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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 15, 1998
MONSANTO COMPANY
---------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-2516 43-0420020
-------- ------ ----------
800 North Lindbergh Boulevard
St. Louis, Missouri 63167
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (314) 694-1000
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ITEM 5. OTHER EVENTS
On October 15, 1998, Monsanto Company (the "Company") issued a press release
announcing the Company's financial results for the third quarter of 1998. A
copy of the press release issued by the Company is filed as an exhibit hereto
and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits. The following exhibit is filed as part of this report:
99.1 Press release, dated October 15, 1998, issued by
Monsanto Company
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: October 30, 1998
MONSANTO COMPANY
By /s/ Michael R. Hogan
------------------------------
Name: Michael R. Hogan
Vice President and Controller
(Principal Accounting Officer)
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<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit
Number Description
- ------ -----------
<C> <S>
99.1 Press release, dated October 15, 1998, issued by Monsanto Company
</TABLE>
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Exhibit 99.1
Immediately
Scarlett Lee Foster (314-694-2883) [email protected]
MONSANTO REPORTS THIRD-QUARTER EARNINGS
ST. LOUIS, Oct. 15, 1998 - Monsanto Company reported an aftertax loss
from continuing operations of $100 million, or a loss of 17 cents per share on
a diluted basis, on sales of $2 billion in the third quarter of 1998. Third-
quarter results included a one-time charge totaling $187 million aftertax for
acquired in-process research and development (R&D) associated with the
acquisitions of Plant Breeding International Cambridge and First Line Seeds.
If that charge was excluded, the aftertax income from continuing operations
would have been $87 million, or 13 cents per share on a diluted basis.
In comparison, the aftertax loss from continuing operations in the same
period in 1997 was $167 million, or a loss of 28 cents per share on a diluted
basis, on sales of $1.7 billion. Results in the third quarter of 1997 included
a one-time write-off of $270 million aftertax for acquired in-process R&D
associated with the acquisition of Holden's Foundation Seeds. If that charge
was excluded, aftertax income from continuing operations would have been $103
million, or 17 cents per share on a diluted basis.
"With the major acquisitions we've announced in recent months, and as
our new products move toward the marketplace, we're focused on getting strong
financial results from our core businesses to fund our growth; rigorously
prioritizing among our businesses and growth programs to improve near-term
income and generate additional cash; developing and launching our new products
around the world; and integrating our seed businesses and accelerating their
contribution to our growth and profitability," said Robert B. Shapiro, Monsanto
chairman and chief executive officer.
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- 2 -
In the third quarter, growth spending rose approximately $180 million,
or more than 50 percent, compared with growth spending in the third quarter of
1997. Growth spending in the first nine months of the year rose $530 million
from growth spending in the same period last year, for an increase of
approximately 60 percent. Most technology, infrastructure expansion and
acquisition-related costs are included in growth spending.
Sales for the agricultural business rose 18 percent for the quarter.
Volumes for Roundup herbicide in the quarter continued above the trend-line
growth of 20 percent annually. Operating income primarily was affected by the
in-process R&D charge, amortization for prior acquisitions, and higher spending
on biotechnology and genomics research. In addition, expected seasonal
fluctuations of the seed businesses also lowered operating income.
Pharmaceutical sales and operating income rose substantially. Increased
sales in the quarter for Daypro and Arthrotec arthritis treatments continued to
bolster Searle as the leading supplier of prescription arthritis treatments in
the United States. R&D spending increased significantly in the quarter as
Searle continues to develop and prepare to launch its new product pipeline.
Sales and operating income included $140 million in milestone payments
from Pfizer Inc. as part of the partnering agreement between Searle and Pfizer
for the development and launch of Searle's celecoxib, a proposed member of a
new class of drugs known as specific COX-2 inhibitors. This agent is under
priority review by the U.S. Food and Drug Administration for acute or chronic
use in the treatment of the signs and symptoms of osteoarthritis and rheumatoid
arthritis and for the management of pain. Searle has recently changed the
proposed brand name for this drug from Celebra to Celebrex, at the FDA's
request. The FDA believed, and Searle shared the concern, that the trade name
Celebra could potentially be confused with an anti-depressant on the market,
called Celexa. The name Celebrex also has been filed by Searle in 115
countries worldwide.
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- 3 -
Sales and operating income for the nutrition and consumer sector in the
third quarter increased modestly. Sales of tabletop sweeteners were up, but
sales of NutraSweet brand sweetener were down, as expected, because of higher
shipments in the second quarter. Sales and operating income for the sector
also included $32 million in payments as part of the agency agreement with The
Scotts Company to market Roundup herbicide for lawn and garden uses.
-oOo-
Notes to editors: Roundup, Arthrotec, Daypro and NutraSweet are trademarks or
service marks owned or licensed by Monsanto Company and its subsidiaries.
In-process R&D is an accounting treatment that values and immediately writes
off research that was under way at the time of the acquisition but that has not
yet resulted in commercial products.
Certain statements made in this press release, including those relating to
future performance, are forward-looking statements and are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such statements involve risks and uncertainties which may cause results to
differ significantly from those set forth in those statements. Among other
things, these forward-looking statements are based on current expectations, but
actual results may differ materially from anticipated future events or results.
Factors that could cause actual results to differ materially from those
anticipated include the economic, competitive, governmental, technological,
financial and other factors identified in Monsanto's filings with the
Securities and Exchange Commission, and the ability to integrate acquisitions.
EVA and Economic Value Added are trademarks of Stern Stewart & Co.
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<TABLE>
Monsanto Company and Subsidiaries
Statement of Consolidated Income
(Dollars in millions, except per share)
UNAUDITED
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 1,986 $ 1,724 $ 6,500 $ 5,694
Costs and Expenses:
Cost of Goods Sold 768 685 2,622 2,342
Selling, General and
Administrative Expenses 585 512 1,746 1,466
Technological Expenses 359 264 967 718
Acquired In-Process Research
and Development 189 436 189 609
Amortization of Intangible Assets 64 43 206 114
Restructuring Expense (Income) (35)
-------- -------- -------- --------
Operating Income (Loss) 21 (216) 805 445
Interest Expense (72) (42) (214) (111)
Interest Income 17 13 39 36
Other Income (Expense) - Net (29) (28) (27) (1)
-------- -------- -------- --------
Income (Loss) from Continuing
Operations Before Taxes (63) (273) 603 369
Income Taxes 37 (106) 250 80
-------- -------- -------- --------
Income (Loss) from Continuing
Operations (100) (167) 353 289
Income from Discontinued
Operations 34 176
-------- -------- -------- --------
Net Income (Loss) $ (100) $ (133) $ 353 $ 465
-------- -------- -------- --------
Basic Earnings (Loss) Per Share
Continuing Operations $ (0.17) $ (0.29) $ 0.59 $ 0.49
Discontinued Operations 0.06 0.30
-------- -------- -------- --------
Total $ (0.17) $ (0.23) $ 0.59 $ 0.79
-------- -------- -------- --------
Diluted Earnings (Loss) Per Share
Continuing Operations $ (0.17) $ (0.28) $ 0.56 $ 0.47
Discontinued Operations 0.05 0.29
-------- -------- -------- --------
Total $ (0.17) $ (0.23) $ 0.56 $ 0.76
-------- -------- -------- --------
Weighted Average Number of Common
Shares (in millions) 600.4 588.7
-------- --------
Weighted Average Number of
Common and Common Equivalent
Shares (in millions) 626.9 609.6
-------- --------
Economic Value Added (in millions) $ (2) $ (39) $ 266 $ 291
-------- -------- -------- --------
</TABLE>
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<TABLE>
Monsanto Company and Subsidiaries
Segment Data
(Dollars in millions)
UNAUDITED
<CAPTION>
Three Months Ended September 30,
-------------------------------------------
1998 1997
--------------------- ---------------------
Net Operating Net Operating
Sales Income(Loss) Sales Income(Loss)
Segment: <F1> <F1>
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Agricultural Products $ 794 $ (129) $ 672 $ (295)
Nutrition & Consumer Products 332 46 342 37
Pharmaceuticals 790 133 605 77
Corporate & Other 70 (29) 105 (35)
-------- -------- -------- --------
Total $ 1,986 $ 21 $ 1,724 $ (216)
-------- -------- -------- --------
<CAPTION>
Nine Months Ended September 30,
-------------------------------------------
1998 1997
--------------------- ---------------------
Net Operating Net Operating
Sales Income(Loss) Sales Income(Loss)
Segment: <F1> <F1>
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Agricultural Products $ 3,169 $ 597 $ 2,603 $ 268
Nutrition & Consumer Products 1,162 203 1,148 139
Pharmaceuticals 1,903 186 1,633 147
Corporate & Other 266 (181) 310 (109)
-------- -------- -------- --------
Total $ 6,500 $ 805 $ 5,694 $ 445
-------- -------- -------- --------
<FN>
<F1> Operating income in 1998 and 1997 has been affected by restructuring
programs, acquired-in process research and development, and other
unusual items, as follows:
<CAPTION>
Operating (Income) / Expense
-----------------------------------------
Three Months Nine Months
------------------- -------------------
Segment: 1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Agricultural Products $ 189 $ 436 $ 189 $ 558
Nutrition & Consumer Products 51
Pharmaceuticals (35)
Corporate & Other 68
-------- -------- -------- --------
Total $ 189 $ 436 $ 222 $ 609
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<CAPTION>
Monsanto Company and Subsidiaries
Segment Data
(Dollars in millions)
UNAUDITED
Operating Contribution <F2>
-----------------------------------------
Three Months Nine Months
------------------- -------------------
Segment: 1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Agricultural Products $ 67 $ 144 $ 799 $ 837
Nutrition & Consumer Products 58 47 238 221
Pharmaceuticals 139 82 171 163
Corporate & Other (5) (34) (87) (109)
-------- -------- -------- --------
Total $ 259 $ 239 $1,121 $1,112
-------- -------- -------- --------
<FN>
<F2> Operating contribution is a measure of a segment's cash-based
operating profitability. It excludes goodwill amortization and the
effects of unusual items from operating income, such as pretax
charges for in-process research and development and restructuring.
<F3> Pretax (Income) / Expense related to restructuring programs, acquired
in-process research and development and other unusual items were
recorded in the Statement of Consolidated Income in the following
categories.
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Costs and Expenses:
Cost of Goods Sold $ $ $ 44 $
Acquired In-Process Research
and Development 189 436 189 609
Amortization of Intangible Assets 24
Restructuring Expense (35)
-------- -------- -------- --------
Operating Income 189 436 222 609
Other (Income) / Expense - Net (20)
-------- -------- -------- --------
Income from Continuing
Operations Before Taxes $ 189 $ 436 $ 202 $ 609
-------- -------- -------- --------
</TABLE>
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<TABLE>
Monsanto Company and Subsidiaries
Statement of Consolidated Financial Position
(Dollars in millions)
UNAUDITED
<CAPTION>
Sep. 30, Dec. 31,
ASSETS 1998 1997
-------- --------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 215 $ 134
Receivables 3,576 2,515
Deferred income tax benefit 302 243
Inventories 1,505 1,374
-------- --------
Total Current Assets 5,598 4,266
-------- --------
Net Property, Plant and Equipment 2,729 2,400
Investment in Affiliates 359 329
Intangible Assets 3,127 2,837
Other Assets 1,053 942
-------- --------
Total Assets $12,866 $10,774
-------- --------
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Payables and accruals $ 2,271 $ 1,813
Short-term debt 2,169 1,726
-------- --------
Total Current Liabilities 4,440 3,539
-------- --------
Long-Term Debt 2,506 1,979
Deferred Income Taxes 100 97
Postretirement Liabilities 838 735
Other Liabilities 296 320
Shareowners' Equity 4,686 4,104
-------- --------
Total Liabilities and Shareowners' Equity $12,866 $10,774
-------- --------
Working Capital $ 1,158 $ 727
-------- --------
Debt to Capital Ratio 50% 47%
</TABLE>
-oOo-
