SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURTIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 1, 1999
(January 21, 1999)
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 January 21, 1999, Monsanto Company (the "Company") issued a press release
announcing the Company's financial results for the fourth quarter of 1998 and
the full year. 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 January 21, 1999, issued by
Monsanto Company
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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: March 1, 1999
MONSANTO COMPANY
By: /s/ Richard B. Clark
_____________________________
Name: Richard B. Clark
Vice President and Controller
(Principal Accounting Officer)
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EXHIBIT INDEX
Exhibit
Number Description
99.1 Press release, dated January 21, 1999, issued
by Monsanto Company
Exhibit 99.1
Immediately
Scarlett Lee Foster (314-694-2883)
MONSANTO REPORTS 1998 FOURTH-QUARTER AND FULL-YEAR RESULTS
ST. LOUIS, Jan. 21, 1999 - Monsanto Company reported an aftertax loss
from continuing operations for the fourth quarter of 1998 of $603 million, or a
loss of $1.00 per share on both a basic and diluted basis. Sales during the
period were $2.1 billion. For the year, the company recorded an aftertax loss
from continuing operations of $250 million, or a loss of 41 cents per share on
both a basic and diluted basis. Sales reached $8.6 billion.
Both the fourth quarter and the year were affected by charges for
restructuring, acquired in-process research and development (R&D) and other
unusual items. If these items were excluded for the fourth quarter, aftertax
income from continuing operations would have been $27 million, or 5 cents per
share on a diluted basis. For the full year, if unusual items were excluded,
aftertax income from continuing operations would have been $580 million, or 93
cents per share on a diluted basis.
Based on an EBIT measure (earnings before interest expense and taxes),
the company recorded a fourth-quarter loss of $748 million, which included
restructuring, in-process R&D and other charges of $858 million. If the unusual
items were excluded, fourth-quarter EBIT would have been $110 million. For the
full year, EBIT was $69 million, which included restructuring, in-process R&D
and other charges of $1.1 billion.
EBITDA (earnings before interest expense, taxes, depreciation and
amortization, and excluding unusual items) was $320 million for the last quarter
of 1998 and $1.8 billion for the full year. EBITDA is a cash-based measure of
operating profitability.
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"We completed several of the critical steps in our life sciences strategy
in 1998 and put in place the platforms that will accelerate the
commercialization and growth of our new products," said Robert B. Shapiro,
Monsanto chairman and chief executive officer. "Our efforts in 1999 will be
centered on continuing to grow strong base businesses like Roundup herbicide,
integrating our newly acquired seed companies, commercializing new products like
Celebrex arthritis treatment, and accelerating the development of our product
pipeline."
In comparison, aftertax income from continuing operations in 1997 was $5
million, or 1 cent per share on a diluted basis, on sales of $1.8 billion for
the quarter, and $294 million, or 48 cents per share on a diluted basis, on
sales of $7.5 billion for the year. If unusual items in 1997 were excluded,
aftertax income from continuing operations would have been $55 million, or 9
cents per share on a diluted basis, for the fourth quarter, and $749 million, or
$1.23 per share on a diluted basis, for the full year. In 1997, EBIT was $56
million for the fourth quarter, which included $75 million of in-process R&D
charges, and $536 million for the 12-month period, which included charges of
$684 million for in-process R&D. (EBITDA for 1997 was $269 million for the
fourth quarter and $1.7 billion for the year.)
In the fourth quarter of 1998, Monsanto reported pretax restructuring and
special charges of $625 million. These charges primarily will cover the costs
necessary to eliminate roughly 1,700 jobs in 1999, to write down assets being
sold, and to dispose of nonstrategic assets and product lines. These initiatives
are expected to generate annual pretax savings of approximately $160 million.
The expenses associated with these charges are expected to be fully offset by
cost savings within 20 months. Additional cost-saving actions are being
considered that may require future charges. Fourth-quarter 1998 results also
included net pretax charges of $233 million, primarily for in-process R&D
write-offs associated with the purchase of DEKALB Genetics Corporation, Plant
Breeding International Cambridge Limited, and the international seed operations
of Cargill Inc.
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In 1998, the company invested $2.1 billion pretax for growth spending,
which included costs associated with research and technology, major product
developments, new product launches and other growth initiatives. This is a 52
percent increase from growth spending in 1997. These growth investments reduced
year-to-year EBIT by approximately $720 million.
Unlike the EBIT measure for the company, the EBIT measure for Monsanto's
specific business segments excludes unusual items, thereby more closely
approximating the cash-generating ability of each business.
Based on EBIT, the agricultural segment had a loss of $79 million for the
quarter and earnings of $737 million for the year, roughly flat with the returns
in the comparable periods in 1997. Technology, selling, administration and
amortization costs negatively affected year-to-year EBIT, primarily because of
the inclusion of recently acquired seed companies in the segment's results.
(EBITDA for the agricultural segment was $35 million for the quarter and $1.1
billion for 1998. This compares with a loss of $11 million and earnings of $939
million, respectively, in 1997.) For the year, worldwide volumes for Roundup
herbicide increased more than 25 percent compared with volumes last year. The
overall number of acres planted with crops enhanced by Monsanto's biotechnology
traits tripled, and new products were launched for corn and potatoes in the
United States and cotton in China.
Searle, Monsanto's pharmaceutical segment, had EBIT of $179 million for
the fourth quarter and $309 million for the year, increases of 14 percent and 8
percent, respectively, from results for the quarter and year in 1997. (On a
year-to-year comparison, Searle's EBITDA was $451 million in 1998 vs. $422
million in 1997. In the fourth quarter, EBITDA improved to $222 million in 1998,
compared with $197 million in the previous year.) Sales reached a record for the
year, fueled by sales of more than $300 million for both Daypro and Arthrotec
arthritis treatments and of more than $400 million for Ambien short-term
treatment for insomnia. Searle became the No. 1 provider of branded arthritis
treatments in 1998 and will add Celebrex to its
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arthritis portfolio in 1999. Results for Searle for the fourth quarter included
approximately $200 million from partnering and product-rights agreements. For
the full year, Searle's EBIT and EBITDA also benefited from roughly $250 million
higher partnering and product-rights payments when compared with 1997 payments.
Celebrex, the first drug of its kind approved for relief of the signs and
symptoms of osteoarthritis and adult rheumatoid arthritis, was approved in the
United States on Dec. 31, 1998, and in Brazil on Jan. 15, 1999. Shipments of
Celebrex to chain and independent pharmacies in the United States also began
this week.
Searle continues to focus its research efforts on compounds in three key
therapeutic areas: arthritis/pain and inflammation, oncology and cardiovascular
disease. Six of the company's pipeline candidates are currently in advanced
stage (Phase III) clinical trials. These investigational drugs include:
valdecoxib, a second-generation COX-2 inhibitor being evaluated for enhanced
inflammation and pain efficacy; parecoxib, a COX-2 inhibitor for post-surgery
pain management; and celecoxib, a COX-2 inhibitor designed to reduce polyps that
may be precursors to certain malignant tumors. Other investigational drugs being
evaluated in Phase III trials are: eplerenone, a cardiovascular candidate for
the treatment of hypertension and congestive heart failure; leridistim, a blood
cell growth factor designed to help prevent infections in cancer patients after
chemotherapy; and hormone replacement therapy patches for the treatment of
menopausal symptoms and estrogen deficiency.
EBIT for the nutrition and consumer segment was $51 million for the
quarter, down 34 percent from EBIT in last year's fourth quarter, and $278
million for the year, down 14 percent in year-to-year comparisons, primarily
because of the timing of sales of NutraSweet brand sweetener to major customers,
and higher spending on neotame and science-based nutrition projects. (EBITDA for
the nutrition and consumer segment was $88 million in the fourth-quarter of
1998, and $109 million in the same period during 1997. For the full year, the
segment's
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EBITDA was $405 million in 1998 vs. $440 million in 1997.) Market share for both
tabletop sweeteners and biogums improved in 1998 as compared with 1997 results.
At the end of 1998, a general use petition for neotame, a new high-intensity
sweetener, was filed with the FDA.
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Notes to editors: Roundup, Celebrex, Daypro, Arthrotec, Ambien 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 is under way at the time of an acquisition but that has not yet
resulted in commercial products. EBIT for the company includes unusual items,
such as restructuring, in-process R&D and other charges; EBIT for business
segments excludes unusual items.
Certain statements made in the news release, including those relating to the
company's future performance, and business and financial plans, are
forward-looking statements. These forward-looking statements are based on
current expectations, currently available information and assumptions that the
company believes to be reasonable. However, forward-looking statements
necessarily involve risks and uncertainties and actual results may differ
materially from those suggested. Factors that could cause actual results to
differ materially from those anticipated include but are not limited to the
economic, competitive, governmental, technological, business, financial and
other factors identified in Monsanto's 10-K, 10-Q and 8-K filings with the
Securities and Exchange Commission.
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Monsanto Company and Subsidiaries
Statement of Consolidated Income
(Dollars in millions, except per share)
UNAUDITED
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
Net Sales $ 2,148 $ 1,820 $ 8,648 $ 7,514
Costs, Expenses and Other:
Cost of Goods Sold 971 749 3,593 3,091
Selling, General and
Administrative Expenses 675 557 2,421 2,023
Technological Expenses 391 326 1,358 1,044
Acquired In-Process Research
and Development 213 75 402 684
Amortization of Intangible Assets 281 59 487 173
Restructuring and Other
Special Charges - Net 307 272
Interest Expense 98 59 312 170
Interest Income (11) (9) (50) (45)
Other Expense - Net 69 7 96 8
-------- -------- -------- --------
Income (Loss) from Continuing
Operations Before Taxes (846) (3) (243) 366
Income Taxes (243) (8) 7 72
-------- -------- -------- --------
Income (Loss) from Continuing
Operations (603) 5 (250) 294
Income from Discontinued
Operations 176
-------- -------- -------- --------
Net Income (Loss) $ (603) $ 5 $ (250) $ 470
-------- -------- -------- --------
Basic Earnings/(Loss) Per Share
Continuing Operations $ (1.00) $ 0.01 $ (0.41) $ 0.50
Discontinued Operations 0.30
-------- -------- -------- --------
Total $ (1.00) $ 0.01 $ (0.41) $ 0.80
-------- -------- -------- --------
Diluted Earnings/(Loss) Per Share
Continuing Operations $ (1.00) $ 0.01 $ (0.41) $ 0.48
Discontinued Operations 0.29
-------- -------- -------- --------
Total $ (1.00) $ 0.01 $ (0.41) $ 0.77
-------- -------- -------- --------
Weighted Average Common Shares - Basic (in millions) 603.5 590.2
-------- --------
Weighted Average Common Shares - Diluted (in millions) 603.5 610.5
-------- --------
Earnings Before Interest and
Tax Expense (EBIT): $ (748) $ 56 $ 69 $ 536
-------- -------- -------- --------
For 1998, 23.5 million common equivalent shares are not included in computing
the diluted loss per share from continuing operations because they are
antidilutive.
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Monsanto Company and Subsidiaries
Segment Data
(Dollars in millions)
UNAUDITED
Three Months Ended December 31,
-------------------------------------------
1998 1997
--------------------- ---------------------
Net Net
Segment: (1) Sales EBIT (2) Sales EBIT (2)
-------- -------- -------- --------
Agricultural Products $ 787 $ (79) $ 562 $ (82)
Nutrition & Consumer Products 362 51 399 77
Pharmaceuticals 953 179 789 157
Corporate & Other 46 (41) 70 (21)
Restructuring & Unusuals (858) (75)
-------- -------- -------- --------
Total $ 2,148 $ (748) $ 1,820 $ 56
-------- -------- -------- --------
Twelve Months Ended December 31,
-----------------------------------------
1998 1997
------------------- -------------------
Net Net
Segment: (1) Sales EBIT (2) Sales EBIT (2)
-------- -------- -------- --------
Agricultural Products $ 4,032 $ 737 $ 3,274 $ 731
Nutrition & Consumer Products 1,533 278 1,552 322
Pharmaceuticals 2,894 309 2,443 286
Corporate & Other 189 (195) 245 (119)
Restructuring & Unusuals (1,060) (684)
-------- -------- -------- --------
Total $ 8,648 $ 69 $ 7,514 $ 536
-------- -------- -------- --------
(1) As a result of adopting Financial Accounting Standard No. 131, which defines
new segment reporting rules, Monsanto changed its measure of segment profit from
operating income to EBIT (defined in note 2 below). In addition, Monsanto
transferred two small businesses that were previously reported in Corporate &
Other to Agricultural Products and Pharmaceuticals. Prior-year segment
information has been reclassified to conform to the current presentation.
(2) EBIT (earnings before interest expense and taxes) is income (loss) from
continuing operations before taxes, excluding interest expense. Segment EBIT
excludes unusual items. The unusual items included restructuring charges,
write-offs for in-process research and development, asset impairments and other
unusual items.
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Monsanto Company and Subsidiaries
Segment Data
(Dollars in millions)
UNAUDITED
EBITDA (3)
-----------------------------------------
Three Months Twelve Months
------------------- -------------------
Segment: 1998 1997 1998 1997
-------- -------- -------- --------
Agricultural Products $ 35 $ (11) $1,092 $ 939
Nutrition & Consumer Products 88 109 405 440
Pharmaceuticals 222 197 451 422
Corporate & Other (25) (26) (183) (94)
-------- -------- -------- --------
Total $ 320 $ 269 $1,765 $1,707
-------- -------- -------- --------
(3) EBITDA (Earnings before interest expense, taxes, depreciation and
amortization excluding unusuals) is EBIT excluding depreciation,
amortization, and the effects of unusual items.
(4) Pretax expense related to restructuring programs, acquired in-process
research and development, asset impairments and other unusual items were
recorded in the Statement of Consolidated Income in the following
categories:
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
Costs and Expenses:
Cost of Goods Sold $ 74 $ 118
Acquired In-Process Research
and Development 213 $ 75 402 $ 684
Amortization of Intangible Assets 193 217
Restructuring and Other
Special Charges - Net 307 272
Other Expense - Net 71 51
-------- -------- -------- --------
Income from Continuing
Operations Before Taxes $ 858 $ 75 $1,060 $ 684
-------- -------- -------- --------
Aftertax, the unusual items totaled $630 million, or $1.01 per share, for the
fourth quarter of 1998; $50 million, or $0.08 per share, for the fourth quarter
of 1997; $830 million, or $1.33 per share, for the year ended December 31, 1998;
and $455 million, or $0.75 per share, for the year ended December 31, 1997. The
per-share amounts for 1998 in this paragraph were computed based on the weighted
average number of common and common equivalent shares of 627.0 million.
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Monsanto Company and Subsidiaries
Statement of Consolidated Financial Position
(Dollars in millions)
UNAUDITED
Dec. 31, Dec. 31,
ASSETS 1998 1997
-------- --------
Current Assets:
Cash and cash equivalents $ 89 $ 134
Trade Receivables 2,404 1,823
Prepaid Assets & Other Receivables 1,141 692
Deferred income tax benefit 567 243
Inventories 2,004 1,374
-------- --------
Total Current Assets 6,205 4,266
-------- --------
Net Property, Plant and Equipment 3,254 2,400
Intangible Assets 6,047 2,837
Investment & Other Assets 1,233 1,271
-------- --------
Total Assets $16,739 $10,774
-------- --------
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities
Payables and accruals $ 2,998 $ 1,813
Short-term debt 1,069 1,726
-------- --------
Total Current Liabilities 4,067 3,539
-------- --------
Long-Term Debt 6,259 1,979
Postretirement Liabilities 871 735
Other Liabilities 536 417
Shareowners' Equity 5,006 4,104
-------- --------
Total Liabilities and Shareowners' Equity $16,739 $10,774
-------- ---------
Working Capital $ 2,138 $ 727
-------- --------
Debt to Capital Ratio 59% 47%
