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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, 1995
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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. [ ]
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES
OF THE REGISTRANT: APPROXIMATELY $15.8 BILLION AS OF THE CLOSE OF BUSINESS ON
FEBRUARY 29, 1996.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: 117,814,610 SHARES
OF COMMON STOCK, $2 PAR VALUE, OUTSTANDING AT FEBRUARY 29, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
1. PORTIONS OF MONSANTO COMPANY ANNUAL REPORT TO SECURITY HOLDERS FOR THE YEAR
ENDED DECEMBER 31, 1995. (PARTS I AND II OF FORM 10-K.)
2. PORTIONS OF MONSANTO COMPANY NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
DATED MARCH 14, 1996. (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 diversified line of agricultural products; chemical
products; pharmaceuticals; and food ingredients. 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 March 8, 1996, Monsanto and DEKALB Genetics Corp. finalized a long-term
research and development collaboration in agricultural biotechnology. In
addition, Monsanto acquired approximately 40 percent of the total outstanding
common stock of DEKALB for approximately $152 million. This includes
approximately 10 percent of DEKALB's Class A voting shares and approximately
45 percent of the Class B non-voting shares.
In December 1995, the Company's Board of Directors approved a restructuring
plan as part of an overall strategy to reduce costs and eliminate redundant
functions. The pretax charge of $169 million ($125 million aftertax, or $1.08
per share) associated with this action is intended to cover the costs of work
force reductions, business consolidations, facility closures and the exit from
nonstrategic businesses and facilities. See ``Review of Consolidated Results of
Operations'' and ``Restructuring and Other Actions'' on pages 29 and 51,
respectively, of the Company's Annual Report to shareowners for the year ended
December 31, 1995 (the ``1995 Annual Report'').
In December 1995, Monsanto sold its worldwide styrenics plastics business
for $580 million. In a separate but related transaction, Monsanto has reached an
agreement to sell its shares in Monsanto Premier Kasei Co. Ltd., a styrenics
plastics manufacturing joint venture in Thailand, to one of its joint venture
partners. See ``Review of Consolidated Results of Operations'' and ``Principal
Acquisitions and Divestitures'' on pages 29 and 53, respectively, of the 1995
Annual Report.
In June 1995, Monsanto announced that it had signed a letter of intent to
acquire a 49.9 percent interest in Calgene, Inc. for approximately $30 million
in cash, certain intellectual property, and 100 percent of the partnership
interests in Gargiulo L. P. and Gargiulo G. P. (jointly ``Gargiulo''). In
addition, Monsanto will provide long-term credit facilities for the general
business needs of Calgene and Gargiulo. The Calgene transaction is subject to
the approval of the shareowners of Calgene and is anticipated to close in early
1996. See ``Review of Changes in Financial Position'' and ``Principal
Acquisitions and Divestitures'' on pages 45 and 53, respectively, of the 1995
Annual Report.
INDUSTRY SEGMENTS; PRINCIPAL PRODUCTS
For 1995, Monsanto reported its business under four industry segments:
Agricultural Products, Chemicals, Pharmaceuticals, and Food Ingredients. The
tabular and narrative information appearing under ``Segment Data'' and
``Geographic Data'' on pages 34, 35 and 43 of the 1995 Annual Report is
incorporated herein by reference.
The following is a list of principal products categorized by major end-use
markets, within the industry segments in which they were reported for 1995.
<TABLE>
<CAPTION>
AGRICULTURAL PRODUCTS
Major End-Use Manufacturing Major Raw Materials
Major End-Use Markets Major Products Products & Applications Locations & Components
--------------------- -------------- ----------------------- ------------- -------------------
<S> <C> <C> <C> <C>
Agricultural, industrial, Roundup(R) herbicide Multipurpose, non- Alvin, TX; Antwerp, Disodiumiminodiacetate;
turf and ornamental and other glyphosate- selective agricultural and Belgium; Fayetteville, NC; Phosphorus Trichloride
applications based herbicides industrial applications Luling, LA; Sao Jose dos
Campos, Brazil
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<CAPTION>
AGRICULTURAL 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>
Lasso(R) and Corn, soybean, peanut and Muscatine, IA Chloroacetyl Chloride;
Harness(R)<F*> herbi- milo (sorghum) crops Diethylaniline
cides and other
acetanilide-based
herbicides
<FN>
<F*>corn only
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Avadex(R) BW Wheat crops Antwerp, Belgium; Ammonium Thiocyanate;
herbicide; Far-Go(R) Muscatine, IA Diisopropylamine;
herbicide Trichloropropane
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Permit(R) herbicide Postemergence control of Manufactured by third Halosulfuron
sedges and broadleaf weeds party
in corn and grain sorghum
crops
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Residential applications Roundup(R) herbicide; Herbicides; insecticides; Fort Madison, IA Acephate; Chlorpyrifos;
Ortho(R) lawn-and- fungicides; fertilizers Diazinon; Glyphosate;
garden products Malathion
- ------------------------------------------------------------------------------------------------------------------------------------
Animal agricultural Posilac(R) bovine Increase efficiency of Manufactured by third No major raw materials
applications somatotropin milk production in dairy party
cows
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<CAPTION>
CHEMICALS
<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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Polymer modifiers Vinyl flooring; caulks and Antwerp, Belgium; Butanol; Chlorine;
sealants; adhesives; Bridgeport, NJ; LaSalle, 2-Ethylhexanol; Phenol;
coatings; wall covering; Quebec, Canada Phthalic Anhydride;
vinyl upholstery; Toluene
insulation; furniture
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Saflex(R) plastic Architectural glass Ghent, Belgium; Sao Butyraldehyde; Ethanol;
interlayer Jose dos Campos, Brazil; Polyvinyl Alcohol; Vinyl
Springfield, MA; Acetate Monomer
Trenton, MI
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Specialty resins Coatings and adhesives Alvin, TX; LaSalle, Acrylate Esters; Butanol;
Quebec, Canada; Formaldehyde; Melamine;
Springfield, MA; Methanol; Vinyl Acetate
Trenton, MI Monomer
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Ammonium Fire retardant coatings; Camden, NJ Phosphorus
polyphosphate polymer additives
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Doormats Doormats Ghent, Belgium; Polyethylene
St. Louis, MO
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Vehicles Saflex(R) plastic Windshields Ghent, Belgium; Sao Jose Butyraldehyde; Ethanol;
interlayer dos Campos, Brazil; Polyvinyl Alcohol; Vinyl
Springfield, MA; Trenton, Acetate Monomer
MI
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Vydyne(R) nylon Automotive exterior and Pensacola, FL Acrylonitrile; Ammonia;
molding resins interior molded parts; Cyclohexane; Propylene
under-the-hood
applications
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<CAPTION>
CHEMICALS (CONT'D)
Major End-Use Manufacturing Major Raw Materials
Major End-Use Markets Major Products Products & Applications Locations & Components
--------------------- -------------- ----------------------- ------------- -------------------
<S> <C> <C> <C> <C>
Nylon filament; nylon Tires; molding resins for Pensacola, FL Acrylonitrile; Ammonia;
polymer auto grilles, bumpers and Cyclohexane; Propylene
gears
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Specialty resins; Automotive coatings and Antwerp, Belgium; Butanol; Chlorine;
polymer modifiers sealants Bridgeport, NJ; LaSalle, Formaldehyde; Melamine;
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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Personal Products Acrilan(R) acrylic Sweaters; half-hose; Decatur, AL Acrylonitrile
fiber active wear; hand-knit
yarns; craft yarns
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Vydyne(R) nylon Consumer electronics; Pensacola, FL Acrylonitrile; Ammonia;
molding resins medical devices Cyclohexane; Propylene
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Dental phosphates; Dentifrices; dish Augusta, GA; Newport, Benzene; Caustic Soda;
industrial phosphates detergents; water United Kingdom; Ruabon, Phosphorus; Soda Ash
conditioners United Kingdom; St. Louis,
MO; Sao Jose dos Campos,
Brazil; Soda Springs, ID;
Trenton, MI
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Chemicals Industrial phosphates; Metal treating, cleaning Augusta, GA; Luling, LA; Ammonia; Chlorine;
phosphoric acid; and etching; plant food St. Louis, MO; Sauget, IL; Phosphorus; Soda Ash;
phosphorus fertilizers; oil additives Trenton, MI Sulphur
pentasulfide;
phosphorus trichloride
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Nitrochlorobenzene Dyes; pigments; rubber Anniston, AL; Nitro, WV; Benzene; Caustic Soda;
derivatives; Sodium preservatives; Ruabon, United Kingdom; Chlorine
MBT engineering; 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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Food Food additives Bakery; dairy; meat St. Louis, MO; Sao Jose dos Caustic Soda; Lime;
Campos, Brazil; Trenton, MI Phosphorus
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<CAPTION>
PHARMACEUTICALS
<S> <C> <C> <C> <C>
Pharmaceuticals 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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<CAPTION>
PHARMACEUTICALS (CONT'D)
Major End-Use Manufacturing Major Raw Materials
Major End-Use Markets Major Products Products & Applications Locations & Components
--------------------- -------------- ----------------------- ------------- -------------------
<S> <C> <C> <C> <C>
Daypro(R) (oxaprozin); Anti-inflammatory Augusta, GA; Caguas, Benzoin; Diclofenac;
Arthrotec(R) Puerto Rico; Morpeth, Misoprostol
(misoprostol/ United Kingdom
diclofenac)
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Ambien(R) (zolpidem Central nervous system Caguas, Puerto Rico Zolpidem
tartrate) (Sleep)
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Cytotec(R) Gastrointestinal Caguas, Puerto Rico; Coapa, Norprostol
(misoprostol) Mexico; Morpeth, United
Kingdom
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Demulen(R) (ethynodiol Women's health Caguas, Puerto Rico; Ethinyl Estradiol;
diacetate); Tri- Morpeth, United Kingdom Ethynodiol Diacetate;
Norinyl(R) Synarel(R) Nefarelin Acetate;
Norethindrone
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<CAPTION>
FOOD INGREDIENTS
<S> <C> <C> <C> <C>
Food NutraSweet(R) brand High-intensity sweetener Augusta, GA; University Aspartic Acid;
sweetener available primarily in Park, IL L-Phenylalanine
beverages and dessert
products
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Equal(R), Canderel(R), Tabletop sweeteners Manteno, IL; Evreux, Aspartame
NutraSweet(R) and France; Morpeth, United
other tabletop Kingdom
sweeteners
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Keltone(R) and Soups; sauces; gravies; Girvan, United Kingdom; Corn Syrup; Seaweed
Manugel(R) sodium dressings; beverages; Okmulgee, OK; San Diego, CA
alginates; snack foods; breadings;
Kelcoloid(R) propylene batters; bakery products;
glycol alginate; dairy products; pet foods
Keltrol(R) SF and Kel-
lite(R) xanthan gums;
Kelcogel(R) gellan gum
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Oil Field Production Kelzan(R) X, Kelzan(R) Oil and gas well drilling Knowsley, United Kingdom; Corn Syrup
XCD, Xanvis(R) xanthan applications Okmulgee, OK; San Diego, CA
gums; Biozan(R) welan
gum
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Industrial Applications Manutex(R) and Cleaners; textile Barcaldine, United Kingdom; Corn Syrup; Seaweed
Kelgin(R) sodium printing; paper sizings Girvan, United Kingdom;
alginates; Kelzan(R) and coatings; firefighting Knowsley, United Kingdom;
AR xanthan gum foams Okmulgee, OK; San Diego, CA
- ------------------------------------------------------------------------------------------------------------------------------------
Pharmaceuticals Kelacid(R) alginic Tablets; liquid Girvan, United Kingdom; Corn Syrup; Seaweed
acid; Keltrol(R) CR suspensions; controlled Okmulgee, OK; San Diego, CA
xanthan gum; Kelmar(R) release medications;
potassium alginate; dental impression
Gelrite(R) gellan gum materials
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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PRINCIPAL EQUITY AFFILIATES
Monsanto participates in a number of joint ventures in which it shares
management control with other companies. Principal joint ventures in which
Monsanto has a fifty percent ownership interest include: Flexsys L.P.,
headquartered in Belgium, which produces and sells rubber chemicals and rubber
test instruments; Advanced Elastomer Systems, L.P., headquartered in the United
States, which produces and sells thermoplastic elastomers; and Companhia
Brasileira de Estireno, headquartered in Brazil, which produces and sells
styrene monomer. In addition, aspartame is manufactured and sold in Europe by
fifty percent-owned joint ventures. See ``Geographic Data'' on page 43 of the
1995 Annual Report.
Monsanto also has investments in a number of other equity affiliates. The
Company has recently taken a significant equity position in DEKALB Genetics
Corp., and expects to take a significant equity position in Calgene, Inc.
during the first quarter of 1996. See ``Recent Developments,'' above.
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
63 of the 1995 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 Products segment 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 Products segment sometimes results in
short-term borrowings to finance 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 Food Ingredients segment, however, makes significant
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, the Pharmaceuticals segment pays rebates to state
governments for pharmaceuticals sold under state Medicaid programs and under
state-funded programs for the indigent. The Pharmaceuticals segment also grants
discounts to certain managed health care providers. Sales through managed health
care providers constitute an increasing percentage of that segment's sales.
Introduction of new products by the Agricultural Products, Pharmaceuticals
and Food Ingredients 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. Governmental actions may also affect the pricing of
certain products, particularly in the Pharmaceuticals segment.
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 generally 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
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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 Products and Pharmaceuticals segments and with respect to
NutraSweet(R) brand sweetener. Certain proprietary products such as Roundup(R)
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(R) 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 or licensed by The NutraSweet Company, a subsidiary of the
Company. 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.
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 Chemicals segment. 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.
Monsanto leases or subleases a number of kelp beds off the coast of
California from the State of California and several private parties. Monsanto
also has leases to harvest seaweed off the coasts of Scotland and (through a
joint venture) Ireland. None of these leases taken individually is deemed by
Monsanto to be material, although the leases to harvest seaweed in the aggregate
are significant to the Food Ingredients segment. The leases have varying terms.
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.
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RESEARCH AND DEVELOPMENT; NEW PRODUCTS
Research and development constitute an important part of Monsanto's
activities. The discovery and development of pharmaceutical and agricultural
products continue to be the focus of most research and development expenditures.
Roundup Ready(TM) soybeans and cotton, NewLeaf(R) insect-protected
potatoes, and Bollgard(TM) insect-protected cotton, all developed through
biotechnology, received regulatory approvals in 1995 and early 1996.
See ``Review of Consolidated Results of Operations'' and ``Supplemental Data''
on pages 32 and 61, respectively, of the 1995 Annual Report, incorporated
herein by reference.
ENVIRONMENTAL MATTERS
Monsanto continues to make a strong commitment to comply with various laws
and government regulations concerning environmental matters and employee safety
and health in the United States and other countries. Compliance with stringent
requirements will continue to be an obligation of 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; 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 long-term environmental protection and compliance
programs that reduce and monitor emissions of hazardous materials into the
environment, as well as to the remediation of identified existing environmental
concerns.
Expenditures in 1995 were approximately $47 million for environmental
capital projects and approximately $210 million for the management of
environmental programs, including the operation and maintenance of facilities
for environmental control. Monsanto estimates that during 1996 and 1997
approximately $30 million to $40 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 93 Superfund sites. Monsanto has resolved disputes, entered partial
consent decrees, and executed administrative orders between Monsanto and the EPA
in 58 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 contaminated 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. Monsanto has an accrued liability of $71 million as of December 31,
1995, 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 Superfund sites in this category include the noncompany-owned
Brio, Fike/Artel, MOTCO and Woburn sites, which account for $44 million of the
accrued amount.
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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. Because of these uncertainties, primarily related to the
method and extent of remediation, potential future expenses could be as much as
$10 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
$90 million as of December 31, 1995, 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. Because of these uncertainties, potential expenses could
be as much as $20 million for these sites. Four sites in this category account
for $58 million of the accrued amount and for approximately all of the potential
future expenses.
Monsanto spent $60 million in 1995 for remediation of Superfund and other
contaminated sites. Most of these expenditures were related to the Chemicals
segment, and similar or lesser amounts can be expected in future years.
For hazardous and other waste facilities at operating locations, Monsanto
recognizes postclosure environmental costs and remediation costs over the
estimated remaining useful life of the related facilities, not to exceed 20
years. Monsanto spent $14 million in 1995 for remediation of these facilities
and has an accrued liability of $49 million as of December 31, 1995, 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 $120
million.
While the ultimate costs and results of remediation of contaminated 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, 1995, Monsanto had approximately 28,500 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 potentially subject to a number of unique risks and
limitations, including: fluctuations in currency values; exchange control
regulations; import and trade restrictions, including embargoes; governmental
instability; and other potentially detrimental domestic and foreign governmental
practices or policies affecting U.S. companies doing business abroad. See
``Geographic Data'' on page 43 of the 1995 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, profitability or liquidity in any one
year, as applicable.
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 has 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 11 cases brought in Harris County District Court or the United
8
<PAGE> 10
States District Court for the Southern District of Texas on behalf of 936
plaintiffs who owned homes or lived in the Southbend, Sageglen or other
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; they assert the need for medical monitoring;
and, in the case of the homeowners, claim property damage. In addition to their
claims of personal injury, four 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 actions brought
in Harris County District Court by 417 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 in one of these actions also
owned homes or lived in subdivisions near the site, attended school in the
Southbend subdivision, or used nearby recreational ball fields. 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, G. D. Searle & Co., a subsidiary of the Company (``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(R) 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(R) caused personal
injury resulting from pelvic inflammatory disease, perforation, pregnancy or
ectopic pregnancy. As of March 1, 1996, there were approximately 35 cases
pending in various U.S. state and federal courts and approximately 345 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(R) in the
United States, citing the cost of defending such litigation.
Searle has been named, together with numerous other prescription
pharmaceutical manufacturers and in some cases wholesalers or distributors, as a
defendant in a large number of related actions brought in federal and/or state
court, based on the practice of providing discounts or rebates to managed-care
organizations and certain other large purchasers. The federal cases have been
consolidated for pre-trial proceedings in the Northern District of Illinois. The
federal suits include a certified class action on behalf of retail pharmacies
representing the majority of retail pharmacy sales in the United States. The
class plaintiffs allege an industry-wide agreement in violation of the Sherman
Act to deny favorable pricing on sales of brand-name prescription
pharmaceuticals to certain retail pharmacies in the United States. The other
federal suits, brought as individual claims by several thousand pharmacies,
allege price discrimination in violation of the Robinson-Patman Act as well as
Sherman Act claims. Certain defendants, not including Searle, have reached
tentative agreement to settle the class action. Searle has entered into an
agreement that would significantly limit its liability (based generally on its
share of the relevant market) should the federal class action result in an
adverse judgment. In addition, consumers and a number of retail pharmacies have
filed suit in various state courts throughout the country alleging violations of
state antitrust and pricing laws. Searle believes it has meritorious defenses
and is vigorously defending each of these lawsuits.
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 formerly owned 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 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
9
<PAGE> 11
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 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. 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, 1996, 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, and major portions of the San Diego, California
plant, are 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 1995.
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 page 49 and ``Quarterly Data'' (for the years 1994 and 1995) on page
62 of the 1995 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 for the years 1991 through 1995, appearing on page
64 of the 1995 Annual Report, is 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 33, ``Segment Data'' on
pages 34 through 42, ``Review of Changes in Financial Position'' on page 45, and
``Review of Cash Flow'' on pages 47 through 49 of the 1995 Annual Report is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of Monsanto appearing on pages 28, 44,
46, 50 and 51 through 61; the Independent Auditors' Opinion appearing on page
27; and the tabular and narrative information appearing under ``Quarterly Data''
on pages 62 and 63 of the 1995 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
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 and page 6 of the Monsanto
Company Notice of Annual Meeting and Proxy Statement (the ``1996 Proxy
Statement'') dated March 14, 1996, is incorporated herein by reference. The
following information with respect to the Executive Officers of the Company on
March 1, 1996, is included pursuant to Instruction 3 of Item 401(b) of
Regulation S-K:
<TABLE>
<CAPTION>
Year First
Became an
Executive
Name--Age Present Position with Registrant Officer Other Business Experience since January 1, 1991
--------- -------------------------------- ---------- -----------------------------------------------
<S> <C> <C> <C>
Richard U. De Schutter, 55 Chairman, Chief Executive 1995 Chairman, International Operations, G. D. Searle & Co.,
Officer and President, G. 1989; President, G. D. Searle & Co., 1991; President
D. Searle & Co. (a and Chief Operating Officer, G. D. Searle & Co., 1993;
subsidiary of the and present position, 1995.
Company); Advisory
Director--Monsanto Company
Steven L. Engelberg, 53 Senior Vice President 1995 Partner, Keck, Mahin & Cate, 1986; Partner-in-Charge,
--Monsanto Company Keck, Mahin & Cate Washington, D.C. office, 1986; Chief
of Staff of Office of the United States Trade
Representative (on leave from Keck, Mahin & Cate
until May 1993), 1993; Vice President, Worldwide
Government Affairs--Monsanto Company, 1994; and present
position, 1996.
Pierre Hochuli, 48 Vice President--Monsanto 1995 Regional Director, Europe/Africa/Middle East--Monsanto
Company; President--Growth Europe, S.A., 1985; Vice President, Finance and
Enterprises Business Unit; Planning--The Agricultural Group, 1991; Vice President
Chairman, Monsanto and General Manager, New Products Division--The
Europe-Africa Agricultural Group, 1992; Group Vice President and
General Manager, New Products Division--The
Agricultural Group, 1993; Vice President, Corporate
Planning--Monsanto Company, 1993; Vice
President--Monsanto Company; President--Growth
Enterprises, 1995; and present position, 1996.
Robert B. Hoffman, 59 Senior Vice President and 1994 Vice President, FMC Corporation, 1990; and present
Chief Financial Officer; position, 1994.
Advisory Director--Monsanto
Company
Teresa E. McCaslin, 46 Vice President, Human 1994 Vice President, Human Resources, Avery Dennison
Resources--Monsanto Corporation, 1989; and present position, 1994.
Company
Philip Needleman, 57 Senior Vice President, 1991 Vice President, Research and Development--Monsanto
Research and Development Company, 1989; Vice President, Research and
and Chief Scientist; Development; Advisory Director--Monsanto Company, 1991;
Advisory Director--Monsanto Vice President, Research and Development; Advisory
Company; President, Director--Monsanto Company; President, Research and
Research and Development, Development, G. D. Searle & Co., 1992; and present
G. D. Searle & Co. position, 1993.
Robert G. Potter, 56 Executive Vice President 1981 Executive Vice President and Advisory
and Advisory Director-- Director--Monsanto Company; President--The Chemical
Monsanto Company Group, 1990; and present position, 1995.
12
<PAGE> 14
<CAPTION>
Year First
Became an
Executive
Name--Age Present Position with Registrant Officer Other Business Experience since January 1, 1991
--------- -------------------------------- ---------- -----------------------------------------------
<S> <C> <C> <C>
Nicholas L. Reding, 61 Director; Vice Chairman-- 1976 Executive Vice President, Environment, Safety, Health
Monsanto Company and Manufacturing and Advisory Director--Monsanto
Company, 1990; and present position, 1993.
Robert W. Reynolds, 52 Vice President, 1994 Vice President and General Manager, Crop Protection
International Operations Products Division--Monsanto Agricultural Company, 1990;
and Development-- Vice President and Managing Director, Latin America
Monsanto Company World Area--Monsanto Company, 1992; and present
position, 1994.
Robert B. Shapiro, 57 Director; Chairman, Chief 1987 Executive Vice President and Advisory
Executive Officer and Director--Monsanto Company and President--The
President--Monsanto Agricultural Group, 1990; Director; President and Chief
Company Operating Officer--Monsanto Company, 1993; and present
position, 1995.
Hendrik A. Verfaillie, 50 Executive Vice President 1993 Vice President and General Manager, Roundup
and Advisory Director-- Division--The Agricultural Group, 1990; Vice President
Monsanto Company and Advisory Director--Monsanto Company; President--The
Agricultural Group, 1993; Vice President and Advisory
Director--Monsanto Company, 1995; and present position,
1995.
Virginia V. Weldon, 60 Senior Vice President, 1990 Vice President, Public Policy; Advisory Director--
Public Policy; Advisory Monsanto Company, 1990; and present position, 1993.
Director--Monsanto Company
</TABLE>
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.
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 17 of the 1996 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 1996 Proxy Statement is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
13
<PAGE> 15
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, 44, 46, 50 and 51
through 61 of the 1995 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,
1995, 1994 and 1993:
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 10.23 on pages 19
through 21 of the Exhibit Index. The following Exhibits listed in the
Exhibit Index are filed with this Report:
10 20. Letter Agreement between the Company and Hendrik A.
Verfaillie entered into as of June 27, 1988
21. Agreement between the Company and Hendrik A. Verfaillie
entered into as of July 5, 1988
22. Agreement dated January 29, 1993 between the Company and
Hendrik A. Verfaillie, amending the Letter Agreement
entered into as of June 27, 1988, and amending the
Agreement entered into as of July 5, 1988
23. Amendment to Letter Agreement between the Company and
Robert B. Shapiro entered into as of July 23, 1990
13 The Company's 1995 Annual Report to shareowners
21 Subsidiaries of the registrant (See page 22)
23 1. Consent of Independent Auditors (See page 23)
2. Consent of Company Counsel (See page 23)
24 1. Powers of attorney submitted by Joan T. Bok, Robert M.
Heyssel, Robert B. Hoffman, Michael R. Hogan, 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, 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 24)
(b) Reports on Form 8-K during the quarter ended December 31, 1995:
No reports on Form 8-K were filed by the Company during the quarter
ended December 31, 1995.
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, 1995 and 1994 and the related
statements of consolidated income, shareowners' equity and cash flow for each of
the three years in the period ended December 31, 1995 and have issued our
opinion thereon dated February 23, 1996; such financial statements and opinion
are included in your 1995 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 23, 1996
15
<PAGE> 17
SCHEDULE V
<TABLE>
MONSANTO COMPANY AND SUBSIDIARIES
---------------------------------
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(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, 1995:
Reserves deducted from related assets in the Statement of Consolidated
Financial Position:
Doubtful receivables and returns and allowances...................... $ 57 $ 24 $ 24<FA> $ 57
----- ---- ----- -----
Inventory and obsolescence losses.................................... $ 34 $ 6 $ 6 $ 34
----- ---- ----- -----
Amortization of intangible assets.................................... $ 522 $128<FB> $ 12 $ 638
----- ---- ----- -----
Deferred tax asset valuation allowances.............................. $ 85 $ 15 $ 10 $ 90
----- ---- ----- -----
Year Ended December 31, 1994:
Reserves deducted from related assets in the Statement of Consolidated
Financial Position:
Doubtful receivables 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
----- ---- ---- -----
<FN>
NOTES:
<FA> Principally allowances granted.
<FB> Includes $9 million charged to cost of goods sold.
</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 Michael R. Hogan
-----------------------------------
Michael R. Hogan
Vice President and Controller
(Principal Accounting Officer)
Date: March 15, 1996
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Karl R. Barnickol
- --------------------------------------------------- Chairman, President and Director March 15, 1996
(Robert B. Shapiro)<F*> (Principal Executive Officer)
Karl R. Barnickol
- --------------------------------------------------- Vice Chairman and Director March 15, 1996
(Nicholas L. Reding)<F*>
Karl R. Barnickol
- --------------------------------------------------- Senior Vice President March 15, 1996
(Robert B. Hoffman)<F*> (Principal Financial Officer)
Michael R. Hogan
- --------------------------------------------------- Vice President and Controller March 15, 1996
(Michael R. Hogan) (Principal Accounting Officer)
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Joan T. Bok)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Robert M. Heyssel)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Gwendolyn S. King)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Philip Leder)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Howard M. Love)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Richard J. Mahoney)<F*>
17
<PAGE> 19
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Frank A. Metz, Jr.)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Buck Mickel)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(Jacobus F.M. Peters)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(John S. Reed)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(William D. Ruckelshaus)<F*>
Karl R. Barnickol
- --------------------------------------------------- Director March 15, 1996
(John B. Slaughter)<F*>
<FN>
<F*>Karl R. Barnickol, 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.
Karl R. Barnickol
--------------------------------------
Karl R. Barnickol
Attorney-in-Fact
</TABLE>
18
<PAGE> 20
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2 Omitted--Inapplicable
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)
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)
19
<PAGE> 21
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
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. 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)
17. 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)
18. 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)
19. 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)
20. Letter Agreement between the Company and Hendrik A.
Verfaillie entered into as of June 27, 1988
21. Agreement between the Company and Hendrik A. Verfaillie
entered into as of July 5, 1988
22. Agreement dated January 29, 1993 between the Company and
Hendrik A. Verfaillie, amending the Letter Agreement entered
into as of June 27, 1988, and amending the Agreement entered
into as of July 5, 1988
20
<PAGE> 22
<CAPTION>
EXHIBIT INDEX (CONT'D)
Exhibit No. Description
- ----------- -----------
<S> <C>
23. Amendment to Letter Agreement between the Company and
Robert B. Shapiro entered into as of July 23, 1990
11 Omitted--Inapplicable; see ``Earnings per Share'' on page 60 of
the 1995 Annual Report
12 Statement re Computation of the Ratio of Earnings to Fixed
Charges--See Exhibit 99 below
13 The Company's 1995 Annual Report to shareowners. (The electronic
submission includes only the financial report section of the
Annual Report, consisting of pages 26 through 64 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 22)
22 Omitted--Inapplicable
23 1. Consent of Independent Auditors (See page 23)
2. Consent of Company Counsel (See page 23)
24 1. Powers of attorney submitted by Joan T. Bok, Robert M.
Heyssel, Robert B. Hoffman, Michael R. Hogan, 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, 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 24)
<FN>
- -------
Only Exhibits Nos. 13, 21, 23.1, 23.2 and 99 have been included in the printed
copy of this Report.
</TABLE>
21
<PAGE> 23
APPENDIX
Throughout the printed Form 10-K, trademarks are designated by the
superscript letters "R" in a circle or "TM"; the EDGAR copy indicates
trademarks with the "R" or "TM" in parentheses.
<PAGE> 1
EXHIBIT 10.20
June 27, 1988
Hendrik A. Verfaillie
Monsanto Company
800 North Lindbergh
St. Louis, MO 63167
Dear Hendrik:
If the Company receives any proposal from a third party
concerning a possible business combination with, or an
acquisition of the Company, the Board of Directors believes it
essential that the Company and the Board be able to rely upon
you to continue in your present position and that the Company
be able to receive your advice in assessing the proposal, in
determining what is in the best interests of the Company and
its shareholders and in determining what action the Company
should take. Your continued employment with the Company
during the assessment of any such proposal and following any
business combination will provide critical continuity of
management and will enhance the value of the Company.
As you know, in order to be eligible for unreduced early
retirement pension benefits, you must retire from the Company
after attainment of age 55 and your age and years of service
must total 80 ("Combo 80"). Moreover, in order for you and
your eligible dependents to be eligible for retiree medical
benefits plan coverage, you must terminate employment after
age 55 with 10 or more years of benefit service. Because you
are not yet age 55, you are not yet Combo 80 eligible, and you
and your eligible dependents are not yet eligible for retiree
medical benefits plan coverage. Therefore, the Executive
Compensation and Development Committee ("ECDC") has decided
that in order to minimize any distraction that could be caused
by the personal uncertainties and risks created by a change of
control proposal, it is in the Company's best interests to
provide you at this time with the early retirement protection
described below.
A. Supplemental Pension.
--------------------
If you Terminate Employment with the Company after a
Change of Control and are not yet Combo 80 eligible,
you will be paid a Supplemental Pension in an amount
equal to the difference between what you would have
<PAGE> 2
-2-
received from the Monsanto Company Salaried
Employees' Pension Plan ("Salaried Pension Plan")
and the Monsanto Company ERISA Parity Pension Plan
("Parity Pension Plan") in effect when you Terminate
Employment (computed without reduction for early
commencement of benefits) less what you are actually
paid from both plans.
Your Supplemental Pension will be paid to you
monthly under the same option election and with the
same beneficiary designation you make under the
Salaried Pension Plan. In order to receive your
Supplemental Pension in the form of monthly
payments, you must, in the case of retirement,
commence receiving your pension payments from the
Salaried Pension Plan on the first day of the month
coinciding with or following your retirement date.
In the case of vested termination, you must commence
receiving your pension payments on the first day of
the month coinciding with or following your
attainment of age 55.
Alternatively, you may elect to receive the
actuarially commuted value of your Supplemental
Pension, or a portion thereof, in a single sum, in
which case the value of your Supplemental Pension
will be calculated actuarially by the Qualified
Actuary for the Salaried Pension Plan who was
serving as such immediately prior to the Change of
Control using the actuarial assumptions applicable
to the Plan. The amount so calculated by the
Qualified Actuary will be paid to you in a single
sum as soon as practicable after you Terminate
Employment.
In the event that you do not elect to receive your
Supplemental Pension in a single sum, and the amount
payable to you under your Key Executive Employment
Agreement is limited because of the Excise Tax
limitation set forth in Section 3(b) of the Key
Executive Employment Agreement, the Public
Accounting Firm in considering how much can be paid
to you under the Excise Tax Limitation provision of
the Key Executive Employment Agreement will first
reduce the cash portion of any Payment which is
subject to Excise Taxes in order to preserve as much
of your Supplemental Pension as possible.
<PAGE> 3
-3-
B. Parity Plan/Bonus Deferral Plan.
-------------------------------
The ECDC has amended the Pension Parity Plan to
permit you to receive the actuarially commuted value
of your accrued benefit under the Plan in a single
sum when you Terminate Employment even if you are
not eligible to receive a Commuted Value Option
distribution from the Salaried Pension Plan. It
also has amended the Deferred Payment Plan ("Bonus
Deferral Plan") to permit you to receive the amount
of any deferred bonus plus accrued earnings thereon
and the actuarially commuted value of any amounts
accrued under the Supplemental Pension Plan in a
single sum when you Terminate Employment.
C. Medical Coverage.
----------------
If at the time you Terminate Employment you are not
eligible for Retiree Medical Plan coverage, you will
receive a $15,000 payment to compensate you for the
loss of medical plan coverage for you and your
eligible dependents. If you wish, and do not have
coverage through other employment, you may elect
COBRA continuation and keep your Monsanto coverage
in effect for up to 18 months following your
Termination of Employment, at which time you may
purchase a conversion policy from Metropolitan Life
Insurance Company. You have an absolute right to
this $15,000 payment regardless of when you obtain
continuation or replacement coverage and regardless
of what such coverage costs.
D. Executive Life Insurance Coverage.
---------------------------------
The ECDC has amended the Executive Life Insurance
Plan to require the Company to continue to make its
premium payments under the terms of the plan, the
underlying policy and your collateral assignment
agreement even if you Terminate Employment prior to
age 62. This provision is contingent upon you
continuing to make your required contributions under
the plan.
You must make your election to receive the actuarially
commuted value of your Supplemental Pension, any Pension
Parity Plan or Supplemental Pension Plan benefits and any
deferred bonus payments in a single sum by signing the
<PAGE> 4
-4-
enclosed election form and filing it with the Management
Liaison Officer to the ECDC within 30 days of the date of this
letter. If you make this election, it will remain binding on
you unless there is a Change of Control, in which case you
will be entitled to make a second written election within 30
days of the Change of Control to receive your Supplemental
Pension as monthly payments and any Pension Parity Plan or
Supplemental Pension Plan benefits and any deferred bonus pay-
ments as otherwise permitted under the terms of these plans.
Unless you make this second written election in a timely
manner, your election to receive it in a single sum will be
binding on you and irrevocable.
As used herein, the term "Terminate Employment" has the same
meaning as does the term "Termination of Employment" in the
Key Executive Employment Agreement ("Key Executive Employment
Agreement") executed by you and the Company contemporaneously
with this Agreement. The terms "Change of Control", "Payment"
and "Termination of Employment" have the same meanings as do
the same terms in the Key Executive Employment Agreement, a
copy of which is attached hereto as Exhibit A. For purposes
of this Agreement, the relevant sections of the Key Executive
Employment Agreement are incorporated by reference herein and
made a part hereof.
Where appropriate, all references to "the Company" or
"Monsanto" also refer to any Monsanto subsidiary or affiliate
and to any successor corporation. The Company's obligation to
pay you the benefits set forth herein is absolute and
unconditional and will not be affected by any circumstances,
including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have
against you. The Company will make from any payments all tax
and other withholdings required by law to be made. This
Agreement will inure to your benefit and that of your
beneficiary and will be binding upon the Company and any
successor of the Company. Moreover, the benefits provided
under this Agreement are not intended to qualify under Section
401 of the Internal Revenue Code. This Agreement will not be
subject to the claims of your creditors and may not be
assigned either by you or your spouse or any beneficiary, and
any attempted assignment, pledge or other transfer will be
void. Finally, the Supplemental Pension will expire and
become null and void if you are still employed by the Company
when you attain Combo 80 eligibility and the payment for
medical plan coverage will expire if you become eligible for
retiree medical benefits plan coverage.
<PAGE> 5
-5-
On behalf of the Company, I am pleased to be able to extend
this Agreement you. Please acknowledge your acceptance of its
terms by signing both copies of this letter and returning one
copy to R. L. Berra, Management Liaison Officer to the ECDC,
c/o Mr. R. N. Abercrombie, Mail Zone B2NA.
Very truly yours,
ACKNOWLEDGED AND AGREED: MONSANTO COMPANY,
/s/ H.A. Verfaillie /s/ Richard J. Mahoney
- -------------------------
(name) Richard J. Mahoney
<PAGE> 1
EXHIBIT 10.21
KEY EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT between Monsanto Company, a Delaware corporation
("Monsanto"), and Hendrik A. Verfaillie (the "Executive");
WHEREAS, the Executive Compensation and Development Committee
(the "Committee") of the Board of Directors (the "Board") of
Monsanto has recommended and the Board has approved the execution
of employment agreements with specified key executives of
Monsanto;
WHEREAS, the Board has determined that the Executive is a key
executive of Monsanto;
WHEREAS, should Monsanto receive any proposal from a third party
concerning a possible business combination with, or an
acquisition of, equity securities of Monsanto, the Board believes
it imperative that Monsanto and the Board be able to rely upon
the Executive to continue in his position, and that Monsanto and
the Board be able to receive and rely upon his advice, if they
request, as to the best interests of Monsanto and its
shareholders without concern that the Executive might be
distracted by the personal uncertainties and risks created by
such a proposal; and
WHEREAS, should Monsanto receive any such proposals, in addition
to the Executive's regular duties, the Executive may be called
upon to assist in the assessment of such proposals, advise
Monsanto and the Board as to whether such proposals would be in
the best interests of Monsanto and its shareholders, and to take
such other actions as Monsanto and the Board might determine to
be appropriate;
WHEREAS, the retention of Executive during the time any such
proposal is being evaluated and following any business
combination or acquisition will provide needed continuity of
<PAGE> 2
-2-
management, thus enhancing Monsanto's business and business
prospects, and shareholder value;
NOW, THEREFORE, to assure Monsanto and the Board that it will
have the continued dedication of the Executive and the
availability of his advice and counsel notwithstanding the
possibility, threat or occurrence of such a proposal, and to
induce the Executive to remain in the employ of Monsanto, and for
other good and valuable consideration, Monsanto and the Executive
agree as follows:
1. Employment. Monsanto hereby agrees to continue the
----------
Executive in its employ, and the Executive hereby agrees to
remain in the employ of Monsanto for the period commencing
on the Effective Date of this Agreement (as defined in
Section 5(b) below) and ending on the earlier to occur of
the third anniversary of such date or the Executive's Normal
Retirement Date under the Monsanto Company Salaried
Employees' Pension Plan (the "Employment Period"), with the
Executive to exercise such authority and perform such
executive duties as are commensurate with the authority
being exercised and duties being performed by the Executive
immediately prior to the Effective Date of this Agreement,
which duties shall be performed at the location where the
Executive was employed immediately prior to the Effective
Date of this Agreement. The Executive agrees that during
the Employment Period he shall devote his full business time
exclusively to his executive duties as described herein and
perform such duties faithfully and efficiently; provided,
however, that Executive shall also be permitted to serve or
continue to serve as a member of the Board of Directors of
other corporations.
<PAGE> 3
-3-
2. Compensation, Compensation Plans, Perquisites. During the
---------------------------------------------
Employment Period, the Executive shall be compensated as
follows:
(a) He shall receive an annual salary at a rate which is
not less than his rate of annual salary immediately
prior to the Effective Date of this Agreement, with the
opportunity for increases, from time to time
thereafter, which are in accordance with the Monsanto's
regular practices.
(b) He shall be eligible to participate on a reasonable
basis in the applicable bonus, stock option, restricted
stock, performance award and other incentive compensa-
tion plans (hereinafter collectively referred to as
"Incentive Compensation Plans") sponsored by Monsanto
(including, but not limited to, the Monsanto Management
Incentive Plan of 1984 and the Monsanto Management
Incentive Plan of 1988/I), which provide opportunities
to receive compensation which are the greater of the
opportunities provided by Monsanto after the Effective
Date of this Agreement for executives with comparable
duties or the opportunities under any such plans under
which he was participating immediately prior to the
Effective Date of this Agreement.
(c) He shall be entitled to participate in the applicable
Pension Plans and Excess Benefit Plans sponsored by
Monsanto (including, but not limited to, the Monsanto
Company Salaried Employees' Pension Plan, the Monsanto
Company Savings and Investment Plan, the Monsanto
Company ERISA Parity Pension Plan and the Monsanto
Company ERISA Parity SIP Plan), which provide pension,
retirement benefits and savings opportunities which are
<PAGE> 4
-4-
the greater of those provided by Monsanto after the
Effective Date of this Agreement for executives with
comparable duties or the opportunities under any such
plans in which he was participating immediately prior
to the Effective Date of this Agreement.
(d) He shall be entitled to participate in the applicable
Employee Welfare Plans sponsored by Monsanto
(including, but not limited to, those which provide
medical, dental, life insurance, and disability income
benefits) and receive perquisites which provide
Employee Welfare Plan benefits and perquisites which
are the greater of those provided by Monsanto after the
Effective Date of this Agreement to executives with
comparable duties or the Employee Welfare Plan benefits
and perquisites to which he was entitled immediately
prior to the Effective Date of this Agreement.
(e) He shall be entitled to the benefits provided in any
Supplemental Executive Retirement Plan ("SERP") or
other similar contract which is applicable to him.
3. Termination of Employment After Change of Control.
-------------------------------------------------
(a) Notwithstanding the provisions of Sections 1 and 2
above, if the Executive terminates employment in a
manner which constitutes a Termination of Employment
(as defined in Section 5(c) below) during the
Employment Period, Monsanto shall pay to the Executive
a Termination Amount. Except as provided in Section
3(b) below, the Termination Amount shall be an amount
equal to:
<PAGE> 5
-5-
(i) two times the sum of the Executive's annual base
pay in effect at the time of his Termination of
Employment (which in no event shall be less than
his annual base pay in effect at the Effective
Date of this Agreement) plus the Executive's
target annual bonus under the applicable Incentive
Compensation Plan for the year in which his
Termination of Employment occurs; plus
(ii) if the Executive's Termination of Employment
occurs within the first year of an applicable
long-term Incentive Compensation Plan cycle, an
additional amount equal to the Executive's target
annual bonus under the applicable Incentive
Compensation Plan for the year in which his
Termination of Employment occurs.
The amount due hereunder shall be paid in a single sum
as soon as practicable after the Executive's
Termination of Employment and shall be in lieu of any
further obligation of Monsanto to make salary payments
under Section 2(a) or to permit the Executive to
further participate in any of the Incentive
Compensation, Pension and Employee Welfare Plans
described in Sections 2(b), 2(c) and 2(d) hereof
(except and to the extent that under the terms of any
of those plans the Executive is permitted to
participate as a terminated or retired employee).
In the event that there are fewer than twenty-four
whole or partial months remaining from the date of the
Executive's Termination of Employment to his Normal
Retirement Date, the amount payable under this
paragraph shall be reduced by multiplying it by a
<PAGE> 6
-6-
fraction, the numerator of which is the number of whole
or partial months remaining to his Normal Retirement
Date and the denominator of which is twenty-four.
(b) Excise Tax Provision.
--------------------
(i) The Public Accounting Firm that serves as
Monsanto's principal independent auditors
immediately prior to the Effective Date of this
Agreement ("Public Accounting Firm") shall
determine if any payment made pursuant to this
Agreement or any other payment received or deemed
to be received by Executive from Monsanto or any
of its subsidiaries and affiliates, or from any
Pension, Employee Welfare, Incentive Compensation
or other plans sponsored by Monsanto or any of its
subsidiaries and affiliates (collectively, the
"Payment") is or will become subject to any excise
tax under Section 4999 of the Internal Revenue
Code of 1986, as amended ("Code"), or any similar
tax payable under any federal, state, local or
other law ("Excise Taxes"). The determination and
computations made by the Public Accounting Firm
shall be based on its understanding of Section
280G and 4999 of the Code, any regulations
promulgated thereunder and any relevant rulings or
judicial decisions relative thereto, and its
determinations and computations shall be final and
binding on all parties. All determinations
hereunder shall be made in adequate time to permit
the Executive to prepare and file his individual
tax returns in a timely fashion.
<PAGE> 7
-7-
(ii) If it is determined by the Public Accounting Firm
that any Payment is or will become subject to any
Excise Taxes, then it shall determine if the
payment of the Excise Taxes in addition to any
federal, state, local or other income, excise or
other taxes ("Other Taxes") payable by the
Executive with respect to the Payment to be
received will cause the Executive to pay an amount
of Excise and Other Taxes such that the net
Payment the Executive will receive after payment
of all Excise and Other Taxes on such Payment is
less than if the Payment he would receive was
reduced to the maximum amount payable without
imposition of any Excise Taxes ("Economic
Detriment".) If the Public Accounting Firm
determines that the Executive will incur an
Economic Detriment as a result of the receipt of
the full Payment, the Payment to the Executive
shall be reduced to the maximum possible Payment
that can be paid the Executive without him
incurring any Economic Detriment.
(iii) The Public Accounting Firm, in determining whether
the Payment is subject to Excise Taxes, may
reasonably conclude that certain items are neither
subject to Excise Taxes, nor are to be counted in
determining whether the Payment is subject to
Excise Taxes or may be considered to be reasonable
compensation for personal services (such items
hereinafter referred to as "Non-Included Items").
If at a later date, it is determined (pursuant to
final regulations or published rulings of the
Internal Revenue Service, final judgment of a
court of competent jurisdiction or, if requested
<PAGE> 8
-8-
by the Executive, an opinion of a nationally
recognized accounting or tax law firm) that any of
the Non-Included Items are subject to Excise
Taxes, are to be counted in determining whether
all or any portion of the Payment is subject to
Excise Taxes or are not considered to be
reasonable compensation for personal services,
with the result that the Executive will incur an
Economic Detriment. Monsanto shall, immediately
upon such determination pay the Executive an
amount equal to the sum of (A) any such Excise
Taxes, plus (B) any interest, fines, penalties,
expenses and other costs incurred by the Executive
and resulting from the Executive having taken a
position that the Payment or a portion of the
Payment, is not subject to Excise Taxes in
accordance with a determination made pursuant to
Subsection(b)(ii) above, plus (C) the amount
necessary to reimburse the Executive for any
federal, state, local or other income taxes
payable by the Executive with respect to the
amounts of (I) the Excise Tax reimbursement
provided in Clause A above, (II) the reimbursement
for interest, fines, penalties and other amounts
paid provided in Clause B above, plus (III) the
amount paid to the Executive as reimbursement of
any federal, state, local or other income, excise
or other taxes (as determined for Clauses I, II
and III hereof) in accordance with the formula set
forth on Schedule 3, which is attached hereto and
incorporated by reference herein.
<PAGE> 9
-9-
(iv) Consultation. At Monsanto's reasonable request
------------
the Executive shall consult with Monsanto
regarding (A) the preparation and filing of the
Executive's federal income and excise tax returns
for any year in which any Payment is received, and
(B) any federal tax issues which may arise with
respect to any Payment made in connection with a
Change of Control. At Monsanto's request, the
Executive shall retain counsel and other experts
and consultants reasonably satisfactory to
Monsanto in connection with any or all of the
matters described in items (A) and (B) of this
Subsection 3(b)(iv) and Monsanto shall reimburse
the Executive (in accordance with Section 6(b)
hereof) for all fees, expenses and costs
(including audit costs, attorneys' and
accountants' fees and expenses, and court costs)
incurred by Executive as a result of the retention
of such counsel and other experts and consultants.
Anything to the contrary herein notwithstanding,
the Executive shall not in any way be restricted
from making such disclosure in his individual tax
returns with respect to payments received
hereunder as he shall deem reasonable and
appropriate.
(v) The fees, expenses and costs charged by the Public
Accounting Firm shall be paid entirely by
Monsanto.
4. Executive Covenants, Duties and Responsibilities.
------------------------------------------------
(a) Satisfaction and Discharge. Except for any payments or
--------------------------
benefits payable under a Supplemental Executive
<PAGE> 10
-10-
Retirement Plan or Agreement ("SERP"), Executive hereby
acknowledges and agrees that Monsanto's execution and
delivery of this Agreement to the Executive is in full
satisfaction, fulfillment and discharge of any and all
claims the Executive may have against Monsanto, any
Monsanto subsidiary or affiliate, any Monsanto
separation pay plan and any of their respective
directors, officers, employees, agents or fiduciaries
for any contract notice pay, or separation, severance,
or redundancy pay to which Executive is or otherwise
might be entitled to under any applicable employment
agreement, international assignment agreement,
separation or severance pay plan or policy, or any
other welfare plan, or pursuant to any statute, court
or administrative decision of any country (hereinafter
individually and collectively referred to as "Severance
Payments"). If any Severance Payments are required to
be made to Executive, Executive agrees that any
payments made pursuant to this Agreement shall be
offset and reduced by the amount of the Severance
Payments.
(b) Executive as a Consultant. During the period
-------------------------
commencing on the date of Executive's Termination of
Employment and ending one year thereafter, Executive
agrees that, during such times as are compatible with
Executive's other obligations, duties and
responsibilities, he will perform such consulting
services as Monsanto may reasonably request at such
locations as shall be reasonably convenient to the
Executive. Monsanto shall pay Employee for such
services at rates which are comparable to the
Executive's compensation rate in effect immediately
prior to his date of Termination of Employment. If the
<PAGE> 11
-11-
Executive incurs any reasonable travel or other
expenses in connection with the performance of his
services pursuant to this Section 4(b), Monsanto shall
promptly reimburse the Executive for all such expenses.
In the performance of the consulting services
hereunder, the Executive shall be in all respects an
independent contractor without the legal capacity to
bind Monsanto and shall not be considered an agent or
employee of Monsanto. The Executive shall be free to
render services to or accept employment with others
while providing consulting services to Monsanto.
(c) Employment Contract. Executive acknowledges and agrees
-------------------
that the provisions of this Agreement shall not have
any effect on Executive's Monsanto Employment Contract,
which remains in full force and affect. As used
herein, the term "Monsanto Employment Contract" shall
mean any contracts (including any and all amendments
thereto) between Monsanto and the Executive relating to
contract notice, confidential information, competitive
activity, intellectual property, ideas, inventions,
patent assignments and other similar matters and which
is usually signed by a Monsanto employee prior to or at
commencement of his employment.
5. Definitions.
-----------
(a) "Change of Control." For the purposes of this
-----------------
Agreement, a "Change of Control" shall be deemed to have
taken place if: (i) a third party, including a "group"
as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the beneficial owner of
shares of Monsanto having 25% or more of the total
number of votes that may be cast for the election of
<PAGE> 12
-12-
directors of Monsanto; or (ii) as the result of, or in
connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or
contested election, or any combination of the foregoing
transactions (a "Transaction"), (A) the persons who
were directors of Monsanto before the Transaction shall
cease to constitute a majority of the Board of
Directors of Monsanto or any successor to Monsanto, or
(B) there is the sale, exchange or other disposition of
all or substantially all of Monsanto's assets to a
third party.
(b) The "Effective Date of this Agreement" shall be the
-------------------------------------
date on which a Change of Control occurs.
(c) "Termination of Employment" shall occur:
-------------------------
1. if Monsanto, within three years after a Change of
Control, terminates the Executive's employment
with Monsanto other than:
(i) for Justifiable Cause; or
(ii) as a consequence of his death, Total and
Permanent Disability (as determined under the
Monsanto Salaried Employees' Disability
Income Plan) or his retirement at or after
his Normal Retirement Date;
2. if the Executive resigns as an employee of
Monsanto for Good Reason within three years after
a Change of Control.
<PAGE> 13
-13-
(d) "Justifiable Cause." Monsanto shall have Justifiable
-----------------
Cause to terminate the Executive's employment hereunder
upon the Executive's:
1. willful and continued failure to perform his usual
duties or to work full-time for Monsanto (other
than any such failure resulting from the Execu-
tive's incapacity due to physical or mental
illness);
2. willful engagement in conduct that is materially
injurious to Monsanto;
3. willful engagement in actions that result in or
are intended to result in the illegal personal
enrichment of the Executive at the expense of
Monsanto;
4. embezzlement of funds or misappropriation of other
property;
5. engaging in acts of dishonesty or common law fraud
in connection with his employment; or
6. commission of a felony.
For purposes of this subsection, no act or failure to
act on the part of the Executive shall be considered
"willful" unless such act or omission was not in good
faith and without reasonable belief that his action or
omission was in the best interests of Monsanto.
The employment of the Executive shall in no event be
considered to have been terminated by Monsanto for
<PAGE> 14
-14-
Justifiable Cause if termination of his employment took
place:
1. as the result of bad judgment or negligence on the
part of the Executive;
2. as the result of an act or omission without intent
of gaining therefrom directly or indirectly a
profit to which the Executive was not legally
entitled;
3. because of an act or omission believed by the
Executive in good faith to have been in or not
opposed to the interests of Monsanto;
4. because of any act or omission in respect of which
a determination could properly be made that the
Executive met the applicable standard of conduct
prescribed for indemnification or reimbursement or
payment of expenses under either the Bylaws of
Monsanto or the laws of the State of Delaware or
the directors' and officers' liability insurance
of Monsanto, in each case as in effect at the time
of such act or omission;
5. as the result of an act or omission which occurred
more than twelve calendar months prior to the
notification of the Executive of his Termination
of Employment for such act or omission unless the
commission of such act or such omission could not
at the time of such commission or omission have
been known to either a member of the Board of
Directors (other than the Executive, if he is then
a member of the Board of Directors) or the Execu-
<PAGE> 15
-15-
tive's immediate superior, in which case more than
twelve calendar months from the date that the
commission of such act or such omission was or
could reasonably have been so known; or
6. as the result of a continuing course of action
which commenced and was or could reasonably have
been known to a member of the Board of Directors
(other than the Executive if he is then a member
of the Board of Directors) or the Executive's
immediate superior more than twelve calendar
months prior to notice having been given to the
Executive of his Termination of Employment.
(e) "Good Reason." Resignation by the Executive as an
-----------
employee for "Good Reason" shall mean the resignation
of the Executive as an employee within three years
following a Change of Control after:
1. a good faith determination by the Executive that
his duties, status or responsibilities have been
diminished or that he has been assigned duties
inconsistent with his duties with Monsanto prior
to the Change of Control;
2. a removal or the Executive from office (if the
Executive is an officer of Monsanto) or any
failure to reelect the Executive to office;
3. any reduction in the Executive's base salary;
4. any failure by Monsanto to continue any Incentive
Compensation Plans in which the Executive was
entitled to participate in at the time the Change
<PAGE> 16
-16-
of Control occurred or to provide comparable
successor Incentive Compensation Plans should
amendment of existing Incentive Compensation Plans
become necessary or advisable or any failure by
Monsanto to continue the Executive in any
Incentive Compensation Plan on at least the same
basis as he was entitled to participate
immediately before the Change of Control;
5. the failure by Monsanto to continue in effect and
make contributions to, or fund, any Pension Plan
(except for the Monsanto Company Payroll Related
Employee Stock Ownership Plan), Excess Benefit
Plan or Employee Welfare Plan (except for the
Monsanto Employee Stock Purchase Plan), in which
the Executive is participating at the time of a
Change of Control of Monsanto (or plans providing
him with substantially similar benefits), the
taking or any action by Monsanto which would
adversely affect his participation in or
materially reduce his benefits under any of such
plans or deprive him of any material perquisites
or fringe benefit enjoyed by him at the time of
the Change of Control, or the failure by Monsanto
to provide him with the number of paid vacation
days to which he is then entitled in accordance
with Monsanto's normal vacation policy in effect
on the date hereof;
6. the failure by Monsanto to continue in effect or
honor the provisions of any SERP which covers the
Executive;
<PAGE> 17
-17-
7. any relocation of the Executive's principal place
of employment more than fifty (50) miles from the
Executive's location immediately before the Change
of Control unless Executive is on international
assignment at the time of the Change of Control
and the relocation is a result of Executive's
being repatriated pursuant to the terms of his
international assignment agreement; or
8. the failure by Monsanto to obtain the assumption
of the performance of this Agreement by any
successor.
(f) "Normal Retirement Date" shall mean the first day of
----------------------
the month following the month in which the executive
attains age 65.
(g) "Monsanto." Where appropriate, all references to
--------
"Monsanto" shall also refer to any Monsanto subsidiary
or affiliate, and to any successor, whether such
succession results from a merger consolidation,
liquidation, purchase of securities, acquisition of
assets or otherwise.
(h) "Successor Plans." Where appropriate, all references
---------------
to a Monsanto Pension, Employee Welfare Benefit,
Incentive Compensation Plan or other plans shall
include any successor plan adopted by Monsanto or any
successor.
(i) "Pension Plan," "Employee Welfare Plan," "Excess
-----------------------------------------------
Benefit Plan," and "ERISA." As used herein, the terms
-------------------------
"Pension Plan," "Employee Welfare Plan" and "Excess
Benefit Plan," shall have the same meanings as they do
<PAGE> 18
-18-
in Section 3 of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
6. General.
-------
(a) Indemnification. If litigation shall be brought to
---------------
enforce or interpret any provision contained herein,
Monsanto, to the extent permitted by applicable law and
Monsanto's Articles of Incorporation and Bylaws, hereby
indemnifies the Executive for his reasonable attorneys'
fees and disbursements incurred in such litigation, and
hereby agrees to pay prejudgment interest on any money
judgment obtained by the Executive calculated at the
Citibank, N.A. prime interest rate in effect from time
to time from the date that payment(s) to him should
have been made to him under this Agreement.
(b) Expenses.
--------
(i) If the Executive incurs (A) legal or other fees
and expenses in an effort to establish entitlement
to benefits under this Agreement, regardless of
whether the Executive ultimately prevails, or (B)
legal, accounting and other fees and expenses in
connection with the retention of counsel and other
experts and consultants as requested by Monsanto
pursuant to Subsection 3(b)(iv) above, Monsanto
shall reimburse him for such fees and expenses.
To the extent such fees and expenses may be
covered, and be reimbursable, under Monsanto's
officers' and directors' insurance policies, the
Executive shall, following payment of such fees
and expenses by Monsanto, reasonably cooperate
with Monsanto in obtaining reimbursement of such
<PAGE> 19
-19-
fees and expenses pursuant to such policies, and
any amounts so recovered shall be paid to
Monsanto.
(ii) Reimbursement of fees and expenses described in
Subsection 6(b)(i), above, shall be made monthly
during the course of any action upon the written
submission of a request for reimbursement together
with proof that the fees and expenses were
incurred.
(c) Payment Obligations Absolute. Monsanto's obligation to
----------------------------
make the payments and arrangements provided herein
shall be absolute and unconditional and shall not be
affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment,
defense or other right which Monsanto may have against
him or anyone else. All amounts payable by Monsanto
hereunder shall be paid without notice or demand. Each
and every payment made hereunder by Monsanto shall be
final and Monsanto shall not seek to recover all or any
part of such payment from the Executive or from
whosoever may be entitled thereto, for any reason
whatsoever. The Executive shall not be obligated to
seek other employment in mitigation of the
post-employment amounts payable or arrangements made
under any provision of this Agreement, and the
obtaining of any post-termination employment shall in
no event effect any reduction of Monsanto's obligations
to make the post-employment payments and arrangements
required to be made under this Agreement.
(d) Withholding. Monsanto shall withhold all amounts
-----------
required by law to be withheld from any payments made
<PAGE> 20
-20-
pursuant to this agreement, including any or all
amounts required to be withheld by the Code or by the
Federal Insurance Contributions Act, any applicable
state or foreign country's income tax act, and any
applicable city, county or municipality's earnings or
income tax act.
(e) Successors. This Agreement shall be binding upon and
----------
inure to the benefit of the Executive and his estate,
and Monsanto and any successor, direct or indirect, of
Monsanto, whether such succession results from a
merger, consolidation, liquidation, purchase of
securities, acquisition of assets or otherwise.
(f) Limitations on Payments. The interests of the
-----------------------
Executive are not subject to the claims of his
creditors and may not be voluntarily or involuntarily
sold, transferred, alienated, assigned, pledged,
anticipated, or encumbered. Any attempt by the
Executive or any other person or entity to sell,
transfer, alienate, assign, pledge, anticipate,
encumber, charge or otherwise dispose of any right to
benefits payable under this Agreement shall be void.
(g) Severability. Any section in this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without
invalidating or affecting the remaining sections
hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render
unenforceable such section in any other jurisdiction.
Any section or part of a section so declared to be
unlawful or invalid shall be construed in a manner
<PAGE> 21
-21-
which will give effect to the terms of such section or
part of a section to the fullest extent possible while
remaining lawful and valid.
(h) Controlling Law. This Agreement shall in all respects
---------------
be governed by, and construed in accordance with, the
laws of the State of Delaware.
(i) Headings and Titles. Section headings and titles are
-------------------
for reference only. In the event of a conflict between
a title and the content of a section, the content of
the section shall control.
(j) No Employment Guarantee. This Agreement shall not be
-----------------------
deemed to entitle the Executive to continued employment
with Monsanto, and the rights of Monsanto to terminate
the employment of the Executive shall continue as fully
as if this Agreement were not in effect, provided that
after a Change of Control, any Termination of
Employment shall entitle the Executive to the benefits
provided in Section 3 above.
(k) Assignment. Except as may be specifically provided by
----------
operation of law, this Agreement may not be assigned by
any party hereto without the prior written consent of
the other party.
(l) Amendment and Waiver. This Agreement shall not be
--------------------
altered, amended or modified except by written instru-
ment executed by the Company and Employee. A waiver of
any term, covenant, agreement or condition contained in
this Agreement shall not be deemed a waiver of any
other term, covenant, agreement or condition, and any
waiver of any default in any such term, covenant,
<PAGE> 22
-22-
agreement or condition shall not be deemed a waiver of
any later default thereof or of any other term,
covenant, agreement or condition.
(m) Notices. All notices required by this Agreement shall
-------
be in writing and delivered by hand or by first class
registered or certified mail, postage prepaid, and
addressed as follows:
If to Monsanto: Monsanto Company
800 North Lindbergh Blvd.
St. Louis, MO 63167
Attention: General Counsel
If to the Executive: Hendrik A. Verfaillie
14308 Strawbridge Ct.
Chesterfield, MO 63017
Either party may from time to time designate a new
address by notice given in accordance with this
Section.
(n) Termination. This Agreement shall terminate if the
-----------
Board determines that the Executive is no longer a key
executive and so notifies the Executive in writing
prior to a Change of Control; except that such
determination shall not be made, and if made, shall
have no effect, during any period of time when Monsanto
has knowledge that any third party has taken steps
reasonably calculated to effect a Change of Control
until, in the opinion of the Board, the third party has
abandoned or terminated his efforts to effect a Change
of Control.
<PAGE> 23
-23-
IN WITNESS WHEREOF, the parties have executed this Agreement on
the 5th day of July 1988.
------- ------------
MONSANTO COMPANY
By /s/ Richard J. Mahoney
---------------------------
Richard J. Mahoney
Chairman of the Board and
Chief Executive Officer
/s/ Cynthia Tisher /s/ H.A. Verfaillie
- ------------------------------ ------------------------------
Witness Executive
<PAGE> 24
-24-
SCHEDULE 3
- ----------
Gross-up Formula
Any payment made pursuant to Section 3(b) of the Agreement (a
"Gross-up Payment") shall be calculated as follows:
A. The Gross-up Payment shall be the product of (i) the amount
of the Excise Taxes, any interest, fines, penalties,
expenses, and other costs relating to Excise Taxes incurred
by the Executive times (ii) a fraction the numerator of
which is 1, and the denominator of which is 1 minus the
combined total rates expressed as a fraction, determined in
accordance with paragraph B hereof, of all federal, state,
local and other income and other taxes and any Excise Taxes
applicable to such Gross-up Payment. In the event that
different rates of tax are applicable to any portion of a
Gross-up Payment, the denominator of the fraction set forth
in clause (ii) above shall be 1 minus the combined total of
the weighted average rates expressed as a fraction,
determined in accordance with paragraph B hereof, of all
federal, state, local and other income and other taxes and
any Excise Taxes applicable to such Gross-up Payment.
B. For purposes of determining the denominator of the fraction
set forth in clause (ii) of paragraph A hereof, the rates of
federal, state, local and other income and other taxes and
Excise Taxes shall be the lesser of the actual rates of such
taxes (giving effect to the Executive's net effective tax
rates determined net of the benefit of any tax deduction or
tax credit) or the rates set forth in the table below.
<PAGE> 25
-25-
<TABLE>
<CAPTION>
Tax Rate
--- ----
<S> <C>
Federal Income Tax The highest marginal federal income
tax rate in effect for the applicable
year, including the effective rate
resulting from Code Section l(g)
(relating to the phaseout of the 15
percent rate and personal exemptions
and any surcharge), ("Federal Income
Tax Rate")
State & Local Income Tax Actual Rate x (100 minus the Federal
Income Tax Rate)
Excise Tax 20% (or if Section 4999 of the Code
is amended, the excise tax rate in
effect after the amendment)
All Other Taxes Actual Net Tax Rate
</TABLE>
<PAGE> 26
EXECUTIVE TERMINATION OF EMPLOYMENT
-----------------------------------
ELECTION FORM
-------------
In the event that I Terminate Employment with Monsanto Company
("Monsanto") following a Change of Control of Monsanto, I
hereby elect to receive the actuarially commuted value of my
Supplemental Pension and Pension Parity Plan benefits, and any
amounts deferred under the Bonus Deferral Plan (including the
actuarially commuted value of any amounts accrued under the
Supplemental Pension Plan) in a single sum as soon as
practicable after I Terminate Employment. I acknowledge and
agree that once this election is filed with the Management
Liaison Officer to the Executive Compensation and Development
Committee ("ECDC") of Monsanto's Board of Directors, it shall
be binding and irrevocable except that if there is a Change of
Control of Monsanto, I will have an opportunity to make a
second written election within 30 days of the Change of
Control to receive my Supplemental Pension in the form of
monthly payments and my Pension Plan and Supplemental Pension
Plan benefits and any deferred bonus payments as otherwise
permitted under those plans.
As used herein the terms "Supplemental Pension" and "Terminate
Employment" have the same meanings as they do in my
Supplemental Executive Retirement Plan ("SERP") contract dated
June 27, 1988. The term "Change of Control" has the same
meaning as it does in my Key Executive Employment Agreement.
Date: 5-7-1988 /s/ Hendrik A. Verfaillie
---------------- -----------------------------
Hendrik A. Verfaillie
After signature, return to Mr. R. L. Berra, Management Liaison
Officer to the ECDC, c/o R. N. Abercrombie, Mail Zone B2NA.
<PAGE> 1
EXHIBIT 10.22
AMENDMENTS
TO
KEY EXECUTIVE EMPLOYMENT AGREEMENT AND
SUPPLEMENTAL AGREEMENT
AGREEMENT between Monsanto Company, a Delaware corporation
("Monsanto"), and Hendrik A. Verfaillie (the "Executive");
WHEREAS, the Board of Directors (the "Board") of Monsanto
has determined that the Executive is a key executive of Monsanto
and appointed the Executive to the Management Council of
Monsanto;
WHEREAS, because of the determination that the Executive is
a key executive of Monsanto and because of his appointment to the
Management Council of Monsanto, the Board authorized Monsanto to
enter into a Key Executive Employment Agreement dated July 5,
1988 ("Key Executive Employment Agreement") and a Supplemental
Agreement dated June 27, 1988 ("Supplemental Agreement") with the
Executive, which are attached hereto as Exhibits A and B,
respectively, and made a part hereof;
WHEREAS, the Executive has been appointed to the Monsanto
Executive Management Committee;
NOW, THEREFORE, to assure Monsanto and the Board that it
will have the continued dedication of the Executive and the
availability of his advice and counsel notwithstanding the
possibility, threat or occurrence of a Change of Control
proposal, and to induce the Executive to remain in the employ of
Monsanto, and for other good and valuable consideration, Monsanto
and the Executive agree as follows:
1. Paragraph 5(a) of the Key Executive Employment
Agreement is hereby amended to read in its entirety as follows:
<PAGE> 2
-2-
(a) "Change of Control." For the purposes of this
-----------------
Agreement, a "Change of Control" shall be deemed to
have taken place if: (i) a third party, including a
"group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial
owner of shares of Monsanto having 10% or more of the
total number of votes that may be case for the election
of directors of Monsanto; or (ii) as the result of, or
in connection with, any cash tender or exchange offer,
merger or other business combination, sale of assets or
contested election, or any combination of the foregoing
transactions (a "Transaction"), (A) the persons who
were directors of Monsanto before the Transaction shall
cease to constitute a majority of the Board of
Directors of Monsanto or any successor to Monsanto, or
(B) there is the sale, exchange or other disposition of
all or substantially all of Monsanto's assets to a
third party.
2. The amended definition of Change of Control set forth
above in paragraph 1 shall also extend to the applicable
provisions of the Supplemental Agreement, as amended.
3. Except as amended hereby, all terms and provisions of
the Key Executive Employment Agreement and the Supplemental
Agreement, as amended, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the 29 day of January , 1993.
----- -----------
MONSANTO COMPANY
By /s/ Richard J. Mahoney
----------------------------
Richard J. Mahoney
Chairman of the Board and
Chief Executive Officer
/s/ Hendrik A. Verfaillie
------------------------------
Hendrik A. Verfaillie
/s/ Cynthia Tisher
- ------------------------------
Witness
<PAGE> 1
EXHIBIT 10.23
ACTION APPROVED BY
EXECUTIVE COMPENSATION AND DEVELOPMENT COMMITTEE
APRIL 28, 1995
AFFECTING CERTAIN EXECUTIVE OFFICERS,
INCLUDING ROBERT B. SHAPIRO
Retiree Medical Proration
-------------------------
/ / The next item is a request to amend the supplemental retirement
agreements (SERP's) for those EMC members shown in Exhibit 1
so that the calculation for their retiree medical coverage is
based in a like manner to their supplemental retirement
provisions.
/ / Over the years, Monsanto has provided executives in certain senior
positions supplemental retirement benefits. The decision to provide
these benefits is normally based on having to recruit a senior
employee with experience in the middle of his or her career.
/ / Calculation of the supplemental retirement benefit (SERP) normally
assumes the executive will be treated as if he or she were a Monsanto
employee with 30 years of service. From this total benefit is
subtracted the retirement benefit which would be available from
the executive's prior employer.
/ / In 1992, Monsanto made changes to the retiree medical plan that
addressed FAS 106 liability issues. Included in these changes was
a proration of Monsanto's contribution to retiree medical coverage
for employees with less than 25 years of service and who retire
after the year 2000.
/ / Therefore, under current policy, those senior executives with SERP's
who will have less than twenty-five years service and retire after
the year 2000, will have their contributions to retiree medical
pro-rated to reflect actual years of service. This is inconsistent
with our philosophy of treating those executives as 30 year
Monsanto employees.
/ / Therefore, we recommend the Committee approve an amendment to
existing SERP's for those EMC members shown in Exhibit 1 that
would provide a supplement to their Monsanto retiree medical
benefit contribution equal to what a Monsanto eligible retiree
with 30 years of service would receive. Of course, they would need
to achieve eligibility for retiree medical (age 55 and 10 yrs). The
example at the bottom of Exhibit 1 shows how our current plan would
work and what is being proposed.
/ / The benefits would be a taxable supplement to their SERP representing
the difference between what the executive will pay for the retiree
medical plan as a retiree with less than 25 years of service and
the same executive with 25 or more years of service. These benefits
are typically paid as a lump sum and we would pay the retiree medical
supplement similarly.
/ / This change would be disclosed in the 1996 proxy as part of the
existing SERPs.
<PAGE> 1
Financial Table
of Contents
Management Report, Audit Committee Report,
Independent Auditors' Opinion 26
Statement of Consolidated Income 28
Statement of Consolidated Financial Position 44
Statement of Consolidated Cash Flow 46
Statement of Consolidated
Shareowners' Equity 50
Notes to Financial Statements 51
Financial Summary 64
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, 1995, is effective and adequate to accomplish the objectives
described above.
/s/R. B. Shapiro
Robert B. Shapiro
Chairman and
Chief Executive Officer
/s/Robert B. Hoffman
Robert B. Hoffman
Senior Vice President and
Chief Financial Officer
Feb. 23, 1996
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.
26 1995 Monsanto Annual Report
<PAGE> 2
Audit Committee
Report
The audit committee, composed of six nonemployee members of the board of
directors, met four times during 1995. 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 1995
annual meeting, Deloitte & Touche LLP 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 management, 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. 23, 1996
Independent Auditors'
Opinion
To the shareowners of Monsanto Company:
We have audited the accompanying statement of consolidated financial
position of Monsanto Company and subsidiaries as of Dec. 31, 1995 and 1994, and
the related statements of consolidated income, shareowners' equity and cash
flow for each of the three years in the period ended Dec. 31, 1995. 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, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended Dec. 31,
1995, in conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
St. Louis, Missouri
Feb. 23, 1996
1995 Monsanto Annual Report 27
<PAGE> 3
<TABLE>
Statement of Consolidated Income
<CAPTION>
(Dollars in millions, except per share) 1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $8,962 $8,272 $7,902
Cost of goods sold 5,109 4,774 4,564
- ------------------------------------------------------------------------------------
Gross Profit 3,853 3,498 3,338
Marketing expenses 1,282 1,191 1,199
Administrative expenses 598 589 548
Technological expenses 713 674 695
Amortization of intangible assets 119 81 81
Restructuring expenses -- net 156 40 5
- ------------------------------------------------------------------------------------
Operating Income 985 923 810
Interest expense (190) (131) (129)
Interest income 59 81 40
Gain on sale of styrenics plastics business 189
Other income (expense) -- net 44 22 8
- ------------------------------------------------------------------------------------
Income Before Income Taxes 1,087 895 729
Income taxes 348 273 235
- ------------------------------------------------------------------------------------
Net Income $ 739 $ 622 $ 494
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Earnings per Share $ 6.36 $ 5.32 $ 4.10
- ------------------------------------------------------------------------------------
<FN>
The above statement should be read in conjunction with pages 51-63 of this report.
</TABLE>
<TABLE>
<CAPTION>
Key Financial Statistics 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
As a Percent of Net Sales:
Gross Profit 43% 42% 42%
Marketing, Administrative and Technological Expenses 29 30 31
Research and Development Expenses 7 7 8
Operating Income 11 11 10
Net Income 8 8 6
Effective Income Tax Rate 32 31 32
Return on Shareowners' Equity 22.1 21.4 16.9
- ---------------------------------------------------------------------------------------------------
</TABLE>
28 1995 Monsanto Annual Report
<PAGE> 4
Review of Consolidated Results of Operations
Monsanto Reports
Record Earnings per
Share and Net Income
In 1995, Monsanto Company set new records for earnings per share and net
income. Earnings per share increased 20 percent to $6.36 from last year's
previous record of $5.32 per share. Net income of $739 million was up 19
percent from $622 million in 1994. The Agricultural Products segment
contributed significantly to the company's strong operating performance,
as worldwide sales volumes of Roundup(R) herbicide continued to grow. Sales
volumes and operating income for acetanilides, such as Harness(R) herbicide,
were stronger in 1995. The Chemicals segment's operating results increased
because of the effects of selective pricing actions and continued cost
reduction efforts, despite the combined effects of higher raw material costs
and worldwide competitive conditions. The Pharmaceuticals segment's operating
performance more than doubled from operating income last year, primarily
because of higher sales volumes of key growth products and higher income from
alliances. Operating income for the Food Ingredients segment declined in
1995, primarily because of restructuring charges. Net of unusual items,
operating results for the Food Ingredients segment, which included 10 months
of operations from the acquired Kelco business, were up moderately and
benefited from higher international sales. The Food Ingredients segment is
aggressively pursuing international markets that offer strong growth
potential for both tabletop sweeteners and NutraSweet(R) brand sweetener, the
company's trademark aspartame product. The increase in international sales,
however, was more than offset by declining U.S. sales of aspartame.
Events Affecting
Comparability
In December 1995, Monsanto sold its worldwide styrenics plastics business
for $580 million. In a separate but related transaction, Monsanto reached an
agreement to sell its shares in Monsanto Premier Kasei Co. Ltd., a styrenics
plastics manufacturing joint venture in Thailand, to one of its joint venture
partners. As a result of these transactions, Monsanto recognized a pretax gain
of $189 million ($116 million aftertax, or $1.00 per share). Monsanto's results
of operations for 1995 included net sales and operating income of $663 million
and $12 million, respectively, from the styrenics plastics business.
As part of the company's overall strategy to reduce costs and eliminate
redundant functions, the board of directors approved a restructuring plan in
December 1995. The pretax charge of $169 million ($125 million aftertax, or
$1.08 per share) associated with this action is intended to cover the costs
of work force reductions, business consolidations, facility closures, and the
exit from nonstrategic businesses and facilities. Approximately 550 positions
are expected to be eliminated by these actions. These actions are expected to
have a favorable effect on future net earnings and aftertax cash flows in the
range of $60 million to $75 million annually.
A charge was taken in the first quarter of 1995 for actions associated
with the formation of the Flexsys L.P. joint venture, which is discussed in
the Notes to Financial Statements. The venture partners, Monsanto and Akzo
Nobel N.V., agreed to bear the one-time costs required to integrate their
respective rubber chemicals businesses into the joint venture. For Monsanto,
these integration costs totaled $40 million pretax ($25 million aftertax, or
$0.22 per share). The charge primarily covered the cost of reducing the work
force by approximately 120 people and providing special termination benefits
for approximately 300 people transferring from Monsanto to the joint venture.
Other items that affected results in 1995 included the receipt in the
first and third quarters of settlement payments from various insurers related
to environmental and other insurance litigation. The combined effect of these
settlements totaled $92 million pretax ($57 million aftertax, or $0.50 per
share). In addition, Monsanto settled a lawsuit related to a contractual
dispute concerning cleanup obligations at a Superfund site by paying $41
million pretax ($25 million aftertax, or $0.22 per share). The payment was
recorded by Monsanto in the third quarter of 1995. The company also recorded
approximately $20 million in favorable pretax adjustments ($13 million
aftertax, or $0.11 per share) under certain sales rebate programs in the United
States for product sales made in prior years.
1995 Monsanto Annual Report 29
<PAGE> 5
Review of Consolidated Results of Operations
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, which was
substantially completed by the end of 1995, reduced worldwide employment levels
by approximately 450 people. In addition, the company closed certain facilities
and ended some programs. The pretax expense related to these actions was $89
million ($55 million aftertax, or $0.47 per share). Separately, in the fourth
quarter of 1994, the board approved the reversal of $49 million pretax ($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-than-expected 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 (IRS)
settled certain tax matters related to the 1985 acquisition of Searle. Monsanto
recognized an aftertax gain of $21 million, or $0.18 per share, in interest
on the settlement.
Without the unusual events in 1995 and 1994, net income for 1995 would
have been $728 million, compared with $623 million for the prior year, an
increase of 17 percent. Earnings per share in 1995 would have been $6.27, an 18
percent increase from 1994 earnings per share.
Net Sales
Reach Record
Net sales in 1995 were approximately $9 billion, 8 percent higher than
those in 1994. The increase came primarily from the continued strong
performances by the Agricultural Products and Pharmaceuticals segments. After
adjusting for prior year sales of businesses contributed to Flexsys, Chemicals'
net sales were up moderately because of higher average selling prices. The
increase in Food Ingredients' net sales primarily reflects the inclusion of 10
months of net sales from the acquired Kelco business.
Net sales in 1995 for Agricultural Products increased 11 percent from
those in 1994 to a record $2.5 billion, primarily because of a significant
increase in worldwide sales volumes for Roundup(R) herbicide. Worldwide demand
continues to be strong for this family of glyphosate-based herbicides because
of continued global expansion of conservation tillage techniques, effective
pricing and new end-use strategies. Sales of acetanilide products, such as
Harness(R) herbicide, also contributed to the increase in net sales. The
increase in Pharmaceuticals' net sales can be attributed to sales of key growth
products, principally Daypro(R) and Arthrotec(R) arthritis treatments, and
Ambien(R) short-term treatment for insomnia. Lower sales of the family of
Calan(R) calcium channel blockers, which continues to be negatively affected by
generic competition, partially offset the growth in net sales. Chemicals' net
sales from continuing businesses for 1995 were approximately 7 percent higher
than those in 1994, primarily because of higher average selling prices. Net
sales for the Food Ingredients segment, exclusive of the sales of the acquired
Kelco business, declined primarily because of lower average selling prices for
aspartame.
Monsanto's net sales in markets outside the United States represented 43
percent of 1995 net sales, compared with 40 percent last year.
<TABLE>
An analysis of the company's sales change follows:
<CAPTION>
Selling Price and
Volume Changes 1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Selling prices 2% (2)% (5)%
Sales volumes and mix
(net of acquisitions
and divestitures) 6 7 7
- ---------------------------------------------------------------------------------------
Total Change 8% 5% 2%
- ---------------------------------------------------------------------------------------
</TABLE>
Operating Results
Are Higher
Operating income in 1995 of $985 million increased by $62 million from
operating income in 1994. If the net pretax restructuring and unusual items of
$125 million and $40 million in 1995 and 1994, respectively, were excluded,
operating income would have increased by $147 million, or 15 percent, in 1995.
This significant increase in operating income was principally related to higher
sales volumes and better pricing. The increase in operating results was
partially offset by higher raw material costs experienced by the Chemicals
segment and higher marketing and technological expenses overall.
30 1995 Monsanto Annual Report
<PAGE> 6
Review of Consolidated Results of Operations
If the aforementioned restructuring charges and unusual items in 1995 and
1994 were excluded, operating results would have improved for all segments,
with the largest increase occurring in the Pharmaceuticals segment. Operating
income in 1995 for the Agricultural Products segment benefited from
significantly higher worldwide sales volumes for Roundup(R) herbicide. Strong
sales volumes of acetanilide products also contributed to the increase in
operating income. Operating results for the Chemicals segment benefited from
higher average selling prices and lower operating costs, but were hurt by the
effect of higher raw material costs. Competitive pressures worldwide have
limited the ability of the Chemicals businesses to recover the increased costs
fully through selling price increases. If restructuring charges and unusual
items in 1995 and 1994 were excluded, the Pharmaceuticals segment would have
more than tripled its operating income, principally through the success of key
growth products and higher income from alliances. Net of restructuring and
unusual items, operating income in 1995 improved moderately for Food
Ingredients, primarily because of the addition of Kelco income and the benefit
of higher sales of tabletop sweetener products. Lower aspartame sales and
higher operating expenses partially offset this increase.
Marketing, administrative and technological expenses increased in 1995,
principally because of higher marketing expenses used to support higher sales,
and the inclusion of 10 months of operating expenses from the acquired Kelco
business. Technological expenses were up because of higher research and
development expenses. Amortization of intangible assets increased primarily
because of the increase in intangible assets associated with the Kelco and
pharmaceutical product line acquisitions. Interest expense increased in 1995,
primarily because of higher short-term debt levels related to the acquisition
of Kelco. Interest income was higher in 1994, primarily because of the
inclusion of the aforementioned settlement with the IRS. The increase in "Other
income (expense) -- net" is principally the result of higher income from joint
ventures and equity affiliates.
Monsanto Sustains
20 Percent ROE
Performance, Moves
to New Performance
Measurement
Monsanto's principal financial target of a 20 percent return on
shareowners' equity (ROE) was achieved once again in 1995. Although
ROE is considered a useful measurement tool, management, after careful
evaluation, has decided to implement in 1996 a new value-based performance
measurement system called Economic Value Added (EVA).
<TABLE>
<CAPTION>
ROE Building Blocks 1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Net sales as a percent
of total assets 84.5% 93.0% 91.5%
(b) Net income as a
percent of net sales 8.3 7.5 6.3
(c) Total assets as a percent
of average shareowners'
equity 317.7 306.4 294.9
Return on shareowners'
equity<F1> 22.1 21.4 16.9
- -------------------------------------------------------------------------------------
<FN>
<F1>ROE is the product of items (a), (b) and (c).
</TABLE>
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 in excess of $300 million in 1995. These
savings are in line with original expectations and are expected to continue on
an annual basis. The continuation of business redesign and other productivity
efforts has yielded significant benefits as well. These initiatives will
continue as the company responds to increased global competition and higher
customer expectations.
1995 Monsanto Annual Report 31
<PAGE> 7
Review of Consolidated Results of Operations
New Products
Continue as a
Strategic Priority
New product development and commercialization continue to be strategic
priorities for Monsanto. For example, four agricultural products that were
developed through biotechnology received regulatory approvals in 1995 and early
1996. These products are Roundup Ready(TM) soybeans and cotton, NewLeaf(R)
insect-protected potatoes and Bollgard(TM) insect-protected cotton. Monsanto's
research and development (R&D) expenditures were $658 million in 1995, or 7
percent of net sales, a level that reflects 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. As a result, 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 1994, Monsanto's operating results were significantly higher than those
in 1993. The Agricultural Products segment 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 Chemicals' earnings, if the
year-to-year effect of restructurings was excluded. Pharmaceuticals'
performance improved dramatically as sales from new products increased
significantly, infrastructure costs were lower, and costs from new product
introductions declined. Food Ingredients performed well, as significant cost
reductions largely offset lower average selling prices. As a result, net income
for 1994 was $622 million, or $5.32 per share, compared with income of $494
million, or $4.10 per share, in 1993. Both years' results, however, were
affected by unusual events.
As described in the Notes to Financial Statements, Monsanto recognized a
net restructuring charge of $22 million aftertax, or $0.19 per share, in
December 1994. The company also settled certain tax matters related to the 1985
acquisition of Searle with the IRS and recognized an aftertax gain of $21
million, or $0.18 per share, in 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, 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 Products segment and the
Chemicals segment.
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(R). The settlement resulted in a $22 million aftertax gain,
or $0.18 per share. These costs were expensed in 1992, pending resolution of
the claim.
Net sales in 1994 were 5 percent higher than those in 1993. Sales in 1994
for Agricultural Products were up 13 percent from those in 1993, primarily
because of a significant increase in worldwide sales volumes of Roundup(R)
herbicide. Continued worldwide adoption of conservation tillage techniques,
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. Pharmaceuticals' net sales growth was led
by a significant increase in sales of newly introduced 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 competition on sales of the Calan(R) family
of calcium channel blockers. Chemicals' net sales for 1994 were slightly higher
than those in 1993. If 1993 net sales from divested businesses were excluded,
net sales for 1994 would have increased 6 percent, as sales volumes increased
for all key products worldwide. Food Ingredients' net sales declined because of
lower average selling prices
32 1995 Monsanto Annual Report
<PAGE> 8
Review of Consolidated Results of Operations
for aspartame. Sales volumes for NutraSweet(R) brand sweetener, the company's
trademark aspartame product, declined 4 percent from volumes in 1993. However,
sales of tabletop sweeteners, such as Equal(R), Canderel(R) and NutraSweet(R),
increased slightly.
Operating income in 1994 of $923 million increased 14 percent, compared
with $810 million in operating income in 1993. If the $40 million in net pretax
restructuring and unusual items in 1994 and the $30 million net pretax gain
from unusual items in 1993 were excluded, operating income would have increased
by $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 Chemicals segment.
If the aforementioned 1994 and 1993 restructuring charges and unusual
items were excluded, operating results would have improved significantly for
the Agricultural Products, Chemicals and Pharmaceuticals segments. Food
Ingredients' operating income declined modestly from that in the prior year.
Agricultural Products' operating income in 1994 was a record, primarily because
of significantly higher worldwide sales volumes for Roundup(R) herbicide, the
inclusion of a full year of earnings from the acquired Ortho business, and the
introduction of new products. Operating results for Chemicals 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. Pharmaceuticals' improved operating
results benefited from significant growth in sales of new products, cost
savings from restructuring actions, and lower new product introduction costs.
Food Ingredients' lower operating income in 1994 resulted from reduced selling
prices and sales volumes for aspartame, partially offset by cost reductions and
higher sales of tabletop sweeteners.
Marketing and administrative expenses increased in 1994, principally
because of 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. These higher costs were partially offset
by lower new product introduction costs for the Pharmaceuticals segment.
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.
<TABLE>
Analysis of Change
in Earnings per Share
<CAPTION>
Better (Worse)
- -------------------------------------------------------------------------------------
1995 vs. 1994 vs.
1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C>
Sales-Related Factors:
Selling prices $ 0.78 $(0.71)
Sales volumes and mix 1.77 1.70
- -------------------------------------------------------------------------------------
Total Sales-Related Factors 2.55 0.99
- -------------------------------------------------------------------------------------
Cost-Related Factors:
Raw material and
manufacturing costs (1.06) 0.22
Marketing, administrative
and technological expenses (0.66) (0.27)
Amortization of intangible assets (0.05) 0.03
- -------------------------------------------------------------------------------------
Total Cost-Related Factors (1.77) (0.02)
- -------------------------------------------------------------------------------------
Other Factors:
Change in shares outstanding 0.04 0.15
Other expenses -- net 0.11 0.24
Divestitures 0.01 (0.01)
- -------------------------------------------------------------------------------------
Total Other Factors 0.16 0.38
- -------------------------------------------------------------------------------------
Change in Earnings per Share
Before Restructuring and
Unusual Factors 0.94 1.35
Restructuring and unusual factors 0.10 (0.13)
- -------------------------------------------------------------------------------------
Change in Earnings per Share $ 1.04 $ 1.22
- -------------------------------------------------------------------------------------
</TABLE>
1995 Monsanto Annual Report 33
<PAGE> 9
Review of Consolidated Results of Operations
[SALES VOLUME INDEX GRAPH]
^The sales volume index increase in 1995 was led by a significant increase in
worldwide sales volumes for Roundup(R) herbicide and by sales volume increases
for key growth products at Searle. The Agricultural Products segment is
discussed on pages 35-37, and the Pharmaceuticals segment on pages 39-41.
[SELLING PRICE INDEX GRAPH]
^The index of selling prices increased slightly in 1995. This was primarily
because of the effect of higher selling prices for the Chemicals segment.
The Chemicals segment is discussed on pages 37-39.
[RAW MATERIAL COST INDEX GRAPH]
^The raw material cost index in 1995 primarily affected the Chemicals segment.
The Chemicals segment is discussed on pages 37-39.
<TABLE>
Segment Data
<CAPTION>
Operating Operating
Net Sales Contribution<F1> Income (Loss)<F2>
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Agricultural Products $2,472 $2,224 $1,967 $ 523 $ 501 $408 $486 $476 $400
Chemicals 3,689 3,715 3,684 357 338 290 322 304 331
Pharmaceuticals 1,711 1,520 1,387 142 51 (22) 131 54 (34)
Food Ingredients 1,090 813 864 204 173 187 109 157 166
Corporate (60) (63) (52) (63) (68) (53)
- ------------------------------------------------------------------------------------------------------------------------------------
Total $8,962 $8,272 $7,902 $1,166 $1,000 $811 $985 $923 $810
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Depreciation
Total Assets Capital Expenditures and Amortization
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Agricultural Products $ 2,589 $2,434 $2,166 $134 $106 $109 $137 $138 $129
Chemicals 2,699 3,101 3,146 220 212 224 214 254 263
Pharmaceuticals 2,561 2,037 2,044 78 61 70 127 110 115
Food Ingredients 2,182 1,003 1,011 65 29 32 115 57 63
Corporate 580 316 273 3 1 2 5 2 2
- ------------------------------------------------------------------------------------------------------------------------------------
Total $10,611 $8,891 $8,640 $500 $409 $437 $598 $561 $572
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Operating contribution is a measure of a segment's cash-based
operating profitability. It excludes goodwill amortization and the effects
of restructuring actions and unusual items from operating income.
<F2>Operating income was affected by the 1995, 1994 and 1993
restructurings and other unusual items as follows:
<CAPTION>
Income (Expense)
- -------------------------------------------------------------------------------------
Segment 1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Agricultural Products $ (27) $(16) $ (3)
Chemicals (33) (33) 43
Pharmaceuticals 7 20 3
Food Ingredients (69) (7) (12)
Corporate (3) (4) (1)
- -------------------------------------------------------------------------------------
Total $(125) $(40) $ 30
- -------------------------------------------------------------------------------------
</TABLE>
34 1995 Monsanto Annual Report
<PAGE> 10
Segment Data
In February 1995, Monsanto created a new organizational structure that
assigns primary business responsibilities to individual business units. As a
result of those changes and the acquisition of Kelco, Monsanto has realigned
its segment structure. The Food Ingredients segment in 1995 reflected
Monsanto's Kelco operations, NutraSweet(R) brand sweetener, and tabletop
sweeteners and other consumer products. The Pharmaceuticals segment reflected
the operations of Searle after the transfer of the Canderel(R) tabletop
sweetener business to the Food Ingredients segment. Segment information for
1994 and 1993 has been reclassified to conform to the current presentation.
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 were stated on a current cost basis.
Sales between segments were not significant. Certain corporate expenses,
primarily those related to the overall management of Monsanto, were not
allocated to the segments or geographic areas. Corporate assets primarily
include investments in affiliates and a portion of the cash balance.
[1995 NET SALES GRAPH]
The principal factors that accounted for the segments' performances in
1995 and 1994, along with the factors that are expected to affect operating
results in the near term, are described on the following pages.
<TABLE>
Agricultural Products
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $2,472 $2,224 $1,967
Operating Contribution<F1> 523 501 408
Operating Income 486 476 400
Total Assets 2,589 2,434 2,166
Capital Expenditures 134 106 109
Depreciation and
Amortization 137 138 129
- --------------------------------------------------------------------------------------
<FN>
<F1>Operating contribution is operating income excluding goodwill amortization
and the effect of restructuring actions and unusual items.
</TABLE>
The Agricultural Products segment is a leading worldwide developer,
manufacturer and marketer of crop protection 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 made in markets outside the United
States. Weather conditions in agricultural markets worldwide affect sales
volumes.
The Agricultural Products segment set sales and operating income records
in 1995, primarily because of another year of outstanding performance from the
family of Roundup(R) herbicides.
Net sales for the segment in 1995 were a record $2.5 billion, 11 percent
higher than those in 1994. The increase was driven by significantly higher
sales volumes of Roundup(R) herbicide. Demand for this family of glyphosate-
based products continues to be strong worldwide, and can be attributed to
further increases in the use of conservation tillage practices, effective
pricing, and new end-use strategies. Selling price reductions, principally in
markets outside the United States, made Roundup(R) cost effective for weed
control in a broader range of crop and industrial uses. The effect of
[AGRICULTURAL PRODUCTS NET SALES GRAPH]
1995 Monsanto Annual Report 35
<PAGE> 11
Segment Data
generic competition, principally in certain foreign markets, dampened selling
prices modestly. However, the effect of increased sales volumes on operating
income exceeded the effect of lower selling prices.
Net sales in 1995 also benefited from higher sales of Posilac(R) bovine
somatotropin (BST) and Harness(R) herbicide. Net sales of Harness(R) increased
significantly from those in 1994, primarily because of higher volumes.
However, these factors were somewhat offset by lower net sales of the
lawn-and-garden products of the Solaris group. This decline was caused by
unfavorable weather conditions in the western United States, which is a large
consumer market for garden products. In addition, distribution changes in
1995 that are designed to move product sales closer to the time of consumer
demand have been implemented, effectively moving sales from 1995 into 1996.
[AGRICULTURAL PRODUCTS OPERATING MEASURES GRAPH]
Both operating contribution and operating income increased from last
year's levels, up 4 percent and 2 percent, respectively. The increase in
operating income was affected by unusual items in both 1995 and 1994. The
unusual items included in 1995 operating income were $27 million in
restructuring charges and other actions, principally related to facility
closures and the cost of work force reductions. Operating income in 1994
included $30 million in restructuring charges for employment reductions and
costs to terminate a program. The 1994 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. If unusual items in 1995 and 1994 were excluded, 1995 operating income
for Agricultural Products would have increased $21 million, or 4 percent.
In addition to the strong operating performance of Roundup(R) and other
crop protection products, operating contribution and operating income in 1995
also benefited from lower manufacturing costs. Higher marketing expenses used to
support the base business and new product introductions partially offset the
increases in operating contribution and operating income.
Prior Year Review
Net sales for Agricultural Products in 1994 were 13 percent higher than
net sales in 1993. Operating contribution and operating income increased $93
million and $76 million, respectively, from those in 1993. 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
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).
Worldwide sales volumes in 1994 for the family of Roundup(R) herbicides
improved significantly from 1993 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 foreign markets, continued to
benefit sales volumes by making Roundup(R) cost effective for weed control in a
broader range of crop and industrial uses. The effect of generic competition,
principally in certain foreign 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(R) in the United States. Earnings from
the acetanilide family
36 1995 Monsanto Annual Report
<PAGE> 12
Segment Data
of herbicides declined because of lower sales into the former Soviet Union as a
result of poor economic conditions, and because of one-time launch costs for
the successful introduction of Harness(R) in the United States.
Agricultural
Products
outlook
Roundup(R) and other glyphosate-based herbicides face competition from
generic producers in certain markets outside the United States. Patents
protecting Roundup(R) in various countries expired in 1991, while compound per
se patent protection for the active ingredient in Roundup(R) 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. Monsanto has introduced new formulations of Roundup(R), called
Roundup(R) Ultra and Roundup(R) Pro herbicides, in the United States.
Significant growth potential for Roundup(R) remains in conservation tillage
applications worldwide.
A significant number of new herbicide and biotechnology-related products
are in the research and development pipeline, some of which should be
commercialized in the next few years. These products are being developed either
by Monsanto or in partnership with biotechnology and seed production companies.
Posilac(R) bovine somatotropin (BST) offers significant value to the dairy
industry by increasing the efficiency of milk production. The U.S. Food and
Drug Administration has made no changes to its interim guidance issued in
February 1994 on the labeling of milk and milk products from cows supplemented
with BST. Any significant change that might restrict the use of Posilac(R) or
the movement of milk among milk processors could affect future sales.
<TABLE>
Chemicals
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $3,689 $3,715 $3,684
Operating Contribution<F1> 357 338 290
Operating Income 322 304 331
Total Assets 2,699 3,101 3,146
Capital Expenditures 220 212 224
Depreciation and
Amortization 214 254 263
- --------------------------------------------------------------------------------------
<FN>
<F1>Operating contribution is operating income excluding goodwill amortization
and the effect of restructuring actions and unusual items.
</TABLE>
The Chemicals segment produces and markets a range of performance
materials -- including nylon and acrylic fibers, Saflex(R) plastic interlayer,
phosphorus and its derivatives, and specialty chemicals -- used by customers to
make consumer, household, automotive and industrial products.
Chemicals' net sales decreased slightly in 1995. Both operating
contribution and operating income increased 6 percent from 1994 results.
However, net sales and operating results for the first four months of 1995 and
for all of 1994 include those from the company's rubber chemicals and
instruments businesses. As further discussed in the Notes to Financial
Statements, Monsanto and Akzo Nobel N.V. formed a 50-50 joint venture in 1995,
known as Flexsys L.P., by combining their respective rubber chemical
businesses. Operations for Flexsys commenced on May 1, 1995. As a result, sales
and operating results for the company's rubber chemicals and instruments
businesses are no longer included in consolidated totals. If the sales from
these businesses were excluded in both 1995 and 1994, Chemicals' sales in 1995
would have increased 7 percent from those in 1994. All business units included
in the Chemicals segment posted sales gains in 1995 from prior year amounts.
The sales increases for these units can be attributed primarily to higher
average selling prices and to an improved sales mix.
[CHEMICALS NET SALES GRAPH]
1995 Monsanto Annual Report 37
<PAGE> 13
Segment Data
Net sales for fibers products increased modestly, primarily because of
higher selling prices for acrylic fibers and intermediates. Nylon fiber sales
were down moderately compared with sales last year, as the carpet industry
experienced lower consumer demand in 1995. Nylon intermediate sales in 1995
increased significantly from sales in the prior year, primarily on the strength
of higher selling prices. Demand for acrylic fibers in U.S. markets was soft
during 1995 and negatively affected sales volumes. This decline was partially
offset by higher export sales, particularly in China. Sales of specialty
products in 1995 increased from those in 1994, principally because higher
average selling prices offset the effect of slightly lower sales volumes. Net
sales of performance materials were up slightly from sales in 1994 on the
strength of higher sales volumes and an improved sales mix, although partially
offset by lower average selling prices. Net sales of Saflex(R) plastic
interlayer increased modestly from sales in 1994, principally because of
favorable exchange rates. Sales volumes were essentially even with last year's
volumes as expected growth in the global automotive markets failed to
materialize in 1995.
Net sales of plastics products in 1995 were higher than those in 1994,
primarily because of higher average selling prices. As further discussed in
the Notes to Financial Statements, Monsanto sold its worldwide styrenics
plastics business in December 1995 for $580 million. This sale resulted in an
aftertax gain of $116 million. Monsanto's 1995 results included net sales and
operating income of $663 million and $12 million, respectively, from the
styrenics plastics business.
[CHEMICALS OPERATING MEASURES GRAPH]
Operating contribution and operating income for the Chemicals segment
increased in 1995 from those in the prior year. A number of unusual items
affected profitability in both years. Operating income in 1995 included a net
charge of $33 million for restructuring and other actions, primarily for the
costs to close several facilities. Operating income in 1994 was reduced by
$33 million in restructuring charges, principally related to employment
reductions and costs to close several facilities.
Operating contribution and operating income were positively affected by
higher selling prices, the effect of continued cost reduction efforts, and
manufacturing efficiencies, but were hurt by higher raw material costs.
Competitive pressures worldwide have limited the Chemicals segment's ability
to recover the increased raw material costs fully through increased selling
prices.
Prior Year Review
In 1994, the Chemicals segment 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.
Chemicals' 1994 net sales were slightly higher than net sales in 1993.
Sales in 1993 included those from businesses later divested as part of a
restructuring program. If net sales from these divested businesses were
excluded, 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 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 1993. 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.
38 1995 Monsanto Annual Report
<PAGE> 14
Segment Data
Operating contribution and 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 segment's profitability, was 86 percent in 1994 vs. 77 percent in 1993.
Partially offsetting these gains were significantly higher raw material
prices.
Chemicals
outlook
The Chemicals segment is affected by economic conditions, particularly as
they relate to the automotive and housing industries.
The prices of purchased raw materials used by the Chemicals segment have
been coming down as the world economy slows and as production capacity comes on
line worldwide. If global economic growth remains in line with expectations,
continuing announcements of new capacity should result in more favorable raw
material costs for Monsanto in the next few years. However, global competition
and customer demands for efficiency will continue to make price increases
difficult.
The Chemicals segment intends to improve its performance through cost
reductions and redesign of its businesses. Growth opportunities exist through
expansion into global markets, the development of new products and new
markets for existing or modified products, and strategic acquisitions,
partnerships or joint ventures.
Pharmaceuticals
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $1,711 $1,520 $1,387
Operating Contribution<F1> 142 51 (22)
Operating Income (Loss) 131 54 (34)
Total Assets 2,561 2,037 2,044
Capital Expenditures 78 61 70
Depreciation and
Amortization 127 110 115
- --------------------------------------------------------------------------------------
<FN>
<F1>Operating contribution is operating income excluding goodwill amortization
and the effect of restructuring actions and unusual items.
</TABLE>
The Pharmaceuticals segment reflects the operations of Searle. 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, to treat
certain infections, and to provide better women's health care.
Net sales for the Pharmaceuticals segment in 1995 were a record $1.7
billion, or 13 percent higher than net sales last year. This strong increase
was driven by higher sales volumes, principally from excellent growth in key
products, such as Daypro(R) and Arthrotec(R) arthritis treatments, and Ambien(R)
short-term treatment for insomnia. Each of these products had double-digit
increases in net sales vs. those in the prior year. In total, these key
products contributed approximately $500 million to 1995 net sales. Sales and
earnings growth also benefited from the women's health care product line
recently acquired from Syntex. The sales increase also reflects the effect of
approximately $20 million in favorable adjustments under certain sales rebate
programs in the United States for product sales made in prior years. The 1995
net sales increase for Pharmaceuticals was partially offset by lower sales of
the family of Calan(R) calcium channel blockers.
[PHARMACEUTICALS NET SALES GRAPH]
1995 Monsanto Annual Report 39
<PAGE> 15
Segment Data
Both operating contribution and operating income for Pharmaceuticals more
than doubled from the 1994 amounts. Operating results in 1995 and 1994 were
affected by unusual items. Operating income in 1995 included a $13 million
charge for restructuring, principally related to employment reductions, and
other actions. Operating results in 1995 also reflected the aforementioned $20
million in favorable sales adjustments. Pharmaceuticals' operating income in
1994 included $15 million in restructuring charges, primarily for employment
reductions, and a $35 million gain from the reversal of prior year
restructuring reserves. The reversal of the reserves was primarily caused by
higher-than-anticipated proceeds and lower-than-expected exit costs related to
certain divested facilities. If the effect of these unusual items were
excluded, operating income would have been $124 million in 1995 and $34 million
in 1994. The significant improvement in operating income primarily came from
higher sales of key growth products. Higher income from cost-sharing alliances
also benefited operating results in 1995. The increase in operating income was
partially offset by higher marketing expenditures incurred to support the sales
growth in key products.
[PHARMACEUTICALS OPERATING MEASURES GRAPH]
Searle's investment in research and development (R&D) continues to be
significant. R&D expenditures, before cost-sharing payments from alliances,
were 21 percent and 22 percent of the segment's net sales in 1995 and 1994,
respectively. Future R&D spending is also expected to be significant. Searle
will continue to seek R&D collaborations to share development costs and to
combine strengths to speed product development. This investment reflects the
segment's commitment to securing a continuing stream of new products.
Prior Year Review
Net sales for the Pharmaceuticals segment were 10 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), Ambien(R) and Arthrotec(R) -- more than offset a
decline in sales of the family of Calan(R) calcium channel blockers. In total,
these new products contributed $310 million to 1994 net sales. Net sales of the
family of Calan(R) products, sold primarily in Canada and the United States,
were $321 million, 8 percent lower than sales in 1993. This decline primarily
reflected the effect of generic competition on Calan(R) SR in the United
States. However, the effect was substantially reduced by the segment's sales of
verapamil SR resulting from a distribution arrangement with a generic
distributor.
Pharmaceuticals' operating contribution and operating income in 1994
increased $73 million and $88 million, respectively, from the 1993 amounts.
Unusual items included in 1994 operating income were $15 million in
restructuring charges, principally related to employment reductions, and $35
million in reversals of prior year restructuring reserves, primarily for
higher-than-anticipated proceeds and lower-than-expected exit costs related to
certain divested facilities. Operating contribution and operating income 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.
Pharmaceuticals
outlook
Arthrotec(R) arthritis treatment -- a combination of diclofenac, a
nonsteroidal anti-inflammatory drug (NSAID), and Cytotec(R), Searle's ulcer
preventive drug -- was launched in five new markets, including Germany, in
1995. In 1996, additional launches are expected in Italy and several other
markets in Europe and Asia-Pacific. A new drug application for Arthrotec(R) was
filed with the U.S. Food and Drug
40 1995 Monsanto Annual Report
<PAGE> 16
Segment Data
Pharmaceuticals
outlook
(continued)
Administration (FDA) in December 1995. A study, published in the third quarter
of 1995, demonstrated that Cytotec(R) effectively reduces the risk of serious
gastrointestinal problems in patients on NSAID therapy. This study should
continue to positively affect sales of Cytotec(R).
In the United States, generic competition and continuing controversy
following the results of a recent study about the use of calcium channel
blockers have negatively affected sales of the family of Calan(R) calcium
channel blockers.
In the first quarter of 1996, Searle received FDA approval for its
new verapamil product, Covera-HS(TM). The product is designed to provide peak
protection for hypertension and angina at the time of day when patients are
most vulnerable to rises in blood pressure and heart rate, which should
differentiate it from other calcium channel blockers and anti-hypertensive
drugs. Searle plans to launch Covera-HS(TM) in the first half of 1996.
In addition to Covera-HS(TM), Searle has a number of other compounds in
various stages of development. Drugs being developed for the treatment of
cardiovascular conditions include xemilofiban, an oral anti-platelet agent to
inhibit the clotting of blood vessels associated with angioplasty; tissue
factor pathway inhibitor (TFPI) to prevent blood from clotting during
microvascular surgery and to treat sepsis; and epoxymexrenone to treat
congestive heart failure, hypertension and cirrhosis. Searle's participation in
the arthritis market potentially could increase with the development of
oxaprozin salt, for the relief of arthritis and pain, as well as COX-2
inhibitors, products that selectively treat arthritis and pain without
gastrointestinal side effects. Also in development is synthokine-1, an
adjunctive therapy to stimulate the replenishment of white blood cells and
platelets in chemotherapy patients.
Food Ingredients
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $1,090 $ 813 $ 864
Operating Contribution<F1> 204 173 187
Operating Income 109 157 166
Total Assets 2,182 1,003 1,011
Capital Expenditures 65 29 32
Depreciation and
Amortization 115 57 63
- --------------------------------------------------------------------------------------
<FN>
<F1>Operating contribution is operating income excluding goodwill amortization
and the effect of restructuring actions and unusual items.
</TABLE>
The Food Ingredients segment manufactures and markets sweeteners,
including NutraSweet(R) brand sweetener and Equal(R), Canderel(R) and
NutraSweet(R) brand tabletop sweeteners. It also develops, produces and markets
alginates, biogums and other food ingredients.
Food Ingredients' net sales for the year were up $277 million, or 34
percent, from the prior year's net sales. Results in 1995 include sales from
the acquired Kelco business. Without these sales, net sales for Food
Ingredients would have declined, primarily because of lower average selling
prices for aspartame. Sales of tabletop sweeteners were up 6 percent, primarily
because of higher sales volumes. A large portion of the increased sales volumes
has come from international markets that the Food Ingredients segment is
aggressively pursuing. Lower sales of NutraSweet(R) brand sweetener, the
company's trademark aspartame product, essentially offset this increase.
Despite an increase in unit sales volumes for aspartame, the effects of lower
average pricing were more than offsetting. Kelco sales were close to
expectations and benefited from strong sales of biogum products.
Operating contribution in 1995 for Food Ingredients increased signifi-
cantly from the segment's contribution in 1994, primarily because of the
addition of Kelco. Operating income declined significantly from income in the
prior year. Certain unusual items affected earnings in both years. In 1995,
operating income included restructuring and other charges of $69 million,
principally for costs to exit a production facility and for work force
reductions. Operating income in 1994 was reduced by $7 million in restructuring
charges for work force reductions. If these unusual items were excluded,
operating income for Food Ingredients
1995 Monsanto Annual Report 41
<PAGE> 17
Segment Data
would have increased moderately, primarily because of the addition of Kelco
income, the benefit of higher sales of tabletop sweeteners, and manufacturing
efficiencies. Lower aspartame sales and higher operating expenses partially
offset the increase.
[FOOD INGREDIENTS OPERATING MEASURES GRAPH]
Prior Year Review
In 1994, Food Ingredients' net sales decreased 6 percent from 1993 net
sales, primarily as the result of lower average selling prices of NutraSweet(R)
brand sweetener. This decline was expected and resulted from lower postpatent
prices in the United States for that product. Sales volumes for NutraSweet(R)
decreased slightly from those in 1993, primarily because of lower contractual
shipments to customers. Sales volumes for tabletop sweeteners such as Equal(R),
Canderel(R) and NutraSweet(R) increased modestly in 1994 from volumes in 1993.
Food Ingredients' 1994 operating contribution and operating income declined
moderately from the 1993 amounts. Operating income in 1994 and 1993 included
pretax restructuring charges for work force reductions of $7 million and $12
million, respectively. The decline in 1994 operating contribution and income
resulted from lower average selling prices and lower sales volumes, which
were partially offset by lower operating expenses and higher sales of
tabletop sweeteners.
Food
Ingredients
outlook
Competition from generic aspartame producers has lowered selling prices
for NutraSweet(R) brand sweetener. However, the worldwide market share for this
product has been maintained because of several competitive advantages,
including a low cost position and superior quality and customer service.
Other new sweeteners also compete with NutraSweet(R) in markets outside the
United States. These sweeteners are now being reviewed by the U.S. Food and
Drug Administration (FDA), and their possible approval could negatively affect
future sales, operating income and cash flow.
International markets offer the greatest growth potential, particularly
for tabletop sweeteners. The company is developing next-generation, high-
intensity sweeteners and expects to file a food additive petition with the FDA
near the end of the decade.
The Kelco lines of alginates and biogums hold strong positions in their
food ingredients markets. While there has been some increased competition for
biogums in certain industrial applications, the effect has not been
significant. Seaweed is the raw material for alginates, and its sourcing
continues to be an area of focus.
42 1995 Monsanto Annual Report
<PAGE> 18
Geographic Data
<TABLE>
<CAPTION>
Net Sales to Operating
Unaffiliated Customers Income (Loss)<F1> Total Assets
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $5,631 $5,376 $5,162 $721 $507 $656 $ 7,181 $5,844 $5,928
Europe-Africa 1,891 1,653 1,559 240 340 129 1,927 1,947 1,801
Asia-Pacific 662 552 533 39 39 (2) 702 586 502
Canada 364 318 311 17 37 28 161 135 121
Latin America 414 373 337 63 65 43 372 300 261
Interarea Eliminations (32) 3 9 (312) (237) (246)
Corporate (63) (68) (53) 580 316 273
- ------------------------------------------------------------------------------------------------------------------------------------
Total $8,962 $8,272 $7,902 $985 $923 $810 $10,611 $8,891 $8,640
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
<TABLE>
Interarea sales have been excluded from the above table and were:
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
World area shipped from:
United States $ 878 $ 682 $ 625
Europe-Africa 293 248 133
Asia-Pacific 36 5 2
Canada 61 44 38
Latin America 2 2 4
Interarea Eliminations (1,270) (981) (802)
- -------------------------------------------------------------------------------------
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>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating income $ 359 $ 481 $ 198
Interest and other income
(expense) -- net (32) (33) (16)
Income taxes (112) (133) (67)
- -------------------------------------------------------------------------------------
Net Income of
Consolidated
Ex-U.S. Subsidiaries $ 215 $ 315 $ 115
- -------------------------------------------------------------------------------------
Total operating assets $3,162 $2,968 $2,685
Total liabilities 873 1,088 1,080
- -------------------------------------------------------------------------------------
Net Assets of Consolidated
Ex-U.S. Subsidiaries $2,289 $1,880 $1,605
- -------------------------------------------------------------------------------------
</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 $550 million for 1995, $399 million for 1994, and $435 million for
1993.
<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 1995 follows:
<CAPTION>
Monsanto's Share
- ----------------------------------------------------------------------
Net Income
Sales (Loss)
- ----------------------------------------------------------------------
<S> <C> <C>
United States $177 $ 3
Europe-Africa 395 (1)
Asia-Pacific 24 (3)
Latin America 163 18
- ----------------------------------------------------------------------
<FN>
<F1>Geographic area operating income was affected by the 1995, 1994 and 1993
restructurings and other unusual items as follows:
<CAPTION>
Income (Expense)
- -------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ (64) $(105) $ 78
Europe-Africa (4) 69 (26)
Asia-Pacific (40) (11) (15)
Canada (13) 2 (4)
Latin America (1) 9 (2)
Corporate (3) (4) (1)
- ------------------------------------------------------------------------------------
Total $(125) $ (40) $ 30
- ------------------------------------------------------------------------------------
</TABLE>
1995 Monsanto Annual Report 43
<PAGE> 19
<TABLE>
Statement of Consolidated Financial Position
<CAPTION>
(Dollars in millions, except per share) As of Dec. 31,
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 297 $ 507
Trade receivables, net of allowances of $57 in 1995 and 1994 1,629 1,530
Miscellaneous receivables and prepaid expenses 596 313
Deferred income tax benefit 415 321
Inventories 1,368 1,212
- -----------------------------------------------------------------------------------------------------------------------------------
Total Current Assets 4,305 3,883
- -----------------------------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment:
Land 118 102
Buildings 1,231 1,268
Machinery and equipment 5,549 5,916
Construction in progress 339 269
- -----------------------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 7,237 7,555
Less accumulated depreciation 4,405 4,738
- -----------------------------------------------------------------------------------------------------------------------------------
Net Property, Plant and Equipment 2,832 2,817
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in Affiliates 544 279
Intangible Assets, net of accumulated amortization of $638 in 1995
and $522 in 1994 1,964 1,134
Other Assets 966 778
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $10,611 $ 8,891
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LIABILITIES AND SHAREOWNERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities:
Accounts payable $ 648 $ 629
Wages and benefits 456 343
Income and other taxes 240 150
Restructuring reserves 163 129
Miscellaneous accruals 940 872
Short-term debt 365 312
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 2,812 2,435
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt 1,667 1,405
Deferred Income Taxes 85 65
Postretirement Liabilities 1,415 1,341
Other Liabilities 900 697
Shareowners' Equity:
Common stock (authorized: 200,000,000 shares, par value $2)
Issued: 164,394,194 shares in 1995 and 1994 329 329
Additional contributed capital 902 849
Treasury stock, at cost (48,923,899 shares in 1995 and 52,859,031 shares in 1994) (2,550) (2,744)
Reserve for ESOP debt retirement<F1> (181) (199)
Unrealized investment holding gain 34 19
Accumulated currency adjustment 101 33
Reinvested earnings 5,097 $ 4,661
- ------------------------------------------------------------------------------------------------------------------------------------
Total Shareowners' Equity 3,732 2,948
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareowners' Equity $10,611 $ 8,891
- ------------------------------------------------------------------------------------------------------------------------------------
The above statement should be read in conjunction with pages 51-63 of this report.
<FN>
<F1>ESOP stands for Employee Stock Ownership Plan.
</TABLE>
44 1995 Monsanto Annual Report
<PAGE> 20
Review of Changes in Financial Position
Financial Position Remains Strong
Monsanto's financial position remained strong in 1995, 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 slightly higher at year-end 1995. Trade receivables at
year-end 1995 increased compared with those at the prior year-end, primarily
because of the acquisition of Kelco, and strong fourth-quarter sales by Searle.
Inventories at year-end 1995 increased, primarily because of the inclusion of
Kelco inventories, and higher inventories in the Agricultural Products segment.
These increases were offset in part by lower cash and cash equivalent balances
and higher accrued tax liabilities.
The amount of net property, plant and equipment was slightly higher than
at the end of 1994, as $500 million in capital additions and the effects of
acquisitions exceeded 1995 depreciation expense and divestitures.
Total deferred tax benefits, both current and noncurrent, of $575 million
at year-end 1995 were primarily related to U.S. operations, which generally
have a strong earnings history.
The company's financial position at the end of 1995 reflects the estimated
fair value of assets acquired and liabilities assumed of Kelco and of the
pharmaceutical product line acquired from Syntex. The estimated fair value of
these assets and liabilities was approximately $1.4 billion and $115 million,
respectively. The allocation of the purchase price for these acquisitions is
based on preliminary assumptions and is subject to change.
Long-term debt at the end of 1995 was higher than that at the end of 1994,
primarily because of the issuance of 8.2 percent debentures and higher balances
of commercial paper classified as long-term issued to finance the Kelco
acquisition.
As further discussed in the Notes to Financial Statements, the company
expects to take significant equity positions in Calgene Inc. and DeKalb
Genetics Corp. in the first quarter of 1996. These investments will total
approximately $290 million and will be funded with a combination of cash and
debt. Monsanto's share of the earnings and losses from these equity affiliates
is expected to have a slightly dilutive effect on net income in 1996.
Monsanto uses financial markets worldwide for its financing needs. It has
available various short- and medium-term bank credit facilities, which are
discussed in the Notes to Financial Statements on page 56. 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.
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 59.
Monsanto's commitments and contingencies are described in the Notes to
Financial Statements on page 60.
Monsanto's return on shareowners' equity (ROE) was 22.1 percent in 1995.
The ROE and other key financial statistics are presented in the table below.
<TABLE>
<CAPTION>
Key Financial Statistics 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Return on Shareowners' Equity (ROE) 22.1% 21.4% 16.9%
(Net income divided by average shareowners' equity)
Current Ratio (Current assets divided by current liabilities) 1.5 1.6 1.6
Trade Receivables -- Days Sales Outstanding 71 67 71
(Fourth-quarter trade receivables divided by fourth-quarter
net sales times 30 days)
Inventory Turnover Ratio (Cost of goods sold divided by inventory) 3.7 3.9 3.7
Interest Coverage 6.4 7.3 6.1
(Income before interest expense and income taxes divided
by total interest cost)
Cash Provided by Operations/Total Debt 41% 76% 42%
Total Debt/Total Capitalization<F1> 35% 37% 38%
- --------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Total capitalization is the sum of short-term debt, long-term debt and
shareowners' equity.
</TABLE>
1995 Monsanto Annual Report 45
<PAGE> 21
<TABLE>
Statement of Consolidated Cash Flow
<CAPTION>
(Dollars in millions) 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
- --------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 739 $ 622 $ 494
Add income taxes 348 273 235
- --------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,087 895 729
Adjustments to reconcile to Cash Provided by Continuing Operations:
Income tax payments (335) (196) (166)
Items that did not use cash:
Depreciation and amortization 598 561 572
Restructuring expenses -- net 156 40 5
Other (6) 43 29
Working capital changes that provided (used) cash:
Accounts receivable (36) (88) 62
Inventories (198) 15 (31)
Accounts payable and accrued liabilities (198) (125) (202)
Other (67) 74 34
Nonoperating pretax gains from asset disposals (125) (11) (6)
Other items (53) 92 (4)
- --------------------------------------------------------------------------------------------------------------------
Cash Provided by Continuing Operations 823 1,300 1,022
Cash Used in Discontinued Operations (291)
- --------------------------------------------------------------------------------------------------------------------
Total Cash Provided by Operations 823 1,300 731
- --------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Property, plant and equipment purchases (500) (409) (437)
Acquisition of Kelco and pharmaceutical product line (1,296)
Acquisition and investment payments (197) (185) (510)
Investment and property disposal proceeds 128 202 298
Proceeds from sale of styrenics plastics business 580
- --------------------------------------------------------------------------------------------------------------------
Cash Used in Investing Activities (1,285) (392) (649)
- --------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net change in short-term financing 53 89 (31)
Long-term debt proceeds 658 49 379
Long-term debt reductions (403) (152) (299)
Treasury stock purchases (478) (380)
Dividend payments (306) (289) (275)
Common stock issued under employee stock plans 194 82 55
Other financing activities 56 25 13
- --------------------------------------------------------------------------------------------------------------------
Cash Provided by (Used in) Financing Activities 252 (674) (538)
- --------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (210) 234 (456)
CASH AND CASH EQUIVALENTS:
Beginning of year 507 273 729
- --------------------------------------------------------------------------------------------------------------------
End of year $ 297 $ 507 $ 273
- --------------------------------------------------------------------------------------------------------------------
The above statement should be read in conjunction with pages 51-63 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 $189 million, $129 million and $133 million in 1995,
1994 and 1993, respectively.
</TABLE>
46 1995 Monsanto Annual Report
<PAGE> 22
Review of Cash Flow
Monsanto's cash flow for 1995, 1994 and 1993 is shown in the Statement
of Consolidated Cash Flow on page 46.
Cash Flow
Remains Strong
Cash provided by continuing operations of $823 million was strong in 1995,
but decreased from last year's level of $1.3 billion. The decrease was
primarily due to the effect of increased inventory balances, higher payments
for accounts payable and accrued liabilities, and higher income tax payments.
Working capital as a percentage of net sales was about the same as that for
last year.
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.
Investment and property disposal proceeds in 1995 were $708 million,
principally related to the sale of the styrenics plastics business. Other
investment and property disposals in 1994 generated more than $200 million in
cash. The principal proceeds in 1994 and 1993 came from the sales of various
businesses associated with restructuring actions.
In December 1995, Monsanto sold its styrenics plastics business for $580
million. Approximately $150 million of the proceeds have been earmarked to
prefund certain 1996 capital expenditures. The effect of this decision
lowered cash flow from continuing operations in 1995, but will benefit 1996
cash flow. The balance of the sale proceeds was used to reduce short-term
debt.
[CASH PROVIDED BY CONTINUING OPERATIONS GRAPH]
Major uses of cash in 1995, 1994 and 1993 included dividends and capital
expenditures. Treasury stock purchases were made in 1994 and 1993. The
acquisition of the Kelco business and the Syntex pharmaceutical product line
in 1995, and investments in various 1994 and 1993 acquisitions were also
major uses of cash. Monsanto's 1995 capital expenditures focused on improved
technology, capacity expansions and environmental projects, and totaled $500
million. Business redesign efforts and productivity enhancements were
successful in increasing effective capacity at many facilities, thereby
reducing the need for additional capital expenditures.
Long-term debt proceeds in 1995 included $150 million in 8.2 percent
debentures and $400 million of commercial paper related to the Kelco
acquisition. Long-term debt repayments in 1993 included $150 million in 9-3/8
percent debentures.
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.
Management decides the amount of insurance coverage to purchase from
unaffiliated companies and the appropriate amount of risk to retain based on
the cost and availability of insurance and the likelihood of a loss. 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.
1995 Monsanto Annual Report 47
<PAGE> 23
Review of Cash Flow
Monsanto Maintains
Strong Environmental
Commitment
Monsanto remains strongly committed to complying with various laws and
government regulations concerning environmental matters and employee safety and
health. Compliance with stringent requirements will continue to be an
obligation of Monsanto, its competitors and industry in general. Monsanto is
dedicated to long-term environmental protection and compliance programs that
reduce and monitor emissions of hazardous materials into the environment, as
well as to the remediation of identified existing environmental concerns.
Expenditures in 1995 were approximately $47 million for environmental
capital projects and approximately $210 million for the management of
environmental programs, including the operation and maintenance of facilities
for environmental control. Monsanto estimates that during 1996 and 1997
approximately $30 million to $40 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 93 Superfund sites. Monsanto has resolved disputes, entered partial consent
decrees, and executed administrative orders between Monsanto and the EPA in 58
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 contaminated 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. Monsanto has an accrued liability of $71
million as of Dec. 31, 1995, 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 Superfund sites in this
category include the noncompany-owned Brio, Fike/Artel, Motco and Woburn sites,
which account for $44 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. Because of these uncertainties, primarily
related to the method and extent of remediation, potential future expenses
could be as much as $10 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 $90 million as of Dec. 31, 1995, 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. Because of these
uncertainties, potential expenses could be as much as $20 million for these
sites. Four sites in this category account for $58 million of the accrued
amount and for approximately all of the potential future expenses.
48 1995 Monsanto Annual Report
<PAGE> 24
Review of Cash Flow
Monsanto spent $60 million in 1995 for remediation of Superfund and other
contaminated sites. Most of these expenditures were related to the Chemicals
segment, and similar or lesser amounts can be expected in future years.
For hazardous and other waste facilities at operating locations, Monsanto
recognizes postclosure environmental costs and remediation costs over the
estimated remaining useful life of the related facilities, not to exceed 20
years. Monsanto spent $14 million in 1995 for remediation of these facilities
and has an accrued liability of $49 million as of Dec. 31, 1995, 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 $120 million.
While the ultimate costs and results of remediation of contaminated sites
cannot be predicted with certainty, Monsanto's liquidity, financial position
and profitability are not expected to be materially affected.
Common Stock
Purchase Program
Suspended for 1995
The company has temporarily suspended the purchase of Monsanto common
stock until the Kelco acquisition debt can be reduced to an appropriate level.
As part of an ongoing treasury stock purchase program, Monsanto's board of
directors authorized in October 1992 the purchase of 12 million shares of
Monsanto common stock, of which 3.4 million shares have been purchased. This
authority is in addition to the normal repurchase of shares for compensation
and benefits programs. There were no shares of Monsanto common stock purchased
in 1995 under this program.
Dividend Increases for
23rd Consecutive Year
Monsanto has paid quarterly dividends on its common shares without
interruption or reduction since 1928, and it has increased the dividend per
share in each of the past 23 years. Dividend payout for 1995 was 37 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. In any given 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. The number of shareowners of record as of Feb. 23, 1996, was 50,260.
The high and low common stock prices on that date were $138 and $135-1/2,
respectively.
[DIVIDENDS PER SHARE GRAPH]
^ Monsanto's dividend per share on a calendar year basis has increased 120
percent since 1985. The dividend payout rate, which is cash dividends paid
divided by net income, was 41 percent, 46 percent and 56 percent in 1995, 1994
and 1993, respectively. The dividend yield, which is dividends per share for
the year divided by the average of the high and low common stock prices for
the year, was 3 percent, 3 percent and 4 percent in 1995, 1994 and 1993,
respectively.
1995 Monsanto Annual Report 49
<PAGE> 25
<TABLE>
Statement of Consolidated Shareowners' Equity
<CAPTION>
(Dollars in millions, except per share) 1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK:
- -----------------------------------------------------------------------------------------------------
Balance, Jan. 1 and Dec. 31 $ 329 $ 329 $ 329
- -----------------------------------------------------------------------------------------------------
ADDITIONAL CONTRIBUTED CAPITAL:
Balance, Jan. 1 $ 849 $ 826 $ 820
Employee stock plans 53 23 6
- -----------------------------------------------------------------------------------------------------
Balance, Dec. 31 $ 902 $ 849 $ 826
- -----------------------------------------------------------------------------------------------------
TREASURY STOCK:
Balance, Jan. 1 $(2,744) $(2,348) $(2,029)
Shares purchased (6,170,016 and 5,795,600 shares in 1994
and 1993, respectively) (478) (380)
Net shares issued under employee stock plans
(3,935,132; 1,729,530; and 1,306,882 shares in 1995,
1994 and 1993, respectively) 194 82 61
- -----------------------------------------------------------------------------------------------------
Balance, Dec. 31 $(2,550) $(2,744) $(2,348)
- -----------------------------------------------------------------------------------------------------
RESERVE FOR ESOP DEBT RETIREMENT:<F1>
Balance, Jan. 1 $ (199) $ (218) $ (233)
Allocation of ESOP shares 18 19 15
- -----------------------------------------------------------------------------------------------------
Balance, Dec. 31 $ (181) $ (199) $ (218)
- -----------------------------------------------------------------------------------------------------
UNREALIZED INVESTMENT HOLDING GAIN:
Balance, Jan. 1 $ 19 $ 15
Net change in market value 15 4
- -----------------------------------------------------------------------------------------------------
Balance, Dec. 31 $ 34 $ 19
- -----------------------------------------------------------------------------------------------------
ACCUMULATED CURRENCY ADJUSTMENT:
Balance, Jan. 1 $ 33 $ (59) $ 15
Translation adjustments 68 92 (74)
- -----------------------------------------------------------------------------------------------------
Balance, Dec. 31 $ 101 $ 33 $ (59)
- -----------------------------------------------------------------------------------------------------
REINVESTED EARNINGS:
Balance, Jan. 1 $ 4,661 $ 4,325 $ 4,103
Net income 739 622 494
Dividends (net of ESOP tax benefits) (303) (286) (272)
- -----------------------------------------------------------------------------------------------------
Balance, Dec. 31 $ 5,097 $ 4,661 $ 4,325
- -----------------------------------------------------------------------------------------------------
The above statement should be read in conjunction with pages 51-63 of this report.
<FN>
<F1>)ESOP stands for Employee Stock Ownership Plan.
</TABLE>
<TABLE>
<CAPTION>
Key Financial Statistics 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stock Price <F2> High $124 3/4 $ 86 1/2 $ 75
Low 68 1/4 66 1/2 48 7/8
Year-End 122 1/2 70 1/2 73 3/8
- -----------------------------------------------------------------------------------------------------------------------
Per Share Dividends 2.70 2.47 2.30
Shareowners' Equity 32.32 26.43 24.62
- -----------------------------------------------------------------------------------------------------------------------
Average Daily Share Trading Volume (thousands of shares) 342 376 335
- -----------------------------------------------------------------------------------------------------------------------
<FN>
<F2>Based on daily reported high and low stock prices.
</TABLE>
50 1995 Monsanto Annual Report
<PAGE> 26
Notes to Financial Statements
Significant Accounting
Policies
Monsanto's significant accounting policies are italicized in the following
Notes to Financial Statements. Previously reported amounts have been
reclassified to make them consistent with the 1995 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' net earnings or losses 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 hyperinflationary 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 denominated in currencies other than the entity's
currency. This hedging activity is intended to protect the company from adverse
fluctuations in foreign currencies vs. the U.S. dollar.
As of Dec. 31, 1995, Monsanto had currency forward contracts to purchase
$247 million and to sell $268 million of other currencies, principally the
Belgian franc, Japanese yen, French franc and British pound sterling. There
were no purchased currency option contracts outstanding as of Dec. 31, 1995.
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, 1995, 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 1995, the board of directors approved a restructuring plan.
The pretax charge associated with these actions was $169 million ($125 million
aftertax) and is intended to cover the costs of work force reductions, business
consolidations, facility closures, and the exit from nonstrategic businesses
and facilities. Approximately 550 positions are expected to be eliminated by
these actions.
The other actions taken in 1995 were associated with the formation of the
Flexsys joint venture, which is discussed in "Principal Acquisitions and
Divestitures." The venture partners, Monsanto and Akzo Nobel N.V., agreed to
bear the one-time costs required to integrate their respective rubber chemicals
businesses into the joint venture. For Monsanto, these integration costs, which
totaled $40 million pretax ($25 million aftertax), were primarily for the cost
of reducing the work force by approximately 120 people and for special
termination benefits for approximately 300 people transferring from Monsanto to
the joint venture. The charge for these actions was recorded in the first
quarter of 1995.
1995 Monsanto Annual Report 51
<PAGE> 27
Notes to Financial Statements
Other items that affected results of operations in 1995 included the
receipt in the first and third quarters of settlement payments from various
insurers related to environmental and other insurance litigation. The combined
effect of these settlements totaled $92 million pretax ($57 million aftertax).
In addition, Monsanto settled a lawsuit related to a Superfund site in La
Marque, Texas. The suit was brought by IT Corporation (IT), a subsidiary of
International Technology Corp., and claimed, among other things, breach of a
contract calling for IT to perform incineration and remediation work at the
site. Monsanto settled the suit by paying $41 million pretax ($25 million
aftertax), and recorded the payment in the third quarter of 1995. The company
also recorded approximately $20 million in favorable pretax adjustments ($13
million aftertax) under certain sales rebate programs in the United States for
product sales made in prior years.
In December 1994, the 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, which was substantially
completed by the end of 1995, reduced worldwide employment by approximately 450
people. In addition, the company closed certain facilities and terminated
certain programs. The pretax expense related to these actions was $89 million
($55 million aftertax). In the fourth quarter of 1994, the board approved the
reversal of $49 million pretax of excess restructuring reserves from prior
years. The excess was due primarily to higher-than-expected proceeds and
lower-than-expected exit costs from the sale and shutdown of nonstrategic
businesses and facilities included in the 1993 and 1992 restructuring actions.
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. This settlement included interest of $33 million pretax
($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 of or exit from some nonstrategic products, the withdrawal from the
pyridine research program in the Agricultural Products segment, and the
consolidation of some manufacturing capacity. The net pretax expense related to
these actions was $5 million ($7 million aftertax) and principally affected
Agricultural Products and Chemicals.
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(R) herbicide. These costs had been expensed in
1992 pending resolution of the claim.
<TABLE>
The components of the pretax expense (income) related to the restructuring
programs and the other actions were:
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of employee reductions $ 62 $ 68 $ 5
Shutdown and consolidation
of various facilities and
departments 107 (25) 51
Glyphosate plant damage
settlement (35)
Insurance-related settlement
(income) (92)
Litigation settlement 41
Joint venture integration costs 40
Other costs (income) (20) (22) 47
Gains on business sales (189) (14) (98)
- -------------------------------------------------------------------------------------
Total $ (51) $ 7 $(30)
- -------------------------------------------------------------------------------------
</TABLE>
Restructuring expenses are recorded based on estimates prepared at the time
the restructuring actions are approved by the board of directors. The balance
in restructuring reserves as of Dec. 31, 1995, was $275 million. It is
earmarked primarily for work force reduction costs associated with the 1995
actions and for the planned facility dismantling and site closure costs that
remain from previous restructurings. Management believes that the balance of
these reserves as of Dec. 31, 1995, is adequate for completion of those
activities. Restructuring actions during the last four years have reduced these
liabilities by approximately $1.3 billion. Approximately two-thirds of these
reductions were recorded for write-offs and expenditures related to the
termination or sale
52 1995 Monsanto Annual Report
<PAGE> 28
Notes to Financial Statements
of nonstrategic products and facilities. The remainder of the reductions were
primarily related to the cost of work force reduction programs, most of 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>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ (20)
Cost of goods sold (11) $(35)
Restructuring expenses -- net 156 $ 40 5
- -------------------------------------------------------------------------------------
Decrease (increase) in
operating income 125 40 (30)
Interest income (33)
Gain on sale of styrenics
plastics business (189)
Other expense<F1> 13
- -------------------------------------------------------------------------------------
Total decrease (increase)
in income before
income taxes $ (51) $ 7 $(30)
- -------------------------------------------------------------------------------------
<FN>
<F1>Monsanto's share of 1995 restructuring actions undertaken by the Flexsys
joint venture.
</TABLE>
Net income increased by $11 million, or $0.09 per share, in 1995; was
reduced by $1 million, or $0.01 per share, in 1994; and increased by $15
million, or $0.12 per share, in 1993 because of these restructurings and
unusual items. In 1993, net sales of $208 million and operating income
of $1 million for divested businesses were included in Monsanto's net sales
and operating income.
Principal Acquisitions
and Divestitures
In February 1996, Monsanto and DeKalb Genetics Corp. agreed to a long-term
research and development collaboration in agricultural biotechnology. In
addition, Monsanto will acquire a significant equity position in DeKalb for
approximately $160 million.
In December 1995, Monsanto sold its worldwide styrenics plastics business.
In a separate but related transaction, Monsanto has reached an agreement to
sell its shares in Monsanto Premier Kasei Co. Ltd., a styrenics plastics
manufacturing joint venture in Thailand, to one of its joint venture partners.
As a result of these transactions, Monsanto received $580 million, which
resulted in an after-tax gain of $116 million (net of applicable income taxes
of $73 million). Monsanto's results of operations for 1995 included net sales
and operating income of $663 million and $12 million, respectively, from the
styrenics plastics business.
In September 1995, Searle acquired the women's health care assets,
primarily product rights, of the former Syntex Corp., a subsidiary of Roche
Holding Ltd., for approximately $240 million. The results of operations for the
acquired product rights were included in the Statement of Consolidated Income
from the date of acquisition. The product rights are being amortized over 10
years.
In June 1995, Monsanto announced that it had signed a letter of intent to
acquire a 49.9 percent interest in Calgene Inc. for approximately $30 million
in cash, certain intellectual property, and 100 percent of the partnership
interests in Gargiulo L.P. and Gargiulo G.P. In addition, Monsanto will provide
long-term credit facilities for the general business needs of Calgene and
Gargiulo. The Calgene transaction is subject to the approval of the shareowners
of Calgene and is anticipated to close in early 1996.
In February 1995, Monsanto completed its acquisition of the worldwide
business of Kelco, the specialty chemicals division of Merck & Co. Inc., for
approximately $1,062 million. The acquisition included total assets with a fair
value of $1,172 million and liabilities of $110 million. The excess of the
purchase price over the estimated fair value of the net assets acquired is
being amortized over 30 years. The financial results of the Kelco business were
included in the Statement of Consolidated Income from the date of acquisition.
On a pro forma basis, results of operations for the years ended Dec. 31, 1994
and 1993 would not have been significantly different assuming the acquisition
had occurred as of the beginning of those years.
In December 1994, Monsanto and Akzo Nobel N.V. agreed to form a 50-50
joint venture by combining their respective rubber chemicals businesses. On May
1, 1995, the joint venture, known as Flexsys L.P., began operations and is
accounted for as an equity affiliate. Accordingly, Monsanto's share of Flexsys'
earnings after that date was reflected in "Other income (expense) -- net" in
the Statement of Consolidated Income. Certain integration costs were incurred
by Monsanto upon the formation of the joint venture and are more fully
described in "Restructuring and Other Actions."
1995 Monsanto Annual Report 53
<PAGE> 29
Notes to Financial Statements
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 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.
Depreciation and
Amortization
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation $459 $442 $469
Amortization of
intangible assets 119 81 81
Obsolescence 20 38 22
- -------------------------------------------------------------------------------------
Total $598 $561 $572
- -------------------------------------------------------------------------------------
</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 amortization. The
components of intangible assets and their estimated remaining useful lives
were:
<CAPTION>
Estimated
Remaining Life<F1> 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Goodwill 27 $1,370 $ 776
Patents 8 81 48
Other intangible assets 13 513 310
- ---------------------------------------------------------------------------------------------
Total $1,964 $1,134
- ---------------------------------------------------------------------------------------------
<FN>
<F1>Weighted average, in years, as of Dec. 31, 1995.
</TABLE>
Goodwill and other intangible assets increased in 1995, primarily because
of the acquisition of Kelco and the acquisition of certain product rights.
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 (5 to 40 years). 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
<TABLE>
Certain investments, primarily equity securities, are recorded at their
market values. When a decline in market value is deemed other than temporary,
the reduction to the investment in a security is charged to expense. As of Dec.
31, these equity securities were detailed as follows:
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Aggregate fair value $163 $140
Gross unrealized holding:
Gains 63 44
Losses 7 8
- -------------------------------------------------------------------------------------
</TABLE>
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, 1995
and 1994, the total amortized cost of these securities was $272 million and
$247 million, respectively.
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 (66 percent as of Dec.
31, 1995) 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.
54 1995 Monsanto Annual Report
<PAGE> 30
Notes to Financial Statements
<TABLE>
The components of inventories were:
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 874 $ 751
Goods in process 305 285
Raw materials and supplies 434 459
- -------------------------------------------------------------------------------------
Inventories, at FIFO cost 1,613 1,495
Excess of FIFO over LIFO cost (245) (283)
- -------------------------------------------------------------------------------------
Total $1,368 $1,212
- -------------------------------------------------------------------------------------
</TABLE>
Inventories at FIFO cost approximate current cost. The effect of LIFO
inventory liquidations increased pretax income by $24 million in 1995, related
to the sale of the styrenics plastics business, and by $15 million in 1994. The
effect of the 1995 liquidations is included in the gain on the sale of the
styrenics plastics business.
Income Taxes
<TABLE>
The components of income before income taxes were:
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 760 $447 $547
Outside United States 327 448 182
- -------------------------------------------------------------------------------------
Total $1,087 $895 $729
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
The components of income tax expense charged to operations were:
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
U.S. federal $ 288 $118 $113
U.S. state 19 17 12
Outside United States 121 94 56
- -------------------------------------------------------------------------------------
428 229 181
- -------------------------------------------------------------------------------------
Deferred:
U.S. federal (80) 2 35
U.S. state 9 3 8
Outside United States (9) 39 11
- -------------------------------------------------------------------------------------
(80) 44 54
- -------------------------------------------------------------------------------------
Total $ 348 $273 $235
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Factors causing Monsanto's effective tax rate to differ from the U.S.
federal statutory rate were:
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal statutory rate 35% 35% 35%
Benefits attributable to:
U.S. export earnings (2) (1) (2)
Puerto Rican operations (2) (2) (1)
Higher (lower) ex-U.S. rates -- -- (3)
Nondeductible goodwill 1 1 1
Valuation allowances 1 (1) 5
Effect of U.S. tax rate change -- -- (2)
U.S. state income taxes 2 1 2
Other (3) (2) (3)
- -------------------------------------------------------------------------------------
Effective income tax rate 32% 31% 32%
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Deferred income tax balances were related to:
<CAPTION>
1995 1994
- ------------------------------------------------------------------------------------------------------
Asset Liability Asset Liability
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Property $(388) $39 $(383) $40
Postretirement benefits 508 7 475 8
Restructuring reserves 130 (3) 69 (3)
Environmental liabilities 65 69
Inventory 38 35
Other 312 42 212 20
Valuation allowances (90) (85)
- ------------------------------------------------------------------------------------------------------
Total $ 575 $85 $ 392 $65
- ------------------------------------------------------------------------------------------------------
</TABLE>
Income taxes and remittance taxes have not been recorded on $920 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 $111 million.
1995 Monsanto Annual Report 55
<PAGE> 31
Notes to Financial Statements
Short-Term Debt and
Credit Arrangements
<TABLE>
Short-term debt was:
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Notes payable to banks $ 61 $ 79
Commercial paper 93 75
Bank overdrafts 113 77
Current portion of long-term debt 98 81
- -------------------------------------------------------------------------------------
Total $365 $312
- -------------------------------------------------------------------------------------
Weighted average interest rates
of notes payable as of Dec. 31:
Banks<F1> 7.0% 5.1%
Commercial paper 5.8% 6.0%
- -------------------------------------------------------------------------------------
<FN>
<F1>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 $262 million, under
which loans totaling $61 million were outstanding as of Dec. 31, 1995. Interest
on these loans is related to various bank rates. Monsanto's 364-day $450
million credit facility expired on Feb. 1, 1996, and was not renewed. On Feb.
13, 1996, Monsanto amended its existing $750 million credit facility. The
amended facility was increased to $1 billion and expires in the year 2001. The
company may request that lenders increase their commitments up to an aggregate
$1.6 billion. There were no borrowings under the previous facilities as of Dec.
31, 1995. The amended credit facility is used to support the issuance of
commercial paper. The company anticipates that interest on amounts borrowed
under this agreement will be at money market rates. Covenants under this credit
facility restrict maximum borrowings. The company does not anticipate that
future borrowings will be limited by the terms of this agreement.
Long-Term Debt
<TABLE>
Long-term debt (exclusive of current maturities) was:
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Industrial revenue bond obligations,
average rate in 1995 of 5.4%,
due 1997 to 2028 $ 335 $ 347
Medium-term notes, rates in 1995
ranging from 8.4% to 9%, due
1997 to 2005 185 200
Commercial paper<F1> 425 181
6% notes due 2000 150 150
7.09% and 8.13% amortizing ESOP
notes and debentures due 2000 and
2006, guaranteed by the company 150 160
8-7/8% debentures due 2009 99 99
8.7% debentures due 2021 100 100
8.2% debentures due 2025 150
Other 73 168
- -------------------------------------------------------------------------------------
Total $1,667 $1,405
- -------------------------------------------------------------------------------------
<FN>
<F1>$150 million swapped to an effective rate of 8.6 percent through
February 1996.
</TABLE>
Maturities and sinking fund requirements on long-term debt are $98 million
in 1996, $72 million in 1997, $72 million in 1998, $74 million in 1999, and
$207 million in 2000.
Commercial paper balances of $425 million and $181 million as of Dec. 31,
1995 and 1994, respectively, have been classified as long-term debt. Monsanto
has the ability and intent to renew these obligations beyond 1996.
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 its debt portfolio. As of Dec. 31,
1995, Monsanto was party to interest-rate swap agreements with an aggregate
notional principal amount of $371 million related to existing debt. The
agreements effectively convert floating-rate debt into fixed-rate debt. This
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 to be paid or received
because of swap agreements are accrued as interest rates change over the
related debt period.
56 1995 Monsanto Annual Report
<PAGE> 32
Notes to Financial Statements
Fair Values Of Financial
Instruments
<TABLE>
The estimated fair values of Monsanto's financial instruments were:
<CAPTION>
1995 1994
- ----------------------------------------------------------------------------------------------------
Recorded Fair Recorded Fair
Amount Value Amount Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments in
securities and
other assets $378 $433 $409 $400
Foreign currency
option contracts 7 5
Liabilities:
Currency swaps 1 4 2 9
Interest-rate swaps 5 19 1 17
Long-term debt 1,667 1,781 1,405 1,408
- ----------------------------------------------------------------------------------------------------
</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 by the use of quoted market prices, estimates
obtained from brokers, and other appropriate valuation techniques based on
information available as of Dec. 31, 1995. 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>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost for benefits
earned during the year $ 70 $ 75 $ 75
Interest cost on benefit
obligation 291 269 285
Assumed return on
plan assets<F1> (326) (317) (342)
Amortization of
unrecognized net gain (25) (12) (26)
- -------------------------------------------------------------------------------------
Total $ 10 $ 15 $ (8)
- -------------------------------------------------------------------------------------
<FN>
<F1>Actual returns (losses) on plan assets were $671 million, $(142) million and
$550 million in 1995, 1994 and 1993, respectively.
</TABLE>
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 through the use of the preceding year-end
rate assumptions. Assumptions used as of Dec. 31 for the principal plans were:
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.25% 8.50% 7.25%
Assumed long-term rate
of return on plan assets 9.50% 9.50% 9.50%
Annual rates of salary increase
(for plans that base benefits
on final compensation level) 4.50% 5.00% 4.25%
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
The funded status of Monsanto's pension plans at year-end was:
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Plan assets at fair value $3,690 $3,358
- -------------------------------------------------------------------------------------
Actuarial present value
of plan benefits:
Vested $3,457 $2,913
Nonvested 145 130
- -------------------------------------------------------------------------------------
Accumulated benefit obligation 3,602 3,043
Effect of projected future
salary increases 385 360
- -------------------------------------------------------------------------------------
Projected benefit obligation<F1> $3,987 $3,403
- -------------------------------------------------------------------------------------
Deficiency of plan assets
over projected benefit obligation $ (297) $ (45)
Less:
Unrecognized initial net gain 119 121
Unrecognized prior service costs (192) (202)
Unrecognized subsequent
net gain (loss) (5) 206
- -------------------------------------------------------------------------------------
Accrued net pension liability<F2> $ 219 $ 170
- -------------------------------------------------------------------------------------
<FN>
<F1>Includes $204 million and $146 million, respectively, for unfunded plans.
<F2>Includes $152 million and $126 million, respectively, for unfunded plans.
</TABLE>
<TABLE>
The accrued net pension liability was included in:
<S> <C> <C>
Postretirement liabilities $277 $225
Less other assets (58) (55)
- -------------------------------------------------------------------------------------
Accrued net pension liability $219 $170
- -------------------------------------------------------------------------------------
</TABLE>
1995 Monsanto Annual Report 57
<PAGE> 33
Notes to Financial Statements
Included in the preceding table are plan assets and projected benefit
obligations for the principal U.S. plans of approximately $3,263 million and
$3,348 million, respectively, as of Dec. 31, 1995. The assumptions used to
compute the funded status of the principal U.S. plans were changed as of Dec.
31, 1995. These changes in assumptions resulted in an increase of approximately
$367 million in the projected benefit obligation.
Plan assets consist principally of common stocks and U.S. government and
corporate obligations. Contributions to these plans were neither required nor
made in 1995, 1994 and 1993 because the company's principal pension plans are
adequately funded, using assumed returns.
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. The costs of postretirement
benefits are 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>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost for benefits
earned during the year $ 21 $ 23 $ 24
Interest cost on benefit
obligation 94 87 92
Amortization of unrecog-
nized net (gain) loss (2) 7 --
- -------------------------------------------------------------------------------------
Total $113 $117 $116
- -------------------------------------------------------------------------------------
</TABLE>
<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>
1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.25% 8.50% 7.25%
Initial trend rate for
health care costs<F1> 9.00% 11.50% 12.00%
Ultimate trend rate for
health care costs 5.00% 5.50% 5.00%
- ------------------------------------------------------------------------------------
<FN>
<F1>The initial trend rate for health care costs declines by 1 percent per year
to 5 percent for years after the year 2000.
</TABLE>
A 1 percent increase in the assumed trend rate for health care costs would
have increased the cost of 1995 postretirement health care benefits by $4
million and the accumulated benefit obligation by $44 million as of Dec. 31,
1995.
<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>
1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligation:
Retirees $1,006 $ 869
Eligible active employees 52 55
Other active employees 213 214
- -------------------------------------------------------------------------------------
Total $1,271 $1,138
- -------------------------------------------------------------------------------------
Unrecognized benefits
from prior service 34 43
Unrecognized subsequent
net gain (loss) (81) 17
- -------------------------------------------------------------------------------------
Accrued liability $1,224 $1,198
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
The accrued liability was included in:
<S> <C> <C>
Miscellaneous accruals $ 86 $ 82
Postretirement liabilities 1,138 1,116
- -------------------------------------------------------------------------------------
Accrued liability $1,224 $1,198
- -------------------------------------------------------------------------------------
</TABLE>
The assumptions used to compute the accumulated benefit obligation of the
principal plans were changed as of Dec. 31, 1995, resulting in an increase of
approximately $100 million in the obligation.
58 1995 Monsanto Annual Report
<PAGE> 34
Notes to Financial Statements
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 1995, $30 million in 1994, and $31 million in 1993.
Monsanto has established an Employee Stock Ownership Plan (ESOP), which
holds 3.7 million shares of Monsanto common stock as of Dec. 31, 1995. The ESOP
acquired shares by using proceeds from the issuance of long-term notes and
debentures that are guaranteed by Monsanto. The ESOP also borrowed $50 million
from Monsanto. Dividends on the common stock owned by the ESOP are being used
to repay the ESOP borrowings. A portion of the ESOP shares is allocated each
year to employee savings accounts as matching contributions. In 1995, 301,036
shares were allocated to participants under the plan, leaving 2,675,119
unallocated shares as of Dec. 31, 1995. Unallocated shares held by the ESOP are
considered outstanding for earnings per share calculations. Compensation
expense is equal to the cost of the shares allocated to participants, less
dividends paid on the shares held by the ESOP. ESOP borrowings totaled $187
million as of Dec. 31, 1995.
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total ESOP expense $26 $29 $25
Interest portion of total
ESOP expense 16 17 18
Cash contribution 18 19 20
Dividends paid on ESOP
shares held 10 9 9
- -------------------------------------------------------------------------------------
</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 Exercise
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
- -------------------------------------------------------------------------------------
1995:
Granted 1,455,745 69.88-103.31
Exercised (4,027,114) 22.81- 77.75
Expired (83,549) 35.44- 78.81
- -------------------------------------------------------------------------------------
Dec. 31, 1995 9,076,758 11,053,862 33.28-103.31
- -------------------------------------------------------------------------------------
</TABLE>
Under the 1994 Management Incentive Plans, the Searle Plan, and the
NutraSweet Plan, 4,076,427 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.
1995 Monsanto Annual Report 59
<PAGE> 35
Notes to Financial Statements
Earnings per Share
Earnings per share were computed using the weighted average number of
common shares and common share equivalents outstanding each year (116,127,872
in 1995; 116,984,960 in 1994; and 120,380,516 in 1993). Common share
equivalents (2,678,265 in 1995; 2,399,245 in 1994; and 1,314,921 in 1993)
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, 1995, there were 15,130,334 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 then 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, as a result of a subsequent
stock split, for every two rights held, the owner will be entitled 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, for every two rights held, the holder will be entitled 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, for every two
rights held, the holder (other than such person or members of such group) will
be entitled 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
basis of one share for every two rights. At any time prior to the acquisition
of such a 20 percent position, the company can redeem each right for $0.01. 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 $107 million as of Dec. 31, 1995. Excluding the
ESOP notes and debentures, Monsanto was contingently liable as a guarantor for
bank loans and for discounted customers' receivables totaling approximately
$388 million and $311 million as of Dec. 31, 1995 and 1994, respectively.
Future minimum payments under noncancelable operating leases and unconditional
inventory purchases are $121 million for 1996, $135 million for 1997, $110
million for 1998, $63 million for 1999, $20 million for 2000, and $69 million
thereafter.
<TABLE>
The more significant concentrations in Monsanto's trade receivables at
year-end were:
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------
<S> <C> <C>
U.S. agricultural product
distributors $257 $295
European agricultural product
distributors 117 103
Pharmaceutical distributors
worldwide 357 287
Customers in the former
Soviet Union 21 40
- -------------------------------------------------------------------------------------
</TABLE>
Management does not anticipate incurring losses on its trade receivables
in excess of established allowances.
Costs for remediation of contaminated 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 $210 million and $207 million as of Dec. 31, 1995 and
1994, respectively, for the remediation of identified contaminated sites.
Expenditures related to remediation activities were $74 million in 1995, $65
million in 1994, and $53 million in 1993.
60 1995 Monsanto Annual Report
<PAGE> 36
Notes to Financial Statements
Monsanto's future remediation expenses for contaminated 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 $30
million.
Postclosure and remediation costs for contamination 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
reach approximately $120 million. Uncertainties related to these costs include
evolving government standards, the method and extent of remediation, and future
changes in technology.
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>
1995 1994 1993
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Raw material and
energy costs $2,265 $2,375 $2,258
Employee compensation
and benefits 2,283 2,193 2,092
Current income and
other taxes 681 477 442
Rent expense 133 124 129
- -------------------------------------------------------------------------------------
Technological expenses:
Research and development 658 609 626
Engineering, commercial
development and patent 55 65 69
- -------------------------------------------------------------------------------------
Total technological expenses 713 674 695
- -------------------------------------------------------------------------------------
Interest expense:
Total interest cost 201 141 141
Less capitalized interest (11) (10) (12)
- -------------------------------------------------------------------------------------
Net interest expense 190 131 129
- -------------------------------------------------------------------------------------
Currency losses
including equity in
affiliates' currency gains
and losses 9 23 6
- -------------------------------------------------------------------------------------
</TABLE>
Segment Information
Certain segment data and geographic data for 1995, 1994 and 1993 that
appear on pages 34 and 43 are integral parts of the accompanying financial
statements. The company's principal product lines are discussed in the segment
data.
1995 Monsanto Annual Report 61
<PAGE> 37
Notes to Financial Statements
<TABLE>
Quarterly Data -- Unaudited
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales 1995 $2,318 $2,482 $2,048 $2,114 $8,962
1994 2,001 2,269 1,912 2,090 8,272
1993 1,941 2,230 1,849 1,882 7,902
- -----------------------------------------------------------------------------------------------------------------------------------
Gross Profit 1995 994 1,124 868 867 3,853
1994 893 1,045 733 827 3,498
1993 835 959 768 776 3,338
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 1995 361 445 224 (45) 985
1994 319 397 131 76 923
1993 231 326 152 101 810
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income 1995 229 290 140 80 739
1994 194 258 116 54 622
1993 141 200 95 58 494
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings per Share 1995 2.02 2.51 1.18 0.65 6.36
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 1995 0.63 0.69 0.69 0.69 2.70
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
1995 High $80-5/8 $90-7/8 $104-1/8 $124-3/4 $124-3/4
Low 68-1/4 79 89 97-1/4 68-1/4
- -----------------------------------------------------------------------------------------------------------------------------------
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>
62 1995 Monsanto Annual Report
<PAGE> 38
Notes to Financial Statements
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 Products segment during that part of the year.
Net income in the first quarter of 1995 included an aftertax gain of $25
million, or $0.22 per share, for insurance-related settlement payments and an
aftertax charge of $25 million, or $0.22 per share, for integration costs
related to the formation of the Flexsys joint venture.
In the third quarter of 1995, net income included an aftertax gain of $32
million, or $0.28 per share, for the receipt of settlement payments related to
environmental insurance litigation, and an aftertax charge of $25 million,
or $0.22 per share, for the settlement of a lawsuit related to a Superfund
site in La Marque, Texas. Third-quarter net income also included favorable
adjustments of approximately $13 million aftertax, or $0.11 per share,
related to certain sales rebate programs in the United States for product
sales made in prior years.
Net income for the fourth quarter of 1995 included an aftertax charge of
$125 million, or $1.08 per share, for restructuring actions and an aftertax
gain of $116 million, or $1.00 per share, resulting from the sale of the
styrenics plastics business.
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 the 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 to exit from 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.
1995 Monsanto Annual Report 63
<PAGE> 39
Financial Summary
<TABLE>
<CAPTION>
(Dollars in millions, except per share) 1995<F1> 1994<F2> 1993<F3> 1992<F4> 1991<F5> 1990<F6>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Results
Net Sales $ 8,962 $8,272 $7,902 $7,763 $7,936 $8,068
Gross Profit 3,853 3,498 3,338 3,053 3,417 3,281
As a Percent of Net Sales 43% 42% 42% 39% 43% 41%
Operating Income 985 923 810 58 475 808
As a Percent of Net Sales 11% 11% 10% 1% 6% 10%
Income (Loss) from Continuing Operations 739 622 494 (126) 238 486
As a Percent of Net Sales 8% 8% 6% (2)% 3% 6%
Income from Discontinued Operations 578 58 60
Cumulative Effect of Accounting Changes (540)
Net Income (Loss) 739 622 494 (88) 296 546
Return on Shareowners' Equity 22.1% 21.4% 16.9% (2.6)% 7.6% 13.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings per Share
Income (Loss) from Continuing Operations $ 6.36 $ 5.32 $ 4.10 $(1.01) $ 1.87 $ 3.77
Net Income (Loss) 6.36 5.32 4.10 (0.71) 2.33 4.23
- ------------------------------------------------------------------------------------------------------------------------------------
Year-End Financial Position
Total Assets $10,611 $8,891 $8,640 $9,085 $9,227 $9,236
Working Capital 1,493 1,448 1,377 1,512 1,536 1,323
- -----------------------------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment:
Gross $ 7,237 $7,555 $7,382 $7,602 $7,510 $7,226
Net 2,832 2,817 2,802 3,005 3,191 3,316
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt $ 1,667 $1,405 $1,502 $1,423 $1,871 $1,645
Shareowners' Equity 3,732 2,948 2,855 3,005 3,654 4,089
- ------------------------------------------------------------------------------------------------------------------------------------
Current Ratio 1.5 1.6 1.6 1.6 1.7 1.6
Percent of Total Debt to Total Capitalization 35% 37% 38% 36% 38% 35%
- ------------------------------------------------------------------------------------------------------------------------------------
Other Data
Property, Plant and Equipment Purchases $ 500 $ 409 $ 437 $ 586 $ 554 $ 711
Depreciation and Amortization 598 561 572 765 714 704
Interest Expense 190 131 129 169 166 176
Research and Development Expenses 658 609 626 651 610 595
Income Taxes 348 273 235 (48) 116 230
Cash Provided by Continuing Operations 823 1,300 1,022 912 1,180 1,104
- ------------------------------------------------------------------------------------------------------------------------------------
Stock Price:
High $ 124-3/4 $ 86-1/2 $ 75 $ 71-1/4 $ 76 $ 60-1/8
Low 68-1/4 66-1/2 48-7/8 49-3/4 46 38-3/4
Year-End 122-1/2 70-1/2 73-3/8 57-5/8 67-7/8 48-1/4
Price/Earnings Ratio on Year-End Stock Price 19 13 18 -- 29 11
- ------------------------------------------------------------------------------------------------------------------------------------
Five-Year Market Return to Shareowners<F7> 298% 139% 198% 147% 182% 144%
- ------------------------------------------------------------------------------------------------------------------------------------
Per Share:
Dividends $ 2.70 $ 2.47 $ 2.30 $ 2.20 $2.045 $ 1.88
Shareowners' Equity 32.32 26.43 24.62 24.95 29.72 32.51
- ------------------------------------------------------------------------------------------------------------------------------------
Shareowners (year-end) 50,745 53,694 56,601 60,074 60,152 62,230
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding (year-end, in millions) 115 112 116 120 123 126
- ------------------------------------------------------------------------------------------------------------------------------------
Employees (year-end) 28,514 29,354 30,019 33,797 39,281 41,081
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Net income for 1995 includes net restructuring expenses and other unusual items of $105 million, or $0.91 per share, and the
gain on the sale of the styrenics plastics business of $116 million, or $1.00 per share.
<F2>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.
<F3>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.
<F4>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.
<F5>Net income for 1991 includes net restructuring expenses of $325 million, or $2.54 per share.
<F6>Net income for 1990 includes $56 million, or $0.43 per share, in gains from divestitures, including the divestiture of certain
assets of a joint venture in Japan.
<F7>Assumes reinvestment of quarterly dividends.
</TABLE>
64 1995 Monsanto Annual Report
<PAGE> 40
APPENDIX
1. In Exhibit 13 to the printed Form 10-K, the following bar graphs appear,
all depicting data for 1993, 1994 and 1995: on page 34, "Sales Volume
Index"; "Selling Price Index" and "Raw Material Cost Index"; on page 35,
"Agricultural Products Net Sales"; on page 36, "Agricultural Products
Operating Measures"; on page 37, "Chemicals Net Sales"; on page 38,
"Chemicals Operating Measures"; on page 39, "Pharmaceuticals Net Sales";
on page 40, "Pharmaceuticals Operating Measures"; on page 42, "Food
Ingredients Operating Measures"; and on page 47, "Cash Provided by
Continuing Operations". On page 35, a pie-chart graph entitled "1995
Net Sales" appears, depicting a percentage breakdown of Monsanto's 1995
net sales by segment. On page 49, a bar graph entitled "Dividend Per
Share" appears, depicting annual dividend per share data for the years 1985
through 1995.
2. Throughout the electronic submission of Exhibit 13, trademarks are
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
The following is a list of the Company's subsidiaries as of December 31,
1995, except for unnamed subsidiaries which, considered in the aggregate as a
single subsidiary, would not constitute a significant subsidiary.
<TABLE>
<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
</TABLE>
22
<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. 33-60189) of our opinions dated February 23,
1996, appearing in and incorporated by reference in this annual report on Form
10-K of Monsanto Company for the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
March 15, 1996
------------------------
<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 1995
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. 33-60189). 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.
KARL R. BARNICKOL
KARL R. BARNICKOL
Associate General Counsel
Monsanto Company
Saint Louis, Missouri
March 15, 1996
23
<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 KARL R. BARNICKOL and J. RUSSELL BLEY, JR., both of St.
Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously been
filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (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; (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;
and (iii) any Registration Statements on Form S-8 and any
amendments thereto to be filed with the Commission under the Act,
covering the registration of the Company's securities to be issued
under new stock-based incentive plans; 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 18th day of January, 1996.
JOAN T. BOK
-------------------------------
COMMONWEALTH OF MASSACHUSETTS )
) SS
COUNTY OF WORCESTER )
On this 18th day of January, 1996, 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 KARL R. BARNICKOL and J.
RUSSELL BLEY, JR., both of St. Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously
been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (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;
(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;
and (iii) any Registration Statements on Form S-8 and any amendments
thereto to be filed with the Commission under the Act, covering the
registration of the Company's securities to be issued under new
stock-based incentive plans; 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 15 day of January, 1996.
ROBERT M. HEYSSEL
-------------------------------
STATE OF DELAWARE )
) SS
CITY OF SUSSEX )
On this 15th day of January, 1996, 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.
AMY M. LITTLETON
----------------------------
Notary Public
My Commission Expires: 6-20-99
<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
KARL R. BARNICKOL and J. RUSSELL BLEY, JR., both of St. Louis County,
Missouri, or either 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. 33-60189 on Form S-3,
which has previously been filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (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; (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; and (iii) any Registration Statements
on Form S-8 and any amendments thereto to be filed with the Commission
under the Act, covering the registration of the Company's securities
to be issued under new stock-based incentive plans; 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 31st day of January, 1996.
ROBERT B. HOFFMAN
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 31st day of January, 1996, 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.
HARRIET CONLON
----------------------------
Notary Public
My Commission Expires: 8/15/98
HARRIET CONLON
Notary Public - Notary Seal
STATE OF MISSOURI
ST. LOUIS COUNTY
My Commission Expires August 15, 1998
<PAGE> 4
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Michael R. Hogan, 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
KARL R. BARNICKOL and J. RUSSELL BLEY, JR., both of St. Louis County,
Missouri, or either 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. 33-60189 on Form S-3,
which has previously been filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (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; (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; and (iii) any Registration Statements
on Form S-8 and any amendments thereto to be filed with the Commission
under the Act, covering the registration of the Company's securities
to be issued under new stock-based incentive plans; 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 9th day of January, 1996.
MICHAEL R. HOGAN
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 9th day of January, 1996, before me personally
appeared Michael R. Hogan, 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.
RUTH M. HOULIHAN
----------------------------
Notary Public
My Commission Expires: 5-27-97
RUTH M. HOULIHAN
NOTARY PUBLIC, STATE OF MISSOURI
MY COMMISSION EXPIRES 5-27-97
ST. LOUIS COUNTY
<PAGE> 5
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
KARL R. BARNICKOL and J. RUSSELL BLEY, JR., both of St. Louis County,
Missouri, or either 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. 33-60189 on Form S-3,
which has previously been filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (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; (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; and (iii) any Registration Statements
on Form S-8 and any amendments thereto to be filed with the Commission
under the Act, covering the registration of the Company's securities
to be issued under new stock-based incentive plans; 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, 1996.
GWENDOLYN S. KING
-------------------------------
COMMONWEALTH OF PENNSYLVANIA )
) SS
COUNTY OF PHILADELPHIA )
On this 17 day of January, 1996, 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: August 23, 1999
Notarial Seal
Suzanne Schwartz, Notary Public
Philadelphia, Philadelphia County
My Commission Expires Aug. 23, 1999
<PAGE> 6
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
KARL R. BARNICKOL and J. RUSSELL BLEY, JR., both of St. Louis County,
Missouri, or either 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. 33-60189 on Form S-3,
which has previously been filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (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; (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; and (iii) any Registration Statements
on Form S-8 and any amendments thereto to be filed with the Commission
under the Act, covering the registration of the Company's securities
to be issued under new stock-based incentive plans; 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 12th day of January, 1996.
PHILIP LEDER
-------------------------------
COMMONWEALTH OF MASSACHUSETTS )
) SS
COUNTY OF SUFFOLK )
On this 12 day of January, 1996, 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> 7
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
KARL R. BARNICKOL and J. RUSSELL BLEY, JR., both of St. Louis County,
Missouri, or either 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. 33-60189 on Form S-3,
which has previously been filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (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; (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; and (iii) any Registration Statements
on Form S-8 and any amendments thereto to be filed with the Commission
under the Act, covering the registration of the Company's securities
to be issued under new stock-based incentive plans; 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, 1996.
HOWARD M. LOVE
-------------------------------
COMMONWEALTH OF PENNSYLVANIA )
) SS
COUNTY OF ALLEGHENY )
On this 11th day of January, 1996, 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
City of Pittsburgh, Allegheny Co.
My Commission Expires April 14, 1999
<PAGE> 8
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Richard J. Mahoney, 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
KARL R. BARNICKOL and J. RUSSELL BLEY, JR., both of St. Louis County,
Missouri, or either 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. 33-60189 on Form S-3,
which has previously been filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (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; (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; and (iii) any Registration Statements
on Form S-8 and any amendments thereto to be filed with the Commission
under the Act, covering the registration of the Company's securities
to be issued under new stock-based incentive plans; 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 19 day of January, 1996.
R. J. MAHONEY
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 19th day of January, 1996, 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.
DONNA R. FRANZ
----------------------------
Notary Public
My Commission Expires: 1/9/97
DONNA R. FRANZ
Notary Public State of Missouri
St. Louis County
My Commission Exp. Jan. 9, 1997
<PAGE> 9
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 KARL R. BARNICKOL and J.
RUSSELL BLEY, JR., both of St. Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously
been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (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;
(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;
and (iii) any Registration Statements on Form S-8 and any amendments
thereto to be filed with the Commission under the Act, covering the
registration of the Company's securities to be issued under new
stock-based incentive plans; 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 23 day of Jan., 1996.
FRANK A. METZ, JR.
-------------------------------
STATE OF NEW YORK )
) SS
COUNTY OF ROCKLAND )
On this 23 day of January, 1996, 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: 1/25/97
MARY ALICE CONWAY
Notary Public, State of New York
No. 5007249
Qualified in Orange County
Commission Expires January 25, 1997
<PAGE> 10
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 KARL R. BARNICKOL and J.
RUSSELL BLEY, JR., both of St. Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously
been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (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;
(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;
and (iii) any Registration Statements on Form S-8 and any amendments
thereto to be filed with the Commission under the Act, covering the
registration of the Company's securities to be issued under new
stock-based incentive plans; 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 12 day of January, 1996.
BUCK MICKEL
-------------------------------
STATE OF SOUTH CAROLINA )
) SS
COUNTY OF GREENVILLE )
On this 16th day of January, 1996, 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> 11
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 KARL R. BARNICKOL and J.
RUSSELL BLEY, JR., both of St. Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously
been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (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;
(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;
and (iii) any Registration Statements on Form S-8 and any amendments
thereto to be filed with the Commission under the Act, covering the
registration of the Company's securities to be issued under new
stock-based incentive plans; 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 25th day of January, 1996.
JACOBUS F. M. PETERS
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 25th day of January, 1996, 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.
BEVERLY A. OHM
----------------------------
Notary Public
My Commission Expires: Feb. 12, 1998
BEVERLY A. OHM
NOTARY PUBLIC, STATE OF MISSOURI
MY COMMISSION EXPIRES FEB. 12, 1998
ST. LOUIS COUNTY
<PAGE> 12
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 KARL R. BARNICKOL and J.
RUSSELL BLEY, JR., both of St. Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously
been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (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;
(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;
and (iii) any Registration Statements on Form S-8 and any amendments
thereto to be filed with the Commission under the Act, covering the
registration of the Company's securities to be issued under new
stock-based incentive plans; 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 12th day of January, 1996.
NICHOLAS L. REDING
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 12th day of January, 1996, 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.
BEVERLY A. OHM
----------------------------
Notary Public
My Commission Expires: 2/12/98
BEVERLY A. OHM
NOTARY PUBLIC, STATE OF MISSOURI
MY COMMISSION EXPIRES FEB. 12, 1998
ST. LOUIS COUNTY
<PAGE> 13
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 KARL R. BARNICKOL and J.
RUSSELL BLEY, JR., both of St. Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously
been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (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;
(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;
and (iii) any Registration Statements on Form S-8 and any amendments
thereto to be filed with the Commission under the Act, covering the
registration of the Company's securities to be issued under new
stock-based incentive plans; 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 24 day of January, 1996.
JOHN S. REED
-------------------------------
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On this 24th day of January, 1996, 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> 14
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 KARL R. BARNICKOL and J.
RUSSELL BLEY, JR., both of St. Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously
been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (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;
(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;
and (iii) any Registration Statements on Form S-8 and any amendments
thereto to be filed with the Commission under the Act, covering the
registration of the Company's securities to be issued under new
stock-based incentive plans; 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 10th day of January, 1996.
WILLIAM D. RUCKELSHAUS
-------------------------------
William D. Ruckelshaus
STATE OF WASHINGTON )
) SS
COUNTY OF KING )
On this 10th day of January, 1996, 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.
DONNA L. HODGSON
----------------------------
Notary Public
My Commission Expires: 11/12/97
<PAGE> 15
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert B. Shapiro, 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 KARL R. BARNICKOL and J. RUSSELL BLEY, JR., both of St.
Louis County, Missouri, or either 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.
33-60189 on Form S-3, which has previously been filed with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (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; (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; and (iii) any Registration
Statements on Form S-8 and any amendments thereto to be filed with the
Commission under the Act, covering the registration of the Company's
securities to be issued under new stock-based incentive plans; 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, 1996.
R. B. SHAPIRO
-------------------------------
STATE OF MISSOURI )
) SS
COUNTY OF ST. LOUIS )
On this 11th day of January, 1996, 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: 2/12/98
BEVERLY A. OHM
NOTARY PUBLIC, STATE OF MISSOURI
MY COMMISSION EXPIRES FEB. 12, 1998
ST. LOUIS COUNTY
<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 KARL R. BARNICKOL and J.
RUSSELL BLEY, JR., both of St. Louis County, Missouri, or either 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. 33-60189 on Form S-3, which has previously
been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (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;
(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;
and (iii) any Registration Statements on Form S-8 and any amendments
thereto to be filed with the Commission under the Act, covering the
registration of the Company's securities to be issued under new
stock-based incentive plans; 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, 1996.
JOHN B. SLAUGHTER
-------------------------------
STATE OF CALIFORNIA )
) SS
COUNTY OF LOS ANGELES )
On this 17th day of January, 1996, 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:
KAY LYNN FUJIWARA
COMM. #995481
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 23, 1996, 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. Karl R. Barnickol and J. Russell Bley, Jr.,
or either of them acting alone, 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
4th day of March, 1996.
/s/ 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 SUBSIDIARIES FOR
THE YEAR ENDED DECEMBER 31, 1995, AND THE STATEMENT OF CONSOLIDATED FINANCIAL
POSITION AS OF DECEMBER 31, 1995. 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-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 297
<SECURITIES> 0
<RECEIVABLES> 1,629<F1>
<ALLOWANCES> 0
<INVENTORY> 1,368
<CURRENT-ASSETS> 4,305
<PP&E> 7,237
<DEPRECIATION> 4,405
<TOTAL-ASSETS> 10,611
<CURRENT-LIABILITIES> 2,812
<BONDS> 1,667
<COMMON> 329
0
0
<OTHER-SE> 3,403
<TOTAL-LIABILITY-AND-EQUITY> 10,611
<SALES> 8,962
<TOTAL-REVENUES> 8,962
<CGS> 5,109
<TOTAL-COSTS> 5,109
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 190
<INCOME-PRETAX> 1,087
<INCOME-TAX> 348
<INCOME-CONTINUING> 739
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 739
<EPS-PRIMARY> 6.36
<EPS-DILUTED> 0
<FN>
<F1> Reported net of allowances of $57
</TABLE>
<PAGE> 1
EXHIBIT 99
MONSANTO COMPANY AND SUBSIDIARIES
---------------------------------
<TABLE>
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<CAPTION>
Year Ended December 31,
----------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing operations before
provision for income taxes.................................... $1,087<F*> $ 895<F*> $ 729<F*> $(174)<F*> $354<F*>
Add
Fixed charges........................................... 245 182 184 231 233
Less capitalized interest............................... (11) (10) (12) (16) (24)
Dividends from affiliated companies..................... 9 2 5 5 5
Less equity income (add equity loss) of
affiliated companies...................................... (17) (21) (20) (1) (3)
------ ------ ----- ----- ----
Income as adjusted.................................. $1,313 $1,048 $ 886 $ 45 $565
====== ====== ===== ===== ====
Fixed charges
Interest expense............................................ $ 190 $ 131 $ 129 $ 169 $166
Capitalized interest........................................ 11 10 12 16 24
Portion of rents representative of interest
factor.................................................... 44 41 43 46 43
------ ------ ----- ----- ----
Fixed charges....................................... $ 245 $ 182 $ 184 $ 231 $233
====== ====== ===== ===== ====
Ratio of earnings to fixed charges.............................. 5.36 5.76 4.82 0.19 2.42
====== ====== ===== ===== ====
<FN>
<F*> Includes restructuring and other unusual items of $(51) million, $7
million, $(30) million, $699 million and $457 million in 1995, 1994, 1993,
1992 and 1991, respectively.
Excluding these restructurings and other unusual items, the ratio of
earnings to fixed charges would have been 5.15, 5.80, 4.65, 3.22 and 4.39,
respectively.
</TABLE>
24
