MONSANTO COMPANY | 2011 FORM 10-K/A | |
Delaware | 43-1878297 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
800 North Lindbergh Blvd., St. Louis, Missouri | 63167 | |
(Address of principal executive offices) | (Zip Code) | |
Registrants telephone number including area code: | (314) 694-1000 |
Title of each class | Name of each exchange on which registered | |
Common Stock $0.01 par value | New York Stock Exchange |
MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions, except per share amounts) | 2011 | 2010 | 2009 | |||||||||
Net Sales |
$ | 11,822 | $ | 10,483 | $ | 11,685 | ||||||
Cost of goods sold |
5,743 | 5,416 | 4,965 | |||||||||
Gross Profit |
6,079 | 5,067 | 6,720 | |||||||||
Operating Expenses: |
||||||||||||
Selling, general and administrative expenses |
2,190 | 2,049 | 2,037 | |||||||||
Research and development expenses |
1,386 | 1,205 | 1,098 | |||||||||
Acquired in-process research and development |
| | 163 | |||||||||
Restructuring charges, net |
1 | 210 | 361 | |||||||||
Total Operating Expenses |
3,577 | 3,464 | 3,659 | |||||||||
Income from Operations |
2,502 | 1,603 | 3,061 | |||||||||
Interest expense |
162 | 162 | 129 | |||||||||
Interest income |
(74 | ) | (56 | ) | (71 | ) | ||||||
Other expense, net |
40 | 7 | 85 | |||||||||
Income from Continuing Operations Before Income Taxes |
2,374 | 1,490 | 2,918 | |||||||||
Income tax provision |
717 | 379 | 813 | |||||||||
Income from Continuing Operations Including Portion |
||||||||||||
Attributable to Noncontrolling Interest |
1,657 | 1,111 | 2,105 | |||||||||
Discontinued Operations: |
||||||||||||
Income from operations of discontinued businesses |
3 | 4 | 19 | |||||||||
Income tax provision |
1 | | 8 | |||||||||
Income on Discontinued Operations |
2 | 4 | 11 | |||||||||
Net Income |
1,659 | 1,115 | 2,116 | |||||||||
Less: Net income attributable to noncontrolling interest |
52 | 19 | 24 | |||||||||
Net Income Attributable to Monsanto Company |
$ | 1,607 | $ | 1,096 | $ | 2,092 | ||||||
Amounts Attributable to Monsanto Company: |
||||||||||||
Income from continuing operations |
$ | 1,605 | $ | 1,092 | $ | 2,081 | ||||||
Income on discontinued operations |
2 | 4 | 11 | |||||||||
Net Income Attributable to Monsanto Company |
$ | 1,607 | $ | 1,096 | $ | 2,092 | ||||||
Basic Earnings per Share Attributable to Monsanto Company: |
||||||||||||
Income from continuing operations |
$ | 2.99 | $ | 2.01 | $ | 3.80 | ||||||
Income on discontinued operations |
0.01 | 0.01 | 0.02 | |||||||||
Net Income Attributable to Monsanto Company |
$ | 3.00 | $ | 2.02 | $ | 3.82 | ||||||
Diluted Earnings per Share Attributable to Monsanto Company: |
||||||||||||
Income from continuing operations |
$ | 2.96 | $ | 1.99 | $ | 3.75 | ||||||
Income on discontinued operations |
| | 0.02 | |||||||||
Net Income Attributable to Monsanto Company |
$ | 2.96 | $ | 1.99 | $ | 3.77 | ||||||
Weighted Average Shares Outstanding: |
||||||||||||
Basic |
536.5 | 543.7 | 547.1 | |||||||||
Diluted |
542.4 | 550.8 | 555.6 |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
As of Aug. 31, |
||||||||||||
(Dollars in millions, except share amounts) | 2011 | 2010 | ||||||||||
Assets |
||||||||||||
Current Assets: |
||||||||||||
Cash and
cash equivalents (variable interest entities restricted - 2011: $96) |
$ | 2,572 | $ | 1,485 | ||||||||
Short-term investments |
302 | | ||||||||||
Trade
receivables, net (variable interest entities restricted - 2011: $51) |
2,117 | 1,590 | ||||||||||
Miscellaneous receivables |
629 | 717 | ||||||||||
Deferred tax assets |
446 | 529 | ||||||||||
Inventory, net |
2,591 | 2,649 | ||||||||||
Other current assets |
152 | 80 | ||||||||||
Total Current Assets |
8,809 | 7,050 | ||||||||||
Total property, plant and equipment |
8,697 | 8,068 | ||||||||||
Less accumulated depreciation |
4,303 | 3,841 | ||||||||||
Property, Plant and Equipment, Net |
4,394 | 4,227 | ||||||||||
Goodwill |
3,365 | 3,204 | ||||||||||
Other Intangible Assets, Net |
1,309 | 1,263 | ||||||||||
Noncurrent Deferred Tax Assets |
873 | 1,014 | ||||||||||
Long-Term Receivables, Net |
475 | 513 | ||||||||||
Other Assets |
619 | 581 | ||||||||||
Total Assets |
$ | 19,844 | $ | 17,852 | ||||||||
Liabilities and Shareowners Equity |
||||||||||||
Current Liabilities: |
||||||||||||
Short-term debt, including current portion of long-term debt |
$ | 678 | $ | 241 | ||||||||
Accounts payable |
839 | 752 | ||||||||||
Income taxes payable |
117 | 66 | ||||||||||
Accrued compensation and benefits |
427 | 179 | ||||||||||
Accrued marketing programs |
1,110 | 887 | ||||||||||
Deferred revenues |
373 | 219 | ||||||||||
Grower production accruals |
87 | 97 | ||||||||||
Dividends payable |
161 | 151 | ||||||||||
Customer payable |
94 | 83 | ||||||||||
Restructuring reserves |
24 | 197 | ||||||||||
Miscellaneous short-term accruals |
819 | 684 | ||||||||||
Total Current Liabilities |
4,729 | 3,556 | ||||||||||
Long-Term Debt |
1,543 | 1,862 | ||||||||||
Postretirement Liabilities |
509 | 920 | ||||||||||
Long-Term Deferred Revenue |
337 | 395 | ||||||||||
Noncurrent Deferred Tax Liabilities |
152 | 137 | ||||||||||
Long-Term Portion of Environmental and Litigation Liabilities |
176 | 188 | ||||||||||
Other Liabilities |
682 | 681 | ||||||||||
Shareowners Equity: |
||||||||||||
Common stock (authorized: 1,500,000,000 shares, par value $0.01)
Issued 591,516,732 and 588,439,202 shares, respectively
Outstanding 535,297,120 and 540,376,499 shares, respectively |
6 | 6 | ||||||||||
Treasury stock 56,219,612 and 48,062,703 shares, respectively, at cost |
(2,613 | ) | (2,110 | ) | ||||||||
Additional contributed capital |
10,096 | 9,896 | ||||||||||
Retained earnings |
4,174 | 3,178 | ||||||||||
Accumulated other comprehensive loss |
(116 | ) | (897 | ) | ||||||||
Reserve for ESOP debt retirement |
(2 | ) | (4 | ) | ||||||||
Total Monsanto Company Shareowners Equity |
11,545 | 10,069 | ||||||||||
Noncontrolling Interest |
171 | 44 | ||||||||||
Total Shareowners Equity |
11,716 | 10,113 | ||||||||||
Total Liabilities and Shareowners Equity |
$ | 19,844 | $ | 17,852 | ||||||||
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Operating Activities: |
||||||||||||
Net Income |
$ | 1,659 | $ | 1,115 | $ | 2,116 | ||||||
Adjustments to reconcile cash provided by operating activities: |
||||||||||||
Items that did not require (provide) cash: |
||||||||||||
Depreciation and amortization |
613 | 602 | 548 | |||||||||
Bad-debt expense |
3 | 58 | 49 | |||||||||
Stock-based compensation expense |
104 | 102 | 116 | |||||||||
Excess tax benefits from stock-based compensation |
(36 | ) | (43 | ) | (35 | ) | ||||||
Deferred income taxes |
135 | 22 | 235 | |||||||||
Restructuring charges, net |
1 | 210 | 361 | |||||||||
Equity affiliate income, net |
(21 | ) | (29 | ) | (15 | ) | ||||||
Acquired in-process research and development |
| | 163 | |||||||||
Net gain on sales of a business or other assets |
(5 | ) | (3 | ) | (66 | ) | ||||||
Other items |
81 | 49 | (25 | ) | ||||||||
Changes in assets and liabilities that provided (required) cash, net of acquisitions: |
||||||||||||
Trade receivables, net |
(310 | ) | (22 | ) | 520 | |||||||
Inventory, net |
156 | 221 | (634 | ) | ||||||||
Deferred revenues |
62 | (89 | ) | (700 | ) | |||||||
Accounts payable and other accrued liabilities |
894 | (395 | ) | (302 | ) | |||||||
Restructuring cash payments |
(183 | ) | (263 | ) | | |||||||
Pension contributions |
(291 | ) | (134 | ) | (187 | ) | ||||||
Net investment hedge settlement |
| (4 | ) | 35 | ||||||||
Other items |
(48 | ) | 1 | 67 | ||||||||
Net Cash Provided by Operating Activities |
2,814 | 1,398 | 2,246 | |||||||||
Cash Flows Provided (Required) by Investing Activities: |
||||||||||||
Purchases of short-term investments |
(732 | ) | | | ||||||||
Maturities of short-term investments |
430 | | 132 | |||||||||
Capital expenditures |
(540 | ) | (755 | ) | (916 | ) | ||||||
Acquisition of businesses, net of cash acquired |
(99 | ) | (57 | ) | (329 | ) | ||||||
Purchases of long-term debt and equity securities |
| (39 | ) | (7 | ) | |||||||
Technology and other investments |
(55 | ) | (33 | ) | (72 | ) | ||||||
Proceeds from divestiture of a business |
| | 300 | |||||||||
Other investments and property disposal proceeds |
21 | 50 | 169 | |||||||||
Net Cash Required by Investing Activities |
(975 | ) | (834 | ) | (723 | ) | ||||||
Cash Flows Provided (Required) by Financing Activities: |
||||||||||||
Net change in financing with less than 90-day maturities |
69 | 48 | (142 | ) | ||||||||
Short-term debt proceeds |
84 | 75 | 75 | |||||||||
Short-term debt reductions |
(74 | ) | (101 | ) | (45 | ) | ||||||
Long-term debt proceeds |
299 | | | |||||||||
Long-term debt reductions |
(193 | ) | (4 | ) | (71 | ) | ||||||
Payments on other financing |
(1 | ) | (1 | ) | (6 | ) | ||||||
Debt issuance costs |
(5 | ) | | | ||||||||
Treasury stock purchases |
(502 | ) | (532 | ) | (398 | ) | ||||||
Stock option exercises |
65 | 56 | 39 | |||||||||
Excess tax benefits from stock-based compensation |
36 | 43 | 35 | |||||||||
Tax withholding on restricted stock and restricted stock units |
(4 | ) | | | ||||||||
Dividend payments |
(602 | ) | (577 | ) | (552 | ) | ||||||
Proceeds from noncontrolling interest |
69 | | | |||||||||
Dividend payments to noncontrolling interests |
(105 | ) | (45 | ) | (10 | ) | ||||||
Net Cash Required by Financing Activities |
(864 | ) | (1,038 | ) | (1,075 | ) | ||||||
Cash Assumed from Initial Consolidations of Variable Interest Entities |
77 | | | |||||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
35 | 3 | (105 | ) | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents |
1,087 | (471 | ) | 343 | ||||||||
Cash and Cash Equivalents at Beginning of Period |
1,485 | 1,956 | 1,613 | |||||||||
Cash and Cash Equivalents at End of Period |
$ | 2,572 | $ | 1,485 | $ | 1,956 | ||||||
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
Monsanto Shareowners |
||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||
Additional | Other | Reserve | Non- | |||||||||||||||||||||||||||||
Common | Treasury | Contributed | Retained | Comprehensive | for ESOP | Controlling | ||||||||||||||||||||||||||
(Dollars in millions, except per share data) | Stock | Stock | Capital | Earnings | (Loss)(1) | Debt | Interest | Total | ||||||||||||||||||||||||
Balance as of Sept. 1, 2008 |
$ | 6 | $ | (1,177 | ) | $ | 9,495 | $ | 1,138 | $ | (78 | ) | $ | (10 | ) | $ | 37 | $ | 9,411 | |||||||||||||
Net income |
| | | 2,092 | | | 24 | 2,116 | ||||||||||||||||||||||||
Foreign currency translation |
| | | | (333 | ) | | (5 | ) | (338 | ) | |||||||||||||||||||||
Postretirement benefit plan activity,
net of tax of $(119) |
| | | | (189 | ) | | | (189 | ) | ||||||||||||||||||||||
Unrealized net derivative losses,
net of tax of $(70) |
| | | | (81 | ) | | | (81 | ) | ||||||||||||||||||||||
Realized net derivative gains,
net of tax of $(25) |
| | | | (63 | ) | | | (63 | ) | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive income for 2009 |
19 | 1,445 | ||||||||||||||||||||||||||||||
Treasury stock purchases |
| (400 | ) | | | | | | (400 | ) | ||||||||||||||||||||||
Restricted stock withholding |
| | (7 | ) | | | | | (7 | ) | ||||||||||||||||||||||
Issuance of shares under employee stock plans |
| | 39 | | | | | 39 | ||||||||||||||||||||||||
Excess tax benefits from stock-based
compensation |
| | 35 | | | | | 35 | ||||||||||||||||||||||||
Stock-based compensation expense |
| | 133 | | | | | 133 | ||||||||||||||||||||||||
Cash dividends of $1.04 per common share |
| | | (565 | ) | | | | (565 | ) | ||||||||||||||||||||||
Dividend payments to noncontrolling interest |
| | | | | | (10 | ) | (10 | ) | ||||||||||||||||||||||
Allocation of ESOP shares,
net of dividends received |
| | | | | 4 | | 4 | ||||||||||||||||||||||||
Donation of noncontrolling interest |
| | | | | | 28 | 28 | ||||||||||||||||||||||||
Purchase of noncontrolling interest |
| | | | | | (5 | ) | (5 | ) | ||||||||||||||||||||||
Balance as of Aug. 31, 2009 |
$ | 6 | $ | (1,577 | ) | $ | 9,695 | $ | 2,665 | $ | (744 | ) | $ | (6 | ) | $ | 69 | $ | 10,108 | |||||||||||||
Net income |
| | | 1,096 | | | 19 | 1,115 | ||||||||||||||||||||||||
Foreign currency translation |
| | | | (99 | ) | | (1 | ) | (100 | ) | |||||||||||||||||||||
Postretirement benefit plan activity,
net of tax of $(75) |
| | | | (113 | ) | | | (113 | ) | ||||||||||||||||||||||
Unrealized net losses on investment holdings,
net of tax of $(2) |
| | | | (4 | ) | | | (4 | ) | ||||||||||||||||||||||
Realized net losses on investment holdings,
net of tax of $6 |
| | | | 10 | | | 10 | ||||||||||||||||||||||||
Unrealized net derivative gains,
net of tax of $(7) |
| | | | 5 | | | 5 | ||||||||||||||||||||||||
Realized net derivative losses,
net of tax of $39 |
| | | | 48 | | | 48 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive income for 2010 |
18 | 961 | ||||||||||||||||||||||||||||||
Treasury stock purchases |
| (533 | ) | | | | | | (533 | ) | ||||||||||||||||||||||
Restricted stock withholding |
| | (6 | ) | | | | | (6 | ) | ||||||||||||||||||||||
Issuance of shares under employee stock plans |
| | 56 | | | | | 56 | ||||||||||||||||||||||||
Excess tax benefits from stock-based
compensation |
| | 43 | | | | | 43 | ||||||||||||||||||||||||
Stock-based compensation expense |
| | 108 | | | | | 108 | ||||||||||||||||||||||||
Cash dividends of $1.08 per common share |
| | | (583 | ) | | | | (583 | ) | ||||||||||||||||||||||
Dividend payments to noncontrolling interest |
| | | | | | (45 | ) | (45 | ) | ||||||||||||||||||||||
Allocation of ESOP shares,
net of dividends received |
| | | | | 2 | | 2 | ||||||||||||||||||||||||
Donation of noncontrolling interest |
| | | | | | 2 | 2 | ||||||||||||||||||||||||
Balance as of Aug. 31, 2010 |
$ | 6 | $ | (2,110 | ) | $ | 9,896 | $ | 3,178 | $ | (897 | ) | $ | (4 | ) | $ | 44 | $ | 10,113 | |||||||||||||
(1) | See Note 23 Accumulated Other Comprehensive Loss for further details of the components of accumulated other comprehensive loss. |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
Monsanto Shareowners |
||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||
Additional | Other | Reserve | Non- | |||||||||||||||||||||||||||||
Common | Treasury | Contributed | Retained | Comprehensive | for ESOP | Controlling | ||||||||||||||||||||||||||
(Dollars in millions, except per share data) | Stock | Stock | Capital | Earnings | (Loss)(1) | Debt | Interest | Total | ||||||||||||||||||||||||
Balance as of Aug. 31, 2010 |
$ | 6 | $ | (2,110 | ) | $ | 9,896 | $ | 3,178 | $ | (897 | ) | $ | (4 | ) | $ | 44 | $ | 10,113 | |||||||||||||
Net income |
| | | 1,607 | | | 52 | 1,659 | ||||||||||||||||||||||||
Foreign currency translation |
| | | | 510 | | 4 | 514 | ||||||||||||||||||||||||
Postretirement benefit plan activity,
net of tax of $98 |
| | | | 160 | | | 160 | ||||||||||||||||||||||||
Unrealized net derivative gains,
net of tax of $77 |
| | | | 110 | | | 110 | ||||||||||||||||||||||||
Realized net derivative losses,
net of tax of $5 |
| | | | 1 | | | 1 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive income for 2011 |
56 | 2,444 | ||||||||||||||||||||||||||||||
Treasury stock purchases |
| (503 | ) | | | | | | (503 | ) | ||||||||||||||||||||||
Restricted stock withholding |
| | (4 | ) | | | | | (4 | ) | ||||||||||||||||||||||
Issuance of shares under
employee stock plans |
| | 65 | | | | | 65 | ||||||||||||||||||||||||
Excess tax benefits from stock-based
compensation |
| | 36 | | | | | 36 | ||||||||||||||||||||||||
Stock-based compensation expense |
| | 103 | | | | | 103 | ||||||||||||||||||||||||
Cash dividends of $1.14 per common share |
| | | (611 | ) | | | | (611 | ) | ||||||||||||||||||||||
Dividend payments to
noncontrolling interest |
| | | | | | (105 | ) | (105 | ) | ||||||||||||||||||||||
Allocation of ESOP shares,
net of dividends received |
| | | | | 2 | | 2 | ||||||||||||||||||||||||
Proceeds from noncontrolling interest |
| | | | | | 69 | 69 | ||||||||||||||||||||||||
Consolidation of VIEs |
| | | | | | 107 | 107 | ||||||||||||||||||||||||
Balance as of Aug. 31, 2011 |
$ | 6 | $ | (2,613 | ) | $ | 10,096 | $ | 4,174 | $ | (116 | ) | $ | (2 | ) | $ | 171 | $ | 11,716 | |||||||||||||
(1) | See Note 23 Accumulated Other Comprehensive Loss for further details of the components of accumulated other comprehensive loss. |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
| Consolidated net income was recast to include net income attributable to both the company and noncontrolling interests in the Statements of Consolidated Operations. | ||
| Noncontrolling interests were reclassified from other liabilities to equity, separate from the parents shareowners equity, in the Statements of Consolidated Financial Position. | ||
| The Statements of Consolidated Cash Flows now begin with net income (including noncontrolling interests) instead of net income attributable to Monsanto Company, with net income from noncontrolling interests (previously, minority interests) no longer a reconciling item in arriving at net cash provided by operating activities, and the Statements of Consolidated Cash Flows were recast to include dividend payments to noncontrolling interests. | ||
| Statements of Consolidated Shareowners Equity and Comprehensive Income have been combined and were recast to include noncontrolling interests. |
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
Aggregate | ||||
(Dollars in millions) | Acquisitions | |||
Current Assets |
$ | 4 | ||
Property, Plant and Equipment |
13 | |||
Goodwill |
51 | |||
Other Intangible Assets |
5 | |||
Acquired In-process Research and Development |
45 | |||
Other Assets |
9 | |||
Total Assets Acquired |
127 | |||
Current Liabilities |
2 | |||
Other Liabilities |
21 | |||
Total Liabilities Assumed |
23 | |||
Net Assets Acquired |
$ | 104 | ||
Supplemental Information: |
||||
Net assets acquired |
$ | 104 | ||
Cash acquired |
5 | |||
Cash paid, net of cash acquired |
$ | 99 | ||
(Dollars in millions) | ||||
Weighted Average Discount Rate |
21 | % | ||
Expected Costs to Complete (undiscounted) |
$ | 100 | ||
Weighted- | ||||||||||||
Average | ||||||||||||
Life | Useful Life | Aggregate | ||||||||||
(Dollars in millions) | (Years) | (Years) | Acquisitions | |||||||||
Acquired Intellectual Property |
17 | 17 | $ | 5 | ||||||||
Other Intangible Assets |
$ | 5 | ||||||||||
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
Aggregate | ||||
(Dollars in millions) | Acquisitions | |||
Current Assets |
$ | 51 | ||
Property, Plant and Equipment |
25 | |||
Goodwill |
20 | |||
Other Intangible Assets |
28 | |||
Total Assets Acquired |
124 | |||
Current Liabilities |
38 | |||
Other Liabilities |
7 | |||
Total Liabilities Assumed |
45 | |||
Net Assets Acquired |
$ | 79 | ||
Supplemental Information: |
||||
Net assets acquired |
$ | 79 | ||
Cash acquired |
3 | |||
Cash paid, net of cash acquired |
$ | 76 | ||
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MONSANTO COMPANY | 2011 FORM 10-K/A | |
Aggregate | ||||
(Dollars in millions) | Acquisitions | |||
Current Assets |
$ | 2 | ||
Property, Plant and Equipment |
6 | |||
Goodwill |
131 | |||
Other Intangible Assets |
33 | |||
Acquired In-process Research and Development |
163 | |||
Other Assets |
| |||
Total Assets Acquired |
335 | |||
Current Liabilities |
10 | |||
Other Liabilities |
2 | |||
Total Liabilities Assumed |
12 | |||
Net Assets Acquired |
$ | 323 | ||
Supplemental Information: |
||||
Net assets acquired |
$ | 323 | ||
Cash acquired |
| |||
Cash paid, net of cash acquired |
$ | 323 | ||
(Dollars in millions) | ||||
Weighted Average Discount Rate |
17 | % | ||
Expected Costs to Complete (undiscounted) |
$ | 166 | ||
Expected Years of Product Launches |
2010 - 2019 | |||
24
MONSANTO COMPANY | 2011 FORM 10-K/A | |
Beeologics | ||||
(Dollars in millions) | Acquisition | |||
Current Assets |
$ | 1 | ||
Property, Plant and Equipment |
| |||
Goodwill |
78 | |||
Other Intangible Assets |
45 | |||
Acquired In-process Research and Development |
4 | |||
Other Assets |
8 | |||
Total Assets Acquired |
136 | |||
Current Liabilities |
12 | |||
Other Liabilities |
10 | |||
Total Liabilities Assumed |
22 | |||
Net Assets Acquired |
$ | 114 | ||
Supplemental Information: |
||||
Net assets acquired |
$ | 114 | ||
Cash acquired |
1 | |||
Cash paid, net of cash acquired |
$ | 113 | ||
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Costs of Goods Sold(1) |
$ | (2 | ) | $ | (114 | ) | $ | (45 | ) | |||
Restructuring Charges, Net(1)(2) |
(1 | ) | (210 | ) | (361 | ) | ||||||
Loss from Continuing Operations Before Income Taxes |
(3 | ) | (324 | ) | (406 | ) | ||||||
Income Tax Benefit |
4 | 100 | 116 | |||||||||
Net Income (Loss) |
$ | 1 | $ | (224 | ) | $ | (290 | ) | ||||
(1) | For the fiscal year ended 2011, the $2 million of restructuring charges recorded in costs of goods sold related to the Seeds and Genomics segment. For the fiscal year ended 2010, the $114 million of restructuring charges recorded in cost of goods sold were split by segment as follows: $13 million in Agricultural Productivity and $101 million in Seeds and Genomics. For the fiscal year ended 2009, the $45 million of restructuring charges recorded in cost of goods sold were split by segment as follows: $1 million in Agricultural Productivity and $44 million in Seeds and Genomics. For the fiscal year ended 2011, the $1 million of restructuring charges recorded in restructuring charges, net, were split by segment as follows: $(8) million in Agricultural Productivity and $9 million in Seeds and Genomics. For the fiscal year ended 2010, the $210 million of restructuring charges were split by segment as follows: $79 million in Agricultural Productivity and $131 million in Seeds and Genomics. For the fiscal year ended 2009, the $361 million of restructuring charges were split by segment as follows: $113 million in Agricultural Productivity and $248 million in Seeds and Genomics. | |
(2) | The restructuring charges for the fiscal year ended 2011 include reversals of $37 million related to the 2009 Restructuring Plan. The reversals primarily related to severance. Although positions originally included in the plan were eliminated, individuals found new roles within the company due to attrition. |
25
MONSANTO COMPANY | 2011 FORM 10-K/A | |
Year Ended Aug. 31, 2011 |
Year Ended Aug. 31, 2010 |
Year Ended Aug. 31, 2009 |
||||||||||||||||||||||||||||||||||
Seeds and | Agricultural | Seeds and | Agricultural | Seeds and | Agricultural | |||||||||||||||||||||||||||||||
(Dollars in millions) |
|
Genomics |
|
|
Productivity |
|
|
Total |
Genomics |
|
|
Productivity |
|
|
Total |
Genomics |
|
|
Productivity |
|
|
Total |
|
|||||||||||||
Work Force Reductions |
$ | (21 | ) | $ | (11 | ) | $ | (32 | ) | $ | 85 | $ | 47 | $ | 132 | $ | 175 | $ | 63 | $ | 238 | |||||||||||||||
Facility Closures / Exit Costs |
26 | 3 | 29 | 46 | 31 | 77 | 3 | 47 | 50 | |||||||||||||||||||||||||||
Asset Impairments |
||||||||||||||||||||||||||||||||||||
Property, plant and
equipment |
4 | | 4 | 8 | 1 | 9 | 31 | 4 | 35 | |||||||||||||||||||||||||||
Inventory |
2 | | 2 | 93 | 13 | 106 | 24 | | 24 | |||||||||||||||||||||||||||
Other intangible assets |
| | | | | | 59 | | 59 | |||||||||||||||||||||||||||
Total Restructuring Charges, Net |
$ | 11 | $ | (8 | ) | $ | 3 | $ | 232 | $ | 92 | $ | 324 | $ | 292 | $ | 114 | $ | 406 | |||||||||||||||||
Cumulative Amount through Aug. 31, 2011 |
||||||||||||
Seeds and | Agricultural | |||||||||||
(Dollars in millions) | Genomics | Productivity | Total | |||||||||
Work Force Reductions |
$ | 239 | $ | 99 | $ | 338 | ||||||
Facility Closures / Exit Costs |
75 | 81 | 156 | |||||||||
Asset Impairments |
||||||||||||
Property, plant and
equipment |
43 | 5 | 48 | |||||||||
Inventory |
119 | 13 | 132 | |||||||||
Other intangible assets |
59 | | 59 | |||||||||
Total Restructuring Charges, Net |
$ | 535 | $ | 198 | $ | 733 | ||||||
26
MONSANTO COMPANY | 2011 FORM 10-K/A |
Work Force | Facility Closures / | Asset | ||||||||||||||
(Dollars in millions) | Reductions | Exit Costs | Impairments | Total | ||||||||||||
Ending Liability as of Aug. 31, 2009 |
$ | 216 | $ | 50 | $ | | $ | 266 | ||||||||
Restructuring charges recognized in fiscal year 2010 |
132 | 77 | 115 | 324 | ||||||||||||
Cash payments |
(180 | ) | (83 | ) | | (263 | ) | |||||||||
Asset impairments and write-offs |
| | (115 | ) | (115 | ) | ||||||||||
Acceleration of stock-based compensation expense in |
||||||||||||||||
additional contributed capital |
(4 | ) | | | (4 | ) | ||||||||||
Foreign currency impact |
(11 | ) | | | (11 | ) | ||||||||||
Ending Liability as of Aug. 31, 2010 |
$ | 153 | $ | 44 | $ | | $ | 197 | ||||||||
Restructuring charges recognized in fiscal year 2011 |
(32 | ) | 29 | 6 | 3 | |||||||||||
Cash payments |
(110 | ) | (73 | ) | | (183 | ) | |||||||||
Asset impairments and write-offs |
| | (6 | ) | (6 | ) | ||||||||||
Reversal of acceleration of stock-based compensation |
||||||||||||||||
expense in additional contributed capital |
8 | | | 8 | ||||||||||||
Foreign currency impact |
5 | | | 5 | ||||||||||||
Ending Liability as of Aug. 31, 2011 |
$ | 24 | $ | | $ | | $ | 24 | ||||||||
(Dollars in millions) | ||||||||||||||||
Balance Sept. 1, 2008 |
$ | 218 | ||||||||||||||
Additions charged to expense |
23 | |||||||||||||||
Other(1) |
(79 | ) | ||||||||||||||
Balance Aug. 31, 2009 |
$ | 162 | ||||||||||||||
Additions charged to expense |
51 | |||||||||||||||
Other(1) |
(70 | ) | ||||||||||||||
Balance Aug. 31, 2010 |
$ | 143 | ||||||||||||||
Deductions credited against expense |
(8 | ) | ||||||||||||||
Other(1) |
(37 | ) | ||||||||||||||
Balance Aug. 31, 2011 |
$ | 98 | ||||||||||||||
(1) | Includes reclassifications to long-term, write-offs, and foreign currency translation adjustments. |
27
MONSANTO COMPANY | 2011 FORM 10-K/A | |
(Dollars in millions) | ||||
Balance Sept. 1, 2008 |
$ | 179 | ||
Additions charged to expense |
26 | |||
Other(1) |
(33 | ) | ||
Balance Aug. 31, 2009 |
$ | 172 | ||
Additions charged to expense |
7 | |||
Other(1) |
47 | |||
Balance Aug. 31, 2010 |
$ | 226 | ||
Incremental Provision |
20 | |||
Recoveries |
(9 | ) | ||
Other(1) |
(24 | ) | ||
Balance Aug. 31, 2011 |
$ | 213 | ||
(1) | Includes reclassifications from current, write-offs, and foreign currency translation adjustments. |
28
MONSANTO COMPANY | 2011 FORM 10-K/A | |
29
MONSANTO COMPANY | 2011 FORM 10-K/A | |
30
MONSANTO COMPANY | 2011 FORM 10-K/A | |
As of Aug. 31, 2011 |
||||
(Dollars in millions) | Financing Programs VIEs | |||
Cash and cash equivalents |
$ | 96 | ||
Trade receivables, net |
51 | |||
Total Assets |
$ | 147 | ||
Total Liabilities |
| |||
Maximum Exposure to Loss |
$ | 11 | ||
As of Aug. 31, 2011 |
||||
(Dollars in millions) | Biotechnology VIEs | |||
Property, plant, and equipment, net |
$ | 5 | ||
Other intangible assets, net |
9 | |||
Other assets |
15 | |||
Total Non-Current Assets |
$ | 29 | ||
Total Liabilities |
| |||
Maximum Exposure to Loss |
$ | 15 | ||
As of Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Finished Goods |
$ | 953 | $ | 1,135 | ||||
Goods In Process |
1,434 | 1,299 | ||||||
Raw Materials and Supplies |
390 | 326 | ||||||
Inventory at FIFO Cost |
2,777 | 2,760 | ||||||
Excess of FIFO over LIFO Cost |
(186 | ) | (111 | ) | ||||
Total |
$ | 2,591 | $ | 2,649 | ||||
31
MONSANTO COMPANY | 2011 FORM 10-K/A | |
(Dollars in millions) | ||||
Balance Sept. 1, 2008 |
$ | 264 | ||
Additions charged to expense |
196 | |||
Deductions and other(1) |
(123 | ) | ||
Balance Aug. 31, 2009 |
$ | 337 | ||
Additions charged to expense |
219 | |||
Deductions and other(1) |
(224 | ) | ||
Balance Aug. 31, 2010 |
$ | 332 | ||
Additions charged to expense |
240 | |||
Deductions and other(1) |
(234 | ) | ||
Balance Aug. 31, 2011 |
$ | 338 | ||
(1) | Deductions and other includes disposals and foreign currency translation adjustments. |
As of Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Land and Improvements |
$ | 545 | $ | 502 | ||||
Buildings and Improvements |
1,946 | 1,750 | ||||||
Machinery and Equipment |
5,034 | 4,591 | ||||||
Computer Software |
587 | 531 | ||||||
Construction In Progress and Other |
585 | 694 | ||||||
Total Property, Plant and Equipment |
8,697 | 8,068 | ||||||
Less Accumulated Depreciation |
(4,303 | ) | (3,841 | ) | ||||
Property, Plant and Equipment, Net |
$ | 4,394 | $ | 4,227 | ||||
32
MONSANTO COMPANY | 2011 FORM 10-K/A | |
Seeds and | Agricultural | |||||||||||
(Dollars in millions) | Genomics | Productivity | Total | |||||||||
Balance as of Sept. 1, 2009 |
$ | 3,156 | $ | 62 | $ | 3,218 | ||||||
Acquisition activity (see Note 4) |
21 | | 21 | |||||||||
Effect of foreign currency translation adjustments and other |
(30 | ) | (5 | ) | (35 | ) | ||||||
Balance as of Aug. 31, 2010 |
$ | 3,147 | $ | 57 | $ | 3,204 | ||||||
Acquisition activity (see Note 4) |
51 | | 51 | |||||||||
Effect of foreign currency translation adjustments |
110 | | 110 | |||||||||
Balance as of Aug. 31, 2011 |
$ | 3,308 | $ | 57 | $ | 3,365 | ||||||
As of Aug. 31, 2011 |
As of Aug. 31, 2010 |
|||||||||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||||||||||
(Dollars in millions) | Amount | Amortization | Net | Amount | Amortization | Net | ||||||||||||||||||
Acquired Germplasm |
$ | 1,189 | $ | (692 | ) | $ | 497 | $ | 1,161 | $ | (640 | ) | $ | 521 | ||||||||||
Acquired Intellectual Property |
973 | (710 | ) | 263 | 866 | (649 | ) | 217 | ||||||||||||||||
Trademarks |
352 | (110 | ) | 242 | 344 | (94 | ) | 250 | ||||||||||||||||
Customer Relationships |
335 | (146 | ) | 189 | 317 | (113 | ) | 204 | ||||||||||||||||
In Process Research & Development |
45 | | 45 | | | | ||||||||||||||||||
Other |
136 | (63 | ) | 73 | 121 | (50 | ) | 71 | ||||||||||||||||
Total |
$ | 3,030 | $ | (1,721 | ) | $ | 1,309 | $ | 2,809 | $ | (1,546 | ) | $ | 1,263 | ||||||||||
33
MONSANTO COMPANY | 2011 FORM 10-K/A | |
(Dollars in millions) | Amount | |||
2012 |
$ | 142 | ||
2013 |
115 | |||
2014 |
121 | |||
2015 |
117 | |||
2016 |
113 | |||
34
MONSANTO COMPANY | 2011 FORM 10-K/A | |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
United States |
$ | 1,640 | $ | 1,230 | $ | 2,137 | ||||||
Outside United States |
734 | 260 | 781 | |||||||||
Total |
$ | 2,374 | $ | 1,490 | $ | 2,918 | ||||||
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Current: |
||||||||||||
U.S. federal |
$ | 330 | $ | 258 | $ | 531 | ||||||
U.S. state |
43 | 5 | 8 | |||||||||
Outside United States |
271 | 122 | 170 | |||||||||
Total Current |
$ | 644 | $ | 385 | $ | 709 | ||||||
Deferred: |
||||||||||||
U.S. federal |
151 | 42 | 101 | |||||||||
U.S. state |
37 | 34 | 32 | |||||||||
Outside United States |
(115 | ) | (82 | ) | (29 | ) | ||||||
Total Deferred |
73 | (6 | ) | 104 | ||||||||
Total |
$ | 717 | $ | 379 | $ | 813 | ||||||
35
MONSANTO COMPANY | 2011 FORM 10-K/A | |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
U.S. Federal Statutory Rate |
$ | 831 | $ | 522 | $ | 1,021 | ||||||
U.S. R&D Tax Credit |
(34 | ) | (10 | ) | (33 | ) | ||||||
U.S. Domestic Manufacturing Deduction |
(37 | ) | (22 | ) | (45 | ) | ||||||
Lower Ex-U.S. Rates |
(98 | ) | (130 | ) | (122 | ) | ||||||
State Income Taxes |
52 | 33 | 58 | |||||||||
Valuation Allowances |
(7 | ) | 10 | 4 | ||||||||
Adjustment for Unrecognized Tax Benefits |
(1 | ) | 3 | (16 | ) | |||||||
Other |
11 | (27 | ) | (54 | ) | |||||||
Income Tax Provision |
$ | 717 | $ | 379 | $ | 813 | ||||||
As of Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Net Operating Loss and Other Carryforwards |
$ | 971 | $ | 865 | ||||
Employee Fringe Benefits |
394 | 504 | ||||||
Restructuring and Impairment Reserves |
154 | 168 | ||||||
Intangibles |
152 | 195 | ||||||
Inventories |
132 | 149 | ||||||
Environmental and Litigation Reserves |
87 | 97 | ||||||
Allowance for Doubtful Accounts |
58 | 56 | ||||||
Other |
316 | 284 | ||||||
Valuation Allowance |
(44 | ) | (57 | ) | ||||
Total Deferred Tax Assets |
$ | 2,220 | $ | 2,261 | ||||
Property, Plant and Equipment |
$ | 527 | $ | 409 | ||||
Intangibles |
454 | 454 | ||||||
Other |
115 | 45 | ||||||
Total Deferred Tax Liabilities |
1,096 | 908 | ||||||
Net Deferred Tax Assets |
$ | 1,124 | $ | 1,353 | ||||
36
MONSANTO COMPANY | 2011 FORM 10-K/A | |
(Dollars in millions) | ||||
Balance Sept. 1, 2009 |
$ | 358 | ||
Increases for prior year tax positions |
42 | |||
Decreases for prior year tax positions |
(102 | ) | ||
Increases for current year tax positions |
55 | |||
Settlements |
(6 | ) | ||
Lapse of statute of limitations |
(9 | ) | ||
Foreign currency translation |
3 | |||
Balance Aug. 31, 2010 |
$ | 341 | ||
Increases for prior year tax positions |
18 | |||
Decreases for prior year tax positions |
(8 | ) | ||
Increases for current year tax positions |
13 | |||
Settlements |
(1 | ) | ||
Lapse of statute of limitations |
(22 | ) | ||
Foreign currency translation |
7 | |||
Balance Aug. 31, 2011 |
$ | 348 | ||
Jurisdiction | Tax Years | |||
Brazil |
19992011 | |||
U.S. state and local income taxes |
20002011 | |||
Argentina |
20012011 | |||
U.S. federal income tax |
20072011 | |||
37
MONSANTO COMPANY | 2011 FORM 10-K/A | |
As of Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Current Maturities of Long-Term Debt |
$ | 626 | $ | 193 | ||||
Notes Payable to Banks |
52 | 48 | ||||||
Total Short-Term Debt |
$ | 678 | $ | 241 | ||||
As of Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
7⅜% Senior Notes, Due 2012(1) |
$ | | $ | 485 | ||||
51/2% Senior Notes, Due 2035(1) |
395 | 395 | ||||||
23/4% Senior Notes, Due 2016(1) |
299 | | ||||||
5⅛% Senior Notes, Due 2018(1) |
299 | 299 | ||||||
51/2% Senior Notes, Due 2025(1) |
277 | 274 | ||||||
5⅞% Senior Notes, Due 2038(1) |
247 | 247 | ||||||
Other (including Capital Leases)(2) |
26 | 162 | ||||||
Total Long-Term Debt |
$ | 1,543 | $ | 1,862 | ||||
(1) | Amounts are net of unamortized discounts. For the 51/2% Senior Notes due 2025, amount is also net of the unamortized premium of $38 million and $40 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively. | |
(2) | Includes $136 million as of Aug. 31, 2010 related to the Chesterfield Village Research Center purchase. |
38
MONSANTO COMPANY | 2011 FORM 10-K/A |
39
MONSANTO COMPANY | 2011 FORM 10-K/A |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Interest Cost Incurred |
$ | 184 | $ | 187 | $ | 163 | ||||||
Less: Capitalized on Construction |
(22 | ) | (25 | ) | (34 | ) | ||||||
Interest Expense |
$ | 162 | $ | 162 | $ | 129 | ||||||
40
MONSANTO COMPANY | 2011 FORM 10-K/A |
Fair Value Measurements at Aug. 31, 2011, Using |
||||||||||||||||||||
Cash | ||||||||||||||||||||
Collateral | Net | |||||||||||||||||||
(Dollars in millions) | Level 1 | Level 2 | Level 3 | Offset(1) | Balance | |||||||||||||||
Assets at Fair Value: |
||||||||||||||||||||
Cash equivalents |
$ | 1,896 | $ | | $ | | $ | | $ | 1,896 | ||||||||||
Short-term investments |
302 | | | | 302 | |||||||||||||||
Equity securities |
26 | | | | 26 | |||||||||||||||
Derivative assets related to: |
||||||||||||||||||||
Foreign currency |
| 3 | | | 3 | |||||||||||||||
Corn |
88 | 30 | | (84 | ) | 34 | ||||||||||||||
Soybeans |
21 | 2 | | (21 | ) | 2 | ||||||||||||||
Energy and raw materials |
| 3 | | | 3 | |||||||||||||||
Total Assets at Fair Value |
$ | 2,333 | $ | 38 | $ | | $ | (105 | ) | $ | 2,266 | |||||||||
Liabilities at Fair Value: |
||||||||||||||||||||
Derivative liabilities related to: |
||||||||||||||||||||
Foreign currency |
$ | | $ | 14 | $ | | $ | | $ | 14 | ||||||||||
Interest rates |
| 38 | | | 38 | |||||||||||||||
Corn |
2 | 30 | | | 32 | |||||||||||||||
Soybeans |
| 1 | | | 1 | |||||||||||||||
Energy and raw materials |
| 9 | | | 9 | |||||||||||||||
Total Liabilities at Fair Value |
$ | 2 | $ | 92 | $ | | $ | | $ | 94 | ||||||||||
Fair Value Measurements at Aug. 31, 2010, Using |
||||||||||||||||||||
Cash | ||||||||||||||||||||
Collateral | Net | |||||||||||||||||||
(Dollars in millions) | Level 1 | Level 2 | Level 3 | Offset(1) | Balance | |||||||||||||||
Assets at Fair Value: |
||||||||||||||||||||
Cash equivalents |
$ | 1,078 | $ | | $ | | $ | | $ | 1,078 | ||||||||||
Debt and equity securities |
23 | | 10 | | 33 | |||||||||||||||
Derivative assets related to: |
||||||||||||||||||||
Foreign currency |
| 26 | | | 26 | |||||||||||||||
Corn |
10 | 2 | | (9 | ) | 3 | ||||||||||||||
Soybeans |
6 | 3 | | (6 | ) | 3 | ||||||||||||||
Total Assets at Fair Value |
$ | 1,117 | $ | 31 | $ | 10 | $ | (15 | ) | $ | 1,143 | |||||||||
Liabilities at Fair Value: |
||||||||||||||||||||
Derivative liabilities related to: |
||||||||||||||||||||
Foreign currency |
$ | | $ | 5 | $ | | $ | | $ | 5 | ||||||||||
Interest rates |
| 39 | | | 39 | |||||||||||||||
Corn |
| 9 | | | 9 | |||||||||||||||
Soybeans |
| 4 | | | 4 | |||||||||||||||
Energy and raw materials |
| 22 | | | 22 | |||||||||||||||
Total Liabilities at Fair Value |
$ | | $ | 79 | $ | | $ | | $ | 79 | ||||||||||
(1) | As allowed by the Derivatives and Hedging topic of the ASC, commodity derivative assets and liabilities have been offset by cash collateral due and paid under a master netting arrangement. |
41
MONSANTO COMPANY | 2011 FORM 10-K/A |
(Dollars in millions) | ||||
Balance Sept. 1, 2010 |
$ | 10 | ||
Elimination due to consolidation of variable interest entities |
(10 | ) | ||
Balance Aug. 31, 2011 |
$ | | ||
(Dollars in millions) | ||||
Balance Sept. 1, 2009 |
$ | | ||
Purchases, sales, issuances, settlements and payments received |
15 | |||
Unrealized loss on investments included in accumulated other comprehensive loss |
(5 | ) | ||
Balance Aug. 31, 2010 |
$ | 10 | ||
42
MONSANTO COMPANY | 2011 FORM 10-K/A |
43
MONSANTO COMPANY | 2011 FORM 10-K/A |
As of Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Derivatives Designated as Hedges: |
||||||||
Foreign exchange contracts |
$ | 359 | $ | 383 | ||||
Commodity contracts |
517 | 387 | ||||||
Interest rate contracts |
475 | 775 | ||||||
Total Derivatives Designated as Hedges |
$ | 1,351 | $ | 1,545 | ||||
Derivatives Not Designated as Hedges: |
||||||||
Foreign exchange contracts |
$ | 779 | $ | 862 | ||||
Commodity contracts |
181 | 123 | ||||||
Interest rate contracts |
153 | | ||||||
Grower contracts |
71 | 34 | ||||||
Total Derivatives Not Designated as Hedges |
$ | 1,184 | $ | 1,019 | ||||
44
MONSANTO COMPANY | 2011 FORM 10-K/A |
Balance Sheet Location |
Fair Value |
|||||||||
As of Aug. 31, |
||||||||||
(Dollars in millions) | 2011 | 2010 | ||||||||
Asset Derivatives: |
||||||||||
Derivatives designated as hedges: |
||||||||||
Foreign exchange contracts |
Miscellaneous receivables | $ | 1 | $ | 23 | |||||
Commodity contracts |
Other current assets(1) | 93 | 12 | |||||||
Commodity contracts |
Other assets(1) | 16 | 4 | |||||||
Total derivatives designated as hedges |
110 | 39 | ||||||||
Derivatives not designated as hedges: |
||||||||||
Foreign exchange contracts |
Miscellaneous receivables | 2 | 3 | |||||||
Commodity contracts |
Trade receivables, net | 30 | 5 | |||||||
Commodity contracts |
Miscellaneous receivables | 2 | | |||||||
Commodity contracts |
Other current assets(1) | 3 | | |||||||
Total derivatives not designated as hedges |
37 | 8 | ||||||||
Total Asset Derivatives |
$ | 147 | $ | 47 | ||||||
Liability Derivatives: |
||||||||||
Derivatives designated as hedges: |
||||||||||
Foreign exchange contracts |
Miscellaneous short-term accruals | $ | 9 | $ | | |||||
Commodity contracts |
Other current assets(1) | 2 | | |||||||
Commodity contracts |
Miscellaneous short-term accruals | 6 | 14 | |||||||
Commodity contracts |
Other liabilities | 4 | 8 | |||||||
Interest rate contracts |
Miscellaneous short-term accruals | 38 | 11 | |||||||
Interest rate contracts |
Other liabilities | | 28 | |||||||
Total derivatives designated as hedges |
59 | 61 | ||||||||
Derivatives not designated as hedges: |
||||||||||
Foreign exchange contracts |
Miscellaneous short-term accruals | 5 | 5 | |||||||
Commodity contracts |
Trade receivables, net | 1 | 4 | |||||||
Commodity contracts |
Miscellaneous short-term accruals | 29 | 9 | |||||||
Total derivatives not designated as hedges |
35 | 18 | ||||||||
Total Liability Derivatives |
$ | 94 | $ | 79 | ||||||
(1) | As allowed by the Derivatives and Hedging topic of the ASC, certain corn and soybean commodity derivative assets and liabilities have been offset by cash collateral due and paid under a master netting arrangement. Therefore, these commodity contracts that are in an asset or liability position are included in asset accounts within the Statements of Consolidated Financial Position. See Note 16 Fair Value Measurements for a reconciliation to amounts reported in the Statements of Consolidated Financial Position as of Aug. 31, 2011, and Aug. 31, 2010. |
45
MONSANTO COMPANY | 2011 FORM 10-K/A |
Amount of Gain (Loss) | ||||||||||||||||||||||||||||
Recognized in AOCL(1) | Amount of Gain (Loss) | |||||||||||||||||||||||||||
(Effective Portion) |
Recognized in Income(2)(3) |
|||||||||||||||||||||||||||
Year Ended Aug. 31, | Year Ended Aug. 31, | |||||||||||||||||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | Income Statement Classification |
|||||||||||||||||||||
Derivatives Designated as Hedges: |
||||||||||||||||||||||||||||
Fair value hedges: |
||||||||||||||||||||||||||||
Commodity contracts(4) |
$ | (20 | ) | $ | 6 | $ | (9 | ) | Cost of goods sold | |||||||||||||||||||
Cash flow hedges: |
||||||||||||||||||||||||||||
Foreign exchange contracts |
$ | (16 | ) | $ | (12 | ) | $ | 34 | (12 | ) | (5 | ) | 35 | Net sales | ||||||||||||||
Foreign exchange contracts |
(20 | ) | 19 | 40 | 5 | 18 | 32 | Cost of goods sold | ||||||||||||||||||||
Commodity contracts |
228 | 43 | (243 | ) | 7 | (94 | ) | 23 | Cost of goods sold | |||||||||||||||||||
Interest rate contracts |
(4 | ) | (53 | ) | 14 | (7 | ) | (6 | ) | (6 | ) | Interest expense | ||||||||||||||||
Net investment hedges: |
||||||||||||||||||||||||||||
Foreign exchange contracts |
| (3 | ) | 21 | | | | N/A | (5) | |||||||||||||||||||
Total Derivatives Designated as Hedges |
188 | (6 | ) | (134 | ) | (27 | ) | (81 | ) | 75 | ||||||||||||||||||
Derivatives Not Designated as Hedges: |
||||||||||||||||||||||||||||
Foreign exchange contracts(6) |
(9 | ) | (46 | ) | (140 | ) | Other expense, net | |||||||||||||||||||||
Commodity contracts |
2 | (10 | ) | | Net sales | |||||||||||||||||||||||
Commodity contracts |
(1 | ) | (1 | ) | 14 | Cost of goods sold | ||||||||||||||||||||||
Commodity contracts |
| (2 | ) | | Other expense, net | |||||||||||||||||||||||
Total Derivatives Not Designated as Hedges |
(8 | ) | (59 | ) | (126 | ) | ||||||||||||||||||||||
Total Derivatives |
$ | 188 | $ | (6 | ) | $ | (134 | ) | $ | (35 | ) | $ | (140 | ) | $ | (51 | ) | |||||||||||
(1) | Accumulated Other Comprehensive Loss (AOCL). | |
(2) | For derivatives designated as cash flow and net investment hedges under the Derivatives and Hedging topic of the ASC, this represents the effective portion of the gain (loss) reclassified from AOCL into income during the period. | |
(3) | Gain or loss on commodity cash flow hedges includes a gain of $2 million, a gain of $1 million and a loss of $3 million from ineffectiveness for fiscal years 2011, 2010 and 2009, respectively. Additionally, the gain or loss on commodity cash flow hedges includes a loss from discontinued hedges of $29 million for fiscal year 2010. There were no hedges discontinued in fiscal years 2011 or 2009. No amounts were excluded from the assessment of hedge effectiveness during fiscal years 2011, 2010 or 2009. | |
(4) | Gain or loss on commodity fair value hedges was offset by a gain of $18 million, a loss of $11 million and a gain of $8 million on the underlying hedged inventory during fiscal years 2011, 2010 and 2009, respectively. A loss of $2 million, $5 million and $1 million during fiscal years 2011, 2010 and 2009, respectively, was included in cost of goods sold due to ineffectiveness. | |
(5) | Gain or loss would be reclassified into income only during the period in which the hedged net investment was sold or liquidated. | |
(6) | Gain or loss on foreign exchange contracts not designated as hedges was offset by a foreign currency transaction loss of $40 million, a gain of $14 million and a gain of $25 million during fiscal years 2011, 2010 and 2009, respectively. |
46
MONSANTO COMPANY | 2011 FORM 10-K/A |
Year Ended Aug. 31, 2011 |
Year Ended Aug. 31, 2010 |
Year Ended Aug. 31, 2009 |
||||||||||||||||||||||||||||||||||
Outside the | Outside the | Outside the | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | U.S. | U.S. | Total | U.S. | U.S. | Total | U.S. | U.S. | Total | |||||||||||||||||||||||||||
Service Cost for Benefits Earned
During the Year |
$ | 59 | $ | 9 | $ | 68 | $ | 49 | $ | 6 | $ | 55 | $ | 45 | $ | 7 | $ | 52 | ||||||||||||||||||
Interest Cost on Benefit Obligation |
84 | 14 | 98 | 91 | 14 | 105 | 100 | 15 | 115 | |||||||||||||||||||||||||||
Assumed Return on Plan Assets |
(108 | ) | (17 | ) | (125 | ) | (118 | ) | (15 | ) | (133 | ) | (109 | ) | (17 | ) | (126 | ) | ||||||||||||||||||
Amortization of Unrecognized Net Loss |
71 | 6 | 77 | 52 | 4 | 56 | 35 | 3 | 38 | |||||||||||||||||||||||||||
Curtailment and Settlement Charge (Gain) |
| 4 | 4 | 3 | (1 | ) | 2 | | 1 | 1 | ||||||||||||||||||||||||||
Total Net Periodic Benefit Cost |
$ | 106 | $ | 16 | $ | 122 | $ | 77 | $ | 8 | $ | 85 | $ | 71 | $ | 9 | $ | 80 | ||||||||||||||||||
47
MONSANTO COMPANY | 2011 FORM 10-K/A |
Outside the | ||||||||||||
(Dollars in millions) | U.S. | U.S. | Total | |||||||||
Current Year Actuarial Gain |
$ | (166 | ) | (14 | ) | $ | (180 | ) | ||||
Recognition of Actuarial Loss |
(71 | ) | (9 | ) | (80 | ) | ||||||
Recognition of Prior Service Cost |
| (1 | ) | (1 | ) | |||||||
Effect of Foreign Currency Translation Adjustment |
| 9 | 9 | |||||||||
Total Recognized in Accumulated Other Comprehensive Loss |
$ | (237 | ) | $ | (15 | ) | $ | (252 | ) | |||
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
Aug. 31, 2011 |
Aug. 31, 2010 |
Aug. 31, 2009 |
||||||||||||||||||||||
U.S. | Outside the U.S. | U.S. | Outside the U.S | U.S. | Outside the U.S. | |||||||||||||||||||
Discount Rate |
4.35 | % | 4.24 | % | 5.30 | % | 5.54 | % | 6.50 | % | 5.84 | % | ||||||||||||
Assumed Long-Term Rate of Return on Assets |
7.50 | % | 6.51 | % | 7.75 | % | 6.63 | % | 8.00 | % | 7.09 | % | ||||||||||||
Annual Rates of Salary Increase |
||||||||||||||||||||||||
(for plans that base benefits on final compensation level) |
4.00 | % | 3.97 | % | 2.45 | % | 4.04 | % | 4.25 | % | 4.14 | % | ||||||||||||
48
MONSANTO COMPANY | 2011 FORM 10-K/A |
U.S. |
Outside the U.S. |
Total |
||||||||||||||||||||||
Year Ended Aug. 31, |
Year Ended Aug. 31, |
Year Ended Aug. 31, |
||||||||||||||||||||||
(Dollars in millions) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
Change in Benefit Obligation: |
||||||||||||||||||||||||
Benefit obligation at beginning of period |
$ | 1,950 | $ | 1,744 | $ | 319 | $ | 307 | $ | 2,269 | $ | 2,051 | ||||||||||||
Service cost |
59 | 49 | 9 | 6 | 68 | 55 | ||||||||||||||||||
Interest cost |
84 | 91 | 14 | 14 | 98 | 105 | ||||||||||||||||||
Plan participants contributions |
| | 2 | 1 | 2 | 1 | ||||||||||||||||||
Plan amendments |
| (3 | ) | | 1 | | (2 | ) | ||||||||||||||||
Actuarial (gain) loss |
(74 | ) | 210 | (15 | ) | 32 | (89 | ) | 242 | |||||||||||||||
Benefits paid |
(136 | ) | (138 | ) | (9 | ) | (23 | ) | (145 | ) | (161 | ) | ||||||||||||
Special termination benefits |
| | | 1 | | 1 | ||||||||||||||||||
Settlements / curtailments |
| (3 | ) | (132 | ) | (6 | ) | (132 | ) | (9 | ) | |||||||||||||
Currency loss (gain) |
| | 37 | (26 | ) | 37 | (26 | ) | ||||||||||||||||
Other(3) |
| | 24 | 12 | 24 | 12 | ||||||||||||||||||
Benefit Obligation at End of Period |
$ | 1,883 | $ | 1,950 | $ | 249 | $ | 319 | $ | 2,132 | $ | 2,269 | ||||||||||||
Change in Plan Assets: |
||||||||||||||||||||||||
Fair value of plan assets at beginning of period |
$ | 1,383 | $ | 1,281 | $ | 243 | $ | 235 | $ | 1,626 | $ | 1,516 | ||||||||||||
Actual return on plan assets |
200 | 126 | 13 | 25 | 213 | 151 | ||||||||||||||||||
Employer contribution(1) |
272 | 114 | 12 | 19 | 284 | 133 | ||||||||||||||||||
Plan participants contributions |
| | 2 | 1 | 2 | 1 | ||||||||||||||||||
Settlements |
| | (16 | ) | | (16 | ) | | ||||||||||||||||
Transfer of plan assets(2) |
| | (116 | ) | | (116 | ) | | ||||||||||||||||
Benefits paid(1) |
(136 | ) | (138 | ) | (9 | ) | (23 | ) | (145 | ) | (161 | ) | ||||||||||||
Currency gain (loss) |
| | 31 | (22 | ) | 31 | (22 | ) | ||||||||||||||||
Other |
| | | 8 | | 8 | ||||||||||||||||||
Plan Assets at End of Period |
$ | 1,719 | $ | 1,383 | $ | 160 | $ | 243 | $ | 1,879 | $ | 1,626 | ||||||||||||
Net Amount Recognized |
$ | 164 | $ | 567 | $ | 89 | $ | 76 | $ | 253 | $ | 643 | ||||||||||||
(1) | Employer contributions and benefits paid include $7 million and $12 million paid from employer assets for unfunded plans in fiscal years 2011 and 2010, respectively. | |
(2) | The transfer of plan assets is attributable to the transfer of the liabilities and assets of the Monsanto sponsored retirement plan in the Netherlands to an industry multi-employer plan. | |
(3) | Other includes early retirement liabilities of $21 million related to restructuring plans in Europe. |
U.S. |
Outside the U.S. |
|||||||||||||||
Year Ended Aug. 31, |
Year Ended Aug. 31, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Discount Rate |
4.59 | % | 4.35 | % | 5.24 | % | 4.25 | % | ||||||||
Rate of Compensation Increase |
4.00 | % | 4.00 | % | 3.82 | % | 3.79 | % | ||||||||
49
MONSANTO COMPANY | 2011 FORM 10-K/A |
U.S. |
Outside the U.S. |
Total |
||||||||||||||||||||||
As of Aug. 31, |
As of Aug. 31, |
As of Aug. 31, |
||||||||||||||||||||||
(Dollars in millions) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
PBO |
$ | 1,883 | $ | 1,950 | $ | 176 | $ | 283 | $ | 2,059 | $ | 2,233 | ||||||||||||
Fair Value of Plan Assets with PBOs in Excess of Plan Assets |
1,719 | 1,383 | 130 | 226 | 1,849 | 1,609 | ||||||||||||||||||
U.S. |
Outside the U.S. |
Total |
||||||||||||||||||||||
As of Aug. 31, |
As of Aug. 31, |
As of Aug. 31, |
||||||||||||||||||||||
(Dollars in millions) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
PBO |
$ | 1,883 | $ | 1,950 | $ | 58 | $ | 168 | $ | 1,941 | $ | 2,118 | ||||||||||||
ABO |
1,803 | 1,848 | 49 | 157 | 1,852 | 2,005 | ||||||||||||||||||
Fair Value of Plan Assets with ABOs in Excess of Plan Assets |
1,719 | 1,383 | 16 | 118 | 1,735 | 1,501 | ||||||||||||||||||
U.S. |
Outside the U.S. |
Total |
||||||||||||||||||||||
As of Aug. 31, |
As of Aug. 31, |
As of Aug. 31, |
||||||||||||||||||||||
(Dollars in millions) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
Miscellaneous Short-Term Accruals |
$ | 4 | $ | 4 | $ | 11 | $ | 6 | $ | 15 | $ | 10 | ||||||||||||
Postretirement Liabilities |
160 | 563 | 85 | 76 | 245 | 639 | ||||||||||||||||||
Other Assets |
| | (7 | ) | (6 | ) | (7 | ) | (6 | ) | ||||||||||||||
Net Liability Recognized |
$ | 164 | $ | 567 | $ | 89 | $ | 76 | $ | 253 | $ | 643 | ||||||||||||
U.S. |
Outside the U.S. |
Total |
||||||||||||||||||||||
As of Aug. 31, |
As of Aug. 31, |
As of Aug. 31, |
||||||||||||||||||||||
(Dollars in millions) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
Net Loss
|
$ | 685 | $ | 921 | $ | 61 | $ | 75 | $ | 746 | $ | 996 | ||||||||||||
Prior Service Cost
|
| 1 | | 1 | | 2 | ||||||||||||||||||
Total
|
$ | 685 | $ | 922 | $ | 61 | $ | 76 | $ | 746 | $ | 998 | ||||||||||||
50
MONSANTO COMPANY | 2011 FORM 10-K/A |
Target | Percentage of Plan Assets |
|||||||||||
Allocation |
As of Aug. 31, |
|||||||||||
Asset Category | 2012 | 2011 | 2010 | |||||||||
Public Equity Securities |
43-59 | % | 50.9 | % | 54.6 | % | ||||||
Private Equity Investments |
2-8 | % | 4.0 | % | 4.1 | % | ||||||
Debt Securities |
32-46 | % | 41.6 | % | 33.4 | % | ||||||
Real Estate |
2-8 | % | 2.5 | % | 2.9 | % | ||||||
Other |
0-3 | % | 1.0 | % | 5.0 | % | ||||||
Total |
100.0 | % | 100.0 | % | ||||||||
51
MONSANTO COMPANY | 2011 FORM 10-K/A |
Target | Percentage of Plan Assets |
|||||||||||
Allocation(1) |
As of Aug. 31, |
|||||||||||
Asset Category | 2012 | 2011 | 2010 | |||||||||
Equity Securities |
46.0 | % | 40.4 | % | 30.6 | % | ||||||
Debt Securities |
41.4 | % | 49.0 | % | 54.5 | % | ||||||
Other |
12.6 | % | 10.6 | % | 14.9 | % | ||||||
Total |
100.0 | % | 100.0 | % | ||||||||
(1) | Monsantos plans outside the United States have a wide range of target allocations, and therefore the 2012 target allocations shown above reflect a weighted-average calculation of the target allocations of each of the plans. |
52
MONSANTO COMPANY | 2011 FORM 10-K/A |
Fair Value Measurements at Aug. 31, 2011 |
||||||||||||||||||||
Cash | ||||||||||||||||||||
Collateral | Balance as of | |||||||||||||||||||
(Dollars in millions) | Level 1 | Level 2 | Level 3 | Offset(1) | Aug. 31, 2011 | |||||||||||||||
Investments at Fair Value: |
||||||||||||||||||||
Cash and Cash Equivalents |
$ | 15 | $ | | $ | | $ | | $ | 15 | ||||||||||
Debt Securities: |
||||||||||||||||||||
U.S. government debt |
| 292 | | | 292 | |||||||||||||||
U.S. agency debt |
| 3 | | | 3 | |||||||||||||||
U.S. state and municipal debt |
| 25 | | | 25 | |||||||||||||||
Foreign government debt |
| 5 | | | 5 | |||||||||||||||
U.S. corporate debt |
| 183 | | | 183 | |||||||||||||||
Mortgage-Backed securities |
| 1 | | | 1 | |||||||||||||||
Asset-Backed securities |
| 1 | | | 1 | |||||||||||||||
Foreign corporate debt |
| 48 | | | 48 | |||||||||||||||
Common and Preferred Stock: |
||||||||||||||||||||
Domestic small capitalization |
51 | | | | 51 | |||||||||||||||
Domestic large capitalization |
284 | | | | 284 | |||||||||||||||
International: |
||||||||||||||||||||
Developed markets |
122 | | | | 122 | |||||||||||||||
Emerging markets |
35 | 1 | | | 36 | |||||||||||||||
Private Equity Investments |
| | 68 | | 68 | |||||||||||||||
Partnership and Joint Venture Interests |
| | 38 | | 38 | |||||||||||||||
Real Estate Investments |
| | 44 | | 44 | |||||||||||||||
Interest in Pooled Funds: |
||||||||||||||||||||
Interest-bearing cash and cash equivalents funds |
| 125 | | | 125 | |||||||||||||||
Common and preferred stock funds: |
||||||||||||||||||||
Domestic small-capitalization |
| 5 | | | 5 | |||||||||||||||
Domestic large-capitalization |
| 219 | | | 219 | |||||||||||||||
International |
| 64 | | | 64 | |||||||||||||||
Corporate debt funds |
| 74 | | | 74 | |||||||||||||||
Mortgage-Backed securities |
| 8 | | | 8 | |||||||||||||||
Interest in Pooled Collateral Fund Securities Lending |
| 263 | | | 263 | |||||||||||||||
Derivatives: |
||||||||||||||||||||
Interest rate futures |
1 | | | (1 | ) | | ||||||||||||||
Equity index futures |
3 | | | (3 | ) | | ||||||||||||||
Common and preferred stock sold short |
| (27 | ) | | 27 | | ||||||||||||||
Total Investments at Fair Value |
$ | 511 | $ | 1,290 | $ | 150 | $ | 23 | $ | 1,974 | ||||||||||
(1) | Futures derivative assets and common and preferred stock sold short have been offset by cash collateral held by the counterparty. |
53
MONSANTO COMPANY | 2011 FORM 10-K/A |
Fair Value Measurements at Aug. 31, 2010 |
||||||||||||||||||||
Cash | ||||||||||||||||||||
Collateral | Balance as of | |||||||||||||||||||
(Dollars in millions) | Level 1 | Level 2 | Level 3 | Offset(1) | Aug. 31, 2010 | |||||||||||||||
Investments at Fair Value: |
||||||||||||||||||||
Cash and Cash Equivalents |
$ | 14 | $ | | $ | | $ | | $ | 14 | ||||||||||
Debt Securities: |
||||||||||||||||||||
U.S. government debt |
| 159 | | | 159 | |||||||||||||||
U.S. agency debt |
| 8 | | | 8 | |||||||||||||||
U.S. state and municipal debt |
| 8 | | | 8 | |||||||||||||||
U.S. corporate debt |
| 130 | | | 130 | |||||||||||||||
Foreign corporate debt |
| 37 | | | 37 | |||||||||||||||
Other debt securities |
| 15 | | | 15 | |||||||||||||||
Common and Preferred Stock: |
||||||||||||||||||||
Domestic small capitalization |
50 | | | | 50 | |||||||||||||||
Domestic large capitalization |
223 | | | | 223 | |||||||||||||||
International: |
||||||||||||||||||||
Developed markets |
170 | | | | 170 | |||||||||||||||
Emerging markets |
34 | 1 | | | 35 | |||||||||||||||
Private Equity Investments |
| | 57 | | 57 | |||||||||||||||
Partnership and Joint Venture Interests |
| | 36 | | 36 | |||||||||||||||
Real Estate Investments |
| | 40 | | 40 | |||||||||||||||
Interest in Pooled Funds: |
||||||||||||||||||||
Cash and cash equivalents funds |
| 115 | | | 115 | |||||||||||||||
Common and preferred stock funds |
| 168 | | | 168 | |||||||||||||||
Corporate debt funds |
| 71 | | | 71 | |||||||||||||||
Mortgage-Backed securities funds |
| 7 | | | 7 | |||||||||||||||
Interest in Pooled Collateral Fund Securities Lending |
| 168 | | | 168 | |||||||||||||||
Derivatives: |
||||||||||||||||||||
Equity index futures |
5 | | | (5 | ) | | ||||||||||||||
Common and preferred stock sold short |
| (21 | ) | | 21 | | ||||||||||||||
Total Investments at Fair Value |
$ | 496 | $ | 866 | $ | 133 | $ | 16 | $ | 1,511 | ||||||||||
(1) | Futures derivative assets and common and preferred stock sold short have been offset by cash collateral held by the counterparty. |
(Dollars in millions) | ||||
Balance Sept. 1, 2009 |
$ | 121 | ||
Purchases, sales, issuances, settlements and payments received |
(1 | ) | ||
Unrealized gain in investments |
13 | |||
Balance Sept. 1, 2010 |
$ | 133 | ||
Purchases |
13 | |||
Settlements |
(13 | ) | ||
Unrealized gain in investments |
17 | |||
Balance Aug. 31, 2011 |
$ | 150 | ||
54
MONSANTO COMPANY | 2011 FORM 10-K/A | |
(Dollars in millions) | ||||
Total Investments at Fair Value |
$ | 1,974 | ||
Liability to return collateral held under securities lending agreement |
(263 | ) | ||
Accrued income / expense |
6 | |||
Other receivables and payables |
2 | |||
Plan Assets at the End of the Period |
$ | 1,719 | ||
Fair Value Measurements at Aug. 31, 2011 |
||||||||||||||||
Balance as of | ||||||||||||||||
(Dollars in millions) | Level 1 | Level 2 | Level 3 | Aug. 31, 2011 | ||||||||||||
Cash and Cash Equivalents |
$ | 3 | $ | | $ | | $ | 3 | ||||||||
Debt Securities Foreign Government Debt |
| 18 | | 18 | ||||||||||||
Common and Preferred stock |
42 | | | 42 | ||||||||||||
Insurance Backed Securities |
1 | | 15 | 16 | ||||||||||||
Interest in Pooled Funds: |
||||||||||||||||
Common and preferred stock funds |
| 18 | | 18 | ||||||||||||
Government debt funds |
| 8 | | 8 | ||||||||||||
Corporate debt funds |
| 55 | | 55 | ||||||||||||
Total Investments at Fair Value |
$ | 46 | $ | 99 | $ | 15 | $ | 160 | ||||||||
Fair Value Measurements at Aug. 31, 2010 |
||||||||||||||||
Balance as of | ||||||||||||||||
(Dollars in millions) | Level 1 | Level 2 | Level 3 | Aug. 31, 2010 | ||||||||||||
Cash and Cash Equivalents |
$ | 13 | $ | | $ | | $ | 13 | ||||||||
Debt Securities Foreign Government Debt |
| 13 | | 13 | ||||||||||||
Common and Preferred stock |
49 | | | 49 | ||||||||||||
Insurance Backed Securities |
1 | | 11 | 12 | ||||||||||||
Interest in Pooled Funds: |
||||||||||||||||
Common and preferred stock funds |
| 96 | | 96 | ||||||||||||
Government debt funds |
| 1 | | 1 | ||||||||||||
Corporate debt funds |
| 57 | | 57 | ||||||||||||
Total Investments at Fair Value |
$ | 63 | $ | 167 | $ | 11 | $ | 241 | ||||||||
55
MONSANTO COMPANY | 2011 FORM 10-K/A | |
(Dollars in millions) | ||||
Balance Sept. 1, 2009 |
$ | 6 | ||
Purchases, sales, issuances, settlements and payments received |
5 | |||
Balance Sept. 1, 2010 |
$ | 11 | ||
Purchases |
6 | |||
Settlements |
(3 | ) | ||
Unrealized gains in investments |
1 | |||
Balance Aug. 31, 2011 |
$ | 15 | ||
(Dollars in millions) | ||||
Total Investments at Fair Value |
$ | 160 | ||
Non-interest bearing cash |
(1 | ) | ||
Other receivables and payables |
1 | |||
Plan Assets at the End of the Period |
$ | 160 | ||
56
MONSANTO COMPANY | 2011 FORM 10-K/A | |
57
MONSANTO COMPANY | 2011 FORM 10-K/A |
U.S. | Outside the | |||||||
(Dollars in millions) | U.S. | |||||||
Employer Contributions 2012 |
$ | 64 | $ | 14 | ||||
Benefit Payments |
||||||||
2012 |
157 | 17 | ||||||
2013 |
155 | 20 | ||||||
2014 |
157 | 20 | ||||||
2015 |
156 | 18 | ||||||
2016 |
157 | 18 | ||||||
2017-2021 |
790 | 83 | ||||||
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Service Cost for Benefits Earned During the Period |
$ | 10 | $ | 9 | $ | 11 | ||||||
Interest Cost on Benefit Obligation |
10 | 12 | 17 | |||||||||
Amortization of Prior Service Credit |
(1 | ) | (3 | ) | | |||||||
Amortization of Actuarial Gain |
| (10 | ) | | ||||||||
Amortization of Unrecognized Net Gain |
| | (14 | ) | ||||||||
Total Net Periodic Benefit Cost |
$ | 19 | $ | 8 | $ | 14 | ||||||
Year Ended Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Actuarial (Gain) Loss |
$ | (9 | ) | $ | 21 | |||
Amortization of Prior Service Credit |
1 | 1 | ||||||
Amortization of Gain |
| 11 | ||||||
Total Recognized in Accumulated Other Comprehensive Loss |
$ | (8 | ) | $ | 33 | |||
58
MONSANTO COMPANY | 2011 FORM 10-K/A |
Year Ended Aug. 31, |
||||||||||||
2011 | 2010 | 2009 | ||||||||||
Discount Rate |
4.10 | % | 5.30 | % | 6.50 | % | ||||||
Initial Trend Rate for Health Care Costs |
7.00 | % | 6.00 | % | 6.50 | % | ||||||
Ultimate Trend Rate for Health Care Costs |
5.00 | % | 5.00 | % | 5.00 | % | ||||||
1 Percentage-Point | 1 Percentage-Point | |||||||
(Dollars in millions) | Increase | Decrease | ||||||
Effect on Total of Service and Interest Cost |
$ | 1 | $ | (1 | ) | |||
Effect on Postretirement Benefit Obligation |
$ | 2 | $ | (2 | ) | |||
Year Ended Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Change in Benefit Obligation: |
||||||||
Benefit obligation at beginning of period |
$ | 264 | $ | 248 | ||||
Service cost |
10 | 9 | ||||||
Interest cost |
10 | 12 | ||||||
Actuarial (gain) loss |
(9 | ) | 21 | |||||
Plan participant contributions |
3 | 3 | ||||||
Plan amendments |
| (2 | ) | |||||
Medicare Part D subsidy receipts |
2 | 2 | ||||||
Benefits paid(1) |
(30 | ) | (29 | ) | ||||
Benefit Obligation at End of Period |
$ | 250 | $ | 264 | ||||
(1) | Benefits paid under the other postretirement benefit plans include $30 million and $29 million from employer assets in fiscal years 2011 and 2010, respectively. |
Year Ended Aug. 31, |
||||||||
2011 | 2010 | |||||||
Discount Rate Postretirement |
4.30 | % | 4.10 | % | ||||
Discount Rate Postemployment |
2.20 | % | 2.30 | % | ||||
Initial Trend Rate for Health Care Costs(1) |
7.00 | % | 7.00 | % | ||||
Ultimate Trend Rate for Health Care Costs |
5.00 | % | 5.00 | % | ||||
(1) | As of Aug. 31, 2011, this rate is assumed to decrease gradually to 5 percent for 2017 and remain at that level thereafter. |
59
MONSANTO COMPANY | 2011 FORM 10-K/A |
As of Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Miscellaneous Short-Term Accruals |
$ | 25 | $ | 25 | ||||
Postretirement Liabilities |
225 | 239 | ||||||
Year Ended Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
Actuarial (Gain) Loss |
$ | (8 | ) | $ | 1 | |||
Prior Service Credit |
(4 | ) | (4 | ) | ||||
Total |
$ | (12 | ) | $ | (3 | ) | ||
(Dollars in millions) | U.S. | |||
Employer Contributions 2012 |
$ | 25 | ||
Benefit Payments(1) |
||||
2012 |
25 | |||
2013 |
26 | |||
2014 |
26 | |||
2015 |
26 | |||
2016 |
26 | |||
2017-2021 |
105 | |||
(1) | Benefit payments are net of expected federal subsidy receipts related to prescription drug benefits granted under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which are estimated to be $2 million through 2013. |
60
MONSANTO COMPANY | 2011 FORM 10-K/A |
61
MONSANTO COMPANY | 2011 FORM 10-K/A |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Cost of Goods Sold |
$ | (18 | ) | $ | (16 | ) | $ | (21 | ) | |||
Selling, General and Administrative Expenses |
(68 | ) | (61 | ) | (72 | ) | ||||||
Research and Development Expenses |
(27 | ) | (24 | ) | (23 | ) | ||||||
Restructuring Charges |
8 | (4 | ) | (15 | ) | |||||||
Total Stock-Based Compensation Expense Included in Operating Expenses |
(105 | ) | (105 | ) | (131 | ) | ||||||
Loss from Continuing Operations Before Income Taxes |
(105 | ) | (105 | ) | (131 | ) | ||||||
Income Tax Benefit |
36 | 36 | 45 | |||||||||
Net Loss |
$ | (69 | ) | $ | (69 | ) | $ | (86 | ) | |||
Basic Loss per Share |
$ | (0.13 | ) | $ | (0.13 | ) | $ | (0.16 | ) | |||
Diluted Loss per Share |
$ | (0.13 | ) | $ | (0.13 | ) | $ | (0.15 | ) | |||
Net Cash Required by Operating Activities |
$ | (36 | ) | $ | (43 | ) | $ | (35 | ) | |||
Net Cash Provided by Financing Activities |
$ | 36 | $ | 43 | $ | 35 | ||||||
62
MONSANTO COMPANY | 2011 FORM 10-K/A |
Outstanding | ||||||||
Weighted-Average | ||||||||
Options | Exercise Price | |||||||
Balance Outstanding Sept. 1, 2008 |
19,910,376 | $ | 32.49 | |||||
Granted |
2,852,030 | 88.96 | ||||||
Exercised |
(1,821,983 | ) | 21.37 | |||||
Forfeited |
(187,919 | ) | 82.39 | |||||
Balance Outstanding Aug. 31, 2009 |
20,752,504 | 40.78 | ||||||
Granted |
3,337,920 | 70.75 | ||||||
Exercised |
(2,632,279 | ) | 21.14 | |||||
Forfeited |
(459,938 | ) | 76.75 | |||||
Balance Outstanding Aug. 31, 2010 |
20,998,207 | 47.22 | ||||||
Granted |
4,001,100 | 58.95 | ||||||
Exercised |
(2,825,500 | ) | 22.96 | |||||
Forfeited |
(664,772 | ) | 73.08 | |||||
Balance Outstanding Aug. 31, 2011 |
21,509,035 | $ | 51.78 | |||||
63
MONSANTO COMPANY | 2011 FORM 10-K/A |
(Dollars in millions, except |
|||||||||||||||||||||||||||||||||
per share amounts) |
Options Outstanding |
Options Exercisable |
|||||||||||||||||||||||||||||||
Weighted-Average | Weighted-Average | ||||||||||||||||||||||||||||||||
Remaining | Aggregate | Remaining | Aggregate | ||||||||||||||||||||||||||||||
Range of | Contractual Life | Weighted-Average | Intrinsic | Contractual Life | Weighted-Average | Intrinsic | |||||||||||||||||||||||||||
Exercise Price | Options | (Years) | Exercise Price | Value(1) | Options | (Years) | Exercise Price | Value(1) | |||||||||||||||||||||||||
$7.33 - $10.00 |
1,340,527 | 1.57 | $ | 8.16 | $ | 81 | 1,340,527 | 1.57 | $ | 8.16 | $ | 81 | |||||||||||||||||||||
$10.01-$20.00 |
1,324,315 | 1.98 | $ | 16.26 | $ | 70 | 1,324,315 | 1.98 | $ | 16.26 | $ | 70 | |||||||||||||||||||||
$20.01-$30.00 |
4,710,880 | 3.65 | $ | 25.75 | $ | 203 | 4,710,880 | 3.65 | $ | 25.75 | $ | 203 | |||||||||||||||||||||
$30.01-$80.00 |
9,583,732 | 7.55 | $ | 58.08 | $ | 110 | 3,999,960 | 5.87 | $ | 51.51 | $ | 72 | |||||||||||||||||||||
$80.01-$141.50 |
4,549,581 | 6.62 | $ | 88.67 | $ | | 3,871,161 | 6.53 | $ | 88.58 | $ | | |||||||||||||||||||||
21,509,035 | 5.79 | $ | 51.78 | $ | 464 | 15,246,843 | 4.64 | $ | 46.09 | $ | 426 | ||||||||||||||||||||||
(1) | The aggregate intrinsic value represents the total pretax intrinsic value, based on Monsantos closing stock price of $68.93 as of Aug. 31, 2011, which would have been received by the option holders had all option holders exercised their options as of that date. |
Weighted-Average | Restricted | Weighted-Average | Directors' | Weighted-Average | ||||||||||||||||||||
Restricted | Grant Date | Stock | Grant Date | Deferred | Grant Date | |||||||||||||||||||
Stock | Fair Values | Units | Fair Values | Stock | Fair Value | |||||||||||||||||||
Nonvested as of Aug. 31, 2010 |
41,970 | $ | 42.04 | 1,386,771 | $ | 106.76 | | | ||||||||||||||||
Granted |
12,167 | $ | 60.86 | 556,774 | $ | 61.96 | 24,534 | $ | 54.75 | |||||||||||||||
Vested |
(28,292 | ) | $ | 38.60 | (205,907 | ) | $ | 98.83 | (21,848 | ) | $ | 54.84 | ||||||||||||
Forfeitures |
(1,264 | ) | $ | 53.99 | (113,914 | ) | $ | 85.50 | (2,686 | ) | $ | 53.99 | ||||||||||||
Nonvested as of Aug. 31, 2011 |
24,581 | $ | 54.71 | 1,623,724 | $ | 93.99 | | | ||||||||||||||||
64
MONSANTO COMPANY | 2011 FORM 10-K/A |
Lattice-binomial |
||||||||||||
Assumptions | 2011 | 2010 | 2009 | |||||||||
Expected Dividend Yield |
1.7 | % | 1.3 | % | 0.9 | % | ||||||
Expected Volatility |
31%-43 | % | 28%-43 | % | 37%-69 | % | ||||||
Weighted-Average Volatility |
41.8 | % | 40.0 | % | 45.5 | % | ||||||
Risk-Free Interest Rates |
1.82%-3.04 | % | 2.35%-3.16 | % | 1.72%-3.39 | % | ||||||
Weighted-Average Risk-Free Interest Rate |
1.85 | % | 3.03 | % | 3.35 | % | ||||||
Expected Option Life (in years) |
6.5 | 6.3 | 6.4 | |||||||||
65
MONSANTO COMPANY | 2011 FORM 10-K/A |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Accumulated Foreign Currency Translation Adjustments |
$ | 270 | $ | (240 | ) | $ | (141 | ) | ||||
Net Unrealized Loss on Investments, Net of Tax |
| | (6 | ) | ||||||||
Net Accumulated Derivative Income (Loss), Net of Tax |
63 | (48 | ) | (101 | ) | |||||||
Postretirement Benefit Plan Activity, Net of Tax |
(449 | ) | (609 | ) | (496 | ) | ||||||
Accumulated Other Comprehensive Loss |
$ | (116 | ) | $ | (897 | ) | $ | (744 | ) | |||
Year Ended Aug. 31, |
||||||||||||
2011 | 2010 | 2009 | ||||||||||
Weighted-Average Number of Common Shares |
536.5 | 543.7 | 547.1 | |||||||||
Dilutive Potential Common Shares |
5.9 | 7.1 | 8.5 | |||||||||
66
MONSANTO COMPANY | 2011 FORM 10-K/A |
Year Ended Aug. 31, | ||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Interest |
$ | 151 | $ | 156 | $ | 136 | ||||||
Taxes |
385 | 497 | 657 | |||||||||
| In fourth quarter 2011, 2010 and 2009, the board of directors declared a dividend payable in first quarter 2012, 2011 and 2010, respectively. As of Aug. 31, 2011, 2010 and 2009, a dividend payable of $161 million, $151 million and $145 million, respectively, was recorded. | ||
| During fiscal years 2011, 2010 and 2009, the company recognized noncash transactions related to restricted stock units and acquisitions. See Note 21 Stock-Based Compensation Plans for further discussion of restricted stock units and Note 4 Business Combinations for details of adjustments to goodwill. | ||
| During fiscal year 2011, the company recognized noncash transactions related to a paid-up license agreement for weed control and herbicide combination use. An intangible asset of $81 million was recorded on the Statement of Consolidated Financial Position. The pending payment of $40 million will be made in December 2011. | ||
| In third quarter 2010, Monsanto acquired the Chesterfield Village Research Center from Pfizer for $435 million. The seller financed $324 million of this purchase. As of Aug. 31, 2011, $136 million is included in short-term debt on the Statements of Consolidated Financial Position. See Note 15 Debt and Other Credit Arrangements for further details. | ||
| During fiscal year 2010, the company recognized noncash transactions related to restructuring. See Note 5 Restructuring. | ||
| During fiscal year 2010, the company recognized noncash transactions related to a paid-up license agreement for Glyphosate manufacturing technology. Intangibles of $39 million were recorded on the Statement of Consolidated Financial Position. See Note 11 Goodwill and Other Intangible Assets for further details. | ||
| In 2009, intangible assets of $4 million, long-term investments of $2 million, and liabilities of $6 million were recorded as a result of payment provisions under collaboration and license agreements. See Note 12 Investments and Equity Affiliates for further discussion of the investments. | ||
| In 2009, the company recognized noncash transactions related to a new capital lease. Long-term debt, short-term debt and assets of $18 million, $2 million and $20 million, respectively, were recorded as a result of payment provisions under the lease agreement. |
67
MONSANTO COMPANY | 2011 FORM 10-K/A |
Payments Due by Fiscal Year Ending Aug. 31, |
||||||||||||||||||||||||||||
2017 and | ||||||||||||||||||||||||||||
(Dollars in millions) | Total | 2012 | 2013 | 2014 | 2015 | 2016 | beyond | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Total Debt, including Capital Lease Obligations |
$ | 2,221 | $ | 678 | $ | 4 | $ | 3 | $ | 2 | $ | 301 | $ | 1,233 | ||||||||||||||
Interest Payments Relating to Long-Term Debt and Capital Lease Obligations(1) |
1,331 | 80 | 80 | 79 | 79 | 79 | 934 | |||||||||||||||||||||
Operating Lease Obligations |
528 | 126 | 104 | 77 | 67 | 64 | 90 | |||||||||||||||||||||
Purchase Obligations: |
||||||||||||||||||||||||||||
Uncompleted additions to property |
112 | 112 | | | | | | |||||||||||||||||||||
Commitments to purchase inventories |
2,183 | 1,331 | 223 | 172 | 156 | 163 | 138 | |||||||||||||||||||||
Commitments to purchase breeding research |
83 | 44 | 3 | 3 | 3 | 3 | 27 | |||||||||||||||||||||
R&D alliances and joint venture obligations |
132 | 41 | 26 | 14 | 6 | 10 | 35 | |||||||||||||||||||||
Other purchase obligations |
11 | 6 | 5 | | | | | |||||||||||||||||||||
Other Liabilities: |
||||||||||||||||||||||||||||
Postretirement and ESOP liabilities(2) |
162 | 103 | | | | | 59 | |||||||||||||||||||||
Unrecognized tax benefits(3) |
299 | 4 | ||||||||||||||||||||||||||
Other liabilities |
234 | 22 | 15 | 11 | 16 | 11 | 159 | |||||||||||||||||||||
|
||||||||||||||||||||||||||||
Total Contractual Obligations |
$ | 7,296 | $ | 2,547 | $ | 460 | $ | 359 | $ | 329 | $ | 631 | $ | 2,675 | ||||||||||||||
(1) | For variable rate debt, interest is calculated using the applicable rates as of Aug. 31, 2011. | |
(2) | Includes the companys planned pension and other postretirement benefit contributions for 2012. The actual amounts funded in 2012 may differ from the amounts listed above. Contributions in 2013 through 2017 are excluded as those amounts are unknown. Refer to Note 18 Postretirement Benefits Pensions and Note 19 Postretirement Benefits Health Care and Other Postemployment Benefits for more information. The 2017 and beyond amount relates to the ESOP enhancement liability balance. Refer to Note 20 Employee Savings Plans for more information. | |
(3) | Unrecognized tax benefits relate to uncertain tax positions recorded under the Income Taxes topic of the ASC. The company is unable to reasonably predict the timing of tax settlements, as tax audits can involve complex issues and the resolution of those issues may span multiple years, particularly if subject to negotiation or litigation. See Note 14 Income Taxes for more information. |
68
MONSANTO COMPANY | 2011 FORM 10-K/A |
As of Aug. 31, |
||||||||
(Dollars in millions) | 2011 | 2010 | ||||||
U.S. Agricultural Product Distributors |
$ | 908 | $ | 634 | ||||
Europe-Africa(1) |
422 | 399 | ||||||
Argentina(1) |
222 | 152 | ||||||
Asia-Pacific(1) |
218 | 142 | ||||||
Mexico(1) |
132 | 122 | ||||||
Brazil(1) |
150 | 105 | ||||||
Canada(1) |
48 | 26 | ||||||
Other |
115 | 153 | ||||||
Gross Trade Receivables |
2,215 | 1,733 | ||||||
Less: Allowance for Doubtful Accounts |
(98 | ) | (143 | ) | ||||
Net Trade Receivables |
$ | 2,117 | $ | 1,590 | ||||
(1) | Represents customer receivables within the specified geography. |
69
MONSANTO COMPANY | 2011 FORM 10-K/A |
(Dollars in millions) | ||||
Aggregate Undiscounted Amount |
$ | 135 | ||
Discounted Portion: |
||||
Expected payment (undiscounted) for: |
||||
2012 |
22 | |||
2013 |
14 | |||
2014 |
11 | |||
2015 |
16 | |||
2016 |
11 | |||
Undiscounted aggregate expected payments after 2016 |
160 | |||
Aggregate Amount to be Discounted as of Aug. 31, 2011 |
234 | |||
Discount, as of Aug. 31, 2011 |
(104 | ) | ||
Aggregate Discounted Amount Accrued as of Aug. 31, 2011 |
$ | 130 | ||
Total Environmental and Litigation Reserve as of Aug. 31, 2011 |
$ | 265 | ||
Balance at Sept. 1, 2008 |
$ | 272 | ||
Payments |
(85 | ) | ||
Accretion |
8 | |||
Additional liabilities recognized in fiscal year 2009 |
56 | |||
Foreign currency translation and other |
11 | |||
Balance at Aug. 31, 2009 |
$ | 262 | ||
Payments |
(57 | ) | ||
Accretion |
5 | |||
Additional liabilities recognized in fiscal year 2010 |
45 | |||
Balance at Aug. 31, 2010 |
$ | 255 | ||
Payments |
(53 | ) | ||
Accretion |
11 | |||
Additional liabilities recognized in fiscal year 2011 |
52 | |||
Total Environmental and Litigation Reserve as of Aug. 31, 2011 |
$ | 265 | ||
70
MONSANTO COMPANY | 2011 FORM 10-K/A |
| On Dec. 17, 2004, 15 plaintiffs filed a purported class action lawsuit, styled Virdie Allen, et al. v. Monsanto, et al., in the Putnam County, West Virginia, state court against Monsanto, Pharmacia and seven other defendants. Monsanto is named as the successor in interest to the liabilities of Pharmacia. The alleged class consists of all current and former residents, workers, and students who, between 1949 and the present, were allegedly exposed to dioxins/furans contamination in counties surrounding Nitro, West Virginia. The complaint alleges that the source of the contamination is a chemical plant in Nitro, formerly owned and operated by Pharmacia and later by Flexsys, a joint venture between Solutia and Akzo Nobel Chemicals, Inc. (Akzo Nobel). Akzo Nobel and Flexsys were named defendants in the case but Solutia was not, due to its then pending bankruptcy proceeding. The suit seeks damages for property cleanup costs, loss of real estate value, funds to test property for contamination levels, funds to test for human exposure, and future medical monitoring costs. The complaint also seeks an injunction against further contamination and punitive damages. Monsanto has agreed to indemnify and defend Akzo Nobel and the Flexsys defendant group, but on May 27, 2011, the judge dismissed both Akzo Nobel and Flexsys from the case. The class action certification hearing was held on Oct. 29, 2007. On Jan. 8, 2008, the trial court issued an order certifying the Allen (now Zina G. Bibb et al. v. Monsanto et al., because Bibb replaced Allen as class representative) case as a class action for property damage and for medical monitoring. On Nov. 2, 2011, the court, in response to defense motions, entered an order decertifying the property class. The court has set a trial date of Jan. 3, 2012, for the Bibb medical monitoring class action. | ||
In October 2007 and November 2009, a total of approximately 200 separate, single plaintiff civil actions were filed in Putnam County, West Virginia, against Monsanto, Pharmacia, Akzo Nobel (and several of its affiliates), Flexsys America Co. (and several of its affiliates), Solutia, and Apogee Coal Company, LLC. These cases allege personal injury occasioned by exposure to dioxin generated by the Nitro Plant during production of 2,4,5 T (1949-1969) and thereafter. Monsanto has agreed to accept the tenders of defense in the matters by Pharmacia, Solutia, Akzo Nobel, Flexsys America, and Apogee Coal under a reservation of rights. |
| On June 23, 2004, two former employees of Monsanto and Pharmacia filed a purported class action lawsuit in the U.S. District Court for the Southern District of Illinois against Monsanto and the Monsanto Company Pension Plan, which is referred to as the Pension Plan. The suit claims that the Pension Plan has violated the age discrimination and other rules under the Employee Retirement Income Security Act of 1974 from Jan. 1, 1997 (when the Pension Plan was sponsored by Pharmacia, then known as Monsanto Company) and continuing to the present. In January 2006, a separate group of former employees of Pharmacia filed a similar purported class action lawsuit in the U.S. District Court for the Southern District of Illinois against Pharmacia, the Pharmacia Cash Balance Plan, and other defendants. On July 7, 2006, the plaintiffs amended their lawsuit to add Monsanto and the Pension Plan as additional defendants. On Sept. 1, 2006, the Court consolidated these lawsuits with two purported class action lawsuits also pending in the same Court against the Solutia Company Pension Plan, under Walker v. Monsanto, the first filed case. The court conducted a class certification hearing on Sept. 12, 2007. Prior to the hearing, all parties agreed the case should proceed as a class action and also |
71
MONSANTO COMPANY | 2011 FORM 10-K/A |
agreed on a definition of the respective classes. The classes were certified by court order on May 22, 2008. On July 11, 2008, all parties filed dispositive motions on the issue of liability, which motions were heard by the court on May 6, 2009. On June 11, 2009, the Court granted summary judgment in favor of Monsanto and the other defendants on the age discrimination claims. The Court granted summary judgment in favor of the plaintiffs on a separate claim regarding post-termination interest, which was subsequently settled for an immaterial amount. The Court entered judgment on the entire case on Sept. 29, 2009. On Oct. 27, 2009, the plaintiffs filed a notice of appeal of the summary judgment order on the age discrimination claims. The Seventh Circuit Court of Appeals heard oral argument in the case on April 20, 2010, and on July 30, 2010, the Court issued its decision affirming the decision of the District Court in all respects. The plaintiffs subsequent petition for rehearing and petition for rehearing en banc was denied in an order of the Court of Appeals issued on Sept. 14, 2010. On Dec. 13, 2010, the plaintiffs filed a petition for a writ of certiorari with the United States Supreme Court, which was denied by the Court on March 21, 2011. |
72
MONSANTO COMPANY | 2011 FORM 10-K/A |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
Net Sales(1) |
||||||||||||
Corn seed and traits |
$ | 4,805 | $ | 4,260 | $ | 4,119 | ||||||
Soybean seed and traits |
1,542 | 1,486 | 1,448 | |||||||||
Cotton seed and traits |
847 | 611 | 466 | |||||||||
Vegetable seeds |
895 | 835 | 808 | |||||||||
All other crops seeds and traits |
493 | 419 | 462 | |||||||||
Total Seeds and Genomics |
$ | 8,582 | $ | 7,611 | $ | 7,303 | ||||||
Agricultural productivity |
3,240 | 2,872 | 4,382 | |||||||||
Total Agricultural Productivity |
$ | 3,240 | $ | 2,872 | $ | 4,382 | ||||||
Total |
$ | 11,822 | $ | 10,483 | $ | 11,685 | ||||||
Gross Profit |
||||||||||||
Corn seed and traits |
$ | 2,864 | $ | 2,464 | $ | 2,608 | ||||||
Soybean seed and traits |
1,045 | 905 | 871 | |||||||||
Cotton seed and traits |
642 | 454 | 344 | |||||||||
Vegetable seeds |
534 | 492 | 416 | |||||||||
All other crops seeds and traits |
221 | 223 | 267 | |||||||||
Total Seeds and Genomics |
$ | 5,306 | $ | 4,538 | $ | 4,506 | ||||||
Agricultural productivity |
773 | 529 | 2,214 | |||||||||
Total Agricultural Productivity |
$ | 773 | $ | 529 | $ | 2,214 | ||||||
Total |
$ | 6,079 | $ | 5,067 | $ | 6,720 | ||||||
EBIT(2)(3)(5) |
||||||||||||
Seeds and genomics |
$ | 2,106 | $ | 1,597 | $ | 1,651 | ||||||
Agricultural productivity |
281 | (29 | ) | 1,307 | ||||||||
Total |
$ | 2,387 | $ | 1,568 | $ | 2,958 | ||||||
Depreciation and Amortization Expense |
||||||||||||
Seeds and genomics |
$ | 496 | $ | 461 | $ | 428 | ||||||
Agricultural productivity |
117 | 141 | 120 | |||||||||
Total |
$ | 613 | $ | 602 | $ | 548 | ||||||
Equity Affiliate Income |
||||||||||||
Seeds and genomics |
$ | (21 | ) | $ | (15 | ) | $ | (17 | ) | |||
Agricultural productivity |
| | | |||||||||
Total |
$ | (21 | ) | $ | (15 | ) | $ | (17 | ) | |||
Total Assets(4) |
||||||||||||
Seeds and genomics |
$ | 15,351 | $ | 13,584 | $ | 13,347 | ||||||
Agricultural productivity |
4,493 | 4,268 | 4,484 | |||||||||
Total |
$ | 19,844 | $ | 17,852 | $ | 17,831 | ||||||
Property, Plant and Equipment Purchases |
||||||||||||
Seeds and genomics |
$ | 434 | $ | 623 | $ | 717 | ||||||
Agricultural productivity |
106 | 132 | 199 | |||||||||
Total |
$ | 540 | $ | 755 | $ | 916 | ||||||
Investment in Equity Affiliates |
||||||||||||
Seeds and genomics |
$ | 141 | $ | 131 | $ | 122 | ||||||
Agricultural productivity |
| | | |||||||||
Total |
$ | 141 | $ | 131 | $ | 122 | ||||||
(1) | Represents net sales from continuing operations. |
73
MONSANTO COMPANY | 2011 FORM 10-K/A |
(2) | EBIT is defined as earnings (loss) before interest and taxes; see the following table for reconciliation. Earnings (loss) is intended to mean net income attributable to Monsanto Company as presented in the Statements of Consolidated Operations under generally accepted accounting principles. EBIT is an operating performance measure for the two business segments. | |
(3) | Agricultural Productivity EBIT includes income of $3 million, $4 million and $18 million from discontinued operations for fiscal years 2011, 2010 and 2009, respectively. | |
(4) | Includes assets recorded in continuing operations and discontinued operations. | |
(5) | EBIT includes restructuring charges for fiscal years 2011, 2010 and 2009. See Note 5 Restructuring for additional information. |
Year Ended Aug. 31, |
||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | |||||||||
EBIT(1) |
$ | 2,387 | $ | 1,568 | $ | 2,958 | ||||||
Interest Expense Net |
88 | 106 | 58 | |||||||||
Income Tax Provision(2) |
692 | 366 | 808 | |||||||||
Net Income Attributable to Monsanto Company |
$ | 1,607 | $ | 1,096 | $ | 2,092 | ||||||
(1) | Includes the income from operations of discontinued businesses and pre-tax noncontrolling interest. | |
(2) | Includes the income tax provision from continuing operations, the income tax benefit on noncontrolling interest and the income tax (benefit) provision on discontinued operations. |
Net Sales to Unaffiliated Customers |
Long-Lived Assets |
|||||||||||||||||||
Year Ended Aug. 31, |
As of Aug. 31, |
|||||||||||||||||||
(Dollars in millions) | 2011 | 2010 | 2009 | 2011 | 2010 | |||||||||||||||
United States |
$ | 6,372 | $ | 5,993 | $ | 6,395 | $ | 6,869 | $ | 6,817 | ||||||||||
Europe-Africa |
1,515 | 1,272 | 1,763 | 1,326 | 1,157 | |||||||||||||||
Brazil |
1,276 | 1,066 | 1,419 | 948 | 873 | |||||||||||||||
Asia-Pacific |
841 | 692 | 568 | 348 | 322 | |||||||||||||||
Argentina |
773 | 616 | 597 | 237 | 223 | |||||||||||||||
Canada |
458 | 364 | 457 | 94 | 72 | |||||||||||||||
Mexico |
362 | 312 | 332 | 96 | 86 | |||||||||||||||
Other |
225 | 168 | 154 | 234 | 227 | |||||||||||||||
Total |
$ | 11,822 | $ | 10,483 | $ | 11,685 | $ | 10,152 | $ | 9,777 | ||||||||||
74
MONSANTO COMPANY | 2011 FORM 10-K/A |
75
MONSANTO COMPANY | 2011 FORM 10-K/A |
76
MONSANTO COMPANY | 2011 FORM 10-K/A |
77
MONSANTO COMPANY | 2011 FORM 10-K/A |
(Dollars in millions, except per share amounts) |
||||||||||||||||||||
1st | 2nd | 3rd | 4th | |||||||||||||||||
2011 | Quarter | Quarter | Quarter | Quarter | Total | |||||||||||||||
Net Sales |
$ | 1,836 | $ | 4,131 | $ | 3,608 | $ | 2,247 | $ | 11,822 | ||||||||||
Gross Profit |
824 | 2,310 | 1,973 | 972 | 6,079 | |||||||||||||||
Income
(Loss) from Continuing Operations Attributable to Monsanto Company |
9 | 1,015 | 692 | (111 | ) | 1,605 | ||||||||||||||
Income (Loss) on Discontinued Operations |
| 3 | | (1 | ) | 2 | ||||||||||||||
Net Income (Loss) |
15 | 1,030 | 712 | (98 | ) | 1,659 | ||||||||||||||
Net Income (Loss) Attributable to Monsanto Company |
$ | 9 | $ | 1,018 | $ | 692 | $ | (112 | ) | $ | 1,607 | |||||||||
Basic Earnings (Loss) per Share Attributable to Monsanto Company: |
||||||||||||||||||||
Income (Loss) from continuing operations |
$ | 0.02 | $ | 1.89 | $ | 1.29 | $ | (0.21 | ) | $ | 2.99 | |||||||||
Income on discontinued operations |
| 0.01 | | | 0.01 | |||||||||||||||
Net Income (Loss) Attributable to Monsanto Company |
$ | 0.02 | $ | 1.90 | $ | 1.29 | $ | (0.21 | ) | $ | 3.00 | |||||||||
Diluted Earnings (Loss) per Share Attributable to Monsanto Company:(1) |
||||||||||||||||||||
Income (Loss) from continuing operations |
$ | 0.02 | $ | 1.87 | $ | 1.28 | $ | (0.21 | ) | $ | 2.96 | |||||||||
Income on discontinued operations |
| 0.01 | | | | |||||||||||||||
Net Income (Loss) Attributable to Monsanto Company |
$ | 0.02 | $ | 1.88 | $ | 1.28 | $ | (0.21 | ) | $ | 2.96 | |||||||||
2010 |
||||||||||||||||||||
Net Sales |
$ | 1,704 | $ | 3,878 | $ | 3,003 | $ | 1,898 | $ | 10,483 | ||||||||||
Gross Profit |
746 | 2,087 | 1,428 | 806 | 5,067 | |||||||||||||||
(Loss)
Income from Continuing Operations Attributable to Monsanto Company |
(27 | ) | 886 | 403 | (170 | ) | 1,092 | |||||||||||||
Income (Loss) on Discontinued Operations |
5 | | | (1 | ) | 4 | ||||||||||||||
Net (Loss) Income |
(22 | ) | 888 | 416 | (167 | ) | 1,115 | |||||||||||||
Net (Loss) Income Attributable to Monsanto Company |
$ | (22 | ) | $ | 886 | $ | 403 | $ | (171 | ) | $ | 1,096 | ||||||||
Basic (Loss) Earnings per Share Attributable to Monsanto Company: |
||||||||||||||||||||
(Loss) Income from continuing operations |
$ | (0.05 | ) | $ | 1.62 | $ | 0.74 | $ | (0.31 | ) | $ | 2.01 | ||||||||
Income on discontinued operations |
0.01 | | | | 0.01 | |||||||||||||||
Net (Loss) Income Attributable to Monsanto Company |
$ | (0.04 | ) | $ | 1.62 | $ | 0.74 | $ | (0.31 | ) | $ | 2.02 | ||||||||
Diluted (Loss) Earnings per Share Attributable to Monsanto Company:(1) |
||||||||||||||||||||
(Loss) Income from continuing operations |
$ | (0.05 | ) | $ | 1.60 | $ | 0.73 | $ | (0.31 | ) | $ | 1.99 | ||||||||
Income on discontinued operations |
0.01 | | | | | |||||||||||||||
Net (Loss) Income Attributable to Monsanto Company |
$ | (0.04 | ) | $ | 1.60 | $ | 0.73 | $ | (0.31 | ) | $ | 1.99 | ||||||||
(1) | Because Monsanto reported a loss from continuing operations in the fourth quarter 2011 and the first and fourth quarters of 2010, generally accepted accounting principles required diluted loss per share to be calculated using weighted-average common shares outstanding, excluding common stock equivalents. As a result, the quarterly earnings (loss) per share do not total to the full-year amount. |
78
MONSANTO COMPANY | 2011 FORM 10-K/A |
79
MONSANTO COMPANY | 2011 FORM 10-K/A |
| Simplifying customer programs; |
| Enhancing the training program for sales and finance personnel on revenue recognition; |
| Establishing a more comprehensive review and approval procedure for prepayments to customers to ensure that the company understands when obligations are fulfilled and payments are earned; and |
| Implementing procedures to improve the capture, review, approval, and recording of all incentive arrangements in the appropriate accounting period. |
80
MONSANTO COMPANY | 2011 FORM 10-K/A |
(a) | Documents filed as part of this Report: |
(1) | The following financial statements appearing in Item 8: Statements of Consolidated Operations; Statements of Consolidated Financial Position; Statements of Consolidated Cash Flows; Statements of Consolidated Shareowners Equity and Comprehensive Income. |
(2) | Exhibits: The list of exhibits in the Exhibit Index to this Report is incorporated herein by reference. The exhibits will be filed with the SEC but will not be included in the printed version of the Annual Report to Shareowners. |
81
MONSANTO COMPANY | 2011 FORM 10-K/A |
MONSANTO COMPANY (Registrant) |
||||
By: | /s/ NICOLE M. RINGENBERG | |||
Nicole M. Ringenberg | ||||
Vice President and Controller (Principal Accounting Officer) |
||||
82
MONSANTO COMPANY | 2011 FORM 10-K/A |
Exhibit No. | Description | |||
2
|
1. | Separation Agreement, dated as of Sept. 1, 2000, between the company and Pharmacia (incorporated by reference to Exhibit 2.1 of Amendment No. 2 to Registration Statement on Form S-1, filed Sept. 22, 2000, File No. 333-36956).* | ||
2. | First Amendment to Separation Agreement, dated July 1, 2002, between Pharmacia and the company (incorporated by reference to Exhibit 99.2 of Form 8-K, filed July 30, 2002, File No. 1-16167).* | |||
3
|
1. | Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of Amendment No. 1 to Registration Statement on Form S-1, filed Aug. 30, 2000, File No. 333-36956). | ||
2. | Monsanto Company Bylaws, as amended effective June.8, 2011 (incorporated by reference to Exhibit 3.2(i) of Form 8-K, filed June 14, 2011, File No. 1-16167). | |||
4
|
1. | Indenture, dated as of Aug. 1, 2002, between the company and The Bank of New York Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.2 of Form 8-K, filed Aug. 31, 2005, File No. 1-16167). | ||
2. | Form of Registration Rights Agreement, dated Aug. 25, 2005, relating to 5 1/2 % Senior Notes due 2025 of the company (incorporated by reference to Exhibit 4.3 of Form 8-K, filed Aug. 31, 2005, File No. 1-16167). | |||
9
|
Omitted | |||
10
|
1. | Tax Sharing Agreement, dated July 19, 2002, between the company and Pharmacia (incorporated by reference to Exhibit 10.4 of Form 10-Q for the period ended June 30, 2002, File No. 1-16167). | ||
2. | Employee Benefits and Compensation Allocation Agreement between Pharmacia and the company, dated as of Sept. 1, 2000 (incorporated by reference to Exhibit 10.7 of Amendment No. 2 to Registration Statement on Form S-1, filed Sept. 22, 2000, File No. 333-36956). | |||
2.1. | Amendment to Employee Benefits and Compensation Allocation Agreement between Pharmacia and the company, dated Sept. 1, 2000 (incorporated by reference to Exhibit 2.1 of Form 10-K for the period ended Dec. 31, 2001, File No. 1-16167). | |||
3. | Intellectual Property Transfer Agreement, dated Sept. 1, 2000, between the company and Pharmacia (incorporated by reference to Exhibit 10.8 of Amendment No. 2 to Registration Statement on Form S-1, filed Sept. 22, 2000, File No. 333-36956). | |||
4. | Services Agreement, dated Sept. 1, 2000, between the company and Pharmacia (incorporated by reference to Exhibit 10.9 of Amendment No. 2 to Registration Statement on Form S-1, filed Sept. 22, 2000, File No. 333-36956). | |||
5. | Corporate Agreement, dated Sept. 1, 2000, between the company and Pharmacia (incorporated by reference to Exhibit 10.10 of Amendment No. 2 to Registration Statement on Form S-1, filed Sept. 22, 2000, File No. 333-36956). | |||
6. | Agreement among Solutia, Pharmacia and the company, relating to settlement of certain litigation (incorporated by reference to Exhibit 10.25 of Form 10-K for the transition period ended Aug. 31, 2003, File No. 1-16167). | |||
7. | Global Settlement Agreement, executed Sept. 9, 2003, in the U.S. District Court for the Northern District of Alabama, and in the Circuit Court of Etowah County, Alabama (incorporated by reference to Exhibit 10.25 of Form 10-K for the transition period ended Aug. 31, 2003, File No. 1-16167). | |||
8. | Solutias Fifth Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code (As Modified) (incorporated by reference to Exhibit 2.1 of Solutias Form 8-K filed December 5, 2007, SEC File No. 001-13255). | |||
9. | Amended and Restated Settlement Agreement dated February 28, 2008, by and among Solutia Inc., Monsanto Company and SFC LLC (incorporated by reference to Exhibit 10.1 of Solutias Form 8-K filed March 5, 2008, SEC File No. 001-13255). | |||
10. | First Amended and Restated Retiree Settlement Agreement dated as of July 10, 2007, among Solutia Inc., the company and the claimants set forth therein (incorporated by reference to Exhibit 10.3 of Solutias Form 8-K filed March 5, 2008, SEC File No. 001-13255). | |||
11. | Letter Agreement between the company and Pharmacia, effective Aug. 13, 2002 (incorporated by reference to Exhibit 10.6 of Form 10-Q for the period ended June 30, 2002, File No. 1-16167). | |||
12. | Five-Year Credit Agreement, dated April 1, 2011 (incorporated by reference to Exhibit 10.1 to Form 8-K, filed April 7, 2011, File No. 1-16167). | |||
13. | The Monsanto Non-Employee Director Equity Incentive Compensation Plan, as amended and restated, effective Sept. 1, 2011 (incorporated by reference to Exhibit 10.13 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | |||
14. | Monsanto Company Long-Term Incentive Plan, as amended and restated, effective April 24, 2003 (formerly known as Monsanto 2000 Management Incentive Plan) (incorporated by reference to Appendix C to Notice of Annual Meeting and Proxy Statement dated March 13, 2003, File No. 1-16167). | |||
14.1. | First Amendment, effective Jan. 29, 2004, to the Monsanto Company Long-Term Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.16.1 of the Form 10-Q for the period ended Feb. 29, 2004, File No. 1-16167). | |||
14.2. | Second Amendment, effective Oct. 23, 2006, to the Monsanto Company Long-Term Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.18.2 of the Form 10-K for the period ended Aug. 31, 2006, File No. 1-16167). | |||
14.3. | Third Amendment, effective June 14, 2007, to the Monsanto Company Long-Term Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.19.3 of Form 10-K for the period ended Aug. 31, 2007, File No. 1-16167). | |||
14.4. | Fourth Amendment, effective June 14, 2007, to the Monsanto Company Long-Term Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.19.4 of Form 10-K for the period ended Aug. 31, 2007, File No. 1-16167). | |||
14.5. | Fifth Amendment, effective Sept. 1, 2010, to the Monsanto Company Long-Term Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.1 to Form 8-K, filed Sept. 1, 2010, File No. 1-16167). | |||
14.6. | Form of Terms and Conditions of Option Grant Under the Monsanto Company Long-Term Incentive Plan, as amended and restated, as of Oct. 2004 (incorporated by reference to Exhibit 10.16.2 of Form 10-K for the period ended Aug. 31, 2004, File No. 1-16167). | |||
14.7. | Form of Terms and Conditions of Option Grant Under the Monsanto Company Long-Term Incentive Plan and the Monsanto Company 2005 Long-Term Incentive Plan, as approved by the People and Compensation Committee of the Board of Directors on Aug. 6, 2007 (incorporated by reference to Exhibit 10.3 to Form 8-K, filed Aug. 10, 2007, File No. 1-16167). |
83
MONSANTO COMPANY | 2011 FORM 10-K/A |
Exhibit No. | Description | |||
14.8. | Form of Terms and Conditions of Option Grant Under the Monsanto Company Long-Term Incentive Plan and the Monsanto Company 2005 Long-Term Incentive Plan, as of Oct. 2008 (incorporated by reference to Exhibit 10.19.7 to Form 10-K, filed Oct. 27, 2009, File No. 1-16167). | |||
14.9. | Form of Terms and Conditions of Option Grant Under the Monsanto Company Long-Term Incentive Plan and the Monsanto Company 2005 Long-Term Incentive Plan, as approved on Oct. 25, 2010 (incorporated by reference to Exhibit 10.14.9 to Form 10-K, filed Oct. 27, 2010, File No. 1-16167). | |||
14.10. | Form of Terms and Conditions of Option Grant Under the Monsanto Company Long-Term Incentive Plan and the Monsanto Company 2005 Long-Term Incentive Plan, as approved on Aug. 24, 2011 (incorporated by reference to Exhibit 10.14.10 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | |||
14.11. | Form of Terms and Conditions of Restricted Stock Grant Under the Monsanto Company Long-Term Incentive Plan (incorporated by reference to Exhibit 10.17.3 of Form 10-K for the period ended Aug. 31, 2005, File No. 1-16167). | |||
14.12. | Form of Terms and Conditions of Restricted Stock Unit Grant Under the Monsanto Company Long-Term Incentive Plan, as of Oct. 2006 (incorporated by reference to Exhibit 10.18.5 of the Form 10-K for the period ended Aug. 31, 2006, File No. 1-16167). | |||
14.13. | Form of Terms and Conditions of Restricted Stock Unit Grant Under the Monsanto Company Long-Term Incentive Plan, as of Oct. 2005 (incorporated by reference to Exhibit 10.17.4 of Form 10-K for the period ended Aug. 31, 2005, File No. 1-16167). | |||
14.14. | Form of Terms and Conditions of Restricted Stock Unit Grant Under the Monsanto Company Long-Term Incentive Plan and the Monsanto Company 2005 Long-Term Incentive Plan, as approved by the People and Compensation Committee of the Board of Directors on Aug. 6, 2007 (incorporated by reference to Exhibit 10.4 to Form 8-K, filed Aug. 10, 2007, File No. 1-16167). | |||
14.15. | Form of Non-Employee Director Restricted Share Grant Terms and Conditions Under the Monsanto Company Long-Term Incentive Plan and the Monsanto 2005 Long-Term Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10.16.2 of the Form 10-Q for the period ended May 31, 2004, File No. 1-16167). | |||
14.16 | Form of Non-Employee Director Restricted Share Grant Terms and Conditions Under the Monsanto Company Long-Term Incentive Plan and the Monsanto 2005 Long-Term Incentive Plan, as approved on Aug. 3, 2011 (incorporated by reference to Exhibit 10.14.16 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | |||
15. | Monsanto Company 2005 Long-Term Incentive Plan, effective Jan. 20, 2005 (incorporated by reference to Exhibit 10.1 of Form 8-K, filed Jan. 26, 2005, File No. 1-16167). | |||
15.1. | First Amendment, effective Oct. 23, 2006, to the Monsanto Company 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.18.2 of the Form 10-K for the period ended Aug. 31, 2006, File No. 1-16167). | |||
15.2. | Second Amendment, effective June 14, 2007, to the Monsanto Company 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.20.2 of Form 10-K for the period ended Aug. 31, 2007, File No. 1-16167). | |||
15.3. | Third Amendment, effective June 14, 2007, to the Monsanto Company 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.20.3 of Form 10-K for the period ended Aug. 31, 2007, File No. 1-16167). | |||
15.4. | Fourth Amendment, effective Sept. 1, 2010, to the Monsanto Company 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to Form 8-K, filed Sept. 1, 2010, File No. 1-16167). | |||
15.5. | Form of Terms and Conditions of Restricted Stock Units Grant Under the Monsanto Company 2005 Long-Term Incentive Plan, as approved by the People and Compensation Committee of the Board of Directors by executed unanimous written consent on Oct. 11, 2007 (incorporated by reference to Exhibit 10.1 of Form 8-K, filed Oct. 17, 2007, File No. 1-16167). | |||
15.6. | Form of Terms and Conditions of Restricted Stock Units Grant Under the Monsanto Company 2005 Long-Term Incentive Plan, as approved by the People and Compensation Committee of the Board of Directors on Oct. 20, 2008 (incorporated by reference to Exhibit 20.5 of Form 10-K for the period ended Aug. 31, 2009, File No. 1-16167). | |||
15.7. | Form of Terms and Conditions of Restricted Stock Units Grant Under the Monsanto Company 2005 Long-Term Incentive Plan, as approved by the People and Compensation Committee of the Board of Directors on Oct. 26, 2009 (incorporated by reference to Exhibit 10.20.6 to Form 10-K, filed Oct. 27, 2009, File No. 16167). | |||
15.8. | Form of Terms and Conditions of Fiscal Year 2011 Restricted Stock Unit Grant Under the Monsanto Company 2005 Long-Term Incentive Plan, as approved on Aug. 26, 2010 (incorporated by reference to Exhibit 10.4 to Form 8-K, filed Sept. 1, 2010, File No. 1-16167). | |||
15.9. | Form of Terms and Conditions of Restricted Stock Unit Grant Under the Monsanto Company Long-Term Incentive Plan and the 2005 Long-Term Incentive Plan, as approved on Aug. 24, 2011 (incorporated by reference to Exhibit 10.15.9 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | |||
15.10. | Form of Terms and Conditions of Financial Goal Restricted Stock Units Under the Monsanto Company 2005 Long-Term Incentive Plan, as approved Oct. 24, 2011 (incorporated by reference to Exhibit 10.15.10 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | |||
15.11. | Form of Terms and Conditions of Strategic Performance Goal Restricted Stock Units Grant Under the Monsanto Company 2005 Long-Term Incentive Plan, as approved by the People and Compensation Committee of the Board of Directors on Oct. 26, 2009 (incorporated by reference to Exhibit 10.20.7 to Form 10-K, filed Oct. 27, 2009, File No. 1-16167). | |||
15.11.1. | Summary of Potential Number of Shares that may Vest Under, and Terms and Conditions of, the Strategic Performance Goal Restricted Stock Unit Grants (incorporated by reference to Exhibit 10.20.7.1 to Form 10-K, filed Oct. 27, 2009, File No. 1-16167). | |||
15.12. | Form of Terms and Conditions of Retention and Performance Restricted Stock Unit Grant under the Monsanto Company 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.15.12 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | |||
16. | Amended and Restated Deferred Payment Plan, effective Dec. 8, 2008 (incorporated by reference to Exhibit 10.16 to Form 10-K, filed Oct. 27, 2010, File No. 1-16167). | |||
16.1. | Amendment No. 1, effective Aug. 27, 2009, to the Amended and Restated Deferred Payment Plan, effective Dec. 8, 2008 (incorporated by reference to Exhibit 10.16.1 to Form 10-K, filed Oct. 27, 2010, File No. 1-16167). | |||
16.2. | Amendment No. 2, effective Aug. 1, 2010, to the Amended and Restated Deferred Payment Plan, effective Dec. 8, 2008 (incorporated by reference to Exhibit 10.16.2 to Form 10-K, filed Oct. 27, 2010, File No. 1-16167). | |||
17. | Monsanto Company Phantom Share Unit Retention Plan for Long-Term International Assignees, amended and restated on Dec. 15, 2008 (incorporated by reference to Exhibit 10.17 to Form 10-K, filed Oct. 27, 2010, File No. 1-16167). |
84
MONSANTO COMPANY | 2011 FORM 10-K/A |
Exhibit No. | Description | ||||
17.1. | Form of Terms and Conditions of Units Under the Monsanto Company Phantom Share Unit Retention Plan for Long-Term International Assignees, amended and restated on Dec. 15, 2008 (incorporated by reference to Exhibit 10.17.1 to Form 10-K, filed Oct. 27, 2010, File No. 1-16167). | ||||
18. | Annual Incentive Program for Certain Executive Officers (incorporated by reference to the description appearing under the sub-heading Approval of Performance Goal Under §162(m) of the Internal Revenue Code on pages 12 through 13 of the Proxy Statement dated Dec. 14, 2005). | ||||
19. | Fiscal Year 2011 Annual Incentive Plan Summary, as approved by the People and Compensation Committee of the Board of Directors on Aug. 26, 2010 (incorporated by reference to Exhibit 10.5 to Form 8-K, filed Sept. 1, 2010, File No. 1-16167). | ||||
20. | Fiscal Year 2012 Annual Incentive Plan, as approved by the People and Compensation Committee of the Board of Directors on Aug. 24, 2011 (incorporated by reference to Exhibit 10 to Form 8-K, filed Aug. 30, 2011, File No. 1-16167). | ||||
21.1 | Form of Change of Control Employment Security Agreement for Messrs. Begemann, Grant and Snively, and Dr. Fraley, effective Sept. 1, 2010 (incorporated by reference to Exhibit 10 to Form 8-K, filed on Sept. 7, 2010, File No. 1-16167). | ||||
21.2. | Form of Change of Control Employment Security Agreement for Mr. Courduroux, effective Feb. 4. 2011 (incorporated by reference to Exhibit 10 to Form 8-K, filed on Feb. 10, 2011, File No. 1-16167). | ||||
22. | Monsanto Company Executive Health Management Program, as amended and restated as of Oct. 25, 2010 (incorporated by reference to Exhibit 10.22 to Form 10-K, filed Oct. 27, 2010, File No. 1-16167). | ||||
23. | Amended and Restated Monsanto Company Recoupment Policy, as approved by the Board of Directors on Oct. 27, 2009 (incorporated by reference to Exhibit 10.20.7 to Form 10-K, filed Oct. 27, 2009, File No. 1-16167). | ||||
24. | Monsanto Benefits Plan for Third Country Nationals (incorporated by reference to Exhibit 10.2 to Form 8-K, filed Aug. 11, 2008, File No. 1-16167) | ||||
24.1. | Amendment to Monsanto Benefits Plan for Third Country Nationals, effective Aug. 5, 2008 (incorporated by reference to Exhibit 10.3 to Form 8-K, filed Aug. 11, 2008, File No. 1-16167). | ||||
25. | Base Salaries of Named Executive Officers dated Oct. 2011 (incorporated by reference to Exhibit 10.25 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | ||||
11 |
Omitted see Item 8 Note 23 Earnings per Share. | ||||
12
|
Statements Re Computation of Ratios (incorporated by reference to Exhibit 12 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | ||||
13
|
Omitted | ||||
14
|
Omitted Monsantos Code of Ethics for Chief Executive and Senior Financial Officers is available on our Web site at www.monsanto.com. | ||||
16
|
Omitted | ||||
18
|
Omitted | ||||
21
|
Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | ||||
22
|
Omitted | ||||
23
|
Consent of Independent Registered Public Accounting Firm. | ||||
24
|
1. | Powers of Attorney submitted by David L. Chicoine, Janice L. Fields, Laura K. Ipsen, Jon R. Moeller, Gwendolyn S. King, C. Steven McMillan, William U. Parfet, George H. Poste and Robert J. Stevens (incorporated by reference to Exhibit 24.1 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | |||
2. | Power of Attorney submitted by Arthur H. Harper (incorporated by reference to Exhibit 24.2 of Form 10-K for the period ended Aug. 31, 2011, File No. 1-16167). | ||||
31
|
1. | Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Chief Executive Officer). | |||
2. | Rule 13a-14(a)/15d-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Chief Financial Officer). | ||||
32
|
Rule 13a-14(b) Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Executive Officer and the Chief Financial Officer). | ||||
101.INS | XBRL Instance Document. |
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101.SCH | XBRL Taxonomy Extension Schema Document. |
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101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Schedules and similar attachments to this Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish supplementally a copy of any omitted schedule or similar attachment to the SEC upon request. | |
| Represents management contract or compensatory plan or arrangement. |
85
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Hugh Grant | ||||
Hugh Grant | ||||
Chairman, President and Chief Executive Officer Monsanto Company |
1. | I have reviewed this report on Form 10-K/A of Monsanto Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Pierre Courduroux | ||||
Pierre Courduroux | ||||
Senior Vice President and Chief Financial Officer Monsanto Company |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Hugh Grant | ||||
Hugh Grant | ||||
President and Chief Executive Officer | ||||
/s/ Pierre Courduroux | ||||
Pierre Courduroux | ||||
Senior Vice President and Chief Financial Officer | ||||
BUSINESS COMBINATIONS (Tables)
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Aug. 31, 2011
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BUSINESS COMBINATIONS (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Price Allocations Table |
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Acquired Indentifiable Intangible Assets |
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Significant Assumptions in Valuation of Inprocess Research And Development |
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EARNINGS PER SHARE (Tables)
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Aug. 31, 2011
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EARNINGS PER SHARE (Tables) [Abstract] | |||||||||||||||||||||||||||||
Basic Earnings Per Share Table |
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FAIR VALUE MEASUREMENTS (Tables)
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Aug. 31, 2011
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FAIR VALUE MEASUREMENTS (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis |
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Level 3 Rollforward |
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SUPPLEMENTAL CASH FLOW (Tables)
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Aug. 31, 2011
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SUPPLEMENTAL CASH FLOW INFORMATION (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Cash Payments for Interest and Taxes |
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INCOME TAXES (Tables)
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INCOME TAXES (Tables) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income From Continuing Operations Before Income Taxes |
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Components Of Income Tax Provision |
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Tax Rate Reconciliation |
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Deferred Income Tax |
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Reconciliation of Unrecognized Tax Benefits |
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Tax Years |
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COMMITMENTS AND CONTINGENCIES
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Aug. 31, 2011
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COMMITMENTS AND CONTINGENCIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | NOTE 26. COMMITMENTS AND CONTINGENCIES
Contractual obligations: The following table sets forth the company's estimates of future payments under contracts as of Aug. 31, 2011.
Leases: The company routinely leases buildings for use as administrative offices or warehousing, land for research facilities, company aircraft, railcars, motor vehicles and equipment. Assets held under capital leases are included in property, plant and equipment. Certain operating leases contain renewal options that may be exercised at Monsanto's discretion. The expected lease term is considered in the decision about whether a lease should be recorded as capital or operating. Certain operating leases contain escalation provisions for an annual inflation adjustment factor and some are based on the CPI published by the Bureau of Labor Statistics. Additionally, certain leases require Monsanto to pay for property taxes, insurance, maintenance, and other operating expenses called rent adjustments, which are subject to change over the life of the lease. These adjustments were not determinable at the time the lease agreements were executed. Therefore, Monsanto recognizes the expenses for rent and rent adjustments when they become known and payable, which is more representative of the time pattern in which the company derives the related benefit in accordance with the Leases topic of the ASC. Other lease agreements provide for base rent adjustments contingent upon future changes in Monsanto's use of the leased space. At the inception of these leases, Monsanto does not have the right to control more than the percentage defined in the lease agreement of the leased property. Therefore, as the company's use of the leased space increases, the company recognizes rent expense for the additional leased property during the period during which the company has the right to control the use of additional property in accordance with the Leases topic of the ASC. Rent expense was $222 million for fiscal year 2011, $193 million for fiscal year 2010 and $205 million for fiscal year 2009. Guarantees: Monsanto may provide and has provided guarantees on behalf of its consolidated subsidiaries for obligations incurred in the normal course of business. Because these are guarantees of obligations of consolidated subsidiaries, Monsanto's consolidated financial position is not affected by the issuance of these guarantees. Monsanto warrants the performance of certain products through standard product warranties. In addition, Monsanto provides extensive marketing programs to increase sales and enhance customer satisfaction. These programs may include performance warranty features and indemnification for risks not related to performance, both of which are provided to qualifying customers on a contractual basis. The cost of payments for claims based on performance warranties has been, and is expected to continue to be, insignificant. It is not possible to predict the maximum potential amount of future payments for indemnification for losses not related to the performance of our products (for example, replanting due to extreme weather conditions), because it is not possible to predict whether the specified contingencies will occur and if so, to what extent. In various circumstances, Monsanto has agreed to indemnify or reimburse other parties for various losses or expenses. For example, like many other companies, Monsanto has agreed to indemnify its officers and directors for liabilities incurred by reason of their position with Monsanto. Contracts for the sale or purchase of a business or line of business may require indemnification for various events, including certain events that arose before the sale, or tax liabilities that arise before, after or in connection with the sale. Certain seed licensee arrangements indemnify the licensee against liability and damages, including legal defense costs, arising from any claims of patent, copyright, trademark, or trade secret infringement related to Monsanto's trait technology. Germplasm licenses generally indemnify the licensee against claims related to the source or ownership of the licensed germplasm. Litigation settlement agreements may contain indemnification provisions covering future issues associated with the settled matter. Credit agreements and other financial agreements frequently require reimbursement for certain unanticipated costs resulting from changes in legal or regulatory requirements or guidelines. These agreements may also require reimbursement of withheld taxes, and additional payments that provide recipients amounts equal to the sums they would have received had no such withholding been made. Indemnities like those in this paragraph may be found in many types of agreements, including, for example, operating agreements, leases, purchase or sale agreements and other licenses. Leases may require indemnification for liabilities Monsanto's operations may potentially create for the lessor or lessee. It is not possible to predict the maximum future payments possible under these or similar provisions because it is not possible to predict whether any of these contingencies will come to pass and if so, to what extent. Historically, these types of provisions did not have a material effect on Monsanto's financial position, profitability or liquidity. Monsanto believes that if it were to incur a loss in any of these matters, it would not have a material effect on its financial position, profitability or liquidity. Based on the company's current assessment of exposure, Monsanto has recorded a liability of $3 million as of fiscal years 2011 and 2010, related to these indemnifications. Monsanto provides guarantees for certain customer loans in the United States, Brazil, Europe and Argentina. See Note 7 — Customer Financing Programs — for additional information. Information regarding Monsanto's indemnification obligations to Pharmacia under the Separation Agreement can be found below in the “Litigation” section of this note. Customer Concentrations in Gross Trade Receivables: The following table sets forth Monsanto's gross trade receivables as of Aug. 31, 2011, and Aug. 31, 2010, by significant customer concentrations:
(1) Represents customer receivables within the specified geography.
Environmental and Litigation Liabilities: Monsanto is involved in environmental remediation and legal proceedings related to its current business and also, pursuant to indemnification obligations, related to Pharmacia's former chemical and agricultural businesses. In addition, Monsanto has liabilities established for various product claims. With respect to certain of these proceedings, Monsanto has established a reserve for the estimated liabilities. For more information on Monsanto's policies regarding “Litigation and Other Contingencies”, see Note ##D<SigAccnt> — Significant Accounting Policies. Portions of the liability included in a reserve for which the amount and timing of cash payments are fixed or readily determinable were discounted, using a risk-free discount rate adjusted for inflation ranging from 2.6 to 3.5 percent. The remaining portions of the liability were not subject to discounting because of uncertainties in the timing of cash outlay. The following table provides a detailed summary of the discounted and undiscounted amounts included in the reserve for environmental and litigation liabilities:
Changes in the environmental and litigation liabilities for fiscal years 2009, 2010, and 2011 are as follows:
Environmental: Included in the liability are amounts related to environmental remediation of sites associated with Pharmacia's former chemicals and agricultural businesses, with no single site representing the majority of the environmental liability. These sites are in various stages of environmental management: at some sites, work is in the early stages of assessment and investigation, while at others the cleanup remedies have been implemented and the remaining work consists of monitoring the integrity of that remedy. The extent of Monsanto's involvement at the various sites ranges from less than 1 percent to 100 percent of the costs currently anticipated. At some sites, Monsanto is acting under court or agency order, while at others it is acting with very minimal government involvement. Monsanto does not currently anticipate any material loss in excess of the amount recorded for the environmental sites reflected in the liability. However, it is possible that new information about these sites for which the accrual has been established, such as results of investigations by regulatory agencies, Monsanto, or other parties, could require Monsanto to reassess its potential exposure related to environmental matters. Monsanto's future remediation expenses at these sites may be affected by a number of uncertainties. These uncertainties include, but are 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. Monsanto cannot reasonably estimate any additional loss and does not expect the resolution of such uncertainties, or environmental matters not reflected in the liability, to have a material adverse effect on its consolidated results of operations, financial position, cash flows or liquidity. Litigation: The above liability includes amounts related to certain third-party litigation with respect to Monsanto's business, as well as tort litigation related to Pharmacia's former chemical business, including lawsuits involving polychlorinated biphenyls (PCBs), dioxins, and other chemical and premises liability litigation. Following is a description of one of the more significant litigation matters reflected in the liability.
In October 2007 and November 2009, a total of approximately 200 separate, single plaintiff civil actions were filed in Putnam County, West Virginia, against Monsanto, Pharmacia, Akzo Nobel (and several of its affiliates), Flexsys America Co. (and several of its affiliates), Solutia, and Apogee Coal Company, LLC. These cases allege personal injury occasioned by exposure to dioxin generated by the Nitro Plant during production of 2,4,5 T (1949-1969) and thereafter. Monsanto has agreed to accept the tenders of defense in the matters by Pharmacia, Solutia, Akzo Nobel, Flexsys America, and Apogee Coal under a reservation of rights. Including litigation reflected in the liability, Monsanto is involved in various legal proceedings that arise in the ordinary course of its business or pursuant to Monsanto's indemnification obligations to Pharmacia, as well as proceedings that management has considered to be material under SEC regulations. Some of the lawsuits seek damages in very large amounts, or seek to restrict the company's business activities. Monsanto believes that it has meritorious legal positions and will continue to represent its interests vigorously in all of the proceedings that it is defending or prosecuting. Although the ultimate liabilities resulting from such proceedings, or the proceedings reflected in the above liability, may be significant to profitability in the period recognized, management does not anticipate they will have a material adverse effect on Monsanto's consolidated results of operations, financial position, cash flows or liquidity. Specific information with respect to these proceedings appears below and in Part I — Item 3 — Legal Proceedings of Monsanto's Report on Form 10-K.
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CAPITAL STOCK (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2011
|
Aug. 31, 2010
|
Aug. 31, 2009
|
Aug. 31, 2011
October Two Thousand Five Repurchase Program [Member]
|
Aug. 31, 2009
October Two Thousand Five Repurchase Program [Member]
|
Aug. 31, 2008
October Two Thousand Five Repurchase Program [Member]
|
Aug. 31, 2011
April Two Thousand Eight Repurchase Program [Member]
|
Aug. 31, 2010
April Two Thousand Eight Repurchase Program [Member]
|
Aug. 31, 2009
April Two Thousand Eight Repurchase Program [Member]
|
Aug. 31, 2011
June Two Thousand Ten Repurchase Program [Member]
|
Aug. 31, 2010
June Two Thousand Ten Repurchase Program [Member]
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Common Stock Disclosures [Abstract] | |||||||||||
Common Stock, Authorized | 1,500,000,000 | 1,500,000,000 | |||||||||
Common Stock, Par Value | $ 0.01 | $ 0.01 | |||||||||
Preferred Stock Shares Authorized | 20,000,000 | ||||||||||
Preferred Stock Par Or Stated Value Per Share | $ 0.01 | ||||||||||
Preferred Stock Shares Outstanding | 0 | ||||||||||
Common Stock, Outstanding | 535,297,120 | 540,376,499 | |||||||||
Employee and Director Stock Options, Authorized | 108,000,000 | 108,000,000 | |||||||||
Stock Option Plans Remaining In Reserve | 9,000,000 | 12,000,000 | |||||||||
Treasury Stock Repurchase [Line Items] | |||||||||||
Total Amount of Repurchase | 800 | 800 | 1,000 | ||||||||
Share purchases under plans | $ 502 | $ 532 | $ 398 | $ 129 | $ 361 | $ 531 | $ 269 | $ 502 | $ 1 | ||
Shares Repurchased | 11,200,000 | 11,300,000 | 8,100,000 | 1,000,000 |
FINANCIAL INSTRUMENTS - FAIR VALUE AND NOTIONAL AMOUNTS (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | |
---|---|---|
Aug. 31, 2011
|
Aug. 31, 2010
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | $ 147 | $ 47 |
Derivative Liability, Fair Value, Net | 94 | 79 |
Additional Information [Abstract] | ||
Derivative Instruments Loss Reclassified From Accumulated OCI Into Income Effective Portion | 73 | |
Derivative Net Liability Position Aggregate Fair Value | 50 | 64 |
Designated as Hedging Instrument [Member]
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||
Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 110 | 39 |
Derivative Liability, Fair Value, Net | 59 | 61 |
Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 1,351 | 1,545 |
Not Designated as Hedging Instrument [Member]
|
||
Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 37 | 8 |
Derivative Liability, Fair Value, Net | 35 | 18 |
Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 1,184 | 1,019 |
Foreign Exchange Contracts
|
||
Notional Amount of Derivatives, [Abstract] | ||
Maximum Length of Time Hedged in Cash Flow Hedge | 11 | |
Foreign Exchange Contracts | Designated as Hedging Instrument [Member]
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||
Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 359 | 383 |
Foreign Exchange Contracts | Not Designated as Hedging Instrument [Member]
|
||
Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 779 | 862 |
Commodity Contracts
|
||
Notional Amount of Derivatives, [Abstract] | ||
Maximum Length of Time Hedged in Cash Flow Hedge | 36 | |
Commodity Contracts | Designated as Hedging Instrument [Member]
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||
Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 517 | 387 |
Commodity Contracts | Not Designated as Hedging Instrument [Member]
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||
Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 181 | 123 |
Interest Rate Contracts
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||
Notional Amount of Derivatives, [Abstract] | ||
Maximum Length of Time Hedged in Cash Flow Hedge | 12 | |
Interest Rate Contracts | Designated as Hedging Instrument [Member]
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||
Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 475 | 775 |
Interest Rate Contracts | Not Designated as Hedging Instrument [Member]
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||
Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 153 | |
Grower Contracts [Member] | Not Designated as Hedging Instrument [Member]
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Notional Amount of Derivatives, [Abstract] | ||
Notional Amount of Derivatives | 71 | 34 |
Miscellaneous Receivables [Member] | Foreign Exchange Contracts | Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 1 | 23 |
Miscellaneous Receivables [Member] | Foreign Exchange Contracts | Not Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 2 | 3 |
Miscellaneous Receivables [Member] | Commodity Contracts | Not Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 2 | |
Other Assets | Commodity Contracts | Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 16 | 4 |
Other Current Assets [Member] | Commodity Contracts | Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 93 | 12 |
Derivative Liability, Fair Value, Net | 2 | |
Other Current Assets [Member] | Commodity Contracts | Not Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 3 | |
Trade Receivables Net [Member] | Commodity Contracts | Not Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Asset, Fair Value, Net | 30 | 5 |
Derivative Liability, Fair Value, Net | 1 | 4 |
Miscellaneous Short Term Accruals [Member] | Foreign Exchange Contracts | Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Liability, Fair Value, Net | 9 | |
Miscellaneous Short Term Accruals [Member] | Foreign Exchange Contracts | Not Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Liability, Fair Value, Net | 5 | 5 |
Miscellaneous Short Term Accruals [Member] | Commodity Contracts | Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Liability, Fair Value, Net | 6 | 14 |
Miscellaneous Short Term Accruals [Member] | Commodity Contracts | Not Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Liability, Fair Value, Net | 29 | 9 |
Miscellaneous Short Term Accruals [Member] | Interest Rate Contracts | Designated as Hedging Instrument [Member]
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Derivative, Fair Value, Net [Abstract] | ||
Derivative Liability, Fair Value, Net | 38 | 11 |
Other Liabilities | Commodity Contracts | Designated as Hedging Instrument [Member]
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||
Derivative, Fair Value, Net [Abstract] | ||
Derivative Liability, Fair Value, Net | 4 | 8 |
Other Liabilities | Interest Rate Contracts | Designated as Hedging Instrument [Member]
|
||
Derivative, Fair Value, Net [Abstract] | ||
Derivative Liability, Fair Value, Net | $ 28 |
SEGMENT AND GEOGRAPHIC DATA (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2011
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SEGMENT AND GEOGRAPHIC DATA (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment Information |
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The reconciliation of EBIT to Net Income |
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Net Sales And Long Lived Assets by World Area |
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SELLING GENERAL AND ADMINISTRATIVE EXPENSES (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2011
|
Aug. 31, 2010
|
Aug. 31, 2009
|
|
SELLING GENERAL AND ADMINISTRATIVE EXPENSES (Details) [Abstract] | |||
Advertising Expense | $ 100 | $ 120 | $ 59 |
Agency Agreement Annual Revenue | 20 | ||
Commission expense | $ 78 | $ 90 | $ 71 |
EARNINGS PER SHARE (Details)
|
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2011
|
Aug. 31, 2010
|
Aug. 31, 2009
|
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EARNINGS PER SHARE (Details) [Abstract] | |||
Weighted-Average Number of Common Shares | 536.5 | 543.7 | 547.1 |
Dilutive Potential Common Shares | 5.9 | 7.1 | 8.5 |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Unvested Share Based Payment Awards Included In Basic Shares | 0.6 | ||
Unvested Share Based Payment Awards Included In Diluted Shares | 0.4 | ||
Stock Options
|
|||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Excluded stock options | 11 | 8 | 5 |
Antidilutive Securities With Exercise Prices Greater Than Average Market Price | 8 | 8 | 5 |
DISCONTINUED OPERATIONS (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
---|---|---|---|
Aug. 31, 2011
|
Aug. 31, 2010
|
Aug. 31, 2009
|
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Discontinued Operations: | |||
Income from operations of discontinued businesses | $ 3 | $ 4 | $ 19 |
Income tax provision | 1 | 8 | |
Income on discontinued operations | 2 | 4 | 11 |
Proceeds from divestiture of a business | $ 300 |
EMPLOYEE SAVINGS PLANS (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
12 Months Ended | |||
---|---|---|---|---|
Aug. 31, 2011
|
Aug. 31, 2010
|
Aug. 31, 2009
|
Aug. 31, 2008
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Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||
Reserve for ESOP debt retirement | $ 2 | $ 4 | ||
Additional Commitment to ESOP | 8 | |||
Special Allocation to ESOP | 4 | |||
Shares In ESOP | 6,600,000 | |||
Number Of Allocated Shares | 600,000 | |||
Unallocated Shares | 700,000 | |||
Dividends Paid To ESOP | 8 | 9 | 9 | |
ESOP Compensation Expense | 1 | 1 | 1 | |
Percent of SIP contributions | 1 percent to 25 percent | |||
Esop Restructuring Two Thousand Four [Member]
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Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||
Liabilitity related to ESOP | 54 | 51 | ||
Esop Restructuring Two Thousand Eight [Member]
|
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Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||
Liabilitity related to ESOP | $ 5 | $ 5 |
DEBT AND OTHER CREDIT ARRANGEMENTS (Details) (USD $)
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12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||
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Aug. 31, 2011
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Aug. 31, 2010
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Aug. 31, 2009
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Aug. 31, 2011
March Two Thousand Nine Interest Rate Swap [Member]
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Aug. 31, 2010
March Two Thousand Nine Interest Rate Swap [Member]
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Aug. 31, 2011
August Two Thousand Ten Interest Rate Swap [Member]
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Aug. 31, 2010
August Two Thousand Ten Interest Rate Swap [Member]
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Aug. 31, 2011
July Two Thousand Ten Interest Rate Swap [Member]
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Aug. 31, 2011
Senior Notes Due Twenty Twelve [Member]
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Aug. 31, 2010
Senior Notes Due Twenty Twelve [Member]
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Aug. 31, 2011
Senior Notes Due Twenty Thirty Five [Member]
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Aug. 31, 2010
Senior Notes Due Twenty Thirty Five [Member]
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Aug. 31, 2011
Senior Notes Due Twenty Eighteen [Member]
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Aug. 31, 2010
Senior Notes Due Twenty Eighteen [Member]
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Aug. 31, 2011
Senior Notes Due Twenty Twenty Five [Member]
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Aug. 31, 2010
Senior Notes Due Twenty Twenty Five [Member]
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Aug. 31, 2005
Senior Notes Due Twenty Twenty Five [Member]
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Aug. 31, 2011
Senior Notes Due Twenty Thirty Eight [Member]
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Aug. 31, 2010
Senior Notes Due Twenty Thirty Eight [Member]
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Aug. 31, 2011
Senior Notes Twenty Sixteen [Member]
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Aug. 31, 2011
Shelf Registration Two Thousand Two [Member]
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Aug. 31, 2011
Shelf Registration Two Thousand Five [Member]
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Aug. 31, 2011
Chesterfield [Member]
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Aug. 31, 2008
Senior Notes Due Two Thousand Eight [Member]
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Aug. 31, 2011
Credit Facility Agreement Twenty Eleven [Member]
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Aug. 31, 2011
Credit Facility Agreement Two Thousand Seven [Member]
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Aug. 31, 2011
Aggregate Senior Notes [Member]
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Short Term Debt [Abstract] | |||||||||||||||||||||||||||
Current Maturities of Long-Term Debt | $ 626,000,000 | $ 193,000,000 | |||||||||||||||||||||||||
Notes Payable to Banks | 52,000,000 | 48,000,000 | |||||||||||||||||||||||||
Total Short-Term Debt | 678,000,000 | 241,000,000 | |||||||||||||||||||||||||
Short-Term Debt Fair Value | 710,000,000 | 241,000,000 | |||||||||||||||||||||||||
Weighted average interest rate on notes payable to banks | 6.70% | 4.50% | |||||||||||||||||||||||||
Other (Including Capital Leases) | 26,000,000 | 162,000,000 | |||||||||||||||||||||||||
Long-Term Debt | 1,543,000,000 | 1,862,000,000 | |||||||||||||||||||||||||
Long-Term Debt Fair Value | 1,797,000,000 | 2,094,000,000 | |||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||
Discounted Amount | 485,000,000 | 395,000,000 | 395,000,000 | 299,000,000 | 299,000,000 | 277,000,000 | 274,000,000 | 247,000,000 | 247,000,000 | 299,000,000 | |||||||||||||||||
Interest Rate | 7.375% | 5.50% | 5.125% | 5.50% | 5.875% | 2.75% | 4.00% | ||||||||||||||||||||
Maturity Date | Aug. 15, 2012 | Jul. 15, 2035 | Apr. 15, 2018 | Apr. 15, 2038 | Aug. 15, 2016 | May 15, 2008 | |||||||||||||||||||||
Face Amount | 485,000,000 | 400,000,000 | 300,000,000 | 314,000,000 | 250,000,000 | 300,000,000 | 238,000,000 | 2,000,000,000 | 2,000,000,000 | 800,000,000 | |||||||||||||||||
Effective Interest Rate | 7.035% | ||||||||||||||||||||||||||
Shelf Registration For Debt Issuance Amount | 2,000,000,000 | 2,000,000,000 | |||||||||||||||||||||||||
Unamortized Premium | 38,000,000 | 40,000,000 | 53,000,000 | ||||||||||||||||||||||||
Short-Term Portion | 136,000,000 | ||||||||||||||||||||||||||
Debt Securities | 950,000,000 | ||||||||||||||||||||||||||
Schedule Of Trading Securities And Other Trading Assets [Line Items] | |||||||||||||||||||||||||||
Notional Amount | 250,000,000 | 225,000,000 | 300,000,000 | ||||||||||||||||||||||||
Unrealized Holding Loss | 14,000,000 | 8,000,000 | 10,000,000 | 9,000,000 | 7,000,000 | ||||||||||||||||||||||
Interest Expense [Abstract] | |||||||||||||||||||||||||||
Interest Costs Incurred | 184,000,000 | 187,000,000 | 163,000,000 | ||||||||||||||||||||||||
Less: Capitalized on Construction | (22,000,000) | (25,000,000) | (34,000,000) | ||||||||||||||||||||||||
Interest expense | $ 162,000,000 | $ 162,000,000 | $ 129,000,000 |
POSTRETIREMENT BENEFITS - PENSIONS
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2011
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POSTRETIREMENT BENEFITS-PENSIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
POSTRETIREMENT BENEFITS-PENSIONS | NOTE 18. POSTRETIREMENT BENEFITS — PENSIONS
Most of Monsanto's U.S. employees are covered by noncontributory pension plans sponsored by the company. Pension benefits are based on an employee's years of service and compensation level. Funded pension plans in the United States and outside the United States were funded in accordance with the company's long-range projections of the plans' financial condition. These projections took into account benefits earned and expected to be earned, anticipated returns on pension plan assets, and income tax and other regulations. Components of Net Periodic Benefit Cost Total pension cost for Monsanto employees included in the Statements of Consolidated Operations was $122 million, $85 million and $80 million in fiscal years 2011, 2010 and 2009, respectively. The information that follows relates to all of the pension plans in which Monsanto employees participated. The components of pension cost for these plans were:
The other changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss for the year ended Aug. 31, 2011, were:
The following assumptions, calculated on a weighted-average basis, were used to determine pension costs for the principal plans in which Monsanto employees participated:
Obligations and Funded Status Monsanto uses a measurement date of August 31 for its pension plans. The funded status of the pension plans as of Aug. 31, 2011, and Aug. 31, 2010, was as follows:
Weighted-average assumptions used to determine benefit obligations as of Aug. 31, 2011, and Aug. 31, 2010, were as follows:
Fiscal year 2012 pension expense, which will be determined using assumptions as of Aug. 31, 2011, is expected to decrease compared with fiscal year 2011 expense. The company increased its discount rate assumption as of Aug. 31, 2011, to reflect current economic conditions of market interest rates. The U.S. accumulated benefit obligation (ABO) was $1.8 billion as of Aug. 31, 2011, and Aug. 31, 2010. The ABO for plans outside of the United States was $171 million and $268 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively. The projected benefit obligation (PBO) and the fair value of the plan assets for pension plans with PBOs in excess of plan assets as of Aug. 31, 2011, and Aug. 31, 2010, were as follows:
The PBO, ABO, and the fair value of the plan assets for pension plans with ABOs in excess of plan assets as of Aug. 31, 2011, and Aug. 31, 2010, were as follows:
As of Aug. 31, 2011, and Aug. 31, 2010, amounts recognized in the Statements of Consolidated Financial Position were included in the following balance sheet accounts: Net Amount Recognized
The following table provides a summary of the pretax components of the amount recognized in accumulated other comprehensive loss:
The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $67 million. Plan Assets U.S. Plans: The asset allocations for Monsanto's U.S. pension plans as of Aug. 31, 2011, and Aug. 31, 2010, and the target allocation range for fiscal year 2012, by asset category, follow. The fair value of assets for these plans was $1.7 billion and $1.4 billion as of Aug. 31, 2011, and Aug. 31, 2010, respectively.
The expected long-term rate of return on these plan assets was 7.5 percent in fiscal year 2011, 7.75 percent in fiscal year 2010, and 8.0 percent in fiscal year 2009. The expected long-term rate of return on plan assets is based on historical and projected rates of return for current and planned asset classes in the plan's investment portfolio. Assumed projected rates of return for each asset class were selected after analyzing historical experience and future expectations of the returns and volatility of the various asset classes. The overall expected rate of return for the portfolio is based on the target asset allocation for each asset class and adjusted for historical and expected experience of active portfolio management results compared to benchmark returns and the effect of expenses paid for plan assets. The general principles guiding investment of U.S. pension plan assets are embodied in the Employee Retirement Income Security Act of 1974 (ERISA). These principles include discharging the company's investment responsibilities for the exclusive benefit of plan participants and in accordance with the “prudent expert” standards and other ERISA rules and regulations. Investment objectives for the company's U.S. pension plan assets are to optimize the long-term return on plan assets while maintaining an acceptable level of risk, to diversify assets among asset classes and investment styles, and to maintain a long-term focus. The plan's investment fiduciaries are responsible for selecting investment managers, commissioning periodic asset/liability studies, setting asset allocation targets, and monitoring asset allocation and investment performance. The company's pension investment professionals have discretion to manage assets within established asset allocation ranges approved by the plan fiduciaries. Late in 2010, an asset/liability study was conducted to determine the optimal strategic asset allocation to meet the plan's projected long-term benefit obligations and desired funded status. The target asset allocation resulting from the asset/liability study is outlined in the previous table. Plans Outside the United States: The weighted-average asset allocation for Monsanto's pension plans outside of the United States as of Aug. 31, 2011, and Aug. 31, 2010, and the weighted-average target allocation for fiscal year 2012, by asset category, follow. The fair value of plan assets for these plans was $160 million and $243 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively.
(1) Monsanto's plans outside the United States have a wide range of target allocations, and therefore the 2012 target allocations shown above reflect a weighted-average calculation of the target allocations of each of the plans. The weighted-average expected long-term rate of return on the plans' assets was 6.5 percent in fiscal year 2011, 6.6 percent in fiscal year 2010, and 7.1 percent in fiscal year 2009. Determination of the expected long-term rate of return for plans outside the United States is consistent with the U.S. methodology. Fair Value Measurements U.S. Plans: The fair values of our U.S. defined benefit pension plan investments as of Aug. 31, 2011, and Aug. 31, 2010, by asset category, are as follows:
The following table summarizes the changes in fair value of the Level 3 investments as of Aug. 31, 2011.
The following table reconciles the investments at fair value to the plan assets as of Aug. 31, 2011.
In managing the plan assets, Monsanto reviews and manages risk associated with funded status risk, market risk, liquidity risk and operational risk. Asset allocation determined in light of the plans' liability characteristics and asset class diversification are central to the company's risk management approach and are integral to the overall investment strategy. Further mitigation of asset class risk is achieved by investment style, investment strategy and investment management firm diversification. Investment guidelines are included in all investment management agreements with investment management firms managing publicly traded equities and fixed income accounts for the plan.
Plans Outside the United States: The fair values of our defined benefit pension plan investments outside of the United States as of Aug. 31, 2011, and Aug. 31, 2010, by asset category, are as follows:
The following table summarizes the changes in fair value of the Level 3 investments as of Aug. 31, 2011.
The following table reconciles the investments at fair value to the plan asset as of Aug. 31, 2011.
In managing the plan assets, risk associated with funded status risk, market risk, liquidity risk and operational risk is considered. The design of a plan's overall investment strategy will take into consideration one or more of the following elements: a plan's liability characteristics, diversification across asset classes, diversification within asset classes and investment management firm diversification. Investment policies consistent with the plan's overall investment strategy are established.
For assets that are measured using quoted prices in active markets, the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs, which have been determined to be immaterial. Assets that are measured using significant other observable inputs are primarily valued by reference to quoted prices of markets that are not active. The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash and cash equivalents: The carrying value of cash represents fair value as it consists of actual currency, and is classified as Level 1.
Debt securities: Debt securities consist of U.S. and foreign corporate credit, U.S. and foreign government issues (including related agency debentures and mortgages), U.S. state and municipal securities, and U.S. term bank loans. Debt securities are generally priced by institutional bids, which reflect estimated values based on underlying model frameworks at various dealers and vendors, or are formally listed on exchanges, where dealers exchange bid and ask offers to arrive at most executed transaction prices. Term bank loans are priced in a similar fashion to corporate debt securities. All debt securities included in the plans are classified as Level 2.
Common and preferred stock: The plans' common and preferred stock primarily consists of investments in listed U.S. and international company stock. Most stock investments are valued using quoted prices from the various public markets. Most equity securities trade on formal exchanges, both domestic and foreign (e.g., NYSE, NASDAQ, LSE), and can be accurately described as active markets. The observable valuation inputs are unadjusted quoted prices that represent active market trades, and are classified as Level 1. Some common and preferred stock holdings are not listed on established exchanges or actively traded inputs to determine their values are obtainable from public sources, and are thus classified as Level 2.
Private equity investments: The U.S. plan invests in private equity, which as an asset class is generally characterized as requiring long-term commitments where liquidity is typically limited. Therefore, private equity does not have an actively traded market with readily observable prices. Valuations depend on a variety of proprietary model methodologies, some of which may be derived from publicly available sources. However, there are also material inputs that are not readily observable, and that require subjective assessments. All private equity investments are classified as Level 3.
Partnership and joint venture interests: The U.S. plan invests in these investments which include interests in two limited partnership funds which are considered absolute return funds in which the manager takes long and short positions to generate returns. While most individual securities in these strategies would fall under Level 1 or Level 2 if held individually, the lack of available quotes and unique structure of the funds cause these to be classified as Level 3. Real estate investments: The U.S. plan invests in U.S. real estate through indirect ownership entities, which are structured as limited partnerships or private real estate investment trusts (REITs). Real estate investments are generally illiquid long-term assets valued in large part using inputs not readily observable in the public markets. There are no formal listed markets for either the funds' underlying commercial properties, or for shares in any given fund. Real estate fund holdings are appraised and valued on an on-going basis. In the case of the investments structured as partnerships, while a net asset value (NAV) is not explicitly calculated, audited financial statements and valuations are produced on an annual basis. For investments structured as private REITs, redemption requests for units held are at the discretion of fund managers. All real estate investments are classified as Level 3. Interest in pooled funds: Investments are structured as commingled pools, or funds. These funds are comprised of other broad asset category types, such as equity and debt securities, derivatives and cash and equivalents. The underlying holdings are all based on unadjusted quoted market prices in an active exchange market, and the total fund value can be ascertained from readily available market data. However, because there are no publicly available market quotes for the pooled funds themselves, all pooled funds are classified as Level 2. Derivatives: The U.S. plan is permitted to use financial derivative instruments to hedge certain risks and for investment purposes. The plan enters into futures contracts in the normal course of its investing activities to manage market risk associated with the plan's equity and fixed income investments and to achieve overall investment portfolio objectives. The credit risk associated with these contracts is minimal as they are traded on organized exchanges and settled daily. Exchange-traded equity index and interest rate futures are measured at fair value using quoted market prices making them qualify as Level 1 investments. The notional value of all futures derivatives was $198 million as of Aug. 31, 2011. The U.S. plan also holds listed common and preferred stock short sale positions, which involves a counterparty arrangement with a prime broker. The existence of the prime broker counter-party relationship introduces the possibility that short sale market values may need to be adjusted to reflect any counter-party risk, however no such adjustment was required as of Aug. 31, 2011. Therefore, the short positions have been classified as Level 2, and their notional value was $30 million as of Aug. 31, 2011.
Insurance backed securities: Insurance backed securities are contracts held with an insurance company. Level 1 securities are quoted prices in active markets for identical assets. The Level 3 fair value of the investments is determined based upon the value of the underlying investments as determined by the insurance company.
Collateral held under securities lending agreement: The U.S. plan participates in a securities lending program through Northern Trust. Securities loaned are fully collateralized by cash and U.S. government securities. Because the collateral pool itself lacks a formal public market and price quotes, it is classified as Level 2. Expected Cash Flows
The company may contribute additional amounts to the plans depending on the level of future contributions required. |
POSTRETIREMENT BENEFITS - PENSIONS (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 31, 2011
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POSTRETIREMENT BENEFITS PENSIONS (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost |
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Changes Recognized in OCI Pension |
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Assumptions Used to Determine Pension Costs |
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Funded Status |
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Assumptions Used to Determine Pension Benefit Obligation |
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Projected Benefit Obligations In Excess of Plan Assets |
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Accumulated Benefit Obligations In Excess of Plan Assets |
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Net Amount Recognized |
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Pre-Tax Components Recognized in AOCI Pension |
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Pension Plan Asset Allocation United States |
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Pension Plan Asset Allocation Foreign |
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United States Pension Plan Asset Fair Value |
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United States Pension plan Asset Level 3 Rollforward |
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Investments At Fair Value To Plan Assets Reconciliation |
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Foreign Pension Plan Asset Fair Value |
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Foreign Pension plan Asset Level 3 Rollforward |
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Investments At Fair Value To Plan Assets |
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Expected Cash Flows Pension |
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VARIABLE INTEREST ENTITIES (Tables)
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Consolidated Variable Interest Entities Assets and Liabilities |
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Non-Consolidated Variable Interest Entities Assets and Liabilities |
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QUARTERLY DATA (UNAUDITED)
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QUARTERLY DATA (UNAUDITED) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY DATA (UNAUDITED) | NOTE 30. QUARTERLY DATA (UNAUDITED)
Background of the Restatement In November 2011, Monsanto filed an Amended Annual Report on Form 10-K/A (“Form 10-K/A”) to its Annual Report on Form 10-K for the fiscal year ended Aug. 31, 2010, to restate the company's audited consolidated financial statements and related disclosures for the fiscal years ended Aug. 31, 2010, and Aug. 31, 2009. The original Form 10-K was filed with the Securities and Exchange Commission (“SEC”) on Oct. 27, 2010. In addition to the filing of the Form 10-K/A, Monsanto filed amendments to the company's Quarterly Reports on Form 10-Q for each of the quarterly periods ended Nov. 30, 2010, Feb. 28, 2011, and May 31, 2011, to restate the company's unaudited condensed consolidated financial statements and related financial information for those quarterly periods and the comparative fiscal year 2010 periods for the effects of the restatement. The financial data for the fiscal year quarters in 2011 and 2010 herein incorporate the effects of this restatement.
Monsanto records accrued customer incentive program costs as a reduction of revenue based on an allocation of the incentive program cost to those revenue transactions that result in progress by the customer toward earning the program incentive. For annual incentive programs, this generally results in recording annual incentive program costs based on actual purchases made by customers during the year as a percentage of estimated annual sales volume targets agreed upon with customers.
In the third quarter of fiscal year 2011, Monsanto announced an investigation being conducted by the SEC of the company's financial reporting associated with customer incentive programs for glyphosate products for fiscal years 2010 and 2009. Following the SEC notification, Monsanto began its own review and the Audit and Finance Committee of the Board of Directors retained independent advisors to conduct an internal investigation. Through this review, the company identified communications with customers and we identified other facts as described below that impacted our determination of which revenue transactions resulted in progress by the customer toward earning the program incentive.
Specifically, Monsanto implemented a program in the first quarter of fiscal year 2010 that was structured to provide payments to retailers who met sales volume targets and performed other marketing and sales activities in the fiscal year 2010 with the amount of the program incentive determined based on the amount of inventory maintained by the customer at Aug. 31, 2009. The company originally accrued the costs of this incentive program based on the retailers' fiscal year 2010 purchases as a percentage of aggregated agreed upon fiscal year 2010 sales volume targets. As a result of the company's internal review, Monsanto determined that, although the program was implemented in first quarter of fiscal year 2010, Monsanto representatives communicated with retailers about the program in the fourth quarter of fiscal year 2009, including advising customers that purchasing product in the fourth quarter of 2009 was a qualification for participation in the program in fiscal year 2010. These communications were intended to induce customers to purchase branded glyphosate in the fourth quarter of fiscal year 2009. In light of these facts, Monsanto determined that purchases made by these retail customers in the fourth quarter of fiscal year 2009 represented progress toward earning the program incentive. As such, it is appropriate to record a portion of the related incentive cost as a reduction of revenue in that quarter as well as in fiscal year 2010. As a result of the company's determination, approximately $24 million of customer incentive accruals associated with the program originally recorded as a reduction of revenue in fiscal year 2010 were recorded as a reduction of revenue in fiscal year 2009.
Additionally, Monsanto maintained an incentive program related to annual incentive agreements with distributors regarding their sales of branded glyphosate. At the end of fiscal year 2009, Monsanto determined not to make annual incentive payments under this program to seven of its distributors who had failed to meet their agreed upon sales targets for branded glyphosate and reversed incentive accruals previously recorded under this program for these customers. The company then provided these distributors with an opportunity to earn back a substantial portion of these incentives in fiscal year 2010 by achieving volume targets for branded glyphosate and performing other marketing and sales activities in that fiscal year. Monsanto originally recorded the costs of this program over these distributors' fiscal year 2010 purchases as a percentage of aggregated agreed upon fiscal year 2010 sales volume targets. As a result of its internal review, the company determined that, although this program was formally announced in the first quarter of fiscal year 2010, Monsanto representatives communicated with distributors about the program in the fourth quarter of fiscal year 2009, and that the incentive opportunity ultimately provided to each distributor under this program in fiscal year 2010 was derived from each distributor's total sales of branded glyphosate in fiscal year 2009. In light of these facts, Monsanto determined that purchases made by these customers in fiscal years 2009 and 2010 represented progress toward earning the program incentive. As such, the company determined that the appropriate method of recording the cost associated with this program is based upon each distributor's purchase volume over the period of fiscal years 2009 and 2010, with a cumulative catch-up entry in the fourth quarter of fiscal year 2009. Accordingly, the company recorded an additional $20 million of customer incentive program costs as a reduction of revenue in fiscal year 2009 originally recorded as a reduction in revenue in fiscal year 2010. In addition, Monsanto's internal review revealed that, during the second quarter of fiscal year 2010, one of the seven distributors received written confirmation from Monsanto that it had fulfilled the requirements of this program. Accordingly, the company determined that it was appropriate to record the full amount of this distributor's unearned incentive in the second quarter of 2010. As a result of the company's determination, approximately $10 million of accruals associated with this one distributor's incentive under this program originally recorded as a reduction of revenue in third quarter fiscal year 2010 were recorded as a reduction of revenue in second quarter fiscal year 2010.
A similar earn back program was offered to two distributors in fiscal year 2011. At the end of fiscal year 2010, Monsanto reversed customer incentive accruals for two distributors that failed to earn their fiscal year 2010 annual incentive payments because they did not meet their agreed upon sales targets. The company then provided these distributors with an opportunity to earn back a substantial portion of this incentive in fiscal year 2011 by achieving agreed upon sales volume targets for branded glyphosate and performing other marketing and sales activities in fiscal year 2011. The company originally accrued the costs of this incentive program over these distributors' fiscal year 2011 purchases as a percentage of aggregated agreed upon fiscal year 2011 sales volume targets. As a result of its internal review, Monsanto determined that purchases made by the customers in fiscal year 2010 represented progress toward earning the program incentive, and that it was appropriate to record the entire cost associated with this incentive program in fiscal year 2010 in view of several factors that made it more apparent that the two distributor customers had earned these incentives in fiscal year 2010. Such factors included the change in market dynamics following the company's May 2010 restructuring of its glyphosate business, the fact that both distributors received written confirmation from Monsanto in the second quarter of fiscal 2011 that they had fulfilled the requirements of this program prior to achieving sales volume targets and, with respect to the prepayment of program incentives to these customers in the first and second quarter of fiscal year 2011, the unlikelihood that Monsanto would have enforced its contractual right of offset against these distributors with respect to any unearned portion of their incentives. As a result of the company's determination, approximately $48 million of customer incentive accruals associated with this program originally recorded as a reduction in revenue in fiscal year 2011 were recorded as a reduction in revenue in fiscal year 2010.
As a result of the findings of the company's investigation and the revised accounting described above, Monsanto announced a restatement of the consolidated financial statements for the fiscal years ended Aug. 31, 2010, and 2009.
The effects of the adjustments relating to certain customer incentive programs to the company's previously issued audited consolidated financial statements for fiscal years 2010 and 2009 include decreases in net sales by $4 million and $45 million, decreases in income tax expense by $1 million and $17 million, decreases in net income by $3 million and $28 million, increases in deferred tax assets by $18 million and $18 million, and increases in accrued marketing programs by $48 million and $45 million, respectively. There was also a reclassification adjustment made for the fiscal year ended Aug. 31, 2010, between net sales and SG&A, which resulted in a decrease of $15 million in both line items. Other Adjustments In addition to the adjustments relating to certain customer incentive programs described above, Monsanto has made other adjustments that had been previously identified but not corrected because they were not material, individually or in the aggregate, to the company's consolidated financial statements. The adjustments included certain reclassifications between net sales and SG&A, inventory and grower production accruals, inventory and other non-current assets, miscellaneous receivables and income taxes payable and accrued marketing programs and miscellaneous accruals. The accrued marketing programs adjustment is unrelated to the adjustments described above surrounding customer incentive programs. Adjustments were also made to record certain discrete income tax items and equity affiliate activity in the proper periods.
The following tables include the impact of the restatement on Monsanto's previously issued audited Statements of Consolidated Operations for the years ended Aug. 31, 2010.
Discontinued Operations The following tables also include financial data for the fiscal year quarters in 2011 and 2010 which have been adjusted for discontinued operations. See Note 29 — Discontinued Operations — for further discussion of the divested Dairy business.
(1) Because Monsanto reported a loss from continuing operations in the fourth quarter 2011 and the first and fourth quarters of 2010, generally accepted accounting principles required diluted loss per share to be calculated using weighted-average common shares outstanding, excluding common stock equivalents. As a result, the quarterly earnings (loss) per share do not total to the full-year amount. |
STOCK BASED COMPENSATION PLANS (Tables)
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STOCK BASED COMPENSATION PLANS (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Restricted Stock |
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Assumptions Used To Value Stock Options |
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DEBT AND OTHER CREDIT ARRANGEMENTS (Tables)
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Aug. 31, 2011
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DEBT AND OTHER CREDIT ARRANGEMENTS (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Debt |
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Long-Term Debt Table |
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Interest Expense on Debt |
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SIGNIFICANT ACCOUNTING POLICIES
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12 Months Ended |
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Aug. 31, 2011
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Disclosure Text Block [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation The accompanying consolidated financial statements of Monsanto and its subsidiaries were prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. Intercompany accounts and transactions have been eliminated in consolidation. The company records income attributable to noncontrolling interest in the Statements of Consolidated Operations for any non-owned portion of consolidated subsidiaries. Noncontrolling interest is recorded within the equity section but separate from Monsanto's equity in the Statements of Consolidated Financial Position.
On September 1, 2010, Monsanto prospectively adopted the accounting standard update regarding improvements to financial reporting by enterprises involving variable interest entities (VIEs). This accounting standard codification (ASC) requires former qualifying Special Purpose Entities (SPE) to be evaluated for consolidation and also changed the approach to determining a VIEs primary beneficiary and requires companies to more frequently reassess whether they must consolidate VIEs. Arrangements with business enterprises are evaluated, and those in which Monsanto is determined to be the primary beneficiary are consolidated. See Note 8 – Variable Interest Entities – for a description of consolidated and non-consolidated VIEs. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect many items in the financial statements. These include allowance for doubtful trade receivables, sales returns and allowances, inventory obsolescence, income tax liabilities and assets and related valuation allowances, asset impairments, valuations of goodwill and other intangible assets, employee benefit plan liabilities, value of equity-based awards, marketing program liabilities, grower accruals (an estimate of amounts payable to farmers who grow seed for Monsanto), restructuring reserves, self-insurance reserves, environmental reserves, deferred revenue, contingencies, litigation, incentives, and the allocation of corporate costs to segments. Significant estimates and assumptions are also used to establish the fair value and useful lives of depreciable tangible and certain intangible assets. Actual results may differ from those estimates and assumptions, and such results may affect income, financial position, or cash flows. Revenue Recognition The company derives most of its revenue from three main sources: sales of branded conventional seed and branded seed with biotechnology traits; royalties and license revenues from licensed biotechnology traits and genetic material; and sales of agricultural chemical products. Revenues from all branded seed sales are recognized when the title to the products is transferred. When the right of return exists in the company's seed business, sales revenues are reduced at the time of sale to reflect expected returns. In order to estimate the expected returns, management analyzes historical returns, economic trends, market conditions, and changes in customer demand. Revenues for agricultural chemical products are recognized when title to the products is transferred. The company recognizes revenue on products it sells to distributors when, according to the terms of the sales agreements, delivery has occurred, performance is complete, no right of return exists, and pricing is fixed or determinable at the time of sale. There are several additional conditions for recognition of revenue including that the collection of sales proceeds must be reasonably assured based on historical experience and current market conditions and that there must be no further performance obligations under the sale or the royalty or license agreement. Monsanto follows the Revenue Recognition topic of the ASC. The Revenue Recognition topic of the ASC affects Monsanto's recognition of license revenues from biotechnology traits sold through third-party seed companies. Trait royalties and license revenues are recorded when earned, usually when the third-party seed companies sell their seeds containing Monsanto traits to growers. To reduce credit exposure in Latin America, Monsanto collects payments on certain customer accounts in grain. Monsanto does not take physical custody of the grain or assume the associated inventory risk and therefore does not record revenue or the related cost of sales for the grain. Such payments in grain are negotiated at or near the time Monsanto's products are sold to the customers and are valued at the prevailing grain commodity prices. By entering into forward sales contracts with grain merchants, Monsanto mitigates the commodity price exposure from the time a contract is signed with a customer until the time a grain merchant collects the grain from the customer on Monsanto's behalf. The grain merchant converts the grain to cash for Monsanto. These forward sales contracts do not qualify for hedge accounting under the Derivatives and Hedging topic of the ASC. Accordingly, the gain or loss on these derivatives is recognized in current earnings. Promotional, Advertising and Marketing Program Costs (Customer Incentive Programs) Promotional and advertising costs are expensed as incurred and are included in selling, general and administrative expenses in the Statements of Consolidated Operations. Marketing program costs are recorded in accordance with the Revenue Recognition topic of the ASC, based on specific performance criteria met by our customers, such as purchase volumes, promptness of payment, and market share increases. The cost of marketing programs is recorded in net sales in the Statements of Consolidated Operations. As actual marketing program expenses are not known at the time of the sale, an estimate based on the best available information (such as historical experience and market research) is used as a basis for recording marketing program liabilities. Management analyzes and reviews the marketing program balances on a quarterly basis and adjustments are recorded as appropriate. In fiscal years 2010 and 2009, the company executed marketing programs that provided certain customers price protection consideration if standard purchase prices fall lower than the price the distributor paid on eligible products. Accordingly, the company evaluated the impacts of these programs on revenue recognition, and recorded revenue when all revenue recognition criteria were met. Under certain marketing programs, product performance and variations in weather can result in free product to customers. The associated cost of this free product is recognized as cost of goods sold in the Statements of Consolidated Operations. Research and Development Costs The company accounts for research and development (R&D) costs in accordance with the Research and Development topic of the ASC. Under the Research and Development topic of the ASC, all R&D costs must be charged to expense as incurred. Accordingly, internal R&D costs are expensed as incurred. Third-party R&D costs are expensed when the contracted work has been performed or as milestone results are achieved. For acquisitions that occurred in 2009 and 2008, in-process R&D (IPR&D) costs with no alternative future uses are expensed in the period acquired. As a result of adopting the provisions of a new accounting standard related to business combinations issued by the FASB, for acquisitions completed after Sept. 1, 2009, acquired IPR&D costs without alternative uses will be recorded on the Statements of Consolidated Financial Position as indefinite-lived intangible assets. The costs of purchased IPR&D that have alternative future uses are capitalized and amortized over the estimated useful life of the asset. The costs associated with equipment or facilities acquired or constructed for R&D activities that have alternative future uses are capitalized and depreciated on a straight-line basis over the estimated useful life of the asset. The amortization and depreciation for such capitalized assets are charged to R&D expenses. In fiscal year 2007, Monsanto and BASF announced a long-term joint R&D and commercialization collaboration in plant technology that will focus on high-yielding crops and crops that are tolerant to adverse conditions. The collaboration resulted in shared R&D costs. Only Monsanto's portion has been included in research and development expenses in the Statements of Consolidated Operations. Income Taxes Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Management regularly assesses the likelihood that deferred tax assets will be recovered from future taxable income, and to the extent management believes that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established. When a valuation allowance is established, increased or decreased, an income tax charge or benefit is included in the consolidated financial statements and net deferred tax assets are adjusted accordingly. The net deferred tax assets as of Aug. 31, 2011, represent the estimated future tax benefits to be received from taxing authorities or future reductions of taxes payable.
On Sept. 1, 2007, Monsanto adopted the updated provisions of the Income Taxes topic of the ASC. Under this topic of the ASC, in order to recognize an uncertain tax benefit, the taxpayer must be more likely than not of sustaining the position, and the measurement of the benefit is calculated as the largest amount that is more than 50 percent likely to be realized upon resolution of the benefit. Tax authorities regularly examine the company's returns in the jurisdictions in which Monsanto does business. Management regularly assesses the tax risk of the company's return filing positions and believes its accruals for uncertain tax benefits are adequate as of Aug. 31, 2011, and Aug. 31, 2010. Cash and Cash Equivalents All highly liquid investments (defined as investments with a maturity of three months or less when purchased) are considered cash equivalents. Inventory Valuation and Obsolescence Inventories are stated at the lower of cost or market, and an inventory reserve would permanently reduce the cost basis of inventory. Inventories are valued as follows: Seeds and Genomics: Actual cost is used to value raw materials such as treatment chemicals and packaging, as well as goods in process. Costs for substantially all finished goods, which include the cost of carryover crops from the previous year, are valued at weighted-average actual cost. Weighted-average actual cost includes field growing and harvesting costs, plant conditioning and packaging costs, and manufacturing overhead costs. Agricultural Productivity: 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. Variances, exclusive of abnormally low volume and operating performance, are capitalized into inventory. Standard cost includes direct labor and raw materials, and manufacturing overhead based on normal capacity. The cost of the Agricultural Productivity segment inventories in the United States (approximately 10 percent as of Aug. 31, 2011 and 14 percent as of Aug. 31, 2010) 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 inventories outside of the United States, as well as supplies inventories in the United States, is determined by using the first-in, first-out (FIFO) method; FIFO is used outside of the United States because the requirements in the countries where Monsanto maintains inventories generally do not allow the use of the LIFO method. Inventories at FIFO approximate current cost. In accordance with the Inventory topic of the ASC, Monsanto records abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) as current period charges and allocates fixed production overhead to the costs of conversion based on the normal capacity of the production facilities. Monsanto establishes allowances for obsolescence of inventory equal to the difference between the higher of cost of inventory and the estimated market value, based on assumptions about future demand and market conditions. The company regularly evaluates the adequacy of our inventory obsolescence reserves. If economic and market conditions are different from those anticipated, inventory obsolescence could be materially different from the amounts provided for in the company's consolidated financial statements. If inventory obsolescence is higher than expected, cost of goods sold will be increased, and inventory, net income, and shareowners' equity will be reduced. Goodwill Monsanto follows the guidance of the Business Combinations topic of the ASC, in recording the goodwill arising from a business combination as the excess of purchase price and related costs over the fair value of identifiable assets acquired and liabilities assumed.
Under the Intangibles – Goodwill and Other topic of the ASC, goodwill is not amortized and is subject to annual impairment tests. A fair-value-based test is applied at the reporting unit level, which is generally at or one level below the operating segment level. The test compares the fair value of the company's reporting units to the carrying value of those reporting units. This test requires various judgments and estimates. The fair value of goodwill is determined using an estimate of future cash flows of the reporting unit and a risk-adjusted discount rate to compute a net present value of future cash flows. An adjustment to goodwill will be recorded for any goodwill that is determined to be impaired. Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit. Goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate it might be impaired. Goodwill was last tested for impairment as of March 1, 2011. See Note 11 — Goodwill and Other Intangible Assets — for further discussion of the annual impairment test. Other Intangible Assets Other intangible assets consist primarily of acquired seed germplasm, acquired intellectual property, trademarks and customer relationships. Seed germplasm is the genetic material used in new seed varieties. Germplasm is amortized on a straight-line basis over useful lives ranging from five years for completed technology germplasm to a maximum of 30 years for certain core technology germplasm. Completed technology germplasm consists of seed hybrids and varieties that are commercially available. Core technology germplasm is the collective germplasm of inbred and hybrid seeds and has a longer useful life as it is used to develop new seed hybrids and varieties. Acquired intellectual property includes intangible assets related to acquisitions and licenses through which Monsanto has acquired the rights to various research and discovery technologies. These encompass intangible assets such as enabling processes and data libraries necessary to support the integrated genomics and biotechnology platforms. These intangible assets have alternative future uses and are amortized over useful lives ranging from three to 10 years. The useful lives of acquired germplasm and acquired intellectual property are determined based on consideration of several factors including the nature of the asset, its expected use, length of licensing agreement or patent and the period over which benefits are expected to be received from the use of the asset.
Monsanto has a broad portfolio of trademarks and patents, including trademarks for Roundup (for herbicide products); Roundup Ready, Bollgard, Bollgard II, YieldGard, YieldGard VT, Roundup Ready 2 Yield and SmartStax (for traits); DEKALB, Asgrow, Deltapine and Vistive (for agricultural seeds); Seminis and De Ruiter (for vegetable seeds); and patents for our insect-protection traits, formulations used to make our herbicides and various manufacturing processes. The amortization period for trademarks and patents ranges from one to 30 years. Trademarks are amortized on a straight-line basis over their useful lives. The useful life of a trademark is determined based on the estimated market-life of the associated company, brand or product. Patents are amortized on a straight-line basis over the period in which the patent is legally protected, the period over which benefits are expected to be received, or the estimated market-life of the product with which the patent is associated, whichever is shorter.
In conjunction with acquisitions, Monsanto obtains access to the distribution channels and customer relationships of the acquired companies. These relationships are expected to provide economic benefits to Monsanto. The amortization period for customer relationships ranges from three to 20 years, and amortization is recognized on a straight-line basis over these periods. The amortization period of customer relationships represents management's best estimate of the expected usage or consumption of the economic benefits of the acquired assets, which is based on the company's historical experience of customer attrition rates.
In accordance with the Intangibles – Goodwill and Other topic of the ASC, all amortizable intangible assets are assessed for impairment whenever events indicate a possible loss. Such an assessment involves estimating undiscounted cash flows over the remaining useful life of the intangible. If the review indicates that undiscounted cash flows are less than the recorded value of the intangible asset, the carrying amount of the intangible is reduced by the estimated cash-flow shortfall on a discounted basis, and a corresponding loss is charged to the Statement of Consolidated Operations. See Note 11 — Goodwill and Other Intangible Assets — for further discussion of Monsanto's intangible assets. Property, Plant and Equipment Property, plant and equipment is recorded at cost. Additions and improvements are capitalized; these include all material, labor, and engineering costs to design, install or improve the asset and interest costs on construction projects. Such costs are not depreciated until the assets are placed in service. Routine repairs and maintenance are expensed as incurred. The cost of plant and equipment is depreciated using the straight-line method over the estimated useful life of the asset — weighted-average periods of approximately 25 years for buildings, 10 years for machinery and equipment and seven years for software. In compliance with the Property, Plant and Equipment topic of the ASC, long-lived assets are reviewed for impairment whenever in management's judgment conditions indicate a possible loss. Such impairment tests compare estimated undiscounted cash flows to the recorded value of the asset. If an impairment is indicated, the asset is written down to its fair value or, if fair value is not readily determinable, to an estimated fair value based on discounted cash flows. Based on recent changes in the Roundup business, Monsanto performed an impairment test on the long-lived assets in the Roundup and other glyphosate-based products reporting unit's asset group. The test indicated no impairment during fiscal year 2010. There were no indications that an impairment test was needed in fiscal year 2011. Monsanto follows the Asset Retirement and Environmental Obligations topic of the ASC, which addresses financial accounting for and reporting of costs and obligations associated with the retirement of tangible long-lived assets. Monsanto has asset retirement obligations with carrying amounts totaling $71 million and $65 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively, primarily relating to its manufacturing facilities. The change in carrying value as of Aug. 31, 2011, consisted of $4 million for accretion expense offset by $2 million in increased costs. Environmental Remediation Liabilities Monsanto follows the Asset Retirement and Environmental Obligations topic of the ASC, which provides guidance for recognizing, measuring and disclosing environmental remediation liabilities. Monsanto accrues these costs in the period when responsibility is established and when such costs are probable and reasonably estimable based on current law and existing technology. Postclosure and remediation costs for hazardous waste sites and other waste facilities at operating locations are accrued over the estimated life of the facility, as part of its anticipated closure cost. Litigation and Other Contingencies Monsanto is involved in various intellectual property, biotechnology, tort, contract, antitrust, shareowner claims, environmental and other litigation, claims and legal proceedings; environmental remediation; and government investigations (see Note 26 — Commitments and Contingencies). Management routinely assesses the likelihood of adverse judgments or outcomes to those matters, as well as ranges of probable losses, to the extent losses are reasonably estimable. In accordance with the Contingencies topic of the ASC, accruals for such contingencies are recorded to the extent that management concludes their occurrence is probable and the financial impact, should an adverse outcome occur, is reasonably estimable. Disclosure for specific legal contingencies is provided if the likelihood of occurrence is at least reasonably possible and the exposure is considered material to the consolidated financial statements. In making determinations of likely outcomes of litigation matters, management considers many factors. These factors include, but are not limited to, past experience, scientific and other evidence, interpretation of relevant laws or regulations and the specifics and status of each matter. If the assessment of the various factors changes, the estimates may change. That may result in the recording of an accrual or a change in a previously recorded accrual. Predicting the outcome of claims and litigation and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates and accruals. Guarantees Monsanto is subject to various commitments under contractual and other commercial obligations. The company recognizes liabilities for contingencies and commitments under the Guarantees topic of the ASC. For additional information on the company's commitments and other contractual and commercial obligations, see Note 26 — Commitments and Contingencies. Foreign Currency Translation The financial statements for most of Monsanto's ex-U.S. operations are translated to U.S. dollars at current exchange rates. For assets and liabilities, the fiscal year-end rate is used. For revenues, expenses, gains and losses, an approximation of the average rate for the period is used. Unrealized currency adjustments in the Statements of Consolidated Financial Position are accumulated in equity as a component of accumulated other comprehensive loss. The financial statements of ex-U.S. operations in highly inflationary economies are translated at either current or historical exchange rates at the time they are deemed highly inflationary, in accordance with the Foreign Currency Matters topic of the ASC. These currency adjustments are included in net income. Based on the Consumer Price Index (CPI), Monsanto designated Venezuela as a hyperinflationary country effective June 1, 2009. Significant translation exposures include the Brazilian real, the European euro, the Mexican peso, the Canadian dollar, the Australian dollar, and the Romanian leu. Currency restrictions are not expected to have a significant effect on Monsanto's cash flow, liquidity, or capital resources. Derivatives and Other Financial Instruments Monsanto uses financial derivative instruments to limit its exposure to changes in foreign currency exchange rates, commodity prices, and interest rates. Monsanto does not use financial derivative instruments for the purpose of speculating in foreign currencies, commodities or interest rates. Monsanto continually monitors its underlying market risk exposures and believes that it can modify or adapt its hedging strategies as needed. In accordance with the Derivatives and Hedging topic of the ASC, all derivatives, whether designated for hedging relationships or not, are recognized in the Statements of Consolidated Financial Position at their fair value. At the time a derivative contract is entered into, Monsanto designates each derivative as: (1) a hedge of the fair value of a recognized asset or liability (a fair-value hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows that are to be received or paid in connection with a recognized asset or liability (a cash-flow hedge), (3) a foreign-currency fair-value or cash-flow hedge (a foreign-currency hedge), (4) a foreign-currency hedge of the net investment in a foreign subsidiary, or (5) a derivative that does not qualify for hedge accounting treatment. Changes in the fair value of a derivative that is highly effective, and that is designated as and qualifies as a fair-value hedge, along with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk, are recorded currently in net income. Changes in the fair value of a derivative that is highly effective, and that is designated as and qualifies as a cash-flow hedge, to the extent that the hedge is effective, are recorded in accumulated other comprehensive loss, until net income is affected by the variability from cash flows of the hedged item. Any hedge ineffectiveness is included in current-period net income. Changes in the fair value of a derivative that is highly effective, and that is designated as and qualifies as a foreign-currency hedge, are recorded either in current-period earnings or in accumulated other comprehensive loss, depending on whether the hedging relationship satisfies the criteria for a fair-value or cash-flow hedge. Changes in the fair value of a derivative that is highly effective, and that is designated as a foreign-currency hedge of the net investment in a foreign subsidiary, are recorded in the accumulated foreign currency translation. Changes in the fair value of derivative instruments not designated as hedges are reported currently in earnings. Monsanto formally and contemporaneously documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and its strategy for undertaking various hedge transactions. This includes linking all derivatives that are designated as fair-value, cash-flow, or foreign-currency hedges either to specific assets and liabilities on the Statements of Consolidated Financial Position, or to firm commitments or forecasted transactions. Monsanto formally assesses a hedge at its inception and on an ongoing basis thereafter to determine whether the hedging relationship between the derivative and the hedged item is still highly effective, and whether it is expected to remain highly effective in future periods, in offsetting changes in fair value or cash flows. When derivatives cease to be highly effective hedges, Monsanto discontinues hedge accounting prospectively. |
RECEIVABLES (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | ||
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Aug. 31, 2011
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Aug. 31, 2010
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Aug. 31, 2009
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Allowance For Doubtful Accounts Current [Abstract] | |||
Balance as of | $ 143 | $ 162 | $ 218 |
Additions - charged to expense | (8) | 51 | 23 |
Deductions and Other | (37) | (70) | (79) |
Balance as of | 98 | 143 | 162 |
Allowance For Doubtful Accounts Long Term [Abstract] | |||
Balance as of | 226 | 172 | 179 |
Incremental Provision | 20 | ||
Allowance for Credit Losses Recoveries | (9) | ||
Additions - charged to expense | 7 | 26 | |
Other | (24) | 47 | (33) |
Balance as of | 213 | 226 | 172 |
Long term receivables [Abstract] | |||
Long term contractual receivables, gross | 468 | 500 | |
Long term customer receivables, gross | $ 220 | $ 239 |