to customers in various
industries, to wholesalers and other distributors and jobbers, to
retailers and to the ultimate consumer, principally by its own sales
force, or, in some cases, through third parties. With respect to
pharmaceuticals, such sales force concentrates on detailing to
physicians and managed health care providers. As indicated on page 57
of the 1994 Annual Report, Monsanto's net income is historically higher
during the first half of the year, primarily because of the
concentration of generally more profitable sales of The Agricultural
Group during that part of the year. Monsanto's marketing and
distribution practices do not result in unusual working capital
requirements on a consolidated basis, although the seasonality of sales
of The Agricultural Group segment sometimes results in short-term
borrowings to finance the customer accounts receivable and inventories.
Inventories of finished goods, goods in process and raw materials are
maintained to meet customer requirements and Monsanto's scheduled
production. In general, Monsanto does not manufacture its products
against a backlog of firm orders; production is geared primarily to the
level of incoming orders and to projections of future demand. Monsanto
generally is not dependent upon one or a group of customers. The
NutraSweet segment, however, makes a majority of its sales to a few
companies for use in carbonated soft drinks. Monsanto has no material
contracts with the government of the United States or any state, local
or foreign government. However, pursuant to contracts executed under
U.S. federal and state laws, Monsanto's Searle segment pays rebates to
state governments for pharmaceuticals sold under state Medicaid
programs and under state-funded programs for the indigent. The Searle
segment also grants discounts to certain managed health care providers.
Sales through managed health care providers constitute an increasing
percentage of Searle's sales.
Introduction of new products by The Agricultural Group, Searle and
NutraSweet segments is typically subject to prior review and approval
by the U.S. Food & Drug Administration, the U.S. Environmental
Protection Agency and/or the U.S. Department of Agriculture (or
comparable agencies of ex-U.S. governments) before they can be sold.
Such reviews are often time-consuming and costly. These agencies also
have continuing jurisdiction over many existing products of these
segments.
RAW MATERIALS AND ENERGY RESOURCES
Monsanto is both a producer and significant purchaser of a wide
spectrum of its basic and intermediate raw material requirements. Major
requirements for key raw materials and fuels are typically purchased
pursuant to long-term contracts. Monsanto is not dependent on any one
supplier for a material amount of its raw materials or fuel
requirements, but certain important raw materials are obtained from a
few major suppliers. In general, where Monsanto has limited sources of
raw materials, it has developed contingency plans to minimize the
effect of any interruption or reduction in supply. Information with
respect to specific raw materials is set forth in the table above under
"Industry Segments; Principal Products."
While temporary shortages of raw materials and fuels may occasionally
occur, these items are sufficiently available to cover current and
projected requirements. However, their continuing availability and
price are subject to unscheduled plant interruptions occurring during
periods of high demand, or due to domestic and world market and
political conditions, as well as to the direct or indirect effect of
U.S. and other countries' government regulations. The impact of any
future raw material and energy shortages on Monsanto's business as a
whole or in specific world areas cannot be accurately predicted.
Operations and products may, at times, be adversely affected by
legislation, shortages or international or domestic events.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS
Monsanto owns a large number of patents which relate to a wide
variety of products and processes, has pending a substantial number of
patent applications, and is licensed under a small number of patents of
others. Also, Monsanto owns a considerable number of established
trademarks in many countries under which it markets its products.
Monsanto's patents and trademarks in the aggregate are of material
importance in the operation of its business, particularly in The
Agricultural Group and Searle segments and with respect to
NutraSweet(R) brand sweetener. Certain proprietary products such as
Roundup(R)
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herbicide are covered by patents. Although patents protecting
Roundup(R) herbicide have now expired in most countries, compound per
se patent protection for the active ingredient in Roundup herbicide
continues in the United States into the year 2000. All patents covering
the use of aspartame as a sweetener have expired. NutraSweet(R) brand
sweetener is currently manufactured under several patents owned by The
NutraSweet Company and patented processes licensed from a third party
for the duration of the applicable patents. Calan(R) SR, an
antihypertensive pharmaceutical, is licensed through the year 2004 to
Searle by a third party, which has retained co-marketing rights. The
product no longer has patent protection nor non-patent regulatory
exclusivity conferred by the Waxman-Hatch amendments to the U.S. Food,
Drug and Cosmetics Act. Cytotec(R) ulcer preventive drug is protected
by a U.S. compound patent to March 26, 1996 and a U.S. composition
patent until July 29, 2000. Ambien(R) short-term treatment for insomnia
is licensed to a joint venture, of which Searle is a general partner
and holds a controlling interest, for the duration of the venture. This
product is protected by a U.S. patent to October 21, 2006, and by non-
patent regulatory exclusivity until December 16, 1997. Daypro(R) once-
a-day arthritis treatment is licensed to Searle until January 5, 2003
in the U.S. and varying dates in other countries. This product is
protected by a U.S. process patent that expires on February 26, 1999,
and by non-patent regulatory exclusivity extending to October 29, 1997.
The trademarks "Roundup," "Equal(R)," "Canderel(R)" and "NutraSweet"
and the NutraSweet symbol are protected by registration in the United
States and in other countries where the products are marketed.
Roundup herbicide, Calan SR antihypertensive and NutraSweet brand
sweetener are each substantial contributors to earnings.
Monsanto holds (directly or by assignment) numerous phosphate leases,
which were issued on behalf of or granted by the United States,
political subdivisions of various states, or private parties. None of
these leases taken individually is deemed by Monsanto to be material,
although Monsanto's phosphate leases in the aggregate are significant
to The Chemical Group segment of its business. Monsanto's phosphate
leases have varying terms, with leases obtained from the United States
being of indefinite duration subject to the modification of lease terms
at twenty-year intervals.
COMPETITION
Monsanto encounters substantial competition in each of its industry
segments. This competition, from other manufacturers of the same
products and from manufacturers of different products designed for the
same uses, is expected to continue in both U.S. and ex-U.S. markets.
Depending on the product involved, various types of competition are
encountered, including price, delivery, service, performance, product
innovation, product recognition and quality.
The number of Monsanto's principal competitors varies from product to
product. It is not practical to discuss Monsanto's numerous competitors
because of the large variety of Monsanto's products, the markets served
and the worldwide business interests of Monsanto. Overall, however,
Monsanto regards its principal product groups to be competitive with
many other products of other producers and believes that it is an
important producer of many of such product groups.
RESEARCH AND DEVELOPMENT
Research and development constitute an important part of Monsanto's
activities. See "Operating Unit Segment Data" on page 33 of the 1994
Annual Report, incorporated herein by reference.
ENVIRONMENTAL MATTERS
Monsanto is subject to various laws and government regulations
concerning environmental matters, employee safety and employee health
in the United States and other countries. It is anticipated that
increasingly stringent requirements will be imposed upon Monsanto, its
competitors and industry in general. U.S. federal environmental
legislation having particular impact on Monsanto includes the Toxic
Substances Control Act; the Federal Insecticide, Fungicide and
Rodenticide Act; the Resource Conservation and Recovery Act; the Clean
Air Act; the Clean Water Act; the Safe Drinking Water Act;
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and the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA," commonly known as "Superfund"), as amended by
the Superfund Amendments and Reauthorization Act ("SARA"). Monsanto is
also subject to the Occupational Safety and Health Act and regulations
of the Occupational Safety and Health Administration ("OSHA")
concerning employee safety and health matters. The Environmental
Protection Agency ("EPA"), OSHA and other federal agencies have the
authority to promulgate regulations which have an impact on Monsanto's
operations. In addition to these federal activities, various states
have been delegated certain authority under the aforementioned federal
statutes. Many state and local governments have adopted environmental
and employee safety and health laws and regulations, some of which are
similar to federal requirements. State and federal authorities may seek
fines and penalties for violation of these laws and regulations.
Monsanto is dedicated to a long-term environmental protection program
that reduces emissions of hazardous materials into the environment, as
well as to the remediation of identified existing environmental
concerns. In 1988, management committed to a 90 percent reduction in
toxic air emissions from worldwide operations by the end of 1992,
including emissions reportable in the U.S. under Title III of SARA.
Monsanto achieved its goal, based on 1992 year-end operating rates. The
cost to accomplish this target did not materially affect operating
results. In fact, some of the target capital projects lowered operating
costs and improved operating efficiency.
Expenditures in 1994 were approximately $47 million for environmental
capital projects and approximately $202 million for management of
environmental programs, including the operation and maintenance of
facilities for environmental control. Monsanto estimates that during
1995 and 1996 approximately $35 million-$45 million per year will be
spent on additional capital projects for environmental protection.
Monsanto periodically receives notices from the EPA that it is a
potentially responsible party ("PRP") under Superfund. The EPA has
designated Monsanto as a PRP at 92 Superfund sites. Monsanto has
resolved disputes, entered partial consent decrees, and executed
administrative orders between Monsanto and the EPA in 47 of these
cases, settling a portion or all of Monsanto's liability for these
Superfund cases. Six other matters involve sites where allegations are
predicated on tentative findings of reuse of drums by others that once
contained products sold by Monsanto. These six matters have been
inactive as to Monsanto for at least ten years. At one other site,
Monsanto has determined that it has no liability whatsoever.
Monsanto's policy is to accrue costs for remediation of waste
disposal sites in the accounting period in which the responsibility is
established and the cost is estimable. Monsanto's estimates of its
liabilities for Superfund sites are based on evaluations of currently
available facts with respect to each individual site and take into
consideration factors such as existing technology, presently enacted
laws and regulations, and prior experience in remediation of
contaminated sites. Monsanto does not discount these liabilities, and
they have not been reduced for any claims for recoveries from insurance
or from third parties. However, Monsanto is engaged in litigation with
some of its insurance carriers regarding both the applicability and the
amount of its coverage responsive to claims for damages at these sites.
Monsanto has an accrued liability of $72 million as of December 31,
1994, for Superfund sites. As assessments and remediation activities
progress at individual sites, these liabilities are reviewed
periodically and adjusted to reflect additional technical, engineering
and legal information that becomes available. Major sites in this
category include the noncompany-owned Brio, Fike/Artel, MOTCO and
Woburn sites, which account for $54 million of the accrued amount.
Monsanto's estimate of its Superfund liability is affected by several
uncertainties such as, but not limited to, the method and extent of
remediation, the percentage of material attributable to Monsanto at the
sites relative to that attributable to other parties, and the financial
capabilities of the other PRPs at most sites. Due to these
uncertainties, primarily related to the method and extent of
remediation, potential future expenses could be as much as $25 million
for these sites. These potential future expenses may be incurred over
the balance of the decade.
There are various other lawsuits, claims and proceedings that state
agencies and others have asserted against the Company seeking
remediation of alleged environmental impairments. Monsanto is
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in the process of determining its involvement, if any, at 41 of these
sites. Monsanto has an accrued liability of $108 million as of December
31, 1994, for these matters and for environmental reserves at certain
former Monsanto plant sites. The Company's estimate of its liability
related to these sites is affected by several uncertainties such as,
but not limited to, the extent of Monsanto's involvement, and the
method and extent of remediation. Due to these uncertainties, potential
future expenses could be as much as $75 million for these sites. Four
sites in this category account for $58 million of the accrued amount
and for approximately $55 million of the potential future expenses.
Monsanto spent $52 million in 1994 for remediation of Superfund and
other waste disposal sites. Most of these expenditures related to The
Chemical Group, and similar or greater amounts can be expected in
future years.
For hazardous and other waste facilities at operating locations,
Monsanto recognizes post-closure environmental costs and remediation
costs over the estimated remaining useful life of the related
facilities, not to exceed 20 years. Monsanto spent $13 million in 1994
for remediation of these facilities and has an accrued liability of $27
million as of December 31, 1994, for these sites. Uncertainties related
to these costs are evolving government regulations, the method and
extent of remediation, and future changes in technology. Monsanto's
estimated closure costs for these facilities are approximately $135
million.
While the ultimate costs and results of remediation of waste disposal
sites cannot be predicted with certainty, Monsanto's liquidity,
financial position and profitability are not expected to be materially
affected.
EMPLOYEE RELATIONS
As of December 31, 1994, Monsanto had approximately 29,000 employees
worldwide. Satisfactory relations have prevailed between Monsanto and
its employees.
INTERNATIONAL OPERATIONS
Monsanto and affiliated companies are engaged in manufacturing, sales
and/or research and development in the United States, Europe, Canada,
Latin America, Australia, Asia and Africa. A large number of products
are manufactured abroad. Ex-U.S. operations are subject to a number of
potential risks and limitations, including: fluctuations in currency
values; exchange control regulations; approvals of therapeutic claims
and pricing for pharmaceutical and other products; employment
regulations; import and trade restrictions, including embargoes;
governmental instability, civil disorders, civil wars and other
hostilities; and other potentially detrimental domestic and foreign
governmental practices or policies affecting U.S. companies doing
business abroad. See "Geographic Data" on page 40 of the 1994 Annual
Report, incorporated herein by reference.
LEGAL PROCEEDINGS
Because of the size and nature of its business, Monsanto is a party
to numerous legal proceedings. Most of these proceedings have arisen in
the ordinary course of business and involve claims for money damages.
While the results of litigation cannot be predicted with certainty,
Monsanto does not believe these matters or their ultimate disposition
will have a material adverse effect on Monsanto's financial position.
The Company was named as a defendant in a lawsuit filed in United
States District Court, Southern District of Texas, Houston Division on
December 3, 1991 by IT Corporation (IT), a remediation contractor at
the MOTCO site, an 11 acre waste site in La Marque, Texas. IT sought
compensatory and punitive damages for alleged breach of contract,
negligent misrepresentation and fraud relating to conditions at the
site. On April 20, 1994, a jury returned a verdict in IT's favor on all
claims, and awarded IT $52.8 million in compensatory damages, $28.6
million in punitive damages and $2.6 million in attorneys' fees. On
December 13, 1994, the federal trial judge set aside the jury's
findings of fraud and negligent misrepresentation but upheld the
finding of breach of contract. The court set aside the
8
<PAGE> 10
punitive damage award and reduced the amount of compensatory damages to
$43.8 million. On January 26, 1995, the trial judge issued a memorandum
confirming that prejudgment interest would be awarded to IT and
specifying the manner in which the amount of such interest should be
calculated. Based upon that memorandum, it is not likely that such
interest will exceed approximately $21 million. No judgment has yet
been entered. The Company believes based on the advice of counsel that
it has meritorious defenses to IT's claims, including that the Company
and the Trust did not breach the contract with IT; that IT bore the
risk that the conditions at the site were different from the conditions
set forth in the site remedial investigations; that IT had the
opportunity to, and in fact did, investigate site conditions, and that
IT represented that it was familiar with site conditions when it
submitted its bid on the contract. The Company will appeal the judgment
when it is entered and will continue to defend this matter vigorously.
No provision for loss has been made in the Company's consolidated
financial statements.
On April 12, 1985, the Company was named as a defendant in the first
of a number of lawsuits in which plaintiffs claim injuries resulting
from alleged exposure to substances present at or emanating from the
Brio Superfund site near Houston, Texas. The Company is one of a number
of companies that had sold materials to the chemical reprocessor at
that site. Currently pending against the Company are the following
matters: (a) The Company is one of a number of defendants in 10 cases
brought in Harris County District Court on behalf of 863 plaintiffs who
owned homes or lived in the Southbend or Sageglen subdivisions,
attended school in the Southbend subdivision, or used nearby
recreational baseball fields. Plaintiffs claim to have suffered various
personal injuries and fear future disease; the need for medical
monitoring; and, in the case of the homeowners, property damage. In
addition to their claims of personal injury, seven plaintiffs in one
of these cases allege business losses. Plaintiffs seek compensatory and
punitive damages in an unspecified amount. (b) The Company is one of a
number of defendants in two additional actions brought in Harris County
District Court by 408 plaintiffs, who are former employees of the
owners/operators of the Brio site, and members of the employees'
families or persons who worked near the Brio site. Plaintiffs claim
physical and emotional injury and seek compensatory and punitive
damages in an unspecified amount. The Company believes that it has
meritorious defenses to all of these lawsuits including lack of
proximate cause, lack of negligent or other improper conduct on the
part of the Company, and negligence of plaintiffs (or their parents)
and/or of builders and developers of the Southbend subdivision. The
Company is vigorously defending these actions.
In 1974, Searle introduced in the United States an intrauterine
contraceptive product, commonly referred to as an intrauterine device
("IUD"), under the name Cu-7(R). Following extensive testing by Searle
and review by the FDA, the Cu-7 was approved for sale as a prescription
drug. Searle has been named a defendant in a number of product
liability lawsuits alleging that the Cu-7 caused personal injury
resulting from pelvic inflammatory disease, perforation, pregnancy or
ectopic pregnancy. As of March 1, 1995, there were approximately 68
cases pending in various U.S. state and federal courts and
approximately 346 cases filed outside the United States (the vast
majority in Australia). The lawsuits seek damages in varying amounts,
including compensatory and punitive damages, with most suits seeking at
least $50,000 in damages. Searle believes it has meritorious defenses
and is vigorously defending each of these lawsuits. On January 31,
1986, Searle voluntarily discontinued the sale of the Cu-7 in the
United States, citing the cost of defending such litigation.
On September 30, 1994, the U.S. Environmental Protection Agency
("EPA") issued an administrative Complaint and Proposed Compliance
Order alleging violations by the Company of certain sections of the
Resource Conservation and Recovery Act. The alleged violations relate
to the disposal of certain wastes at the Company's facility in
Addyston, Ohio. The EPA has proposed penalties in the amount of
$555,900. The Company has denied the allegations and is vigorously
defending itself in the proceedings.
The Company registered, on June 27, 1991, for the Compliance Audit
Program ("CAP") administered by the EPA under the authority of Section
8(e) of the Toxic Substances Control Act ("TSCA"). It has been reported
that over 120 companies in the United States registered for the CAP.
The CAP requires registrants to audit health and environmental effect
information in order to determine whether information in the
registrant's possession is reportable to the EPA under TSCA Section
8(e). A
9
<PAGE> 11
registrant's liability, under the CAP, for late reporting of
information under TSCA 8(e), will be assessed on the basis of a set
amount per study submitted with the total liability not to exceed
$1,000,000. The Company voluntarily entered into a similar Consent
Agreement with the EPA before the CAP, and under that Agreement
performed a more limited audit than is required by the CAP and paid a
settlement of $648,000. This settlement amount has been credited to the
Company under the CAP. It has now been determined that the Company's
remaining liability under the CAP will be $352,000.
RISK MANAGEMENT
Monsanto continually evaluates risk retention and insurance levels
for product liability, property damage and other potential areas of
risk. Monsanto devotes significant effort to maintaining and improving
safety and internal control programs, which reduce its exposure to
certain risks. Based on the cost and availability of insurance and the
likelihood of a loss, management determines the amount of insurance
coverage to be purchased from unaffiliated companies and the
appropriate amount of risk to retain. Since 1986, Monsanto's liability
insurance has been on the "claims made" policy form. Management
believes that the current levels of risk retention are consistent with
those of other companies in the various industries in which Monsanto
operates. There can be no assurance that Monsanto will not incur losses
beyond the limits of, or outside the coverage of, its insurance.
However, Monsanto's liquidity, financial position and profitability are
not expected to be affected materially by the levels of risk retention
that the Company accepts.
ITEM 2. PROPERTIES.
The General Offices of the Company are located on a 285-acre tract of
land in St. Louis County, Missouri. The Company also owns a 210-acre
tract in St. Louis County on which additional research facilities are
located. Monsanto also has research laboratories and technical centers
throughout the world. Information with respect to Monsanto's
manufacturing locations worldwide and the industry segments which use
such plants as of January 1, 1995, is set forth under "Business-
Industry Segments; Principal Products" in Item 1 of this Report, which
is incorporated herein by reference.
Monsanto's principal plants are suitable and adequate for their use.
Utilization of these facilities may vary with seasonal, economic and
other business conditions, but none of the principal plants is
substantially idle. The facilities generally have sufficient capacity
for existing needs and expected near-term growth. Most of these plants
are owned in fee. However, the land at the Antwerp, Belgium plant is
leased. In addition, a portion of a plant at Augusta, Georgia is
currently leased with an option to purchase, pursuant to an industrial
revenue bond financing. The Company has granted leases, with options to
purchase, on approximately 366 acres of the 3,000 acres at the Alvin,
Texas plant site. In limited instances, Monsanto has granted leases on
portions of other plant sites not required for current operations.
ITEM 3. LEGAL PROCEEDINGS.
For information concerning certain legal proceedings involving
Monsanto, see "Business-Environmental Matters" and "Business-Legal
Proceedings" contained in Item 1 of this Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the security holders during the fourth
quarter of 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers is contained in Item 10 of
Part III of this Report (General Instruction G) and is incorporated
herein by reference.
10
<PAGE> 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The narrative or tabular information regarding the market for the
Company's common equity and related stockholder matters appearing under
"Review of Cash Flow" on pages 45 through 47 and "Quarterly Data" on
page 57 of the 1994 Annual Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The tabular information under "Financial Summary-Operating Results,
Earnings per Share and Year-End Financial Position" and the amounts of
Dividends per Share, all appearing on page 58 of the 1994 Annual
Report, are incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The tabular and narrative information appearing under "Review of
Consolidated Results of Operations" on pages 29 through 32, "Operating
Unit Segment Data" on pages 33 through 39, "Review of Changes in
Financial Position" on page 42, and "Review of Cash Flow" on pages 45
through 47 of the 1994 Annual Report is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of Monsanto appearing on pages
28, 41, 43, 44 and 47 through 56; the Independent Auditors' Opinion
appearing on page 27; and the tabular and narrative information
appearing under "Quarterly Data" on page 57 of the 1994 Annual Report
are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
11
<PAGE> 13
PART III
<TABLE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding directors and executive officers appearing
under "Election of Directors" on pages 2 through 4 of the Monsanto
Company Notice of Annual Meeting and Proxy Statement (the "1995 Proxy
Statement") dated March 16, 1995, is incorporated herein by reference.
The following information with respect to the Executive Officers of the
Company on March 1, 1995, is included pursuant to Instruction 3 of Item
401(b) of Regulation S-K:
<CAPTION>
Year First
Became an
Executive
Name - Age Present Position with Registrant Officer Other Business Experience since January 1, 1990
- -------------------------- ---------------------------------- ---------- ---------------------------------------------------
<S> <C> <C> <C>
Richard U. De Schutter, 54 President and Chief Operating 1995 Chairman, International Operations, G. D. Searle
Officer, G. D. Searle & Co. (a & Co., 1989; President, G. D. Searle &
subsidiary of the Company) Co., 1991; and present position, 1993.
Richard W. Duesenberg, 64 Senior Vice President, 1977 Present position, 1982.
Secretary and General Counsel-
Monsanto Company
Steven L. Engelberg, 52 Vice President, Worldwide 1995 Partner, Keck, Mahin & Cate, 1986; Partner-in-Charge,
Government Affairs-Monsanto Keck, Mahin & Cate Washington, D.C. office, 1986;
Company Chief of Staff of Office of the United States Trade
Representative (on leave from Keck, Mahin & Cate
until May 1993), 1993; and present position, 1994.
Robert E. Flynn, 61 Chairman and Chief Executive 1987 Chairman, Chief Executive Officer and President,
Officer, The NutraSweet Company Fisher Controls International, Inc. (a former
(a subsidiary of the Company); subsidiary of the Company), 1988; Chairman and Chief
Advisory Director-Monsanto Executive Officer, The NutraSweet Company, 1990; and
Company present position, 1993.
Sheldon G. Gilgore, 63 Chairman and Chief Executive 1987 Chairman, President and Chief Executive Officer, G. D.
Officer, Searle & Co., 1986; Chairman and Chief Executive
G. D. Searle & Co. (a Officer, G. D. Searle & Co., 1991; and present
subsidiary of the Company); position, 1993.
Advisory Director-Monsanto
Company
Pierre Hochuli, 47 Vice President-Monsanto 1995 Regional Director, Europe/Africa/Middle East-Monsanto
Company; President-Growth Europe, S.A., 1985; Vice President, Finance and
Enterprises Planning-The Agricultural Group, 1991; Vice President
and General Manager, New Products Division-The
Agricultural Group, 1992; Group Vice President and
General Manager, New Products Division-The
Agricultural Group, 1993; Vice President, Corporate
Planning-Monsanto Company, 1993; and present position,
1995.
Robert B. Hoffman, 58 Senior Vice President and Chief 1994 International business consultant, 1988; Vice
Financial Officer; Advisory President, FMC Corporation, 1990; and present
Director-Monsanto Company position, 1994.
Richard J. Mahoney, 61 Director; Chairman and Chief 1975 Present position, 1986.
Executive Officer-Monsanto
Company
12
<PAGE> 14
<CAPTION>
Year First
Became an
Executive
Name - Age Present Position with Registrant Officer Other Business Experience since January 1, 1990
- -------------------------- ---------------------------------- ---------- ---------------------------------------------------
<S> <C> <C> <C>
Teresa E. McCaslin, 45 Vice President, Human 1994 Vice President, Human Resources, Avery Dennison
Resources-Monsanto Company Corporation, 1989; and present position, 1994.
Philip Needleman, 56 Senior Vice President, Research 1991 Vice President, Research and Development-Monsanto
and Development; Advisory Company, 1989; Vice President, Research and
Director-Monsanto Company; Development; Advisory Director-Monsanto Company, 1991;
President, Research and Vice President, Research and Development; Advisory
Development, G. D. Searle & Co. Director-Monsanto Company; President, Research and
Development, G.D. Searle & Co., 1992; and present
position, 1993.
Robert G. Potter, 55 Executive Vice President and 1981 Group Vice President and Advisory Director-
Advisory Director-Monsanto Monsanto Company and President-Monsanto Chemical
Company Company, 1986; Executive Vice President and
Advisory Director-Monsanto Company; President-The
Chemical Group, 1990; and present position, 1995.
Nicholas L. Reding, 60 Director; Vice Chairman- 1976 Executive Vice President and Advisory Director-
Monsanto Company Monsanto Company and President-Monsanto
Agricultural Company, 1986; Executive Vice President,
Environment, Safety, Health and Manufacturing and
Advisory Director-Monsanto Company, 1990; and present
position, 1993.
Robert W. Reynolds, 51 Vice President, International 1994 Vice President, North America-Monsanto Agricultural
Operations and Develop- Company, 1986; Vice President and General Manager,
ment-Monsanto Company Crop Protection Products Division-Monsanto
Agricultural Company, 1990; Vice President and
Managing Director, Latin America World Area-Monsanto
Company, 1992; and present position, 1994.
Robert B. Shapiro, 56 Director; President and Chief 1987 Chairman and Chief Executive Officer, The NutraSweet
Operating Officer-Monsanto Company, 1986; Executive Vice President and Advisory
Company Director-Monsanto Company and President-The
Agricultural Group, 1990; and present position, 1993.
Hendrik A. Verfaillie, 49 Vice President and Advisory 1993 Vice President, Commercial Development-Monsanto
Director-Monsanto Company Agricultural Company, 1986; Vice President and General
Manager, Roundup Division-The Agricultural Group,
1990; Vice President and Advisory Director-Monsanto
Company; President-The Agricultural Group, 1993;
and present position, 1995.
Virginia V. Weldon, 59 Senior Vice President, Public 1990 Vice President, Public Policy-Monsanto Company, 1989;
Policy; Advisory Director- Vice President, Public Policy; Advisory Director-
Monsanto Company Monsanto Company, 1990; and present position, 1993.
</TABLE>
Mr. Mahoney will retire on March 31, 1995 and Mr. Shapiro will become
Chairman, President and Chief Executive Officer of Monsanto Company,
effective April 1, 1995. Dr. Gilgore will retire on April 26, 1995 and
Mr. De Schutter will become Chairman and Chief Executive Officer of
G. D. Searle & Co. Otherwise, the above-listed individuals are elected
to the offices set opposite their names to hold office until their
successors are duly elected and have qualified, or until their earlier
death, resignation or removal.
13
<PAGE> 15
ITEM 11. EXECUTIVE COMPENSATION.
Information appearing under "Directors' Fees and Other Arrangements"
on pages 8 and 9 and under "Executive Compensation" on pages 13 through
"Certain Agreements" on page 18 of the 1995 Proxy Statement is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information appearing under "Stock Ownership of Management and
Certain Beneficial Owners" on pages 5 and 6 of the 1995 Proxy Statement
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
(a) Documents filed as part of this Report:
1. The financial statements set forth at pages 28, 41, 43, 44 and
47 through 58 of the 1994 Annual Report (See Exhibit 13 under
Paragraph (a)3 of this Item 14)
2. Financial Statement Schedules
The following supplemental schedule for the years ended December
31, 1994, 1993 and 1992:
V--Valuation and Qualifying Accounts
All other supplemental schedules are omitted because of the
absence of the conditions under which they are required.
3. Exhibits--See the Exhibit Index beginning at page 19 of this
Report. For a listing of all management contracts and
compensatory plans or arrangements required to be filed as
exhibits to this Form 10-K, see the Exhibits listed under
Exhibit Nos. 10.1 through 10.32 on pages 19 through 22 of the
Exhibit Index, all of which were previously filed. The following
Exhibits listed in the Exhibit Index are filed with this Report:
13 The Company's 1994 Annual Report to shareowners
21 Subsidiaries of the registrant (See page 23)
23 1. Consent of Independent Auditors (See page 24)
2. Consent of Company Counsel (See page 24)
24 1. Powers of attorney submitted by Joan T. Bok, Robert
M. Heyssel, Robert B. Hoffman, Gwendolyn S. King,
Philip Leder, Howard M. Love, Richard J. Mahoney,
Frank A. Metz, Jr., Buck Mickel, Jacobus F.M. Peters,
Nicholas L. Reding, John S. Reed, William D. Ruckels-
haus, Bruce R. Sents, Robert B. Shapiro and John B.
Slaughter.
2. Certified copy of Board resolution authorizing Form
10-K filing utilizing powers of attorney
27 Financial Data Schedule (part of electronic submission
only)
99 Computation of the Ratio of Earnings to Fixed Charges
for Monsanto Company and Subsidiaries (See page 25)
(b) Reports on Form 8-K during the quarter ended December 31, 1994:
No reports on Form 8-K were filed by the Company during the quarter
ended December 31, 1994.
14
<PAGE> 16
OPINION OF INDEPENDENT AUDITORS
Monsanto Company:
We have audited the statement of consolidated financial position of
Monsanto Company and Subsidiaries as of December 31, 1994 and 1993 and
the related statements of consolidated income, shareowners' equity and
cash flow for each of the three years in the period ended December 31,
1994 and have issued our opinion thereon dated February 24, 1995; such
financial statements and opinion are included in your 1994 Annual
Report to shareowners and are incorporated herein by reference. Our
audits also comprehended the schedule of Monsanto Company and
Subsidiaries, listed in Item 14(a)2. This schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such schedule,
when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects
the information shown therein.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 24, 1995
15
<PAGE> 17
<TABLE>
SCHEDULE V
MONSANTO COMPANY AND SUBSIDIARIES
---------------------------------
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in millions)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- ------------- -------- --------
Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description of Year Expenses Deductions Year
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1994:
Reserves deducted from related assets in the Statement of
Consolidated Financial Position:
Doubtfulreceivables and returns and allowances.................. $ 51 $ 25 $ 19<FA> $ 57
------ ---- ------ ----
Inventory and obsolescence losses................................ $ 45 $ 12 $ 23 $ 34
------ ---- ------ ----
Amortization of intangible assets................................ $ 450 $ 81 $ 9 $522
------ ---- ------ ----
Deferred tax asset valuation allowances.......................... $ 89 $ (9) $ (5) $ 85
------ ---- ------- ----
Year Ended December 31, 1993:
Reserves deducted from related assets in the Statement of
Consolidated Financial Position:
Doubtful receivables and returns and allowances.................. $ 33 $ 36 $ 18<FA> $ 51
------ ---- ------ ------
Inventory and obsolescence losses................................ $ 23 $ 31 $ 9 $ 45
------ ---- ------ ------
Amortization of intangible assets................................ $ 383 $ 81 $ 14 $ 450
------ ---- ------ ------
Deferred tax asset valuation allowances.......................... $ 62 $ 34 $ 7 $ 89
------ ---- ------ ------
Year Ended December 31, 1992:
Reserves deducted from related assets in the Statement of
Consolidated Financial Position:
Doubtful receivables and returns and allowances.................. $ 36 $ 15 $ 18<FA> $ 33
------ ---- ------ ------
Inventory and obsolescence losses................................ $ 31 $ 11 $ 19 $ 23
------ ---- ------ ------
Amortization of intangible assets................................ $1,422 $238 $1,277<FB> $ 383
------ ---- ------ ------
Deferred tax asset valuation allowances.......................... $ 32 $ 33 $ 3 $ 62
------ ---- ------ ------
<FN>
NOTES:
<FA> Principally allowances granted.
<FB> Includes $1,270 million related to NutraSweet's fully amortized
aspartame-use patent.
</TABLE>
16
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By BRUCE R. SENTS
.............................................
Bruce R. Sents
Vice President and Controller
(Principal Accounting Officer)
Date: March 17, 1995
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
RICHARD W. DUESENBERG Chairman and Director March 17, 1995
................................................................ (Principal Executive Officer)
(Richard J. Mahoney)<F*>
RICHARD W. DUESENBERG President and Director March 17, 1995
................................................................
(Robert B. Shapiro)<F*>
RICHARD W. DUESENBERG Vice Chairman and Director March 17, 1995
................................................................
(Nicholas L. Reding)<F*>
RICHARD W. DUESENBERG Senior Vice President March 17, 1995
................................................................ (Principal Financial Officer)
(Robert B. Hoffman)<F*>
BRUCE R. SENTS Vice President and Controller March 17, 1995
................................................................ (Principal Accounting Officer)
(Bruce R. Sents)
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(Joan T. Bok)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(Robert M. Heyssel)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(Gwendolyn S. King)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(Philip Leder)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(Howard M. Love)<F*>
17
<PAGE> 19
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(Frank A. Metz, Jr.)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(Buck Mickel)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(Jacobus F.M. Peters)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(John S. Reed)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(William D. Ruckelshaus)<F*>
RICHARD W. DUESENBERG Director March 17, 1995
................................................................
(John B. Slaughter)<F*>
<FN>
<F*>Richard W. Duesenberg, by signing his name hereto, does sign this
document on behalf of the above noted individuals, pursuant to powers
of attorney duly executed by such individuals which have been filed as
an Exhibit to this Report.
RICHARD W. DUESENBERG
........................................
Richard W. Duesenberg
Attorney-in-Fact
</TABLE>
18
<PAGE> 20
<TABLE>
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of
Item 601 of Regulation S-K.
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
2 1. Agreement of Purchase and Sale dated as of December 20, 1994, by and between Merck &
Co., Inc. ("Merck") and The NutraSweet Company relating to the purchase and sale of
Merck's Kelco Business, plus identification of contents of omitted schedules and
exhibits and agreement to furnish supplementally a copy of any omitted schedule or
exhibit to the Securities and Exchange Commission upon request (incorporated herein by
reference to Exhibit 2.1 of the Company's Form 8-K dated as of February 17, 1995 and
filed on February 28, 1995)
2. Amendment, dated as of February 15, 1995, to the Agreement of Purchase and Sale dated
as of December 20, 1994 between Merck & Co., Inc., a New Jersey corporation, and The
NutraSweet Company, a Delaware corporation, plus identification of contents of omitted
schedules and exhibits and agreement to furnish supplementally a copy of any omitted
schedule or exhibit to the Securities and Exchange Commission upon request
(incorporated herein by reference to Exhibit 2.2 of the Company's Form 8-K dated as of
February 17, 1995 and filed on February 28, 1995).
3 1. Restated Certificate of Incorporation of the Company effective as of April 27, 1987
(incorporated herein by reference to Exhibit 19(ii)2 of the Company's Form 10-Q for the
quarter ended June 30, 1987)
2. By-Laws of the Company, as amended effective September 1, 1993 (incorporated herein by
reference to Exhibit 99.1 of the Company's Form 10-Q for the quarter ended September
30, 1993)
4 1. Form of Rights Agreement, dated as of January 26, 1990 between the Company and The
First National Bank of Boston (incorporated herein by reference to Form 8-A filed on
January 31, 1990)
2. Registrant agrees to furnish to the Securities and Exchange Commission upon request
copies of instruments defining the rights of holders of certain long-term debt not
being registered of the registrant and all subsidiaries for which consolidated or
unconsolidated financial statements are required to be filed.
9 Omitted - Inapplicable
10 1. Non-Employee Directors Stock Plan, as amended in 1991 (incorporated herein by
reference to Exhibit 19(ii)1 of the Company's Form 10-Q for the quarter ended June 30,
1991)
2. Non-Employee Directors Retirement Plan, as amended in 1991 (incorporated herein by
reference to Exhibit 19(ii) of the Company's Form 10-Q for the quarter ended September
30, 1991)
3. Charitable Contribution Program effective April 1, 1992 (incorporated herein by
reference to Exhibit 19(i)1 of the Company's Form 10-K for the year ended December 31,
1991)
4. Deferred Compensation Plan for Non-Employee Directors, as amended in 1983 and 1991
(incorporated herein by reference to Exhibit 19(ii)1 of the Company's Form 10-K for
the year ended December 31, 1991)
19
<PAGE> 21
<CAPTION>
EXHIBIT INDEX (CONT'D)
Exhibit No. Description
- ----------- -----------
<C> <S>
5. Consulting Agreement between the Company and Philip Leder dated January 17, 1990
(incorporated herein by reference to Exhibit 19(i)3 of the Company's Form 10-K for the
year ended December 31, 1989)
6. Financial Planning Services Program for Monsanto Management Council Members, as
amended in 1993 (incorporated herein by reference to Exhibit 10.1 of the Company's
Form 10-Q for the quarter ended March 31, 1993)
7. Monsanto Management Incentive Plan of 1984, as amended in 1987, 1988 and 1989
(incorporated herein by reference to Exhibit 19(ii)2 of the Company's Form 10-K for
the year ended December 31, 1989)
8. Monsanto Management Incentive Plan of 1988/I, as amended in 1988, 1989, 1991 and 1992
(incorporated herein by reference to Exhibit 99.1 of the Company's Form 10-K for the
year ended December 31, 1992)
9. Monsanto Management Incentive Plan of 1988/II, as amended in 1989, 1991 and 1992
(incorporated herein by reference to Exhibit 99.2 of the Company's Form 10-K for the
year ended December 31, 1992)
10. 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)
11. 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)
12. 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)
13. Split-dollar Life Insurance Plan (incorporated herein by reference to Exhibit
10(iii)19 of the Company's Form 10-K for the year ended December 31, 1987)
14. Executive Health Program (incorporated herein by reference to Exhibit 19(i) of the
Company's Form 10-Q for the quarter ended March 31, 1989)
15. Agreements between the Company and Richard J. Mahoney and Nicholas L. Reding entered
into as of May 16, 1988 (incorporated herein by reference to Exhibit 19(i)18 of the
Company's Form 10-Q for the quarter ended June 30, 1988)
16. Letter from the Company to Dr. Sheldon G. Gilgore dated February 12, 1986
(incorporated herein by reference to Exhibit 10(iii)14 of the Company's Form 10-K for
the year ended December 31, 1986)
17. Letter Agreement between G. D. Searle & Co. and Dr. Sheldon G. Gilgore, dated March 7,
1991, amending the Letter from the Company dated February 12, 1986 (incorporated
herein by reference to Exhibit 19(ii)1 of the Company's Form 10-Q for the quarter
ended March 31, 1991)
20
<PAGE> 22
<CAPTION>
EXHIBIT INDEX (CONT'D)
Exhibit No. Description
- ----------- -----------
<C> <S>
18. Agreement between the Company and Robert G. Potter entered into as of May 16, 1988
(incorporated herein by reference to Exhibit 19(i)5 of the Company's Form 10-K for the
year ended December 31, 1989)
19. Agreement between the Company and Robert B. Shapiro entered into as of July 23, 1990
(incorporated herein by reference to Exhibit 19(i)1 of the Company's Form 10-Q for the
quarter ended September 30, 1990)
20. Letter Agreement between the Company and Robert B. Shapiro entered into as of July 23,
1990 (incorporated herein by reference to Exhibit 19(i)2 of the Company's Form 10-Q
for the quarter ended September 30, 1990)
21. Letter Agreement between the Company and Robert B. Shapiro entered into as of July 23,
1990 (incorporated herein by reference to Exhibit 19(i)3 of the Company's Form 10-Q
for the quarter ended September 30, 1990)
22. Searle Phantom Stock Option Plan of 1986, as amended in 1990, 1991 and 1992
(incorporated herein by reference to Exhibit 99.3 of the Company's Form 10-K for the
year ended December 31, 1992)
23. Searle Monsanto Stock Option Plan of 1986, as amended in 1988, 1989, 1990 and 1991
(incorporated herein by reference to Exhibit 19(ii)4 of the Company's Form 10-Q for
the quarter ended June 30, 1991)
24. 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)
25. G. D. Searle & Co. Executive Travel Accident Insurance Plan, as amended in 1989
(incorporated herein by reference to Exhibit 19(ii)4 of the Company's Form 10-Q for
the quarter ended June 30, 1989)
26. G. D. Searle & Co. Executive Supplemental Long Term Disability Plan (incorporated
herein by reference to Exhibit 19(i)7 of the Company's Form 10-Q for the quarter ended
June 30, 1988)
27. G. D. Searle & Co. Split Dollar Life Insurance Plan, as amended in 1989 (incorporated
herein by reference to Exhibit 19(ii)3 of the Company's Form 10-Q for the quarter
ended June 30, 1989)
28. G. D. Searle & Co. Legal/Tax/Financial Counseling Plan (incorporated herein by
reference to Exhibit 19(i)8 of the Company's Form 10-Q for the quarter ended June 30,
1988)
29. G. D. Searle & Co. Executive Relocation Plan (incorporated herein by reference to
Exhibit 10.7 of the Company's Form 10-Q for the quarter ended June 30, 1994)
30. G. D. Searle & Co. Supplemental Medical Reimbursement Plan (incorporated herein by
reference to Exhibit 19(i)10 of the Company's Form 10-Q for the quarter ended June 30,
1988)
21
<PAGE> 23
<CAPTION>
EXHIBIT INDEX (CONT'D)
Exhibit No. Description
- ----------- -----------
<C> <S>
31. G. D. Searle & Co. Deferred Compensation Plan, as amended in 1994 (incorporated herein
by reference to Exhibit 10.6 of the Company's Form 10-Q for the quarter ended June 30,
1994)
32. G. D. Searle & Co. Executive Physical Examinations Program, as amended in 1992
(incorporated herein by reference to Exhibit 99.1 of the Company's Form 10-Q for the
quarter ended June 30, 1992)
11 Omitted - Inapplicable; see "Earnings per Share" on page 55 of the 1994 Annual Report
12 Statement re Computation of the Ratio of Earnings to Fixed Charges - See Exhibit 99 below
13 The Company's 1994 Annual Report to shareowners. (The electronic submission includes only
the financial report section of the Annual Report, consisting of pages 26 through 58 of
that Report.) Only those portions expressly incorporated by reference into this Form 10-K
are deemed "filed"; other portions are furnished only for the information of the
Commission.
18 Omitted - Inapplicable
21 Subsidiaries of the registrant (See page 23)
22 Omitted - Inapplicable
23 1. Consent of Independent Auditors (See page 24)
2. Consent of Company Counsel (See page 24)
24 1. Powers of attorney submitted by Joan T. Bok, Robert M. Heyssel, Robert B. Hoffman,
Gwendolyn S. King, Philip Leder, Howard M. Love, Richard J. Mahoney, Frank A. Metz,
Jr., Buck Mickel, Jacobus F.M. Peters, Nicholas L. Reding, John S. Reed, William D.
Ruckelshaus, Bruce R. Sents, Robert B. Shapiro and John B. Slaughter.
2. Certified copy of Board resolution authorizing Form 10-K filing utilizing powers of
attorney
27 Financial Data Schedule (part of electronic submission only)
28 Omitted - Inapplicable
99 Computation of the Ratio of Earnings to Fixed Charges for Monsanto Company and
Subsidiaries (See page 25)
<FN>
- -----
Only Exhibits Nos. 13, 21, 23.1, 23.2 and 99 have been included in the
printed copy of this Report.
</TABLE>
22
<PAGE> 24
APPENDIX
Throughout the printed Form 10-K, trademarks are initially designated
on each page by the superscript letter "R" in a circle or by the
superscript letters "TM."
<PAGE> 1
EXHIBIT 13
<TABLE>
<CAPTION>
FINANCIAL TABLE OF CONTENTS
<S> <C>
MANAGEMENT REPORT, AUDIT COMITTEE REPORT,
INDEPENDENT AUDITORS' OPINION 26
STATEMENT OF CONSOLIDATED INCOME 28
STATEMENT OF CONSOLIDATED FINANCIAL POSITION 41
STATEMENT OF CONSOLIDATED SHAREOWNERS' EQUITY 43
STATEMENT OF CONSOLIDATED CASH FLOW 44
NOTES TO FINANCIAL STATEMENTS 47
FINANCIAL SUMMARY 58
</TABLE>
Unless otherwise indicated by the context, "Monsanto" means
Monsanto Company and consolidated subsidiaries, and "the company"
means Monsanto Company only. All dollars are in millions, except
per share data.
MANAGEMENT REPORT
Monsanto Company's management is responsible for the fair
presentation and consistency, in accordance with generally
accepted accounting principles, of all the financial information
included in this annual report. Where necessary, the information
reflects management's best estimates and judgments.
Management is also responsible for maintaining a system of
internal accounting controls with the objectives of providing
reasonable assurance that Monsanto's assets are safeguarded
against material loss from unauthorized use or disposition and
that authorized transactions are properly recorded to permit the
preparation of accurate financial information. Cost/benefit
judgments are an important consideration in this regard. The
effectiveness of internal controls is maintained by personnel
selection and training, division of responsibilities,
establishment and communication of policies, and ongoing internal
review programs and audits.
Management believes that Monsanto's system of internal accounting
controls as of Dec. 31, 1994, is effective and adequate to
accomplish the objectives described above.
/s/Richard J. Mahoney
Richard J. Mahoney
Chairman and
Chief Executive Officer
/s/Robert B. Hoffman
Robert B. Hoffman
Senior Vice President and
Chief Financial Officer
Feb. 24, 1995
26
<PAGE> 2
AUDIT COMMITTEE REPORT
The audit committee, composed of six nonemployee members of the
board of directors, met four times during 1994. The committee
reviews and monitors Monsanto's internal accounting controls,
financial reports, accounting practices, and the scope and
effectiveness of the audits performed by the independent auditors
and internal auditors. The committee also recommends to the full
board of directors the appointment of Monsanto's principal
independent auditors, and it approves in advance all significant
audit and nonaudit services provided by such auditors. As
ratified by shareowner vote at the 1994 annual meeting, Deloitte
& Touche LLP (Deloitte & Touche) were appointed independent
auditors to examine, and to express an opinion as to the fair
presentation of, the consolidated financial statements. This
opinion follows.
The audit committee discusses audit and financial reporting
matters with representatives of the company's financial manage-
ment, its internal auditors and Deloitte & Touche. The internal
auditors and Deloitte & Touche meet with the committee, with and
without management representatives present, to discuss the
results of their examinations, the adequacy of Monsanto's
internal accounting controls, and the quality of its financial
reporting. The committee encourages the internal auditors and
Deloitte & Touche to communicate directly with the committee.
The audit committee has reviewed the financial section of this
annual report. Pursuant to the recommendation of the committee,
the board of directors has approved the financial section.
/s/Buck Mickel
Buck Mickel
Chair, Audit Committee
Feb. 24, 1995
INDEPENDENT AUDITORS' OPINION
To the shareowners of Monsanto Company:
We have audited the accompanying statement of consolidated finan-
cial position of Monsanto Company and Subsidiaries as of
Dec. 31, 1994 and 1993, and the related statements of consoli-
dated income, shareowners' equity and cash flow for each of the
three years in the period ended Dec. 31, 1994. These financial
statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly in all material respects the financial position of
Monsanto Company and Subsidiaries as of Dec. 31, 1994 and 1993,
and the results of their operations and their cash flows for each
of the three years in the period ended Dec. 31, 1994, in
conformity with generally accepted accounting principles.
As discussed in the Notes to Financial Statements, in 1992
Monsanto changed its methods of accounting for postretirement
benefits other than pensions and for income taxes.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
St. Louis, Missouri
Feb. 24, 1995
27
<PAGE> 3
<TABLE>
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
(Dollars in millions, except per share) 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $8,272 $7,902 $7,763
Cost of goods sold 4,774 4,564 4,710
- -------------------------------------------------------------------------------
GROSS PROFIT 3,498 3,338 3,053
Marketing expenses 1,191 1,199 1,115
Administrative expenses 589 548 487
Technological expenses 674 695 720
Amortization of intangible assets 81 81 237
Restructuring expenses -- net 40 5 436
- -------------------------------------------------------------------------------
OPERATING INCOME 923 810 58
Interest expense (131) (129) (169)
Interest income 81 40 43
Other income (expense) -- net 22 8 (106)
- -------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 895 729 (174)
Income taxes 273 235 (48)
- -------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 622 494 (126)
- -------------------------------------------------------------------------------
DISCONTINUED OPERATIONS:
Income from Fisher Controls 24
Gain on sale of Fisher Controls 554
- -------------------------------------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS 578
- -------------------------------------------------------------------------------
INCOME BEFORE ACCOUNTING CHANGES 622 494 452
CUMULATIVE EFFECT OF ACCOUNTING CHANGES:
Postretirement Benefits Other Than Pensions (658)
Income Taxes 118
- -------------------------------------------------------------------------------
NET INCOME (LOSS) $ 622 $ 494 $ (88)
- -------------------------------------------------------------------------------
EARNINGS PER SHARE:
Income (Loss) from Continuing Operations $ 5.32 $ 4.10 $(1.01)
Discontinued Operations 4.68
Accounting Changes (4.38)
- -------------------------------------------------------------------------------
NET INCOME (LOSS) $ 5.32 $ 4.10 $(0.71)
- -------------------------------------------------------------------------------
<FN>
The above statement should be read in conjunction with pages 47 through 57
of this report.
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL STATISTICS 1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
AS A PERCENT OF NET SALES:
Gross Profit 42% 42% 39%
Marketing, Administrative
and Technological Expenses 30 31 30
Research and Development Expenses 7 8 8
Operating Income 11 10 1
Income (Loss) from Continuing Operations 8 6 (2)
Net Income (Loss) 8 6 (1)
EFFECTIVE INCOME TAX RATE 31 32 (28)
RETURN ON SHAREOWNERS' EQUITY 21.4 16.9 (2.6)
- ------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 4
REVIEW OF CONSOLIDATED RESULTS OF OPERATIONS
MONSANTO REPORTS RECORD EARNINGS PER SHARE
Monsanto Company's earnings per share in 1994 were a record
$5.32, and net income was the second-best in Monsanto's history.
Net income for 1994 was $622 million, compared with income of
$494 million, or $4.10 per share, in 1993. Return on
shareowners' equity (ROE) for 1994 was 21.4 percent. The
Agricultural Group continued its impressive growth, fueled by
record sales volumes for Roundup(R) herbicide and significant income
contributions from sales of new products. Higher sales volumes
for key products, excellent manufacturing performance, and
continued cost reduction efforts led to a substantial increase in
The Chemical Group's earnings, excluding the year-to-year effect
of restructurings. Searle's performance improved dramatically as
sales from new products increased significantly, infrastructure
costs were lower, and costs from new product introductions
declined. The NutraSweet Company performed well, as significant
cost reductions largely offset lower average selling prices.
EVENTS AFFECTING COMPARABILITY
In December 1994, Monsanto's board of directors approved a plan
to eliminate redundant staff activities across the company and to
consolidate certain staff and administrative business functions.
The plan will result in worldwide employment reductions of
approximately 500 people. In addition, the company will close or
exit certain facilities and programs. These work force
reductions and closures will be substantially completed by the
end of 1995. The pretax expense related to these actions was $89
million ($55 million aftertax, or $0.47 per share). The effect
of these actions is anticipated to generate future pretax cash
savings and benefit future operating income by approximately $100
million annually. Separately, in the fourth quarter of 1994, the
board approved the reversal of $49 million ($33 million aftertax,
or $0.28 per share) of excess restructuring reserves from prior
years. The excess was primarily due to higher than expected
proceeds and lower exit costs from the sale and shutdown of
nonstrategic businesses and facilities included in the 1993 and
1992 restructuring actions.
In September 1994, Monsanto and the U.S. Internal Revenue Service
settled certain tax matters related to the 1985 acquisition of
Searle, and Monsanto recognized an aftertax gain of $21 million,
or $0.18 per share, for interest on the settlement.
In December 1993, the board of directors approved a small reserve
to cover the sale of or exit from certain nonstrategic products,
the withdrawal from the pyridine research program in The
Agricultural Group, and the consolidation of some manufacturing
capacity. The net aftertax expense for these actions was $7
million, or $0.06 per share, and principally affected The
Agricultural and Chemical Groups.
In March 1993, Monsanto received reimbursement from insurance
companies for various costs associated with damage to a
manufacturing site of a raw material for Roundup. The settlement
resulted in a $22 million aftertax gain, or $0.18 per share.
These costs had been expensed in 1992, pending resolution of the
claim.
Without the unusual events in 1994 and 1993, net income for 1994
would have been $623 million, compared with $479 million for the
prior year, an increase of 30 percent. Earnings per share in
1994 would have been $5.33, a 34 percent increase from 1993
earnings per share.
NET SALES ARE HIGHER
Net sales in 1994 were 5 percent higher than those in 1993, led
by increases in net sales for The Agricultural Group and Searle.
Net sales for The Chemical Group increased slightly as a result
of higher sales volumes. Net sales for The NutraSweet Company
declined, in line with expectations.
The Agricultural Group reached record net sales in 1994, up 13
percent from those in 1993, due primarily to a significant
increase in worldwide sales volumes for Roundup herbicide.
Continued worldwide adoption of conservation tillage techniques
by farmers, pricing and new end-use strategies contributed to
this sales volume increase. Sales of new products, such as
Posilac(R) bovine somatotropin (BST) and Harness(R) herbicide, and
the inclusion of a full year's net sales of lawn-and-garden products
from the Ortho acquisition also were significant contributors to
the sales increase. Searle's net sales growth was led by
significant growth in sales of recently introduced new products
in the United States, principally Daypro(R), a once-daily arthritis
treatment, and Ambien(R), a short-term treatment for insomnia.
Sales of these and other new products more than offset the effect
of generic
29
<PAGE> 5
competition on sales of the Calan(R) family of calcium
channel blockers. The Chemical Group's net sales for 1994 were
slightly higher than those in 1993. However, after adjusting for
1993 net sales from divested businesses, net sales for 1994 would
have increased 6 percent, as sales volumes increased for all key
products worldwide. The NutraSweet Company's net sales declined,
because of lower average selling prices for aspartame. Sales
volumes for NutraSweet(R) brand sweetener, the company's trademark
aspartame product, declined 4 percent from volumes last year.
However, sales of tabletop sweeteners, such as Equal(R) and
NutraSweet(R) Spoonful(TM), increased slightly.
Monsanto's net sales in markets outside the United States
represented 40 percent of 1994 net sales, about the same
percentage as last year.
MONSANTO ACHIEVES HIGHER OPERATING RESULTS
Operating income in 1994 of $923 million was the second-best in
Monsanto's history, and increased 14 percent compared with $810
million in operating income in 1993. Excluding the $40 million
in net pretax restructuring and unusual items in 1994 and the $30
million net pretax gain from unusual items in 1993, operating
income would have increased by approximately $183 million, or 23
percent, in 1994. Operating results in 1994 benefited from
strong sales volume gains for several major products, the
successful introduction of new products, and savings from cost
reduction efforts. These increases in operating income were
partially offset by the effects of lower selling prices in all
units and by substantial cost increases for raw materials
experienced by The Chemical Group.
Excluding the aforementioned 1994 and 1993 restructuring charges
and unusual items, operating results would have improved
significantly for The Agricultural Group, The Chemical Group and
Searle. NutraSweet's operating income declined modestly from
that in the prior year. The Agricultural Group's operating
income in 1994 was a record and benefited from significantly
higher worldwide sales volumes for Roundup(R) herbicide, from the
inclusion of a full year of earnings from the acquired Ortho
business, and from the introduction of new products. Operating
results for The Chemical Group benefited from significantly
higher sales volumes in several major products, lower
manufacturing costs and cost reduction efforts. These factors
were partially offset by significantly higher raw material costs
and lower average selling prices, principally in Europe and
Japan. Searle's improved operating results benefited from
significant growth in sales of new products, cost savings from
restructuring actions, and lower new product introduction costs.
NutraSweet's lower operating income in 1994 resulted from reduced
selling prices and sales volumes for aspartame, partially offset
by cost reductions and by higher sales of tabletop sweeteners.
Marketing and administrative expenses increased in 1994,
principally because of the higher costs associated with various
employee incentive programs, and inclusion of a full year's
operating expenses of the acquired Ortho lawn-and-garden products
business, partially offset by lower new product introduction
costs at Searle. Interest income in 1994 increased because of
the aforementioned Searle tax refund. "Other income (expense) --
net" increased in 1994, principally because of lower currency
losses.
MONSANTO REACHES 20 PERCENT ROE TARGET
In 1994, Monsanto achieved its goal of a 20 percent return on
equity (ROE). The company continues to believe that the 20
percent ROE target is useful.
COST SAVINGS CONTINUE
In the past few years, Monsanto has taken steps to make worldwide
operations more focused, productive and cost effective. The
effect of these actions benefited operating income by
approximately $250 million in 1994. These savings are in line
with original expectations and are expected to continue on an
annual basis. Continuing business redesign and other
productivity enhancement efforts have yielded significant
benefits as well. These initiatives will continue as the company
responds to increased global competition and higher customer
expectations.
NEW PRODUCTS ARE STRATEGIC PRIORITY
New product development and commercialization continue to be
strategic priorities for Monsanto. For example, three
agricultural products developed through the use of biotechnology
completed the U.S. Food and Drug Administration's consultation
process in 1994, an important step toward regulatory approval.
Monsanto's research and development (R&D) expenditures were
$609 million in 1994, or 7 percent of net sales, a level that reflects
30
<PAGE> 6
management's strong, long-term commitment to R&D. The
discovery and development of pharmaceutical and agricultural
products continue to be the focus of most of these expenditures.
Significant R&D efforts in existing product technologies and new
product applications also continue across all business units.
Additionally, Monsanto's research program includes the
acquisition of new technologies through licensing. The result is
that Monsanto has many potential products in the R&D pipeline.
Several of them should be commercialized in the next few years.
PRIOR YEAR REVIEW
In 1993, Monsanto Company's operating results improved
substantially from those in 1992. Net income for 1993 was $494
million, or $4.10 per share, although it was affected by several
unusual events. The Agricultural Group continued its impressive
growth, fueled by record sales volumes for Roundup(R) herbicide.
Savings from cost reductions and from working capital reduction
efforts, coupled with slightly higher sales volumes, led to
increased earnings in The Chemical Group. Searle's performance
improved as sales from new products and significant cost savings
from restructuring actions more than offset new product launch
costs and the effect of generic competition on sales of the Calan(R)
family of calcium channel blockers in the United States. The
NutraSweet Company, which completed its first postpatent year for
NutraSweet(R) brand sweetener in the United States, showed continued
growth in 1993 in sales volumes and improved earnings.
As more fully described on page 29, in December 1993, the
board of directors approved a small restructuring reserve. In
March 1993, Monsanto received reimbursement from insurance
companies for various costs associated with damage to a
manufacturing site of a raw material for Roundup.
In 1992, restructuring actions were approved, which primarily
affected Searle, and resulted in a one-time aftertax expense of
$425 million, or $3.44 per share. The Fisher Controls business
was sold in 1992, which resulted in an aftertax gain of $554
million, or $4.49 per share. Net income in 1992 also included
$24 million, or $0.19 per share, in partial-year earnings from
Fisher Controls prior to the sale of this subsidiary.
In addition, Monsanto implemented new accounting rules related to
postretirement benefits and income taxes in 1992, which resulted
in a net one-time aftertax charge of $540 million, or $4.38 per
share.
Other unusual items in 1992 totaled an aftertax expense of $47
million, or $0.38 per share. These items were principally the
costs incurred from damage in January 1992 to a manufacturing
unit that produces a raw material for Roundup, and from the
settlement in the second quarter of 1992 of certain lawsuits
related to the Brio Superfund site.
Consolidated net sales in 1993 were 2 percent higher than those
in the prior year. Net sales for The Agricultural Group grew 17
percent from those in 1992, due primarily to a 24 percent
increase in worldwide sales volumes for Roundup. Rapid worldwide
adoption of conservation tillage techniques by farmers, the
effects of the wet spring in the United States, and pricing and
new end-use strategies contributed to this sales volume increase.
Searle's net sales growth was led by new product introductions in
the United States, principally Daypro(R), a once-daily arthritis
treatment, and Ambien(R), a short-term treatment for insomnia.
Sales of these and other new products more than offset lower
sales of Calan, which was subject to generic competition in the
United States. The Chemical Group's net sales for 1993 were
slightly lower, as sales volume increases in the United States
were offset by lower worldwide average selling prices. The lower
selling prices were principally due to the recession in Europe
and Japan. In NutraSweet's first year following the expiration
of its aspartame-use patent in the United States, net sales
declined, as expected, because of lower average selling prices.
However, aspartame sales volumes grew 6 percent from volumes in
1992.
Operating income was $810 million in 1993, compared with $58
million in operating income in 1992. Excluding the unusual items
in 1993 and the restructuring and unusual charges in 1992,
operating results would have improved for all business segments.
The Agricultural Group in 1993 benefited from significantly
higher worldwide sales volumes for Roundup and from lower
manufacturing costs. Operating results for The Chemical Group
benefited from lower raw material costs, cost reduction efforts,
and increased demand in the United States. Operating results for
Searle improved as a result of cost savings from restructuring
actions and from higher net sales. These factors more than
offset substantial costs of new product introductions and the
effect of generic competition on sales of Calan in the United
States. NutraSweet's improved operating income in 1993 resulted
from increased aspartame sales volumes, and from reduced
operating and amortization expenses, which combined to offset
lower postpatent prices in the United States for NutraSweet brand
sweetener.
31
<PAGE> 7
Marketing and administrative expenses increased in 1993,
principally because of the aforementioned product launch costs
incurred by Searle, higher costs associated with various employee
incentive programs, and operating expenses of the acquired Ortho
lawn-and-garden products business. Amortization of intangible
assets declined because of the expiration of NutraSweet's U.S.
aspartame-use patent in December 1992. Interest expense in 1993
fell 24 percent, primarily because of lower average debt levels.
"Other income (expense) -- net" increased in 1993, principally
because of lower currency losses and higher income from equity
affiliates. The 1992 amount included a write-down of investments
to market value.
<TABLE>
ANALYSIS OF CHANGE IN EARNINGS PER SHARE -- BETTER (WORSE)
<CAPTION>
1994 vs. 1993 1993 vs. 1992
------------- -------------
<S> <C> <C>
SALES-RELATED FACTORS:
Selling prices $(0.71) $(1.90)
Sales volumes and mix 1.70 1.33
- -----------------------------------------------------------------------
Total Sales-Related Factors 0.99 (0.57)
- -----------------------------------------------------------------------
COST-RELATED FACTORS:
Raw material costs (0.52) 0.55
Manufacturing capacity utilization 0.40 0.01
Other manufacturing costs 0.34 0.23
Marketing, administrative
and technological expenses (0.27) (0.43)
Amortization of intangible assets 0.03 0.85
- -----------------------------------------------------------------------
Total Cost-Related Factors (0.02) 1.21
- -----------------------------------------------------------------------
Interest expense (0.01) 0.20
Interest income 0.04 (0.02)
Other income (expense) -- net 0.07 0.20
Change in income taxes 0.14 0.19
Change in shares outstanding 0.15 0.10
- -----------------------------------------------------------------------
Change in Earnings per Share
Before Other Factors 1.36 1.31
- -----------------------------------------------------------------------
OTHER FACTORS:
Restructuring and other unusual actions (0.13) 3.94
Gain on sale of Fisher Controls (4.49)
Divestitures (0.01) (0.33)
Accounting change for postretirement
benefits 5.34
Accounting change for income taxes (0.96)
- -----------------------------------------------------------------------
Total Other Factors (0.14) 3.50
- -----------------------------------------------------------------------
Change in Earnings per Share $1.22 $4.81
- -----------------------------------------------------------------------
</TABLE>
[SELLING (1989 = 1.0)
PRICE
INDEX The index of selling prices declined in 1994. This was
GRAPH] primarily due to the effect of lower selling prices for
The Agricultural Group and for The NutraSweet Company.
Refer to the discussion of the operating unit segment
data for The Agricultural Group on pages 34 - 35, and
for NutraSweet on page 39.
[RAW (1989 = 1.0)
MATERIAL
COST
INDEX The higher raw material cost index in 1994 primarily
GRAPH] affected The Chemical Group. Refer to the discussion
of the operating unit segment data for The Chemical
Group on pages 36 - 37.
[SALES (1989 = 1.0)
VOLUME
INDEX
GRAPH] The sales volume index increase in 1994 was led by
higher sales volumes for key products in The Chemical
Group, a significant increase in worldwide sales
volumes for Roundup(R) herbicide from those last year,
and from sales volume increases for new products at
Searle. Refer to the discussion of the operating unit
segment data for The Agricultural Group on pages 34 -
35, for The Chemical Group on pages 36 - 37, and for
Searle on pages 37 - 38.
32
<PAGE> 8
OPERATING UNIT SEGMENT DATA
<TABLE>
<CAPTION>
Operating Research
Net Sales Income (Loss)<F1> and Development
- ---------------------------------------------------------- ------------------------- -------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
------ ------ ------ ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Agricultural Group $2,224 $1,967 $1,676 $ 476 $ 400 $ 242 $ 141 $ 152 $ 152
The Chemical Group 3,715 3,684 3,705 304 331 91 95 113 112
Searle 1,681 1,546 1,503 72 (13) (288) 330 305 332
The NutraSweet Company 652 705 879 139 145 72 30 42 44
Corporate (68) (53) (59) 13 14 11
- ----------------------------------------------------------------------------------------------------------------------
Total $8,272 $7,902 $7,763 $ 923 $ 810 $ 58 $ 609 $ 626 $ 651
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Capital Depreciation
Total Assets Expenditures and Amortization
-------------------------- ------------------------- -------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
------ ------ ------ ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Agricultural Group $2,434 $2,166 $1,680 $ 106 $ 109 $ 136 $ 138 $ 129 $ 112
The Chemical Group 3,101 3,146 3,236 212 224 290 254 263 301
Searle 2,139 2,145 2,435 63 72 110 114 119 116
The NutraSweet Company 901 910 934 27 30 49 53 59 234
Corporate 316 273 800 1 2 1 2 2 2
- ----------------------------------------------------------------------------------------------------------------------
Total $8,891 $8,640 $9,085 $ 409 $ 437 $ 586 $ 561 $ 572 $ 765
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Amounts for 1992 have been restated from those previously
reported for the reclassification of expenses and assets
estimated to be attributable to biotechnology product discovery.
In 1993, these expenses and assets were charged to the respective
business units to reflect the current organizational structure.
[FN]
<F1> Operating income was affected by the 1994, 1993 and 1992
restructurings and other unusual items as follows:
<TABLE>
<CAPTION>
Income (Expense)
--------------------------
Operating Unit: 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
The Agricultural Group $ (16) $ (3) $(135)
The Chemical Group (33) 43 (148)
Searle 19 3 (265)
The NutraSweet Company (6) (12) (70)
Corporate (4) (1) (6)
----- ----- -----
Total $ (40) $ 30 $(624)
----- ----- -----
</TABLE>
Although inflation is relatively low in most of Monsanto's major
markets, it continues to affect operating results. To mitigate
the effect of inflation, Monsanto has implemented measures to
control costs, to improve productivity, to manage new fixed and
working capital, and to raise selling prices where government
regulations and competitive conditions permit. In addition, the
current cost of replacing certain assets is estimated to be
greater than their historical cost presented in the financial
statements. Accordingly, the depreciation expense reported in
the Statement of Consolidated Income would be greater if the
expense was stated on a current cost basis.
Sales between operating units were not significant. Certain
corporate expenses, primarily those related to the overall
management of Monsanto, were not allocated to the operating units
or geographic areas. Corporate assets primarily include
investments in affiliates and a portion of the cash balance.
[1994 NET SALES GRAPH]
The principal factors that accounted for the operating units'
performances in 1994 and 1993, along with the factors that are
expected to affect operating results in the near term, are
described on the following pages.
33
<PAGE> 9
<TABLE>
THE AGRICULTURAL GROUP
<CAPTION>
1994 1993 1992
- ------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales:
Crop chemicals $2,123 $1,936 $1,647
Animal sciences 101 31 29
- ------------------------------------------------------------------
Total $2,224 $1,967 $1,676
Operating Income 476 400 242
- ------------------------------------------------------------------
</TABLE>
The Agricultural Group is a leading worldwide developer, producer
and marketer of crop protection products and lawn-and-garden
products. This group also develops and markets products enhanced
by biotechnology. These products improve the efficiency of food
production and preserve environmental quality for agricultural,
industrial, turf and residential uses. More than half of the
unit's herbicide net sales are in markets outside the United
States. Weather conditions in agricultural markets worldwide
affect sales volumes.
[AGRICULTURAL GROUP NET SALES GRAPH]
The Agricultural Group's sales and operating performance in 1994
were records, helped by strong sales from the family of Roundup(R)
herbicides, the successful introduction of new products, and
excellent manufacturing performance.
Net sales for The Agricultural Group in 1994 were 13 percent
higher than net sales in 1993. Net sales in 1994 benefited from
higher worldwide sales of Roundup, from the inclusion of a full
year of lawn-and-garden sales from the acquired Ortho business,
and from sales of newly introduced Posilac(R) bovine somatotropin
(BST). However, these factors were somewhat offset by lower net
sales from the acetanilide family of herbicides, which include
Lasso(R) herbicide and newly introduced Harness(R) herbicide. Sales
volumes of Lasso declined from volumes last year; however, sales
of Harness have substantially replaced those of Lasso in many
U.S. markets.
Operating income increased $76 million, or 19 percent. The
increase in operating income was affected by unusual items in
both 1994 and 1993. The unusual items included in 1994 operating
income were $30 million in restructuring charges, principally for
employment reductions and costs to terminate a program. These
charges were partially offset by $14 million in reversals of
prior year restructuring reserves, primarily for higher than
anticipated proceeds from the sale of the pyridine research
program. Operating income in 1993 included $38 million in net
charges primarily related to the withdrawal from the pyridine
research program, and a $35 million pretax gain resulting from
reimbursement by insurance companies for various costs incurred
in 1992 from damage to a manufacturing site that produces a key
raw material for Roundup.
<TABLE>
An analysis of the change in operating income shows:
<CAPTION>
Better (Worse)
--------------------
1994 vs. 1993 vs.
1993 1992
--------- --------
<S> <C> <C>
Selling prices $ (68) $ (60)
Sales volumes and mix 106 157
Raw material and other
manufacturing costs 41 24
Restructuring and other charges 22 25
Glyphosate plant damage costs 42
Insurance settlement (35) 35
Inventory write-down 30
Effect of divested businesses 30
Other (primarily
volume-related expenses) (20) (95)
----- ----
Change in operating income $ 76 $158
----- ----
</TABLE>
Worldwide sales volumes in 1994 for the family of Roundup
herbicides improved significantly from last year's sales volumes,
reflecting strong demand in most key worldwide markets. The
continued worldwide adoption of conservation tillage techniques
by farmers and satisfactory weather conditions, on balance, in
many key markets contributed to this sales volume increase.
Selling price declines for certain products, principally in ex-
U.S. markets, continued to benefit sales volumes by making
Roundup cost effective for weed control in a broader range of
crop and industrial uses. The effect of generic competition,
principally in certain ex-U.S. markets, dampened selling prices
modestly. However, the effect of increased sales volumes on
operating income exceeded the effect of the lower selling prices.
Operating income in 1994 benefited from excellent manufacturing
performance, from inclusion of a full year's operating income
from the acquired Ortho business, and from sales of Posilac in
the United States.
34
<PAGE> 10
Earnings from the acetanilide family of herbicides declined due
to lower sales into the former Soviet Union as a result of poor
economic conditions, and one-time launch costs for the successful
introduction of Harness in the United States.
PRIOR YEAR REVIEW
Net sales for The Agricultural Group in 1993 were 17 percent
higher than sales in 1992. Operating income increased $158
million, or 65 percent. The increase in operating income was
affected by unusual items occurring in both 1993 and 1992. The
unusual items included in 1993 operating income were $38 million
in net charges primarily related to withdrawal from the pyridine
research program and a $35 million pretax gain resulting from
reimbursement by insurance companies for various costs incurred
in 1992 from damage to a manufacturing site that produces a key
raw material for Roundup(R) herbicide. The unusual items included
in 1992 operating income were $63 million in restructuring
charges and other items, principally related to employment
reductions; a $42 million loss associated with the aforementioned
costs incurred from damage to a manufacturing site of a raw
material for Roundup; and a $30 million charge for the write-down
of certain bovine somatotropin (BST) inventories because of
shelf-life expiration.
Worldwide sales volumes for Roundup in 1993 improved 24 percent
from 1992 sales volumes, reflecting strong demand in most key
markets. The rapid worldwide adoption of conservation tillage
techniques by farmers; the effects of the wet spring in the
United States; and good weather conditions, on balance, in many
key markets contributed to this sales volume increase. The
decline in selling prices, principally for certain products in
ex-U.S. markets, continued to benefit sales volumes for Roundup
by making the herbicide cost-effective for weed control in a
broader range of crop and industrial uses. The effect of these
increased sales volumes on operating income exceeded the effect
of lower selling prices.
While 1993 sales benefited from the addition of the Ortho lawn-
and-garden products business, operating income was hurt by the
dilutive effect of that acquisition. Expenditures in 1993 for
BST continued to affect financial results adversely.
AGRICULTURAL GROUP OUTLOOK
Patents protecting Roundup and other glyphosate herbicides in
various countries expired in 1991, while compound per se patent
protection for the active ingredient in Roundup herbicide
continues in the United States until the year 2000. Management
expects that manufacturing process and formulation patents that
are important to Monsanto's cost position will help maintain our
competitive position after the expiration of this other patent.
Roundup faces competition from several generic producers in
certain markets outside the United States.
Sales of Harness(R) herbicide should continue to replace those of
Lasso(R) herbicide in most U.S. markets. This trend is expected to
continue in future periods with some incremental growth
anticipated. In December 1994, the U.S. Environmental Protection
Agency registered Permit(R) herbicide for control of sedges and
broadleaf weeds in corn and grain sorghum, and Manage(R) herbicide
for nutsedge control in turf.
Posilac bovine somatotropin (BST) offers significant value to the
dairy industry by increasing the efficiency of milk production,
but it continues to meet opposition from certain groups. The
U.S. Food and Drug Administration has yet to finalize labeling
regulations for milk products, and several state legislatures are
considering milk labeling bills, which could affect future sales.
The Agricultural Group has a significant number of new products
in the research and development pipeline, some of which should be
commercialized in the next few years. The focus continues to be
on a number of herbicide and biotechnology-related products.
35
<PAGE> 11
<TABLE>
THE CHEMICAL GROUP
<CAPTION>
1994 1993 1992
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Sales:
Industrial Products Group $1,391 $1,522 $1,371
Fibers 1,239 1,141 1,089
Plastics and Saflex 1,085 1,021 1,053
Discontinued products 192
- ----------------------------------------------------------------
Total $3,715 $3,684 $3,705
Operating Income 304 331 91
- ----------------------------------------------------------------
</TABLE>
The Chemical Group produces and markets a range of performance
materials -- including plastics, nylon and acrylic fibers, rubber
chemicals, Saflex(R) plastic interlayer, and phosphorus and its
derivatives -- used by customers to make countless consumer,
household, automotive and industrial products.
[CHEMICAL GROUP NET SALES GRAPH]
In 1994, The Chemical Group benefited from significantly higher
sales volumes for several key products, from improved worldwide
capacity utilization levels, and from savings from continuing
cost reduction efforts. Partially offsetting these gains were
significantly higher raw material costs, principally in the last
half of the year, and global pricing pressures in certain
businesses.
The Chemical Group's 1994 net sales were slightly higher than net
sales last year. Sales in 1993 included those from businesses
later divested as part of the previously announced restructuring
program. Excluding net sales from these divested businesses, net
sales in 1994 would have increased 6 percent from sales in 1993.
Sales volumes increased 7 percent from sales volumes in 1993.
This increase was offset by lower selling prices, principally in
the rubber chemicals business. The sales volume increase in 1994
benefited from increased demand in the North American and certain
European automotive markets, from increases in U.S. housing
starts and resales, which resulted in an improved U.S. market for
replacement carpet, and from an increase in the architectural use
of laminated glass.
Operating income in 1994 declined from operating income in the
prior year. However, a number of unusual items affected
profitability in both years. Specifically, 1994 operating income
included $33 million in restructuring charges, principally
related to employment reductions and costs to close several
facilities. Operating income in 1993 benefited from $43 million
in gains from the sale of several nonstrategic businesses,
partially offset by expenses related to facility rationalization
and other costs.
<TABLE>
An analysis of the change in operating income shows:
<CAPTION>
Better (Worse)
-------------------------
1994 vs. 1993 vs.
1993 1992
---------- ----------
<S> <C> <C>
Selling prices $ (14) $ (85)
Sales volumes and mix 128 11
Capacity utilization and other
manufacturing costs 74 21
Raw material costs (74) 71
Restructuring (76) 120
Asset impairment 30
Brio litigation settlement 41
Effect of inventory reduction (11) 31
Effect of divested businesses (32) (5)
Other (22) 5
----- -----
Change in operating income $ (27) $ 240
----- -----
</TABLE>
Operating income in 1994 benefited from the effect of higher
sales volumes, excellent manufacturing performance and continued
cost reduction efforts. Capacity utilization, an important
factor for The Chemical Group's profitability, was 86 percent in
1994 vs. 77 percent in 1993. Partially offsetting these gains
were significantly higher raw material prices.
Net sales for the Industrial Products Group showed growth in
North America and Asia. This growth was offset by the depressed
economic conditions in the former Soviet Union during 1994 and in
Europe during the first half of the year.
The Fibers Division's net sales in 1994 were 9 percent higher
than those in 1993. This strong performance was primarily due to
increased nylon sales in the United States to carpet
manufacturers for the home replacement carpet market and to tire
producers for tire reinforcement.
The Plastics and Saflex Divisions' net sales in 1994 were higher
than those in 1993, primarily because of sales volume increases
worldwide. Selling prices stabilized compared with those in
1993, principally in the United States.
PRIOR YEAR REVIEW
In 1993, The Chemical Group benefited from lower raw material
prices, cost reduction efforts, and an improved U.S. economy.
However, the group was adversely affected
36
<PAGE> 12
by the recession in Europe and Japan, which continued to constrict
demand for chemical products.
The Chemical Group's 1993 net sales were slightly lower than net
sales in 1992. Sales volumes increased 3 percent from sales
volumes in 1992. This increase was offset by lower selling
prices, principally in the Plastics and Resins Divisions. The
sales volume increase in 1993 was primarily in the United States,
and benefited from a stronger market for replacement carpet.
Sales volumes also benefited from increased U.S. automotive
production, which rebounded from 1992 levels. Various product
sales volumes in Europe, Japan and the former Soviet Union
declined as a result of weak demand.
Operating income in 1993 more than tripled when compared with
1992 operating income. However, a number of unusual items
affected profitability both years. In 1993, operating income
benefited from $43 million in gains from the sale of several
nonstrategic businesses, partially offset by expenses related to
facility rationalization and other costs. In 1992, operating
income was adversely affected by $77 million in restructuring
expenses associated with implementing further cost cutting
actions; $41 million in costs associated with the settlement of
certain litigation related to the Brio Superfund site; and $30
million in expenses related to a facility asset impairment.
CHEMICAL GROUP OUTLOOK
In 1995, The Chemical Group intends 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. The new
organization will serve the global rubber industry. When the
venture is formed, certain redundant activities and functions for
the combined businesses are expected to be consolidated, and a
one-time charge will be recorded. Net sales and operating income
of the joint venture will not be included with those of The
Chemical Group. The Chemical Group's share of the joint
venture's earnings will be reflected in "Other income (expense) -
net" in the Statement of Consolidated Income.
The Chemical Group's outlook is for growth based on continued
improvement of existing businesses through process redesign and
cost reductions, development of new markets for existing or
modified products, development of new products, and growth
through rational and synergistic acquisitions.
<TABLE>
SEARLE
<CAPTION>
1994 1993 1992
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $1,681 $1,546 $1,503
Operating Income (Loss) 72 (13) (288)
- ----------------------------------------------------------------
</TABLE>
Searle develops, produces and markets prescription
pharmaceuticals. Its products include medications to relieve the
symptoms of arthritis, to control high blood pressure, to relieve
insomnia, to prevent the formation of ulcers, and to treat
certain infections.
[SEARLE NET SALES GRAPH]
Searle's 1994 net sales were 9 percent higher than net sales last
year. This increase in net sales was driven by 10 percent higher
volumes, partially offset by lower net selling prices. Sales
growth from new products -- led by Daypro(R), a once-daily arthritis
treatment, Ambien(R), a short-term treatment for insomnia, and
Arthrotec(R), a combination of Cytotec(R) ulcer preventive drug with
the nonsteroidal anti-inflammatory drug diclofenac, for the
treatment of arthritis -- more than offset a decline in sales of
the Calan(R) family of calcium channel blockers. In total, these
new products contributed $310 million to 1994 net sales. Net
sales of the Calan family of products, sold primarily in Canada
and the United States, were $321 million, 8 percent lower than
last year's. This decline primarily reflected the effect of
generic competition on Calan SR in the United States. However,
the effect was substantially reduced by Searle sales of verapamil
SR resulting from a distribution arrangement with a generic
distributor. Net sales of Canderel(R) tabletop sweetener, made with
NutraSweet brand sweetener and marketed by Searle outside the
United States, were $155 million in 1994, up 3 percent from net
sales in 1993, due to higher sales volumes.
Searle's operating income in 1994 was $72 million compared with
an operating loss of $13 million in 1993. Unusual items included
in 1994 operating income were $16 million in restructuring
charges, principally related
37
<PAGE> 13
to employment reductions; and $35 million in reversals of prior year
restructuring reserves, primarily for higher than anticipated proceeds and
lower exit costs related certain divested facilities. Operating results in
1994 benefited from increased sales of new products, lower new
product introduction costs in 1994, and cost savings, primarily
from restructuring actions initiated in 1992.
<TABLE>
An analysis of the change in operating income shows:
<CAPTION>
Better (Worse)
-----------------------
1994 vs. 1993 vs.
1993 1992
-------- --------
<S> <C> <C>
Selling prices $ (24) $ (34)
Sales volumes and mix 100 94
Restructuring 16 268
Marketing, administrative and
technological expenses 1 (31)
Other (8) (22)
----- -----
Change in operating income $ 85 $ 275
----- -----
</TABLE>
Searle's investment in research and development (R&D) continues
to be significant. R&D expenditures were 20 percent of the
unit's net sales for both 1994 and 1993. Future R&D spending is
also expected to be significant, and Searle will continue to seek
R&D collaborations to share development costs and combine
strengths to speed development. This investment reflects
Searle's commitment to securing a continuing stream of new
products through discovery and development.
PRIOR YEAR REVIEW
Searle's 1993 net sales were 3 percent higher than 1992 net sales
driven by 5 percent higher volumes, partially offset by lower net
selling prices. Sales growth from new products more than offset
a decline in sales of Calan(R). New product introductions included
Daypro(R) and Ambien(R) in the United States and Arthrotec(R) in the
United Kingdom, Canada, Sweden and Ireland. In total, these
products contributed $159 million to 1993 net sales. Net sales
of Calan, sold primarily in the U.S. and Canadian markets, were
$350 million, 23 percent lower than those in 1992. This decline
primarily reflected the effect of generic competition in the
United States. Sales in 1993 of Maxaquin(R) quinolone anti-
infective agent were almost 50 percent higher than those in 1992,
the year the product was launched in the United States. But 1993
sales of Maxaquin were short of expectations because of
photosensitivity issues. Net sales of Canderel(R) were $151 million
in 1993, down 4 percent from net sales in 1992, because of a
stronger U.S. dollar.
Operating results in 1993 benefited from cost savings, primarily
from restructuring actions initiated in 1992. However, results
were negatively affected by substantial new product introduction
costs and global health care reforms. The 1992 operating loss
included a $265 million pretax restructuring charge.
SEARLE OUTLOOK
Arthrotec, a combination of Cytotec ulcer preventive drug and
diclofenac for the treatment of arthritis, was launched in the
Netherlands and Portugal in 1994. Additional launches in Germany
and Italy, as well as the filing of the U.S. new product
application, are anticipated in 1995. Cytotec has now been
approved in all major markets. Recent clinical developments
related to Cytotec are believed to represent a potential
opportunity to enhance future sales and performance of this
product.
Calan calcium channel blocker participates in an increasingly
competitive market for antihypertensive drugs and faces generic
competition. This increased competition is likely to continue to
affect the future sales and profits of Calan adversely. Searle,
in conjunction with ALZA Corp., is developing a formulation of
verapamil hydrochloride (the active ingredient in Calan) with
proprietary delayed-release technology. The new product
application for Verapamil OROS was recently filed with the Food
and Drug Administration for marketing approval in the United
States. A positive review could enhance Searle's competitive
position for such hypertension products.
Searle's current product development activities are focused on
areas of strategic importance. In addition to Verapamil OROS,
Searle is developing drugs for the treatment of cardiovascular
conditions, including an oral antiplatelet agent to inhibit blood
clots from forming after bypass surgery or angioplasty; tissue
pathway factor inhibitor (TPFI) to be used during microvascular
surgery to prevent blood clots; and epoxymexrenone for the
treatment of hypertension, congestive heart failure and
cirrhosis. COX-2 inhibitor, in early development as an improved
treatment for arthritis, could potentially increase Searle's
participation in this important therapeutic market. Other
products in development include eliprodil, a neuroprotective
agent to limit the damage caused by stroke, and IL-3 synthokine
to help chemotherapy patients replenish white blood cells and
platelets more rapidly.
38
<PAGE> 14
<TABLE>
THE NUTRASWEET COMPANY
<CAPTION>
1994 1993 1992
- ----------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $652 $705 $879
Operating Income 139 145 72
- ----------------------------------------------------------------
</TABLE>
The NutraSweet Company manufactures and markets sweeteners,
including NutraSweet(R) brand sweetener and Equal(R) and
NutraSweet(R) Spoonful(TM) tabletop sweeteners, and other food
ingredients. Approximately 90 percent of NutraSweet's net sales
are in the U.S. market. NutraSweet brand sweetener is produced
and sold by 50 percent-owned European joint ventures in the
European market. These sales and operating income are not
included with those of NutraSweet. NutraSweet's share of the
European joint ventures' earnings is reflected in "Other income
(expense) -- net" in the Statement of Consolidated Income.
In 1994, NutraSweet's net sales decreased 8 percent from 1993 net
sales as the result of lower average selling prices of NutraSweet
brand sweetener. This decline was expected, and resulted from
lower postpatent prices in the United States for that product.
Sales volumes for NutraSweet brand sweetener decreased slightly
from those in 1993, primarily due to lower contractual shipments
to customers. Sales volumes for Equal and NutraSweet Spoonful
increased 4 percent in 1994 from those in 1993.
NutraSweet's 1994 operating income decreased 4 percent from 1993
operating income. Operating income in 1994 and 1993 included
pretax restructuring charges for work force reductions of $6
million and $12 million, respectively. The decline in 1994
resulted from lower average selling prices and lower sales
volumes, which were partially offset by lower operating expenses
and higher sales of tabletop sweeteners.
<TABLE>
An analysis of the change in operating income shows:
<CAPTION>
Better (Worse)
-----------------------
1994 vs. 1993 vs.
1993 1992
-------- --------
<S> <C> <C>
Sales decline (lower selling prices
and change in sales volumes) $ (64) $(177)
Restructuring charge 6 12
Inventory adjustment 46
Patent amortization 173
Other, principally lower
operating costs 52 19
----- -----
Change in operating income $ (6) $ 73
----- -----
</TABLE>
PRIOR YEAR REVIEW
In 1993, NutraSweet's net sales decreased 20 percent from 1992
net sales as the result of lower average selling prices of
NutraSweet brand sweetener. This decline was expected, and
resulted from lower postpatent prices in the United States for
that product. Sales volumes for NutraSweet brand sweetener were
6 percent higher than those in 1992, led by growth in the private
label and specialty flavor segments of the diet soft drink
market.
Sales volumes for Equal and NutraSweet Spoonful tabletop
sweeteners increased 7 percent in 1993 from those in 1992.
Despite the expiration of its aspartame-use patent, NutraSweet
increased its market share in 1993 in the U.S. tabletop market as
the result of the successful launch of NutraSweet Spoonful in
mid-1992.
NutraSweet's 1993 operating income included a pretax
restructuring charge of $12 million, and 1992 operating income
was reduced by a $46 million inventory write-down and by
restructuring actions totaling $24 million. The improvement in
1993 operating income resulted from reduced operating expenses
and from lower amortization expense, as the U.S. aspartame-use
patent was fully amortized in 1992. These lower expenses more
than offset the lower average selling prices.
NUTRASWEET OUTLOOK
The market prospects for high-intensity sweeteners, such as
aspartame, are strong worldwide as an ingredient and in tabletop
products. NutraSweet has built important competitive market
advantages, including brand name identity, logo recognition, and
the reputation as a superior quality, highly reliable supplier.
In addition, NutraSweet brand sweetener potentially offers an
economical replacement for sugar in certain markets.
Competition from generic aspartame producers and other sweeteners
now being reviewed by the U.S. Food and Drug Administration could
negatively affect sales in the future. This could adversely
affect operating income and cash flow.
The United States will remain the principal market for NutraSweet
brand sweetener in 1995, but international markets offer
significant growth potential, particularly in the tabletop
category.
NutraSweet is developing a next-generation, high-intensity
sweetener and expects to file a food additive petition with the
U.S. Food and Drug Administration near the end of the decade.
39
<PAGE> 15
<TABLE>
GEOGRAPHIC DATA
<CAPTION>
Net Sales to Operating
Unaffiliated Customers Income (Loss)<F1> Total Assets
---------------------------- ---------------------------- ----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $5,376 $5,162 $4,964 $ 507 $ 656 $ 181 $5,844 $5,928 $5,641
Europe-Africa 1,653 1,559 1,652 340 129 (168) 1,947 1,801 2,046
Asia-Pacific 552 533 566 39 (2) 50 586 502 533
Canada 318 311 290 37 28 18 135 121 147
Latin America 373 337 291 65 43 29 300 261 242
Interarea
Eliminations 3 9 7 (237) (246) (324)
Corporate (68) (53) (59) 316 273 800
- ------------------------------------------------------------------------------------------------------------------------------
Total $8,272 $7,902 $7,763 $ 923 $ 810 $ 58 $8,891 $8,640 $9,085
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
The data above are prepared on an "entity basis," which means
that net sales, operating income and assets of a legal entity are
assigned to the geographic area where the legal entity is
located. For example, a sale from the United States to Latin
America is reported as a U.S. export sale. Interarea sales, which
are sales between Monsanto locations in different world areas, were
made on a market price basis. Interarea sales have been excluded
from the above table and were:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
World area shipped from:
United States $ 682 $ 625 $ 683
Europe-Africa 248 133 105
Asia-Pacific 5 2 5
Canada 44 38 33
Latin America 2 4 2
Interarea Eliminations (981) (802) (828)
----- ----- -----
TOTAL $ -- $ -- $ --
----- ----- -----
</TABLE>
<TABLE>
Following is a reconciliation of ex-U.S. operating income and
total assets to the net income and net assets of consolidated ex-
U.S. subsidiaries:
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Operating income (loss) $ 481 $ 198 $ (71)
Interest and other income
(expense) -- net (33) (16) (89)
Income taxes (133) (67) 54
------ ------ ------
NET INCOME (LOSS) OF CONSOLIDATED
EX-U.S. SUBSIDIARIES $ 315 $ 115 $ (106)
Total operating assets $2,968 $2,685 $2,968
Total liabilities 1,088 1,080 1,416
------ ------ ------
NET ASSETS OF CONSOLIDATED
EX-U.S. SUBSIDIARIES $1,880 $1,605 $1,552
------ ------ ------
</TABLE>
The reported operating income for the individual geographic areas
does not include the full profitability generated by sales of
Monsanto products imported from other locations, principally from
the United States. Direct export sales from the United States to
third-party customers outside the United States were $399 million
for 1994, $435 million for 1993 and $393 million for 1992.
<TABLE>
Sales and operating income for the geographic segments do not
include the financial results from those joint venture companies
in which Monsanto does not have management control. Monsanto's
share of the income or loss of these companies is reflected in
"Other income (expense) -- net" in the Statement of Consolidated
Income. Monsanto's share of the unconsolidated net sales and
income or loss of these companies for 1994 follows:
<CAPTION>
Monsanto's Share
--------------------
Net Income
Sales (Loss)
----- ------
<S> <C> <C>
United States $ 179 $ 10
Europe-Africa 90 2
Asia-Pacific 20 (2)
Latin America 130 10
</TABLE>
<TABLE>
<FN>
<F1> Geographic area operating income was affected by the 1994,
1993 and 1992 restructurings and other unusual items as follows:
<CAPTION>
Income (Expense)
--------------------------
1994 1993 1992
----- ---- -----
<S> <C> <C> <C>
United States $(105) $ 78 $(327)
Europe-Africa 69 (26) (295)
Asia-Pacific (11) (15) 13
Canada 2 (4) (8)
Latin America 9 (2) (1)
Corporate (4) (1) (6)
----- ----- -----
Total $ (40) $ 30 $(624)
----- ----- -----
</TABLE>
40
<PAGE> 16
<TABLE>
STATEMENT OF CONSOLIDATED FINANCIAL POSITION
<CAPTION>
(Dollars in millions, except per share) At Dec. 31,
- --------------------------------------------------------------------------------------
ASSETS 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 507 $ 273
Trade receivables, net of allowances of $57 in
1994 and $51 in 1993 1,530 1,445
Miscellaneous receivables and prepaid expenses 313 388
Deferred income tax benefit 321 342
Inventories 1,212 1,224
- --------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 3,883 3,672
- --------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land 102 107
Buildings 1,268 1,237
Machinery and equipment 5,916 5,793
Construction in progress 269 245
- --------------------------------------------------------------------------------------
Total property, plant and equipment 7,555 7,382
Less accumulated depreciation 4,738 4,580
- --------------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT 2,817 2,802
- --------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATES 279 227
INTANGIBLE ASSETS, net of accumulated amortization
of $522 in 1994 and $450 in 1993 1,134 1,189
OTHER ASSETS 778 750
- --------------------------------------------------------------------------------------
TOTAL ASSETS $8,891 $8,640
- --------------------------------------------------------------------------------------
LIABILITIES AND SHAREOWNERS' EQUITY
- -------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 629 $ 538
Wages and benefits 343 299
Income and other taxes 150 140
Restructuring reserves 129 255
Miscellaneous accruals 872 840
Short-term debt 312 223
- -------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,435 2,295
- -------------------------------------------------------------------------------------
LONG-TERM DEBT 1,405 1,502
DEFERRED INCOME TAXES 65 54
POSTRETIREMENT LIABILITIES 1,341 1,256
OTHER LIABILITIES 697 678
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 849 826
Treasury stock, at cost (52,859,031 shares
in 1994 and 48,418,545 shares in 1993) (2,744) (2,348)
Reserve for ESOP debt retirement (199) (218)
Unrealized investment holding gain 19
Accumulated currency adjustment 33 (59)
Reinvested earnings 4,661 4,325
- -------------------------------------------------------------------------------------
TOTAL SHAREOWNERS' EQUITY 2,948 2,855
- -------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $8,891 $8,640
- -------------------------------------------------------------------------------------
<FN>
The above statement should be read in conjunction with pages 47
through 57 of this report.
</TABLE>
ESOP stands for Employee Stock Ownership Plan.
41
<PAGE> 17
REVIEW OF CHANGES IN FINANCIAL POSITION
FINANCIAL POSITION REMAINS STRONG
Monsanto's financial position remained strong in 1994, as
evidenced by Monsanto's current "A" debt rating. Financial
resources were adequate to support existing businesses and to
fund new business opportunities.
Working capital was higher at year-end 1994, principally because
of higher cash and cash equivalent balances, offset, in part, by
higher short-term commercial paper borrowings. Trade receivables
at year-end 1994 increased compared with those at the prior year-
end, primarily because of higher fourth-quarter sales of The
Agricultural Group. Inventories at year-end 1994 declined
slightly, primarily because of planned inventory reductions in
The Chemical Group.
The amount of net property, plant and equipment was higher than
at year-end 1993, as $409 million in capital additions and the
effect of a stronger U.S. dollar exceeded 1994 depreciation
expense.
Total deferred tax benefits, both current and noncurrent, of $392
million at year-end 1994 are primarily related to U.S.
operations, which generally have a strong earnings history.
Long-term debt at year-end 1994 was lower than that at the prior
year-end, primarily because of principal payments on the
company's medium term notes.
On Feb. 20, 1995, Monsanto completed its acquisition of the
worldwide business of Kelco, the specialty chemicals division of
Merck & Co. Inc., for approximately $1,075 million. Kelco is the
worldwide leader in the development, application and production
of alginates and biogums. Monsanto will fund the acquisition
through a combination of cash and debt. Net sales in 1995
will benefit from the acquisition of Kelco. However, the effect
on Monsanto's 1995 operating income from the acquisition is
expected to be slightly dilutive.
Monsanto uses financial markets worldwide for its financing needs
and has available various short- and medium-term bank credit
facilities, which are discussed in the Notes to Financial
Statements (page 51). These credit facilities provide the
financing flexibility to let Monsanto take advantage of
investment opportunities that may arise and to satisfy future
funding requirements. To maintain adequate financial flexibility
and access to debt markets worldwide, Monsanto management intends
to maintain an "A" debt rating. The company's strong financial
position will not be significantly affected by the debt issued to
fund the Kelco acquisition.
In October 1991, Monsanto's board of directors approved the
establishment of an Employee Stock Ownership Plan (ESOP). In
January 1992, the ESOP purchased from Monsanto $250 million in
common stock, which is being used to match employee contributions
under the company's existing savings and investment plan. A more
detailed description of the ESOP is provided in the Notes to
Financial Statements on page 54.
In February 1994, Monsanto established a grantor trust that had
been approved by the board of directors. A more detailed
description of the grantor trust is provided in the Notes to
Financial Statements on page 55.
Monsanto's commitments and contingencies are described in the
Notes to Financial Statements on page 55.
Monsanto's return on shareowners' equity (ROE) was 21.4 percent
in 1994. The ROE and other key financial statistics are
presented in the table below.
<TABLE>
<CAPTION>
KEY FINANCIAL STATISTICS 1994 1993 1992
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Return on Shareowners' Equity (ROE) 21.4% 16.9% (2.6)%
(Net income divided by average shareowners' equity)
Current Ratio 1.6 1.6 1.6
(Current assets divided by current liabilities)
Trade Receivables-Days Sales Outstanding 67 71 67
(Fourth-quarter trade receivables divided
by fourth-quarter net sales times 30 days)
Inventory Turnover Ratio 3.9 3.7 4.1
(Cost of goods sold divided by inventory)
Interest Coverage 7.3 6.1 --
(Income before interest expense and income taxes
divided by total interest cost)
Cash Provided by Operations/Total Debt 76% 42% 54%
Total Debt/Total Capitalization <F**> 37% 38% 36%
- ----------------------------------------------------------------------------------------
<FN>
<F**> Total capitalization is the sum of short-term debt, long-term debt and shareowners'
equity.
</TABLE>
42
<PAGE> 18
<TABLE>
STATEMENT OF CONSOLIDATED SHAREOWNERS' EQUITY
<CAPTION>
(Dollars in millions, except per share) 1994 1993 1992
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK:
BALANCE, JAN. 1 AND DEC. 31 $ 329 $ 329 $ 329
- --------------------------------------------------------------------------------------------
ADDITIONAL CONTRIBUTED CAPITAL:
Balance, Jan. 1 $ 826 $ 820 $ 726
Employee stock plans and ESOP 23 6 94
- --------------------------------------------------------------------------------------------
BALANCE, DEC. 31 $ 849 $ 826 $ 820
- --------------------------------------------------------------------------------------------
TREASURY STOCK:
Balance, Jan. 1 $(2,348) $(2,029) $(1,797)
Shares purchased (6,170,016; 5,795,600; and
6,732,300 shares in 1994, 1993
and 1992, respectively) (478) (380) (417)
Shares issued under employee stock plans
and ESOP (1,729,530; 1,306,882; and
4,269,180 shares in 1994, 1993
and 1992, respectively) 82 61 185
- --------------------------------------------------------------------------------------------
BALANCE, DEC. 31 $(2,744) $(2,348) $(2,029)
- --------------------------------------------------------------------------------------------
RESERVE FOR ESOP DEBT RETIREMENT:
Balance, Jan. 1 $ (218) $ (233) $ (250)
Allocation of ESOP shares 19 15 17
- --------------------------------------------------------------------------------------------
BALANCE, DEC. 31 $ (199) $ (218) $ (233)
- --------------------------------------------------------------------------------------------
UNREALIZED INVESTMENT HOLDING GAIN:
Balance, Jan. 1 $ 15
Net change in market value 4
- --------------------------------------------------------------------------------------------
BALANCE, DEC. 31 $ 19
- --------------------------------------------------------------------------------------------
ACCUMULATED CURRENCY ADJUSTMENT:
Balance, Jan. 1 $ (59) $ 15 $ 187
Translation adjustments 92 (74) (172)
- --------------------------------------------------------------------------------------------
BALANCE, DEC. 31 $ 33 $ (59) $ 15
- --------------------------------------------------------------------------------------------
REINVESTED EARNINGS:
Balance, Jan. 1 $ 4,325 $ 4,103 $ 4,459
Net income (loss) 622 494 (88)
Dividends (net of ESOP tax benefits) (286) (272) (268)
- --------------------------------------------------------------------------------------------
BALANCE, DEC. 31 $ 4,661 $ 4,325 $ 4,103
- --------------------------------------------------------------------------------------------
<FN>
The above statement should be read in conjunction with pages 47
through 57 of this report.
ESOP stands for Employee Stock Ownership Plan.
</TABLE>
<TABLE>
<CAPTION>
KEY FINANCIAL STATISTICS 1994 1993 1992
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Price <F*> High $ 86 1/2 $75 $71 1/4
Low 66 1/2 48 7/8 49 3/4
Year-End 70 1/2 73 3/8 57 5/8
- ---------------------------------------------------------------------------------------------
Per Share Dividends 2.47 2.30 2.20
Shareowners' Equity 26.43 24.62 24.95
- ---------------------------------------------------------------------------------------------
Average Daily Share Trading Volume
(thousands of shares) 376 335 392
- --------------------------------------------------------------------------------------------
<FN>
<F*> Based on daily reported high and low stock prices.
</TABLE>
43
<PAGE> 19
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOW
<CAPTION>
(Dollars in millions) 1994 1993 1992
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Income (loss) from continuing operations $ 622 $ 494 $ (126)
Add income taxes -- continuing operations 273 235 (48)
- -------------------------------------------------------------------------------------------
Income (loss) from continuing operations
before income taxes 895 729 (174)
Adjustments to reconcile to Cash Provided
by Continuing Operations:
Income tax payments (196) (166) (162)
Items that did not use cash:
Depreciation and amortization 561 572 765
Restructuring expenses -- net 40 5 436
Incremental SFAS No. 106 expenses 48 48 45
Other (5) (19) 157
Working capital changes that provided (used) cash:
Accounts receivable (88) 62 21
Inventories 15 (31) (30)
Accounts payable and accrued liabilities (125) (202) (107)
Other 74 34 (125)
Other items 81 (10) 22
- -------------------------------------------------------------------------------------------
CASH PROVIDED BY CONTINUING OPERATIONS 1,300 1,022 848
CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS (291) 64
- -------------------------------------------------------------------------------------------
TOTAL CASH PROVIDED BY OPERATIONS 1,300 731 912
- -------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Property, plant and equipment purchases (409) (437) (586)
Acquisition and investment payments (185) (510) (259)
Investment and property disposal proceeds 202 298 177
Proceeds from sale of Fisher Controls 1,275
Discontinued operations -- other (30)
- -------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (392) (649) 577
- -------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net change in short-term financing 89 (31) (78)
Long-term debt proceeds 49 379 120
Long-term debt reductions (152) (299) (565)
Treasury stock purchases (478) (380) (417)
Dividend payments (289) (275) (270)
Common stock issued to ESOP 250
Other financing activities 107 68 11
- -------------------------------------------------------------------------------------------
CASH USED IN FINANCING ACTIVITIES (674) (538) (949)
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 234 (456) 540
CASH AND CASH EQUIVALENTS:
Beginning of year 273 729 189
- -------------------------------------------------------------------------------------------
End of year $ 507 $ 273 $ 729
- -------------------------------------------------------------------------------------------
<FN>
The above statement should be read in conjunction with pages 47 through 57
of this report.
The effect of exchange rate changes on cash and cash equivalents was not
material. Cash payments for interest (net of amounts capitalized) were $129
million, $133 million and $176 million for the years 1994, 1993 and 1992,
respectively.
During 1991, Monsanto established an Employee Stock Ownership Plan (ESOP).
Monsanto was guarantor of $70 million of ESOP notes and $100 million of
ESOP debentures as of Dec. 31, 1994.
</TABLE>
44
<PAGE> 20
REVIEW OF CASH FLOW
Monsanto's cash flow for 1994, 1993 and 1992 is shown in the Statement of
Consolidated Cash Flow on the preceding page.
CASH FLOW REMAINS STRONG
Cash provided by continuing operations of $1,300 million was strong in
1994, 27 percent higher than that in 1993. This outstanding improvement
was due primarily to higher net income in 1994, but also to successful
efforts in streamlining working capital requirements and in inventory
management. Working capital as a percentage of net sales was about the
same as that for last year. Cash from continuing operations was generated
primarily by The Chemical Group, The Agricultural Group and The NutraSweet
Company.
Monsanto's operations have historically generated sufficient cash to fund
existing businesses and growth-related research and investments.
Management expects that cash provided by operations, supplemented by
periodic borrowings, will be adequate to fund future requirements.
[CASH PROVIDED BY CONTINUING OPERATIONS GRAPH]
Other investment and property disposals in 1994 generated more than $200
million in cash. The principal proceeds in 1994, 1993 and 1992 were from
the sales of various businesses associated with restructuring actions.
In 1992, Monsanto received $1,275 million in cash from the sale of Fisher
Controls. A portion of the cash proceeds was used to reduce debt and to
purchase Monsanto common stock. Cash used by discontinued operations in
1993 was for income taxes related to the sale of Fisher Controls.
Major uses of cash for 1994, 1993 and 1992 included dividends, capital
expenditures, and treasury stock purchases. The acquisition of the Ortho
lawn-and-garden products business in 1993 and investments in various 1992
acquisitions were also major uses of cash. Monsanto's 1994 capital
expenditures focused on improved technology, capacity expansions and
environmental projects, and totaled $409 million. Business redesign
efforts and productivity enhancements were successful in increasing
effective capacity at many facilities, reducing the need for additional
capital expenditures.
Long-term debt repayments in 1993 included $150 million in 9 3/8 percent
debentures. Long-term debt repayments in 1992 included $145 million in 11
3/8 percent debentures, $141 million in 8 3/4 percent debentures, $104
million in 8 1/2 percent debentures, and $51 million in industrial revenue
bonds.
Monsanto continually evaluates risk retention and insurance levels for
product liability, property damage and other potential areas of risk.
Monsanto devotes significant effort to maintaining and improving safety and
internal control programs, which reduce its exposure to certain risks.
Based on the cost and availability of insurance and the likelihood of a
loss, management decides the amount of insurance coverage to purchase from
unaffiliated companies and the appropriate amount of risk to retain. Since
1986, Monsanto's liability insurance has been on the "claims made" policy
form. Management believes that the current levels of risk retention are
consistent with those of other companies in the various industries in which
Monsanto operates. There can be no assurance that Monsanto will not incur
losses beyond the limits of, or outside the coverage of, its insurance.
Monsanto's liquidity, financial position and profitability are not expected
to be affected materially by the levels of risk retention that the company
accepts.
MONSANTO MAINTAINS STRONG ENVIRONMENTAL COMMITMENT
Monsanto is subject to various laws and government regulations concerning
environmental matters, employee safety and employee health. It is
anticipated that increasingly stringent requirements will be imposed upon
Monsanto, its competitors and industry in general. Monsanto is dedicated
to a long-term environmental protection program that reduces emissions of
hazardous materials into the environment, as well as to the remediation of
identified existing environmental concerns. In 1988, management committed
to a 90 percent reduction in toxic air emissions from worldwide operations
by the end of 1992. Monsanto achieved its goal, based on 1992 year-end
operating rates. The cost to accomplish this target did not materially
affect operating results. In fact, some of the targeted capital projects
lowered operating costs and improved operating efficiency.
Expenditures in 1994 were approximately $47 million for environmental
capital projects and approximately
45
<PAGE> 21
$202 million for management of environmental programs, including the
operation and maintenance of facilities for environmental control.
Monsanto estimates that during 1995 and 1996 approximately $35 million to
$45 million per year will be spent on additional capital projects for
environmental protection.
Monsanto periodically receives notices from the U.S. Environmental
Protection Agency (EPA) that it is a potentially responsible party (PRP)
under the Comprehensive Environmental Response, Compensation and Liability
Act (CERCLA), commonly known as Superfund. The EPA has designated Monsanto
as a PRP at 92 Superfund sites. Monsanto has resolved disputes, entered
partial consent decrees, and executed administrative orders between
Monsanto and the EPA in 47 of these cases, settling a portion or all of
Monsanto's liability for these Superfund cases. Six other matters involve
sites where allegations are predicated on tentative findings of reuse of
drums by others that once contained products sold by Monsanto. These six
matters have been inactive as to Monsanto for at least 10 years. At one
other site, Monsanto has determined that it has no liability whatsoever.
Monsanto's policy is to accrue costs for remediation of waste disposal
sites in the accounting period in which the responsibility is established
and the cost is estimable. Monsanto's estimates of its liabilities for
Superfund sites are based on evaluations of currently available facts with
respect to each individual site and take into consideration factors such as
existing technology, presently enacted laws and regulations, and prior
experience in remediation of contaminated sites. Monsanto does not
discount these liabilities, and they have not been reduced for any claims
for recoveries from insurance or from third parties. However, Monsanto is
engaged in litigation with some of its insurance carriers regarding both
the applicability and the amount of its coverage responsive to claims for
damages at these sites. Monsanto has an accrued liability of $72 million
as of Dec. 31, 1994, for Superfund sites. As assessments and remediation
activities progress at individual sites, these liabilities are reviewed
periodically and adjusted to reflect additional technical, engineering and
legal information that becomes available. Major sites in this category
include the noncompany-owned Brio, Fike/Artel, Motco and Woburn sites,
which account for $54 million of the accrued amount.
Monsanto's estimate of its Superfund liability is affected by several
uncertainties such as, but not limited to, the method and extent of
remediation, the percentage of material attributable to Monsanto at the
sites relative to that attributable to other parties, and the financial
capabilities of the other PRPs at most sites. Due to these uncertainties,
primarily related to the method and extent of remediation, potential future
expenses could be as much as $25 million for these sites. These potential
future expenses may be incurred over the balance of the decade.
There are various other lawsuits, claims and proceedings that state
agencies and others have asserted against the company seeking remediation
of alleged environmental impairments. Monsanto is in the process of
determining its involvement, if any, at 41 of these sites. Monsanto has an
accrued liability of $108 million as of Dec. 31, 1994, for these matters
and for environmental reserves at certain former Monsanto plant sites. The
company's estimate of its liability related to these sites is affected by
several uncertainties such as, but not limited to, the extent of Monsanto's
involvement, and the method and extent of remediation. Due to these
uncertainties, potential future expenses could be as much as $75 million
for these sites. Four sites in this category account for $58 million of
the accrued amount and for approximately $55 million of the potential
future expenses.
Monsanto spent $52 million in 1994 for remediation of Superfund and other
waste disposal sites. Most of these expenditures related to The Chemical
Group, and similar or greater amounts can be expected in future years.
For hazardous and other waste facilities at operational locations,
Monsanto recognizes post-closure environmental costs and
remediation costs over the estimated remaining useful life of the
related facilities, not to exceed 20 years. Monsanto spent $13
million in 1994 for remediation of these facilities and has an accrued
liability of $27 million as of Dec. 31, 1994, for these sites.
Uncertainties related to these costs are evolving government regulations,
the method and extent of remediation, and future changes in technology.
Monsanto's estimated closure costs for these facilities are approximately
$135 million.
While the ultimate costs and results of remediation of waste disposal sites
cannot be predicted with certainty, Monsanto's liquidity, financial
position and profitability are not expected to be materially affected.
COMMON STOCK PURCHASE PROGRAM CONTINUED IN 1994
In October 1992, Monsanto's board of directors authorized the purchase of
12 million shares of Monsanto common stock. This authority is in addition
to the normal repurchase of shares for compensation and benefits
46
<PAGE> 22
programs. In 1994, Monsanto purchased 6.2 million shares at a cost of $478
million. Since June 1987, Monsanto has purchased 55.8 million shares at a
cost of $3,028 million. Management believes that the stock purchase
program represents an appropriate use of excess cash.
DIVIDEND INCREASES FOR THE 22ND CONSECUTIVE YEAR
Monsanto has paid quarterly dividends on its common shares without
interruption or reduction since 1928, and has increased the dividend per
share in each of the past 22 years. Dividend payout for 1994 was
22 percent of cash provided by operations. Monsanto's dividend policy
reflects a desired long-term payout percentage based on Monsanto's
expectations of future growth and profitability levels.
For both common stock repurchases and dividends in any individual year,
additional consideration is given to expected financial position and
results, acquisitions, working and fixed capital needs, scheduled debt
repayments, and economic conditions, including inflation.
Monsanto's common stock is traded principally on the New York Stock
Exchange and is listed on other exchanges worldwide. The number of
shareowners of record as of Feb. 24, 1995, was 53,312. The high and low
common stock prices on that date were $ 79 1/4 and $78 3/8.
[DIVIDENDS PER SHARE GRAPH]
Monsanto's dividend per share has increased
120 percent on a calendar year basis since
1984.
NOTES TO FINANCIAL STATEMENTS
SIGNIFICANT ACCOUNTING POLICIES
Monsanto's significant accounting policies are capitalized in the
following Notes to Financial Statements. Previously reported
amounts have been reclassified consistent with the 1994
presentation.
BASIS OF CONSOLIDATION
THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE COMPANY AND ITS
MAJORITY-OWNED SUBSIDIARIES. INTERCOMPANY TRANSACTIONS HAVE BEEN
ELIMINATED IN CONSOLIDATION. OTHER COMPANIES IN WHICH MONSANTO
HAS A SIGNIFICANT OWNERSHIP INTEREST (GENERALLY GREATER THAN
20 PERCENT) ARE INCLUDED IN "INVESTMENTS IN AFFILIATES" IN THE
STATEMENT OF CONSOLIDATED FINANCIAL POSITION. MONSANTO'S SHARE
OF THESE COMPANIES' INCOME OR LOSS IS INCLUDED IN "OTHER INCOME
(EXPENSE) -- NET" IN THE STATEMENT OF CONSOLIDATED INCOME.
CURRENCY TRANSLATION
THE FINANCIAL STATEMENTS FOR MOST OF MONSANTO'S EX-U.S. ENTITIES
ARE TRANSLATED INTO U.S. DOLLARS AT CURRENT EXCHANGE RATES.
UNREALIZED CURRENCY ADJUSTMENTS IN THE STATEMENT OF CONSOLIDATED
FINANCIAL POSITION ARE ACCUMULATED IN SHAREOWNERS' EQUITY. THE
FINANCIAL STATEMENTS OF EX-U.S. ENTITIES THAT OPERATE IN HYPER-
INFLATIONARY ECONOMIES, PRINCIPALLY BRAZIL, ARE TRANSLATED AT
EITHER CURRENT OR HISTORICAL EXCHANGE RATES, AS APPROPRIATE.
THESE CURRENCY ADJUSTMENTS ARE INCLUDED IN NET INCOME.
Major currencies are the U.S. dollar, British pound sterling,
Belgian franc and Japanese yen. Other important currencies
include the Brazilian real, Canadian dollar, French franc, German
mark and Italian lira. Currency restrictions are not expected to
have a significant effect on Monsanto's cash flow, liquidity or
capital resources.
Currency option contracts are purchased to manage currency
exposure for anticipated transactions (for example, expected
export sales in the following year denominated in foreign
currencies). Currency option and forward contracts are used to
manage other currency exposures, primarily for receivables and
payables outside the United States. This hedging activity is
intended to protect the company from adverse fluctuations in
currencies vs. the U.S. dollar.
47
<PAGE> 23
As of Dec. 31, 1994, Monsanto had currency forward contracts to
purchase $119 million and to sell $179 million, and purchased
currency option contracts to sell $256 million of other
currencies, principally the French franc, Japanese yen, Canadian
dollar and British pound sterling. GAINS AND LOSSES ON CONTRACTS
THAT ARE DESIGNATED AND EFFECTIVE AS HEDGES ARE DEFERRED AND ARE
INCLUDED IN THE RECORDED VALUE OF THE TRANSACTION BEING HEDGED.
Net deferred hedging losses as of Dec. 31, 1994, were not
material. GAINS AND LOSSES ON OTHER CURRENCY FORWARD AND OPTION
CONTRACTS ARE INCLUDED IN NET INCOME IMMEDIATELY. Monsanto is
subject to loss if the counterparties to these contracts do not
perform.
RESTRUCTURING AND OTHER ACTIONS
In December 1994, the board of directors approved a plan to
eliminate redundant staff activities across the company and
consolidate certain staff and administrative business functions.
The plan will result in reductions in worldwide employment levels
of approximately 500 people. In addition, the company will close
or exit certain facilities and programs. These work force
reductions and closures will be substantially completed by the
end of 1995. The pretax expense related to these actions was $89
million ($55 million aftertax).
In September 1994, Monsanto received $67 million from the U.S. Internal
Revenue Service in settlement of certain tax matters related to the 1985
acquisition of Searle. The settlement included interest of $33 million ($21
million aftertax), recorded as a one-time gain. Most of the remainder of
the proceeds reduced the balance of unamortized goodwill related to the
Searle acquisition.
In December 1993, the board of directors approved a small reserve
to cover the sale or exit from some nonstrategic products, the
withdrawal from the pyridine research program in The Agricultural
Group, and the consolidation of some manufacturing capacity. The
net pretax expense related to these actions was $5 million ($7
million aftertax) and principally affected The Agricultural and
Chemical Groups.
In the first quarter of 1993, Monsanto recognized a $35 million
pretax gain resulting from reimbursement from insurance companies
of various costs associated with damage in January 1992 to a
manufacturing unit that produces a key raw material for Roundup
herbicide. These costs had been expensed in 1992 pending
resolution of the claim.
In November 1992, the board of directors approved a series of
actions designed to make Monsanto's worldwide operations more
focused, productive and cost-effective. Major elements included
reductions in employment; a realignment of selected research
investments; a number of consolidations, closings and asset
write-downs; and sales of nonstrategic businesses and facilities.
These actions principally affected Searle, but also included a
reduction in corporate staff and additional fine-tuning of other
operating units.
Other unusual items in 1992 included the aforementioned costs
incurred from damage in January 1992 to a facility that makes
Roundup herbicide and from the settlement in the second quarter
of 1992 of certain lawsuits related to the Brio Superfund site.
<TABLE>
The components of the pretax expense (income) related to the
restructuring programs and the other unusual items were:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cost of employee reductions $ 68 $ 5 $224
Shutdown and consolidation of
various facilities and departments (25) 51 164
Asset write-downs 188
Glyphosate plant damage costs (settlement) (35) 42
Brio litigation settlement 41
Other costs (income) (22) 47 111
Gains on business sales (14) (98) (71)
---- ---- ----
Total $ 7 $(30) $699
---- ---- ----
<FN>
In addition, Monsanto recognized net restructuring expenses of
$457 million in 1991, primarily for the shutdown and
consolidation of various facilities.
</TABLE>
Restructuring expenses are recorded based on estimates prepared
at the time the restructuring actions are approved by the board
of directors. In the fourth quarter of 1994, the board approved
the reversal of $49 million of pretax excess restructuring
reserves from prior years. The excess was primarily due to
higher than expected proceeds and lower exit costs from the sale
and shutdown of nonstrategic businesses and facilities included
in the 1993 and 1992 restructuring actions. The balance in
restructuring reserves as of Dec. 31, 1994, was $254 million, and
consisted primarily of work force reduction costs under the 1994
actions and planned facility dismantling and site closure costs
remaining under previous restructurings. Management believes
that the balance of these reserves at Dec. 31, 1994, is adequate
for completion of those activities. Reductions to restructuring
liabilities
48
<PAGE> 24
over the last three years for restructuring actions taken were
approximately $1.1 billion. Approximately two-thirds of these reductions
were for write-offs and expenditures related to the closure or sale of
nonstrategic products and facilities. Most of the remainder of the
reductions related to the cost of work force reduction programs, which have
been completed.
<TABLE>
The pretax expenses (income) related to the restructuring
programs and the other unusual items were recorded in the
Statement of Consolidated Income in the following categories:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cost of goods sold $(35) $188
Restructuring expense -- net $ 40 5 436
---- ---- ----
Decrease (increase) in operating income 40 (30) 624
Interest income (33)
Other expense 75
---- ---- ----
Total decrease (increase) in income
from continuing operations
before income taxes $ 7 $(30) $699
---- ---- ----
</TABLE>
<TABLE>
Income from continuing operations was decreased by $1 million
aftertax, or $0.01 per share, for 1994; increased by $15 million
aftertax, or $0.12 per share, for 1993; and reduced by $472
million aftertax, or $3.82 per share, for 1992 from the effect of
these restructurings and unusual items. Product sales of
businesses targeted for divestiture in these restructurings were
excluded from Monsanto's net sales after the board of directors
approved the divestiture. Net sales and operating income for
these businesses in 1993 and 1992, included in Monsanto's net
sales and operating income, were:
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Net sales $208 $289
Operating income $ 1 $ 26
</TABLE>
PRINCIPAL ACQUISITIONS AND DIVESTITURES
On Feb. 20, 1995, Monsanto completed its acquisition of the
worldwide business of Kelco, the specailty chemicals division of
Merck & Co. Inc., for approximately $1,075 million. Kelco is the
worldwide leader in the development, application and production
of alginates and biogums.
In Dec. 1994, Monsanto and Akzo Nobel N.V. agreed to form a 50/50
joint venture by contributing their respective rubber chemicals
businesses. When formed, the venture will be accounted for as an
equity affiliate.
In May 1993, Monsanto purchased the assets, including a
seasonally high amount of working capital, of the Ortho Consumer
Products Division of Chevron Chemical Co. for $412 million. The
acquisition included total assets with a fair market value of
$327 million and liabilities of $51 million. The financial
results of the Ortho business were included in the Statement of
Consolidated Income from the date of acquisition.
On an unaudited, pro forma basis, assuming the acquisition of
Ortho had occurred at the beginning of 1993 and 1992, Monsanto's
net sales in each of those years would have been approximately $8
billion. Net income (loss) and earnings per share for those
years would not have been significantly different from the
reported amounts.
In October 1992, Monsanto sold the worldwide Fisher Controls
business. Monsanto received $1,275 million in cash, which
resulted in an aftertax gain of $554 million (net of applicable
income taxes of $371 million). Financial data for the nine
months ended Sept. 30, 1992, for Fisher Controls were: net sales,
$679 million; income before income taxes, $37 million; income
taxes, $13 million; and net income, $24 million.
<TABLE>
DEPRECIATION AND AMORTIZATION
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Depreciation $442 $469 $473
Amortization of intangible assets 81 81 237
Obsolescence 38 22 55
---- ---- ----
TOTAL $561 $572 $765
---- ---- ----
</TABLE>
PROPERTY, PLANT AND EQUIPMENT IS RECORDED AT COST. THE COST OF
PLANT AND EQUIPMENT IS DEPRECIATED OVER WEIGHTED AVERAGE PERIODS
OF 18 YEARS FOR BUILDINGS AND 10 YEARS FOR MACHINERY AND
EQUIPMENT, BY THE STRAIGHT-LINE METHOD.
<TABLE>
INTANGIBLE ASSETS ARE RECORDED AT COST LESS ACCUMULATED AMORTIZA-
TION. The components of intangible assets and their estimated
remaining useful lives were:
<CAPTION>
Estimated
Remaining Life<F*> 1994 1993
------------------ ---- ----
<S> <C> <C> <C>
Goodwill 26 $ 776 $ 798
Patents 6 48 62
Other intangible assets 14 310 329
------ ------
TOTAL $1,134 $1,189
------ ------
<FN>
<F*>Weighted average, in years, as of Dec. 31, 1994.
</TABLE>
GOODWILL IS THE COST OF ACQUIRED BUSINESSES IN EXCESS OF THE FAIR
VALUE OF THEIR IDENTIFIABLE NET ASSETS AND IS AMORTIZED OVER THE
ESTIMATED PERIODS OF BENEFIT (FIVE TO 40 YEARS).
49
<PAGE> 25
PATENTS OBTAINED IN A BUSINESS ACQUISITION ARE RECORDED AT THE PRESENT
VALUE OF ESTIMATED FUTURE CASH FLOWS RESULTING FROM PATENT
OWNERSHIP. THE COST OF PATENTS IS AMORTIZED OVER THEIR LEGAL
LIVES. THE COST OF OTHER INTANGIBLE ASSETS (PRINCIPALLY PRODUCT
RIGHTS AND TRADEMARKS) IS AMORTIZED OVER THEIR ESTIMATED USEFUL
LIVES.
IMPAIRMENT TESTS OF LONG-LIVED ASSETS ARE MADE WHEN CONDITIONS
INDICATE A POSSIBLE LOSS. SUCH IMPAIRMENT TESTS ARE BASED ON A
COMPARISON OF UNDISCOUNTED CASH FLOWS TO THE RECORDED VALUE OF
THE ASSET. IF AN IMPAIRMENT IS INDICATED, THE ASSET VALUE IS
WRITTEN DOWN TO ITS DISCOUNTED CASH VALUE, USING AN APPROPRIATE
DISCOUNT RATE.
INVESTMENTS
Effective Jan. 1, 1994, Monsanto adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which requires that
certain investments, primarily equity securities, be recorded at
their market values. The Jan. 1, 1994, adoption of this standard
resulted in a $15 million increase, net of taxes of $7 million,
in investment balances and shareowners' equity, by the
recognition of a net unrealized investment holding gain. As of
Dec. 31, 1994, the aggregate fair value of these equity
securities was $140 million, and gross unrealized holding gains
and losses were $44 million and $8 million, respectively.
Debt securities held are recorded at amortized cost, because the
company has the ability and intent to hold these securities to
their maturity date. Most of these securities mature in less
than five years. As of Dec. 31, 1994, the total amortized cost
of these securities was $247 million.
WHEN A DECLINE IN MARKET VALUE IS DEEMED OTHER THAN TEMPORARY,
THE REDUCTION TO THE INVESTMENT IN A SECURITY IS CHARGED TO
EXPENSE.
INVENTORY VALUATION
INVENTORIES ARE STATED AT COST OR MARKET, WHICHEVER IS LESS.
ACTUAL COST IS USED TO VALUE RAW MATERIALS AND SUPPLIES.
STANDARD COST, WHICH APPROXIMATES ACTUAL COST, IS USED TO VALUE
FINISHED GOODS AND GOODS IN PROCESS. STANDARD COST INCLUDES
DIRECT LABOR AND RAW MATERIALS, AND MANUFACTURING OVERHEAD BASED
ON PRACTICAL CAPACITY. THE COST OF CERTAIN INVENTORIES (54
PERCENT AS OF DEC. 31, 1994) IS DETERMINED BY USING THE LAST-IN,
FIRST-OUT (LIFO) METHOD, WHICH GENERALLY REFLECTS THE EFFECTS OF
INFLATION OR DEFLATION ON COST OF GOODS SOLD SOONER THAN OTHER
INVENTORY COST METHODS. THE COST OF OTHER INVENTORIES GENERALLY
IS DETERMINED BY USING THE FIRST-IN, FIRST-OUT (FIFO) METHOD.
<TABLE>
The components of inventories were:
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Finished goods $ 751 $ 734
Goods in process 285 319
Raw materials and supplies 459 430
------ ------
Inventories, at FIFO cost 1,495 1,483
Excess of FIFO over LIFO cost (283) (259)
------ ------
TOTAL $1,212 $1,224
------ ------
</TABLE>
Inventories at FIFO cost approximate current cost. The effect of
LIFO inventory liquidations increased pretax income by $15
million in 1994 and by $31 million in 1993.
INCOME TAXES
<TABLE>
The components of income (loss) from continuing operations before
income taxes were:
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
United States $ 447 $ 547 $ (14)
Outside United States 448 182 (160)
----- ----- -----
TOTAL $ 895 $ 729 $(174)
----- ----- -----
</TABLE>
<TABLE>
The components of income tax expense (benefit) charged to
continuing operations were:
<CAPTION>
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Current:
U.S. federal $ 118 $ 113 $ 56
U.S. state 17 12 24
Outside United States 94 56 19
----- ----- -----
229 181 99
----- ----- -----
Deferred:
U.S. federal 2 35 (59)
U.S. state 3 8 (15)
Outside United States 39 11 (73)
----- ----- -----
44 54 (147)
----- ----- -----
TOTAL $ 273 $ 235 $ (48)
----- ----- -----
</TABLE>
<TABLE>
Factors causing Monsanto's effective tax rate for continuing
operations to differ from the U.S. federal statutory rate were:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory rate 35% 35% (34)%
Benefits attributable to:
U.S. export earnings (1) (2) (9)
Puerto Rican operations (2) (1) (4)
Higher (lower) ex-U.S. rates -- (3) (12)
Nondeductible goodwill 1 1 3
Valuation allowances (1) 5 19
Effect of U.S. tax rate change (2)
State income taxes 1 2 2
Other (2) (3) 7
---- ---- ----
EFFECTIVE INCOME TAX RATE 31% 32% (28)%
---- ---- ----
</TABLE>
50
<PAGE> 26
In 1992, the income taxes netted against the gain on the sale of
Fisher Controls and the cumulative effect of adopting Statement
of Financial Accounting Standards (SFAS) No. 106 exceeded the 34
percent U.S. federal statutory rate, primarily because of the
effect of state income taxes.
Monsanto adopted SFAS No. 109, "Accounting for Income Taxes,"
effective Jan. 1, 1992, and recognized a gain of $118 million, or
$0.96 per share. This gain has been reflected in the Statement
of Consolidated Income as a cumulative effect of an accounting
change. Deferred income tax balances reflect the effect of
temporary differences between the amounts of assets and
liabilities for income tax purposes, compared with the respective
amounts for financial statement purposes.
<TABLE>
Deferred income tax balances were related to:
<CAPTION>
1994 1993
----------------- ------------------
Asset Liability Asset Liability
----- --------- ----- ---------
<S> <C> <C> <C> <C>
Property $(383) $ 40 $(347) $ 49
Postretirement benefits 475 8 480 2
Restructuring reserves 69 (3) 128 9
Environmental liabilities 69 93
Inventory 35 44
Other 212 20 145 (6)
Valuation allowances (85) (89)
----- ---- ----- ----
Total $ 392 $ 65 $ 454 $ 54
----- ---- ----- ----
</TABLE>
INCOME AND REMITTANCE TAXES HAVE NOT BEEN RECORDED ON $700
MILLION IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES, EITHER BECAUSE
ANY TAXES ON DIVIDENDS WOULD BE OFFSET SUBSTANTIALLY BY FOREIGN
TAX CREDITS OR BECAUSE MONSANTO INTENDS TO REINVEST THOSE
EARNINGS INDEFINITELY. If such earnings were paid as dividends,
the estimated U.S. income tax would be $96 million.
SHORT-TERM DEBT AND CREDIT ARRANGEMENTS
<TABLE>
Short-term debt was:
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Notes payable to banks $ 79 $ 49
Commercial paper 75 16
Bank overdrafts 77 67
Current portion of long-term debt 81 91
---- ----
TOTAL $312 $223
---- ----
Weighted average interest rates of
notes payable as of Dec. 31:
Banks <F*> 5.1% 6.8%
Commercial paper 4.1% 3.1%
<FN>
<F*> Includes the effect of notes in certain countries where local
inflation results in high interest rates.
</TABLE>
Monsanto had aggregate short-term loan facilities of $299
million, under which loans totaling $79 million were outstanding
as of Dec. 31, 1994. Interest on these loans is related to
various bank rates. Monsanto's worldwide unused short-term loan
facilities were $220 million as of Dec. 31, 1994. On Feb. 2,
1995, Monsanto amended its existing $750 million credit facility
to expire in the year 2000, and to permit the company to request
that the lenders increase their commitments up to an aggregate of
$1 billion. There were no borrowings under the previous facility
as of Dec. 31, 1994. Also on Feb. 2, 1995, Monsanto entered into
a new $450 million credit agreement with a term of 364 days.
Monsanto may request that the lenders under that agreement
increase their commitments up to an aggregate $650 million,
and/or agree to renew the agreement for additional 364-day
periods. To the extent that lenders decline to increase or, in
the case of the 364-day agreement, renew their commitments,
Monsanto may request that new lenders become parties to the
agreements. These credit facilities will be used to support the
issuance of commercial paper. Interest on amounts borrowed under
these agreements would likely be at money market rates.
Covenants under these credit facilities restrict maximum
borrowings. The company does not anticipate that future
borrowings will be limited by these restrictions.
51
<PAGE> 27
LONG-TERM DEBT
<TABLE>
Long-term debt (exclusive of current maturities) was:
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Industrial revenue bond obligations,
average rate in 1994 of 5.3%
due 1996 to 2028 $ 347 $ 353
Medium-term notes, rates in 1994 ranging from
8.4% to 9.0%, due 1996 to 2005 200 247
Commercial paper, swapped to an effective
rate of 8.6% through February 1996 181 187
6% notes due 2000 150 150
7.09% and 8.13% amortizing ESOP notes and
debentures due 2000 and 2006, guaranteed
by the company 160 170
8 7/8% debentures due 2009 99 99
8.7% debentures due 2021 100 100
Other 168 196
------ ------
Total $1,405 $1,502
------ ------
</TABLE>
Maturities and sinking fund requirements on long-term debt are
$81 million, $280 million, $68 million, $68 million and $70
million for 1995, 1996, 1997, 1998 and 1999, respectively.
Commercial paper balances of $181 million and $187 million as of
Dec. 31, 1994 and 1993, respectively, have been classified as
long-term debt. Monsanto has the ability and intent to renew
these obligations past 1995 and into future periods.
Interest rate swap agreements are used to reduce interest rate
risks and to manage interest expense. By entering into these
agreements, the company changes the fixed/variable interest rate
mix of the debt portfolio. As of Dec. 31, 1994, Monsanto was
party to interest rate swap agreements with an aggregate notional
principal amount of $377 million related to existing debt. The
agreements are primarily for conversion of floating-rate debt
into fixed rates, which reduces the company's risk of incurring
higher interest costs in periods of rising interest rates.
Monsanto is subject to loss if the counterparties to these
agreements do not perform. INTEREST DIFFERENTIALS FROM SWAP
AGREEMENTS TO BE PAID OR RECEIVED ARE ACCRUED AS INTEREST RATES
CHANGE OVER THE RELATED DEBT PERIOD.
FAIR VALUES OF FINANCIAL INSTRUMENTS
<TABLE>
The estimated fair values of Monsanto's financial instruments
were:
<CAPTION>
1994 1993
---------------- ----------------
Recorded Fair Recorded Fair
Amount Value Amount Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities
and other assets $ 409 $ 400 $ 328 $ 339
Foreign currency option contracts 7 5 6 3
LIABILITIES:
Currency swaps 2 9 3 9
Interest rate swaps 1 17 3 23
Long-term debt 1,405 1,408 1,502 1,590
</TABLE>
The recorded amounts of cash, trade receivables, discounted
receivables, third-party guarantees, foreign currency forward
contracts, accounts payable, and short-term debt approximate
their fair values.
Fair values are estimated using quoted market prices, estimates
obtained from brokers, and other appropriate valuation techniques
based on information available as of Dec. 31, 1994. The fair-
value estimates do not necessarily reflect the values Monsanto
could realize in the current market.
POSTRETIREMENT BENEFITS -- PENSIONS
<TABLE>
Most Monsanto employees are covered by noncontributory pension
plans. The components of pension cost (income) were:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Service cost for benefits earned
during the year $ 75 $ 75 $ 65
Interest cost on benefit obligation 269 285 272
Assumed return on plan assets<F*> (317) (342) (291)
Amortization of unrecognized net gain (12) (26) (41)
----- ----- -----
TOTAL $ 15 $ (8) $ 5
----- ----- -----
<FN>
<F*>Actual returns (losses) on plan assets were $(142) million, $550
million and $230 million in 1994, 1993 and 1992, respectively.
</TABLE>
52
<PAGE> 28
Pension benefits are based on the employee's years of service
and/or compensation level. Pension plans are funded in
accordance with Monsanto's long-range projections of the plans'
financial conditions. These projections take into account
benefits earned and expected to be earned, anticipated returns on
pension plan assets, and income tax and other regulations.
<TABLE>
Pension costs are determined by using the preceding year-end rate
assumptions. Assumptions used as of Dec. 31 for the principal
plans were:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate 8.5% 7.25% 8.5%
Assumed long-term rate of
return on plan assets 9.5% 9.50% 9.5%
Annual rates of salary increase
(for plans that base benefits
on final compensation level) 5.0% 4.25% 6.0%
</TABLE>
<TABLE>
The funded status of Monsanto's pension plans at year-end was:
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
PLAN ASSETS AT FAIR VALUE $3,358 $3,827
------ ------
Actuarial present value of plan benefits:
Vested $2,913 $3,266
Nonvested 130 120
------ ------
Accumulated benefit obligation 3,043 3,386
Effect of projected future salary increases 360 373
------ ------
PROJECTED BENEFIT OBLIGATION <F1> $3,403 $3,759
------ ------
Excess (Deficiency) of plan assets over
projected benefit obligation $ (45) $ 68
Less:
Unrecognized initial net gain 121 161
Unrecognized prior service costs (202) (261)
Unrecognized subsequent net gain 206 305
------ ------
ACCRUED NET PENSION LIABILITY <F2> $ 170 $ 137
------ ------
<FN>
<F1> Includes $146 million and $122 million, respectively, for
unfunded plans.
<F2> Includes $126 million and $108 million, respectively, for
unfunded plans.
</TABLE>
<TABLE>
The accrued net pension liability was included in:
<S> <C> <C>
Postretirement liabilities $ 225 $ 185
Less: Other assets (55) (48)
------ ------
ACCRUED NET PENSION LIABILITY $ 170 $ 137
------ ------
</TABLE>
As a result of employment reductions from the 1992 restructuring
program, Monsanto settled a portion of its projected benefit
obligation through lump-sum payments to retirees in 1993.
Accordingly, $30 million of accrued net pension liability was
transferred to restructuring reserves during 1993.
Included in the above table, plan assets and projected benefit
obligations for the principal U.S. plans were approximately
$2,983 million and $2,883 million, respectively, as of Dec. 31,
1994. The assumptions used to compute the funded status of the
principal U.S. plans were changed as of Dec. 31, 1994. These
changes in assumptions resulted in a decrease of approximately
$360 million in the projected benefit obligation.
Plan assets consist principally of common stocks and U.S.
government and corporate obligations. Because the company's
principal pension plans are well funded, contributions to these
plans were neither required nor made in 1994, 1993 and 1992.
POSTRETIREMENT BENEFITS -- HEALTH CARE AND OTHER
Monsanto provides certain health care and life insurance benefits
for retired employees. Substantially all of Monsanto's regular,
full-time U.S. employees and certain employees in other countries
may become eligible for these benefits if they reach retirement
age while employed by Monsanto. These postretirement benefits
are unfunded and are generally based on the employee's years of
service and/or compensation level.
Monsanto adopted Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," effective Jan. 1, 1992, and
recognized an aftertax expense of $658 million ($1,045 million
pretax), or $5.34 per share, for retiree benefits earned through
1991. The expense was included in the Statement of Consolidated
Income as a cumulative effect of an accounting change. SFAS No.
106 requires that the cost of other postretirement benefits be
accrued by the date the employees become eligible for the
benefits.
<TABLE>
The components of the cost of these postretirement benefits,
principally health care and life insurance, were:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Service cost for benefits earned
during the year $ 23 $ 24 $ 26
Interest cost on benefit obligation 87 92 88
Amortization of unrecognized net loss 7 --
---- ---- ----
TOTAL $117 $116 $114
---- ---- ----
</TABLE>
53
<PAGE> 29
<TABLE>
Postretirement costs are determined by using the preceding year-
end rate assumptions. Assumptions used as of Dec. 31 for the
principal plans were:
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate 8.5% 7.25% 8.5%
Initial trend rate for health care costs 11.5% 12.00% 14.0%
Ultimate trend rate for health care costs 5.5% 5.00% 6.0%
</TABLE>
The initial trend rate for health care costs declines by 1
percent a year to 5.5 percent for years after the year 2000.
A 1 percent increase in the assumed trend rate for health care
costs would have increased the cost of 1994 postretirement health
care benefits by $4 million and the accumulated benefit
obligation as of Dec. 31, 1994, by $50 million.
<TABLE>
As of Dec. 31, the status of Monsanto's postretirement health
care and life insurance benefit plans, and employee disability
benefit plans was:
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
ACCUMULATED BENEFIT OBLIGATION:
Retirees $ 869 $ 870
Eligible active employees 55 86
Other active employees 214 277
------ ------
TOTAL $1,138 $1,233
Unrecognized benefits from prior service 43 36
Unrecognized subsequent net gain (loss) 17 (126)
------ ------
ACCRUED LIABILITY $1,198 $1,143
------ ------
</TABLE>
<TABLE>
The accrued liability was included in:
<S> <C> <C>
Miscellaneous accruals $ 82 $ 72
Postretirement liabilities 1,116 1,071
------ ------
ACCRUED LIABILITY $1,198 $1,143
------ ------
</TABLE>
The assumptions used to compute the accumulated benefit
obligation of the principal plans were changed as of Dec. 31,
1994, resulting in a decrease of approximately $100 million in
the obligation.
EMPLOYEE SAVINGS PLANS
For some employee savings plans, employee contributions are
matched in part by Monsanto. Matching contributions charged to
expense for such plans were $30 million in 1994, $31 million in
1993 and $33 million in 1992.
During 1991, Monsanto established an Employee Stock Ownership
Plan (ESOP) and guaranteed the long-term notes and debentures
issued by the ESOP. The ESOP also borrowed $50 million from
Monsanto. In January 1992, the ESOP used the proceeds of the
loans to purchase 3.7 million shares of common stock from
Monsanto, a portion of which is allocated each year to employee
savings accounts as matching contributions. UNALLOCATED SHARES
HELD BY THE ESOP ARE CONSIDERED OUTSTANDING FOR EARNINGS PER
SHARE CALCULATIONS. The proceeds from the issuance of common
stock to the ESOP were used primarily for the purchase of an
equivalent number of common shares under a treasury stock
purchase program. COMPENSATION EXPENSE IS EQUAL TO THE COST OF
THE SHARES ALLOCATED TO PARTICIPANTS, LESS DIVIDENDS PAID ON THE
ESOP SHARES HELD. Dividends on the common stock owned by the
ESOP are being used to repay the ESOP borrowings.
In 1994, 324,020 shares were allocated to participants under the
plan, leaving 2,976,155 unallocated shares as of Dec. 31, 1994.
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Total ESOP expense $ 29 $ 25 $ 28
Interest portion of total ESOP expense 17 18 19
Cash contribution 19 20 19
Dividends paid on ESOP shares held 9 9 8
</TABLE>
STOCK OPTION PLANS
<TABLE>
Key officers and employees have been granted Monsanto stock
options under the company's 1994 Management Incentive Plans; the
Searle Monsanto Stock Option Plan (Searle Plan); and the
NutraSweet/Monsanto Stock Plan (NutraSweet Plan). Information
about the status of such stock options is presented below:
<CAPTION>
Outstanding
Exercisable ---------------------------------
Shares Shares Price per Share
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Dec. 31, 1992 5,140,969 10,142,705 $21.31 - $74.25
- -------------------------------------------------------------------------------
1993:
Granted 4,710,999 51.19 - 65.81
Exercised (1,253,869) 21.31 - 68.13
Expired (337,230) 41.13 - 73.56
- -------------------------------------------------------------------------------
DEC. 31, 1993 5,724,125 13,262,605 22.81 - 74.25
- -------------------------------------------------------------------------------
1994:
Granted 2,579,294 69.44 - 82.06
Exercised (1,821,245) 22.81 - 74.25
Expired (311,874) 38.94 - 77.75
- -------------------------------------------------------------------------------
DEC. 31, 1994 7,168,599 13,708,780 22.81 - 82.06
- -------------------------------------------------------------------------------
</TABLE>
54
<PAGE> 30
Under the 1994 Management Incentive Plans, the Searle Plan and
the NutraSweet Plan, 5,510,925 shares remain available for grant.
In February 1994, Monsanto established a grantor trust and
contributed 2.5 million shares of Monsanto common stock to be
used to satisfy compensation and benefit arrangements and
obligations, including issuance of shares upon the exercise of
certain stock options. Shares held by the grantor trust are
included in earnings per share calculations only after they are
transferred to employees.
EARNINGS PER SHARE
Earnings per share were computed using the weighted average
number of common shares and common share equivalents outstanding
each year (116,984,960 in 1994; 120,380,516 in 1993; and
123,443,744 in 1992). Common share equivalents (2,399,245 in
1994; 1,314,921 in 1993; and 1,041,096 in 1992) consist primarily
of common stock issuable upon exercise of outstanding stock
options. Earnings per share assuming full dilution were not
significantly different from the primary amounts.
CAPITAL STOCK
As of Dec. 31, 1994, there were 19,219,705 common shares reserved
for employee stock options.
In January 1990, the company's board of directors declared a
dividend of one preferred stock purchase right on each
outstanding share of the company's common stock. If a person or
group acquires beneficial ownership of 20 percent or more, or
announces a tender offer that would result in beneficial
ownership of 20 percent or more, of the company's outstanding
common stock, the rights become exercisable and each right will
then entitle its holder to purchase one one-hundredth of a share
of a new series of preferred stock for $450. If Monsanto is
acquired in a business combination transaction while the rights
are outstanding, each right will entitle its holder to purchase,
for $450, common shares of the acquiring company having a market
value of $900. In addition, if a person or group acquires
beneficial ownership of 20 percent or more of the company's
outstanding common stock, each right will entitle its holder
(other than such person or members of such group) to purchase,
for $450, a number of shares of the company's common stock having
a market value of $900. Furthermore, at any time after a person
or group acquires beneficial ownership of 20 percent or more (but
less than 50 percent) of the company's outstanding common stock,
the board of directors may, at its option, exchange part or all
of the rights (other than rights held by the acquiring person or
group) for shares of the company's common stock on a one-for-one
basis. At any time prior to the acquisition of such a 20 percent
position, the company can redeem each right for 1 cent. The
board of directors is also authorized to reduce the
aforementioned 20 percent thresholds to not less than 10 percent.
The rights expire in the year 2000.
COMMITMENTS AND CONTINGENCIES
Commitments, principally in connection with uncompleted additions
to property, were approximately $45 million as of Dec. 31, 1994.
Excluding the ESOP notes and debentures, Monsanto was
contingently liable as a guarantor for bank loans and for
discounted customers' receivables totaling approximately $311
million and $316 million as of Dec. 31, 1994 and 1993,
respectively. Future minimum payments under noncancelable
operating leases and unconditional inventory purchases are $119
million for 1995, $96 million for 1996, $117 million for 1997,
$59 million for 1998, $60 million for 1999, and $106 million
thereafter.
<TABLE>
The more significant concentrations in Monsanto's trade
receivables at year-end were:
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
U.S. agricultural product distributors $295 $294
European agricultural product distributors 103 117
Pharmaceutical distributors worldwide 287 287
Customers in the former Soviet Union 40 78
</TABLE>
Management does not anticipate incurring losses on its trade
receivables in excess of established allowances.
COSTS FOR REMEDIATION OF WASTE DISPOSAL SITES ARE ACCRUED IN THE
ACCOUNTING PERIOD IN WHICH THE RESPONSIBILITY IS ESTABLISHED AND
WHEN THE COST IS ESTIMABLE. Monsanto's Statement of Consolidated
Financial Position included accrued liabilities of $207 million
and $266 million as of Dec. 31, 1994 and 1993, respectively, for
the remediation of identified waste disposal sites. Expenditures
related to remediation activities were $65 million in 1994, $53
million in 1993 and $46 million in 1992.
55
<PAGE> 31
Monsanto's future remediation expenses for waste disposal sites
are affected by a number of uncertainties, including, but not
limited to, the method and extent of remediation, the percentage
of material attributable to Monsanto at the sites relative to
that attributable to other parties, and the financial
capabilities of the other potentially responsible parties (PRPs).
Because of the uncertainties associated with remediation
activities, Monsanto's potential future expenses to remediate
these sites could approximate an additional $100 million.
POST-CLOSURE AND REMEDIATION COSTS FOR HAZARDOUS AND OTHER WASTE
FACILITIES AT OPERATING LOCATIONS ARE ACCRUED OVER THE ESTIMATED
LIFE OF THE FACILITY AS PART OF ITS ANTICIPATED CLOSURE COST.
Monsanto's estimated closure costs for these facilities could
approximate $135 million. Uncertainties related to these costs
include evolving government standards, the method and extent of
remediation, and future changes in technology.
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 Technology Corporation, claiming
fraud, negligent misrepresentation and breach of a contract
calling for IT to perform incineration and remediation work at
the site. The verdict awarded IT $52.8 million in compensatory
damages, $28.6 million in punitive damages and $2.6 million in
fees. On Dec. 13, 1994, the federal trial judge set aside the
jury's findings of fraud and negligent misrepresentation but
upheld the finding on breach of contract. The court set aside
the punitive damage award and reduced the amount of compensatory
damages to $43.8 million. On Jan. 26, 1995, the trial judge
issued a memorandum confirming that prejudgment interest would be
awarded to IT and specifying the manner in which the amount of
such interest should be calculated. Based upon that memorandum,
it is not likely that such interest will exceed approximately $21
million. No judgment has yet been entered. The company
believes, based on the advice of counsel, that it has meritorious
defenses to all of IT's claims. The company will appeal the
judgment when it is entered and will continue to defend this
matter vigorously. No provision has been made in the company's
consolidated financial statements with respect to this matter.
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.
SUPPLEMENTAL DATA
<TABLE>
Supplemental income statement data were:
<CAPTION>
1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Raw material and energy costs $2,375 $2,258 $2,247
Employee compensation and benefits 2,193 2,092 1,994
Current income and other taxes 477 442 393
Rent expense 124 129 138
- ------------------------------------------------------------------------------
Technological expenses:
Research and development 609 626 651
Engineering, commercial development
and patent 65 69 69
--- --- ---
TOTAL TECHNOLOGICAL EXPENSES 674 695 720
- ------------------------------------------------------------------------------
Interest expense:
Total interest cost 141 141 185
Less capitalized interest (10) (12) (16)
--- --- ---
NET INTEREST EXPENSE 131 129 169
- ------------------------------------------------------------------------------
Currency gains (losses) including
equity in affiliates' currency
gains and losses (23) (6) (39)
- ------------------------------------------------------------------------------
</TABLE>
SEGMENT INFORMATION
Certain operating unit segment data and geographic data for 1994,
1993 and 1992 that appear on pages 14 and 28 are integral parts
of the accompanying financial statements. The principal product
lines included in each operating unit are shown in the operating
unit segment data.
56
<PAGE> 32
<TABLE>
QUARTERLY DATA -- UNAUDITED
<CAPTION>
- --------------------------------------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales 1994 $2,001 $2,269 $1,912 $2,090 $8,272
1993 1,941 2,230 1,849 1,882 7,902
- --------------------------------------------------------------------------
Gross Profit 1994 893 1,045 733 827 3,498
1993 835 959 768 776 3,338
- --------------------------------------------------------------------------
Operating Income 1994 319 397 131 76 923
1993 231 326 152 101 810
- --------------------------------------------------------------------------
Net Income 1994 194 258 116 54 622
1993 141 200 95 58 494
- --------------------------------------------------------------------------
Earnings per Share 1994 1.63 2.19 0.99 0.51 5.32
1993 1.17 1.66 0.78 0.49 4.10
- --------------------------------------------------------------------------
Dividends per Share 1994 0.58 0.63 0.63 0.63 2.47
1993 0.56 0.58 0.58 0.58 2.30
- --------------------------------------------------------------------------
Common Stock Price
1994 High 80 3/4 83 3/4 86 1/2 80 1/4 86 1/2
Low 72 3/8 73 5/8 74 1/2 66 1/2 66 1/2
- --------------------------------------------------------------------------
1993 High 57 5/8 60 1/8 66 1/4 75 75
Low 49 3/4 48 7/8 56 1/8 65 3/8 48 7/8
- --------------------------------------------------------------------------
</TABLE>
Historically, Monsanto's net income is higher during the first
half of the year, primarily because of the concentration of
generally more profitable sales of The Agricultural Group during
that part of the year.
In the third quarter of 1994, net income included an aftertax
gain of $21 million, or $0.18 per share, for interest on the
amount of settlement of certain tax matters with the U.S.
Internal Revenue Service related to the 1985 acquisition of
Searle.
Net income for the fourth quarter of 1994 included an aftertax
expense of $55 million, or $0.47 per share, for a work force
reduction plan approved by the board of directors and for costs
to close or exit certain facilities and programs. Also included
in the quarter was an aftertax gain of $33 million, or $0.28 per
share, from the reversal of excess restructuring reserves from
prior years.
Net income in the first quarter of 1993 included a $22 million
aftertax gain, or $0.18 per share, resulting from reimbursement
from insurance companies of various costs associated with damage
to a manufacturing site of a raw material for Roundup(R) herbicide.
Costs associated with the damage had been expensed in 1992,
pending resolution of the claim.
The fourth quarter of 1993 included an aftertax expense of $7
million, or $0.06 per share, for a restructuring program and
other actions approved by the board of directors.
57
<PAGE> 33
<TABLE>
FINANCIAL SUMMARY
<CAPTION>
(Dollars in millions, except per share) 1994<F1> 1993<F2> 1992<F3> 1991<F4> 1990<F5> 1989<F6>
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net Sales $8,272 $7,902 $7,763 $7,936 $8,068 $7,829
Operating Income 923 810 58 475 808 1,006
As a Percent of Net Sales 11% 10% 1% 6% 10% 13%
Income (Loss) from
Continuing Operations 622 494 (126) 238 486 627
As a Percent of Net Sales 8% 6% (2)% 3% 6% 8%
Income from Discontinued
Operations 578 58 60 52
Cumulative Effect of Accounting
Changes (540)
Net Income (Loss) 622 494 (88) 296 546 679
Return on Shareowners' Equity 21.4% 16.9% (2.6)% 7.6% 13.6% 17.6%
- -----------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE
Income (Loss) from
Continuing Operations $5.32 $4.10 $(1.01) $ 1.87 $ 3.77 $ 4.63
Net Income (Loss) 5.32 4.10 (0.71) 2.33 4.23 5.01
- -----------------------------------------------------------------------------------------------------------
YEAR-END FINANCIAL POSITION
Total Assets $8,891 $8,640 $9,085 $9,227 $9,236 $8,604
Working Capital 1,448 1,377 1,512 1,536 1,323 1,326
- -----------------------------------------------------------------------------------------------------------
Property, Plant and Equipment:
Gross $7,555 $7,382 $7,602 $7,510 $7,226 $6,578
Net 2,817 2,802 3,005 3,191 3,316 3,009
- -----------------------------------------------------------------------------------------------------------
Long-Term Debt $1,405 $1,502 $1,423 $1,871 $1,645 $1,464
Shareowners' Equity 2,948 2,855 3,005 3,654 4,089 3,941
- -----------------------------------------------------------------------------------------------------------
Current Ratio 1.6 1.6 1.6 1.7 1.6 1.7
Percent of Total Debt to
Total Capitalization 37% 38% 36% 38% 35% 33%
- -----------------------------------------------------------------------------------------------------------
OTHER DATA
Property, Plant and Equipment
Purchases $ 409 $ 437 $ 586 $ 554 $ 711 $ 578
Depreciation and Amortization 561 572 765 714 704 659
Interest Expense 131 129 169 166 176 176
Research and Development Expenses 609 626 651 610 595 581
Income Taxes 273 235 (48) 116 230 327
Cash Provided by Operations 1,300 731 912 1,180 1,104 1,037
- -----------------------------------------------------------------------------------------------------------
Stock Price:
High $86 1/2 $75 $71 1/4 $76 $60 1/8 $62 1/8
Low 66 1/2 48 7/8 49 3/4 46 38 3/4 40 1/4
Year-End 70 1/2 73 3/8 57 5/8 67 7/8 48 1/4 57 3/4
Price/Earnings Ratio on
Year-End Stock Price 13 18 -- 29 11 12
- -----------------------------------------------------------------------------------------------------------
Per Share:
Dividends $ 2.47 $ 2.30 $ 2.20 $ 2.045 $ 1.88 $ 1.65
Shareowners' Equity 26.43 24.62 24.95 29.72 32.51 29.79
- -----------------------------------------------------------------------------------------------------------
Shareowners (year-end) 53,694 56,601 60,074 60,152 62,230 61,942
- -----------------------------------------------------------------------------------------------------------
Shares Outstanding
(year-end, in millions) 112 116 120 123 126 132
- -----------------------------------------------------------------------------------------------------------
Employees (year-end) 29,354 30,019 33,797 39,281 41,081 42,179
- -----------------------------------------------------------------------------------------------------------
<FN>
<F1> Income from continuing operations and net income for 1994 include a net
aftertax loss for restructuring and other unusual items of $1 million, or
$0.01 per share.
<F2> Income from continuing operations and net income for 1993 include a net
aftertax gain for restructuring and other unusual items of $15 million, or
$0.12 per share.
<F3> Loss from continuing operations and net loss for 1992 include a net
aftertax loss for restructuring and other unusual items of $472 million, or
$3.82 per share.
<F4> Net income for 1991 includes net restructuring expense of $325 million, or
$2.54 per share.
<F5> Net income for 1990 includes $56 million, or $0.43 per share, in gains
resulting from divestitures, including the divestiture of certain assets of
a joint venture in Japan.
<F6> Net income for 1989 includes a $36 million, or $0.27 per share, gain on the
sale of the analgesics business.
</TABLE>
58
<PAGE> 34
APPENDIX
1. In Exhibit 13 to the printed Form 10-K, the following bar graphs appear,
all depicting data for 1992, 1993 and 1994: on page 32, "Selling
Price Index", "Raw Material Cost Index" and "Sales Volume Index"; on
page 34, "Agricultural Group Net Sales"; on page 36, "Chemical Group Net
Sales"; on page 37, "Searle Net Sales"; and on page 45, "Cash Provided
by Continuing Operations". On page 33, a pie-chart graph entitled "1994
Net Sales" appears, depicting a percentage breakdown of Monsanto's 1994
consolidated net sales by Operating Unit Segment. On page 47, a bar graph
entitled "Dividend Per Share" appears, depicting annual dividend per
share data for the years 1984 through 1994.
2. Throughout the electronic submission of Exhibit 13, trademarks are initially
designated on each page by the letter "R" in parentheses or the letters
"TM" in parentheses; whereas in the printed copy of the annual report,
all trademarks are italicized.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
The following is a list of the Company's subsidiaries as of December
31, 1994, except for unnamed subsidiaries which, considered in the
aggregate as a single subsidiary, would not constitute a significant
subsidiary.
<CAPTION>
Percentage of
Voting Power
Owned by
Monsanto
-------------
<S> <C>
G. D. Searle & Co. (Delaware Corporation)......................................................... 100
Monsanto Europe, S.A. (Belgian Corporation)....................................................... 100
Monsanto International Holdings, Inc.
(Delaware Corporation).......................................................................... 100
Monsanto International Sales Company, Inc.
(Virgin Islands Corporation).................................................................... 100
Monsanto p.l.c. (United Kingdom Corporation)...................................................... 100
The NutraSweet Company (Delaware Corporation)..................................................... 100
</TABLE>
23
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
MONSANTO COMPANY:
We 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 our opinions dated February
24, 1995, appearing in and incorporated by reference in this
annual report on Form 10-K of Monsanto Company for the year
ended December 31, 1994.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
March 17, 1995
-----------------
<PAGE> 1
EXHIBIT 23.2
CONSENT OF COMPANY COUNSEL
I hereby consent to the reference to Company counsel in the
"Commitments and Contingencies" note to the financial
statements in the Company's 1994 Annual Report to shareowners
and incorporated in the 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). 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
March 17, 1995
24
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Joan T. Bok, of Boston, Commonwealth of
Massachusetts, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in my
name, place and stead, to execute and sign: (i) any Amendments to
Registration Statement No. 33-46845 on Form S-3, which has
previously been filed with the Commission under the Act; and any
Amendments to Registration Statements 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, all on
Form S-8, which have previously been filed with the Commission
under the Act, covering the registration of shares of Common
Stock of the Company; and (ii) the Annual Report on Form 10-K and
any Amendments thereto to be filed with the Commission under the
Securities Exchange Act of 1934; giving and granting unto said
attorneys full power and authority to do and perform such actions
as fully as I might have done or could do if personally present
and executing any of said documents.
Witness my hand this 5th day of January, 1995.
JOAN T. BOK
-------------------------------
COMMONWEALTH OF MASSACHUSETTS )
) SS
COUNTY OF WORCESTER )
On this 5th day of January, 1995, before me personally
appeared Joan T. Bok, to me known to be the person described in
and who executed the foregoing instrument, and acknowledged that
she executed the same as her free act and deed.
RENEE M. KOSSUTH
----------------------------
Notary Public
My Commission Expires: April 24, 1998
<PAGE> 2
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert M. Heyssel, of Seaford, State of Delaware,
Director of Monsanto Company (the "Company"), a Delaware
corporation with its general offices in the County of St. Louis,
Missouri, do by these presents make, constitute and appoint
RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL BLEY,
JR., all of St. Louis County, Missouri, or any of them acting
alone, to be my true and lawful attorneys for me and in my name,
place and stead, to execute and sign: (i) any Amendments to
Registration Statement No. 33-46845 on Form S-3, which has
previously been filed with the Commission under the Act; and any
Amendments to Registration Statements 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, all on
Form S-8, which have previously been filed with the Commission
under the Act, covering the registration of shares of Common
Stock of the Company; and (ii) the Annual Report on Form 10-K
and any Amendments thereto to be filed with the Commission under
the Securities Exchange Act of 1934; giving and granting unto
said attorneys full power and authority to do and perform such
actions as fully as I might have done or could do if personally
present and executing any of said documents.
Witness my hand this 27th day of January, 1995.
ROBERT M. HEYSSEL
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 27th day of January, 1995, before me personally
appeared Robert M. Heyssel, to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that he executed the same as his free act and deed.
HARRIET CONLON
----------------------------
Notary Public
My Commission Expires: HARRIET CONLON
Notary Public -- Notary Seal
STATE OF MISSOURI
ST. LOUIS COUNTY
My Commission Expires August 15, 1998
<PAGE> 3
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert B. Hoffman, of St. Louis County, State of
Missouri, Principal Financial Officer of Monsanto Company (the
"Company"), a Delaware corporation with its general offices in
the County of St. Louis, Missouri, do by these presents make,
constitute and appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL
and J. RUSSELL BLEY, JR., all of St. Louis County, Missouri, or
any of them acting alone, to be my true and lawful attorneys for
me and in my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 5th day of January, 1995.
R. B. HOFFMAN
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 5th day of January, 1995, before me personally
appeared Robert B. Hoffman, to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that he executed the same as his free act and deed.
MARY HELEN MOSS
----------------------------
Notary Public
My Commission Expires: August 10, 1997
<PAGE> 4
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Gwendolyn S. King, of Philadelphia, Commonwealth of
Pennsylvania, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 6th day of January, 1995.
GWENDOLYN S. KING
-------------------------------
COMMONWEALTH OF PENNSYLVANIA )
) SS
COUNTY OF PHILADELPHIA )
On this 6th day of January, 1995, before me personally
appeared Gwendolyn S. King, to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that she executed the same as her free act and
deed.
SUZANNE SCHWARTZ
----------------------------
Notary Public
My Commission Expires: June 12, 1995
NOTARIAL SEAL
SUZANNE SCHWARTZ, Notary Public
City of Philadelphia, Phila. County
My Commission Expires June 12, 1995
<PAGE> 5
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Philip Leder, of Chestnut Hill, Commonwealth of
Massachusetts, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 12th day of January, 1995.
PHILIP LEDER
-------------------------------
COMMONWEALTH OF MASSACHUSETTS )
) SS
COUNTY OF SUFFOLK )
On this 12th day of January, 1995, before me personally
appeared Philip Leder, to me known to be the person described in
and who executed the foregoing instrument, and acknowledged that
he executed the same as his free act and deed.
TERRI BRODERICK
----------------------------
Notary Public
My Commission Expires: 6/21/96
<PAGE> 6
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Howard M. Love, of Pittsburgh, Commonwealth of
Pennsylvania, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 5th day of January, 1995.
HOWARD M. LOVE
-------------------------------
COMMONWEALTH OF PENNSYLVANIA )
) SS
COUNTY OF ALLEGHENY )
On this 5th day of January, 1995, before me personally
appeared Howard M. Love, to me known to be the person described
in and who executed the foregoing instrument, and acknowledged
that he executed the same as his free act and deed.
JOAN M. ZAKOR
----------------------------
Notary Public
My Commission Expires: Notarial Seal
Joan M. Zakor, Notary Public
Pittsburgh, Allegheny County
My Commission Expires April 14, 1995
Member, Pennsylvania Association of Notaries
<PAGE> 7
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Richard J. Mahoney, of St. Louis County, State of
Missouri, Principal Executive Officer and Director of Monsanto
Company (the "Company"), a Delaware corporation with its general
offices in the County of St. Louis, Missouri, do by these
presents make, constitute and appoint RICHARD W. DUESENBERG,
KARL R. BARNICKOL and J. RUSSELL BLEY, JR., all of St. Louis
County, Missouri, or any of them acting alone, to be my true and
lawful attorneys for me and in my name, place and stead, to
execute and sign: (i) any Amendments to Registration Statement
No. 33-46845 on Form S-3, which has previously been filed with
the Commission under the Act; and any Amendments to Registration
Statements 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, all on Form S-8, which have previously
been filed with the Commission under the Act, covering the
registration of shares of Common Stock of the Company; and (ii)
the Annual Report on Form 10-K and any Amendments thereto to be
filed with the Commission under the Securities Exchange Act of
1934; giving and granting unto said attorneys full power and
authority to do and perform such actions as fully as I might
have done or could do if personally present and executing any of
said documents.
Witness my hand this 11th day of January, 1995.
R. J. MAHONEY
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 11th day of January, 1995, before me personally
appeared Richard J. Mahoney, to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that he executed the same as his free act and deed.
MARY K. BRADY
----------------------------
Notary Public
My Commission Expires: MARY K. BRADY
NOTARY PUBLIC STATE OF MISSOURI
ST. LOUIS COUNTY
MY COMMISSION EXP. MAY 21, 1996
<PAGE> 8
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Frank A. Metz, Jr., of Sloatsburg, State of
New York, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 6th day of Jan., 1995.
FRANK A. METZ, JR.
-------------------------------
STATE OF NEW YORK )
) SS
COUNTY OF ROCKLAND )
On this 6th day of January, 1995, before me personally
appeared Frank A. Metz, Jr., to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that he executed the same as his free act and deed.
MARY ALICE CONWAY
----------------------------
Notary Public
My Commission Expires: 1/23/95
MARY ALICE CONWAY
Notary Public, State of New York
No. 5007249
Qualified in Orange County
Commission Expires January 25, 1995
<PAGE> 9
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Buck Mickel, of Greenville, State of South
Carolina, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 5 day of January, 1995.
BUCK MICKEL
-------------------------------
STATE OF SOUTH CAROLINA )
) SS
COUNTY OF GREENVILLE )
On this 5th day of January, 1995, before me personally
appeared Buck Mickel, to me known to be the person described in
and who executed the foregoing instrument, and acknowledged that
he executed the same as his free act and deed.
DOROTHY F. KING
----------------------------
Notary Public
My Commission Expires: My Commission Expires February 13, 2000
<PAGE> 10
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Jacobus F. M. Peters, of Wassenaar, Country of The
Netherlands, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 10th day of January, 1995.
JACOBUS F. M. PETERS
-------------------------------
COUNTRY OF THE NETHERLANDS )
) SS
CITY OF WASSENAAR )
On this ----- day of ---------------, 1995, before me
personally appeared Jacobus F. M. Peters, to me known to be the
person described in and who executed the foregoing instrument,
and acknowledged that he executed the same as his free act and
deed.
----------------------------
Notary Public
My Commission Expires: ---------------------------------------
Seen for legalisation of the above signature of Mr Drs Jacobus
Franciscus Maria Peters, born on the eighth of September
nineteen-hundred and thirty one in Amsterdam, residing at (2244
AK) Wassenaar, Dennenlaan 15, by me, Annemarie van Lonkhuijzen,
civil law notary, residing in The Hague.
The Hague, tenth of January nineteenhundred and ninety five.
A. VAN LONKHUIJZEN
NOTARIS TE 's-GRAVENHAGE A. VAN LONKHUIJZEN
------------------------------
<PAGE> 11
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Nicholas L. Reding, of St. Louis County, State of
Missouri, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 18th day of January, 1995.
NICHOLAS L. REDING
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 18th day of January, 1995, before me personally
appeared Nicholas L. Reding, to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that he executed the same as his free act and deed.
THERESA A. VALENTINE
----------------------------
Notary Public
My Commission Expires: January 20, 1998
THERESA A. VALENTINE
NOTARY PUBLIC STATE OF MISSOURI
MY COMMISSION EXPIRES JAN. 20, 1998
ST. LOUIS COUNTY
<PAGE> 12
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, John S. Reed, of Princeton, State of New Jersey,
Director of Monsanto Company (the "Company"), a Delaware
corporation with its general offices in the County of St. Louis,
Missouri, do by these presents make, constitute and appoint
RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL BLEY,
JR., all of St. Louis County, Missouri, or any of them acting
alone, to be my true and lawful attorneys for me and in my name,
place and stead, to execute and sign: (i) any Amendments to
Registration Statement No. 33-46845 on Form S-3, which has
previously been filed with the Commission under the Act; and any
Amendments to Registration Statements 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, all on
Form S-8, which have previously been filed with the Commission
under the Act, covering the registration of shares of Common
Stock of the Company; and (ii) the Annual Report on Form 10-K
and any Amendments thereto to be filed with the Commission under
the Securities Exchange Act of 1934; giving and granting unto
said attorneys full power and authority to do and perform such
actions as fully as I might have done or could do if personally
present and executing any of said documents.
Witness my hand this 17th day of January, 1995.
JOHN S. REED
-------------------------------
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On this 17th day of January, 1995, before me personally
appeared John S. Reed, to me known to be the person described in
and who executed the foregoing instrument, and acknowledged that
he executed the same as his free act and deed.
MARY F. CHIODI
----------------------------
Notary Public
My Commission Expires: MARY F. CHIODI
Notary Public, State of New York
No. 4506585
Qualified in Nassau County
Commission Expires January 31, 1996
<PAGE> 13
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, William D. Ruckelshaus, of Houston, State of Texas,
Director of Monsanto Company (the "Company"), a Delaware
corporation with its general offices in the County of St. Louis,
Missouri, do by these presents make, constitute and appoint
RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL BLEY,
JR., all of St. Louis County, Missouri, or any of them acting
alone, to be my true and lawful attorneys for me and in my name,
place and stead, to execute and sign: (i) any Amendments to
Registration Statement No. 33-46845 on Form S-3, which has
previously been filed with the Commission under the Act; and any
Amendments to Registration Statements 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, all on
Form S-8, which have previously been filed with the Commission
under the Act, covering the registration of shares of Common
Stock of the Company; and (ii) the Annual Report on Form 10-K
and any Amendments thereto to be filed with the Commission under
the Securities Exchange Act of 1934; giving and granting unto
said attorneys full power and authority to do and perform such
actions as fully as I might have done or could do if personally
present and executing any of said documents.
Witness my hand this 6 day of January, 1995.
WILLIAM D. RUCKELSHAUS
-------------------------------
STATE OF TEXAS )
) SS
COUNTY OF HARRIS )
On this 6th day of January, 1995, before me personally
appeared William D. Ruckelshaus, to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that he executed the same as his free act and deed.
CYNTHIA L. REYNOLDS
----------------------------
Notary Public
My Commission Expires: 05-09-96
NOTARY PUBLIC CYNTHIA L. REYNOLDS
STATE OF TEXAS MY COMMISSION EXPIRES
May 9, 1996
<PAGE> 14
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Bruce R. Sents, of St. Louis County, State of
Missouri, Principal Accounting Officer of Monsanto Company (the
"Company"), a Delaware corporation with its general offices in
the County of St. Louis, Missouri, do by these presents make,
constitute and appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL
and J. RUSSELL BLEY, JR., all of St. Louis County, Missouri, or
any of them acting alone, to be my true and lawful attorneys for
me and in my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 5 day of January, 1995.
BRUCE R. SENTS
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 5th day of January, 1995, before me personally
appeared Bruce R. Sents, to me known to be the person described
in and who executed the foregoing instrument, and acknowledged
that he executed the same as his free act and deed.
ROBERT L. KELLEY
----------------------------
Notary Public
My Commission Expires: October 5, 1996
ROBERT L. KELLEY
NOTARY PUBLIC STATE OF MISSOURI
ST. LOUIS COUNTY
MY COMMISSION EXP. OCT. 5, 1996
<PAGE> 15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert B. Shapiro, of St. Louis County, State of
Missouri, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 10th day of January, 1995.
R. B. SHAPIRO
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 10th day of January, 1995, before me personally
appeared Robert B. Shapiro, to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that he executed the same as his free act and deed.
BEVERLY A. OHM
----------------------------
Notary Public
My Commission Expires: Feb. 12, 1998
<PAGE> 16
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, John B. Slaughter, of Pasadena, State of
California, Director of Monsanto Company (the "Company"), a
Delaware corporation with its general offices in the County of
St. Louis, Missouri, do by these presents make, constitute and
appoint RICHARD W. DUESENBERG, KARL R. BARNICKOL and J. RUSSELL
BLEY, JR., all of St. Louis County, Missouri, or any of them
acting alone, to be my true and lawful attorneys for me and in
my name, place and stead, to execute and sign: (i) any
Amendments to Registration Statement No. 33-46845 on Form S-3,
which has previously been filed with the Commission under the
Act; and any Amendments to Registration Statements 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,
all on Form S-8, which have previously been filed with the
Commission under the Act, covering the registration of shares of
Common Stock of the Company; and (ii) the Annual Report on Form
10-K and any Amendments thereto to be filed with the Commission
under the Securities Exchange Act of 1934; giving and granting
unto said attorneys full power and authority to do and perform
such actions as fully as I might have done or could do if per-
sonally present and executing any of said documents.
Witness my hand this 10th day of January, 1995.
JOHN B. SLAUGHTER
-------------------------------
STATE OF CALIFORNIA )
) SS
COUNTY OF LOS ANGELES )
On this 10th day of January, 1995, before me personally
appeared John B. Slaughter to me known to be the person
described in and who executed the foregoing instrument, and
acknowledged that he executed the same as his free act and deed.
KAY LYNN FUJIWARA
----------------------------
Notary Public
My Commission Expires: ---------------------------------------
THE GREAT SEAL KAY LYNN FUJIWARA
OF THE STATE OF COMM. #995481
CALIFORNIA Notary Public--California
LOS ANGELES COUNTY
My Comm. Expires JUN 11, 1997
<PAGE> 1
EXHIBIT 24.2
MONSANTO COMPANY
CERTIFICATE
-----------
I, J. Russell Bley, Jr., Assistant Secretary of Monsanto Company,
hereby certify that the following is a full, true and correct
copy of a resolution adopted by the Board of Directors of
Monsanto Company on February 24, 1995, at which meeting a quorum
was present and acting throughout:
RESOLVED, that each officer and director who may be required
to sign and execute Form 10-K or any document in connection
therewith (whether for and on behalf of the Company, or as
an officer or director of the Company, or otherwise), be and
hereby is authorized to execute a power of attorney
appointing Messrs. Richard W. Duesenberg, Karl R. Barnickol
and J. Russell Bley, Jr., or any of them, severally, his
true and lawful attorney or attorneys to sign in his name,
place and stead in any such capacity such Form 10-K and any
and all amendments thereto and documents in connection
therewith, and to file the same with the Commission or any
other governmental body, each of said attorneys to have
power to act with or without the others, and to have full
power and authority to do and perform, in the name and on
behalf of each of said officers and directors, every act
whatsoever which such attorneys, or any one of them, may
deem necessary, appropriate or desirable to be done in
connection therewith as fully and to all intents and
purposes as such officers or directors might or could do in
person.
IN WITNESS WHEREOF, I have hereunto set my hand in my official
capacity and affixed the corporate seal of Monsanto Company this
3rd day of March, 1995.
J. RUSSELL BLEY, JR.
______________________________
J. Russell Bley, Jr.
Assistant Secretary
SEAL
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF CONSOLIDATED INCOME OF MONSANTO COMPANY AND SUBSIDIAIRES FOR
THE YEAR ENDED DECEMBER 31, 1994, AND THE STATEMENT OF CONSOLIDATED FINANCIAL
POSITION AS OF DECEMBER 31, 1994. SUCH INFORMATION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 507
<SECURITIES> 0
<RECEIVABLES> 1,530<F1>
<ALLOWANCES> 0
<INVENTORY> 1,212
<CURRENT-ASSETS> 3,883
<PP&E> 7,555
<DEPRECIATION> 4,738
<TOTAL-ASSETS> 8,891
<CURRENT-LIABILITIES> 2,435
<BONDS> 1,405
<COMMON> 329
0
0
<OTHER-SE> 2,619
<TOTAL-LIABILITY-AND-EQUITY> 8,891
<SALES> 8,272
<TOTAL-REVENUES> 8,272
<CGS> 4,774
<TOTAL-COSTS> 4,774
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 131
<INCOME-PRETAX> 895
<INCOME-TAX> 273
<INCOME-CONTINUING> 622
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 622
<EPS-PRIMARY> 5.32
<EPS-DILUTED> 0
<FN>
<F1> Reported net of allowances of $57
</TABLE>
<PAGE> 1
EXHIBIT 99
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
---------------------------------
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing operations before
provision for income taxes........................... $ 895<F*> $ 729<F*> $(174)<F*> $354<F*> $716
Add
Fixed charges..................................... 182 184 231 233 248
Less capitalized interest......................... (10) (12) (16) (24) (29)
Dividends from affiliated companies............... 2 5 5 5 6
Less equity income (add equity loss) of affiliated
companies.......................................... (21) (20) (1) (3) 11
------ ----- ----- ---- ----
Income as adjusted.............................. $1,048 $ 886 $ 45 $565 $952
====== ===== ===== ==== ====
Fixed charges
Interest expense.................................... $ 131 $ 129 $ 169 $166 $176
Capitalized interest................................ 10 12 16 24 29
Portion of rents representative of interest factor.. 41 43 46 43 43
------ ----- ----- ---- ----
Fixed charges................................... $ 182 $ 184 $ 231 $233 $248
====== ===== ===== ==== ====
Ratio of earnings to fixed charges.................... 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>
25
