MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Delaware | 43-1878297 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
800 North Lindbergh Blvd., | 63167 |
St. Louis, MO | (Zip Code) |
(Address of principal executive offices) |
Large accelerated filer | x | Accelerated filer | o | |
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
CAUTION REGARDING FORWARD-LOOKING STATEMENTS |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
TABLE OF CONTENTS |
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MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
PART I—FINANCIAL INFORMATION |
ITEM 1. | FINANCIAL STATEMENTS |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
Unaudited (Dollars in millions) | Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Net Sales | $ | 4,248 | $ | 4,219 | $ | 12,659 | $ | 11,406 | ||||||
Cost of goods sold | 1,986 | 1,856 | 5,930 | 5,242 | ||||||||||
Gross Profit | 2,262 | 2,363 | 6,729 | 6,164 | ||||||||||
Operating Expenses: | ||||||||||||||
Selling, general and administrative expenses | 632 | 638 | 1,773 | 1,681 | ||||||||||
Research and development expenses | 392 | 375 | 1,097 | 1,079 | ||||||||||
Total Operating Expenses | 1,024 | 1,013 | 2,870 | 2,760 | ||||||||||
Income from Operations | 1,238 | 1,350 | 3,859 | 3,404 | ||||||||||
Interest expense | 37 | 39 | 123 | 139 | ||||||||||
Interest income | (19 | ) | (21 | ) | (69 | ) | (59 | ) | ||||||
Other expense (income), net | (4 | ) | 3 | 35 | 46 | |||||||||
Income from Continuing Operations Before Income Taxes | 1,224 | 1,329 | 3,770 | 3,278 | ||||||||||
Income tax provision | 292 | 361 | 1,017 | 971 | ||||||||||
Income from Continuing Operations Including Portion Attributable to Noncontrolling Interest | $ | 932 | $ | 968 | $ | 2,753 | $ | 2,307 | ||||||
Discontinued Operations: | ||||||||||||||
Income (loss) from operations of discontinued businesses | — | (3 | ) | 17 | 8 | |||||||||
Income tax provision (benefit) | — | (1 | ) | 6 | 3 | |||||||||
Income (loss) from Discontinued Operations | — | (2 | ) | 11 | 5 | |||||||||
Net Income | $ | 932 | $ | 966 | $ | 2,764 | $ | 2,312 | ||||||
Less: Net income attributable to noncontrolling interest | 23 | 29 | 33 | 38 | ||||||||||
Net Income Attributable to Monsanto Company | $ | 909 | $ | 937 | $ | 2,731 | $ | 2,274 | ||||||
Amounts Attributable to Monsanto Company: | ||||||||||||||
Income from continuing operations | $ | 909 | $ | 939 | $ | 2,720 | $ | 2,269 | ||||||
Income (loss) from discontinued operations | — | (2 | ) | 11 | 5 | |||||||||
Net Income Attributable to Monsanto Company | $ | 909 | $ | 937 | $ | 2,731 | $ | 2,274 | ||||||
Basic Earnings per Share Attributable to Monsanto Company: | ||||||||||||||
Income from continuing operations | $ | 1.70 | $ | 1.76 | $ | 5.09 | $ | 4.25 | ||||||
Income on discontinued operations | — | — | 0.02 | 0.01 | ||||||||||
Net Income Attributable to Monsanto Company | $ | 1.70 | $ | 1.76 | $ | 5.11 | $ | 4.26 | ||||||
Diluted Earnings per Share Attributable to Monsanto Company: | ||||||||||||||
Income from continuing operations | $ | 1.68 | $ | 1.74 | $ | 5.03 | $ | 4.20 | ||||||
Income on discontinued operations | — | — | 0.02 | 0.01 | ||||||||||
Net Income Attributable to Monsanto Company | $ | 1.68 | $ | 1.74 | $ | 5.05 | $ | 4.21 | ||||||
Weighted Average Shares Outstanding: | ||||||||||||||
Basic | 534.1 | 532.9 | 534.5 | 534.2 | ||||||||||
Diluted | 540.0 | 538.8 | 540.7 | 540.2 | ||||||||||
Dividends Declared per Share | $ | — | $ | — | $ | 0.75 | $ | 0.60 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
Unaudited (Dollars in millions) | Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Comprehensive Income Attributable to Monsanto Company | ||||||||||||||
Net Income Attributable to Monsanto Company | $ | 909 | $ | 937 | $ | 2,731 | $ | 2,274 | ||||||
Other Comprehensive Income (Loss), Net of Tax: | ||||||||||||||
Foreign Currency Translation | (186 | ) | (603 | ) | (20 | ) | (944 | ) | ||||||
Postretirement benefit plan activity, net of tax of $7, $7, $21 and $20, respectively | 12 | 13 | 35 | 35 | ||||||||||
Unrealized net gains on investment holdings, net of tax of $0, $2, $3 and $4, respectively | 1 | 1 | 7 | 5 | ||||||||||
Realized net gains on investment holdings, net of tax of $0, $0, $(3) and $0, respectively | — | — | (6 | ) | — | |||||||||
Unrealized net derivative (losses) gains, net of tax of $16, $(31), $(21) and $(79), respectively | 28 | (45 | ) | (35 | ) | (115 | ) | |||||||
Realized net derivative gains, net of tax of $(21), $(7), $(41) and $(23), respectively | (33 | ) | (9 | ) | (67 | ) | (41 | ) | ||||||
Total Other Comprehensive Loss, Net of Tax | (178 | ) | (643 | ) | (86 | ) | (1,060 | ) | ||||||
Comprehensive Income Attributable to Monsanto Company | $ | 731 | $ | 294 | $ | 2,645 | $ | 1,214 | ||||||
Comprehensive Income (Loss) Attributable to Noncontrolling Interests | ||||||||||||||
Net Income Attributable to Noncontrolling Interests | 23 | 29 | 33 | 38 | ||||||||||
Other Comprehensive Loss | ||||||||||||||
Foreign currency translation | (14 | ) | (31 | ) | (6 | ) | (39 | ) | ||||||
Total Other Comprehensive Loss | (14 | ) | (31 | ) | (6 | ) | (39 | ) | ||||||
Comprehensive Income (Loss) Attributable to Noncontrolling Interests | $ | 9 | $ | (2 | ) | $ | 27 | $ | (1 | ) | ||||
Total Comprehensive Income | $ | 740 | $ | 292 | $ | 2,672 | $ | 1,213 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
Unaudited (Dollars in millions) | As of May 31, | As of Aug. 31, | |||||
2013 | 2012 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents (variable interest entity restricted - 2013: $175 and 2012: $120) | $ | 2,921 | $ | 3,283 | |||
Short-term investments | 143 | 302 | |||||
Trade receivables, net (variable interest entity restricted - 2013: $6 and 2012: $52) | 3,610 | 1,897 | |||||
Miscellaneous receivables | 812 | 620 | |||||
Deferred tax assets | 574 | 534 | |||||
Inventory, net | 2,884 | 2,839 | |||||
Other current assets | 197 | 183 | |||||
Total Current Assets | 11,141 | 9,658 | |||||
Total property, plant and equipment | 9,242 | 8,835 | |||||
Less accumulated depreciation | 4,775 | 4,470 | |||||
Property, Plant and Equipment, Net | 4,467 | 4,365 | |||||
Goodwill | 3,510 | 3,435 | |||||
Other Intangible Assets, Net | 1,225 | 1,237 | |||||
Noncurrent Deferred Tax Assets | 518 | 551 | |||||
Long-Term Receivables, Net | 242 | 376 | |||||
Other Assets | 576 | 602 | |||||
Total Assets | $ | 21,679 | $ | 20,224 | |||
Liabilities and Shareowners’ Equity | |||||||
Current Liabilities: | |||||||
Short-term debt, including current portion of long-term debt | $ | 169 | $ | 36 | |||
Accounts payable | 745 | 794 | |||||
Income taxes payable | 397 | 75 | |||||
Accrued compensation and benefits | 408 | 546 | |||||
Accrued marketing programs | 763 | 1,281 | |||||
Deferred revenues | 322 | 396 | |||||
Grower production accruals | 66 | 194 | |||||
Dividends payable | — | 200 | |||||
Miscellaneous short-term accruals | 944 | 699 | |||||
Total Current Liabilities | 3,814 | 4,221 | |||||
Long-Term Debt | 2,054 | 2,038 | |||||
Postretirement Liabilities | 498 | 543 | |||||
Long-Term Deferred Revenue | 167 | 245 | |||||
Noncurrent Deferred Tax Liabilities | 444 | 313 | |||||
Long-Term Portion of Environmental and Litigation Liabilities | 204 | 213 | |||||
Other Liabilities | 420 | 615 | |||||
Shareowners’ Equity: | |||||||
Common stock (authorized: 1,500,000,000 shares, par value $0.01) | |||||||
Issued 601,202,277 and 596,136,929 shares, respectively | |||||||
Outstanding 533,789,394 and 534,373,880 shares, respectively | 6 | 6 | |||||
Treasury stock 67,412,883 and 61,763,049 shares, respectively, at cost | (3,623 | ) | (3,045 | ) | |||
Additional contributed capital | 10,743 | 10,371 | |||||
Retained earnings | 7,865 | 5,537 | |||||
Accumulated other comprehensive loss | (1,122 | ) | (1,036 | ) | |||
Total Monsanto Company Shareowners’ Equity | 13,869 | 11,833 | |||||
Noncontrolling Interest | 209 | 203 | |||||
Total Shareowners’ Equity | 14,078 | 12,036 | |||||
Total Liabilities and Shareowners’ Equity | $ | 21,679 | $ | 20,224 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
Unaudited (Dollars in millions) | Nine Months Ended May 31, | ||||||
2013 | 2012 | ||||||
Operating Activities: | |||||||
Net Income | $ | 2,764 | 2,312 | ||||
Adjustments to reconcile cash provided by operating activities: | |||||||
Items that did not require (provide) cash: | |||||||
Depreciation and amortization | 457 | 466 | |||||
Bad-debt expense | 14 | (9 | ) | ||||
Stock-based compensation expense | 76 | 102 | |||||
Excess tax benefits from stock-based compensation | (73 | ) | (33 | ) | |||
Deferred income taxes | 171 | 195 | |||||
Equity affiliate income, net | (11 | ) | (11 | ) | |||
Net gain on sales of a business or other assets | (15 | ) | (3 | ) | |||
Other items | (48 | ) | 51 | ||||
Changes in assets and liabilities that required cash, net of acquisitions: | |||||||
Trade receivables, net | (1,614 | ) | (1,773 | ) | |||
Inventory, net | (100 | ) | (134 | ) | |||
Deferred revenues | (156 | ) | (35 | ) | |||
Accounts payable and other accrued liabilities | (465 | ) | (171 | ) | |||
Restructuring cash payments | — | (11 | ) | ||||
Pension contributions | (53 | ) | (57 | ) | |||
Other items | (161 | ) | (36 | ) | |||
Net Cash Provided by Operating Activities | 786 | 853 | |||||
Cash Flows (Required) Provided by Investing Activities: | |||||||
Purchases of short-term investments | (462 | ) | (444 | ) | |||
Maturities of short-term investments | 621 | 444 | |||||
Capital expenditures | (459 | ) | (376 | ) | |||
Acquisition of businesses, net of cash acquired | (120 | ) | (113 | ) | |||
Technology and other investments | (63 | ) | (61 | ) | |||
Other proceeds | 96 | 8 | |||||
Net Cash Required by Investing Activities | (387 | ) | (542 | ) | |||
Cash Flows Provided (Required) by Financing Activities: | |||||||
Net change in financing with less than 90-day maturities | 170 | (86 | ) | ||||
Short-term debt proceeds | 1 | 9 | |||||
Short-term debt reductions | (29 | ) | (21 | ) | |||
Long-term debt proceeds | 16 | — | |||||
Long-term debt reductions | (2 | ) | (142 | ) | |||
Payments on other financing | — | (2 | ) | ||||
Treasury stock purchases | (578 | ) | (423 | ) | |||
Stock option exercises | 234 | 69 | |||||
Excess tax benefits from stock-based compensation | 73 | 33 | |||||
Tax withholding on restricted stock and restricted stock units | (3 | ) | (1 | ) | |||
Dividend payments | (602 | ) | (482 | ) | |||
Dividend payments to noncontrolling interests | (19 | ) | (76 | ) | |||
Proceeds from noncontrolling interest | — | 101 | |||||
Net Cash Required by Financing Activities | (739 | ) | (1,021 | ) | |||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (22 | ) | (146 | ) | |||
Net Decrease in Cash and Cash Equivalents | (362 | ) | (856 | ) | |||
Cash and Cash Equivalents at Beginning of Period | 3,283 | 2,572 | |||||
Cash and Cash Equivalents at End of Period | $ | 2,921 | $ | 1,716 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
Monsanto Shareowners | |||||||||||||||||||||||||||||||
Unaudited (Dollars in millions, except per share data) | Common Stock | Treasury Stock | Additional Contributed Capital | Retained Earnings | Accumulated Other Comprehensive (Loss)(1) | Reserve for ESOP Debt | Non-Controlling Interest | Total | |||||||||||||||||||||||
Balance as of Aug. 31, 2011 | $ | 6 | $ | (2,613 | ) | $ | 10,096 | $ | 4,174 | $ | (116 | ) | $ | (2 | ) | $ | 171 | $ | 11,716 | ||||||||||||
Net income | — | — | — | 2,045 | — | — | 48 | 2,093 | |||||||||||||||||||||||
Other comprehensive loss for 2012 | — | — | — | — | (920 | ) | — | (40 | ) | (960 | ) | ||||||||||||||||||||
Treasury stock purchases | — | (432 | ) | — | — | — | — | — | (432 | ) | |||||||||||||||||||||
Restricted stock withholding | — | — | (19 | ) | — | — | — | — | (19 | ) | |||||||||||||||||||||
Issuance of shares under employee stock plans | — | — | 117 | — | — | — | — | 117 | |||||||||||||||||||||||
Net excess tax benefits from stock-based compensation | — | — | 50 | — | — | — | — | 50 | |||||||||||||||||||||||
Stock-based compensation expense | — | — | 127 | — | — | — | — | 127 | |||||||||||||||||||||||
Cash dividends of $1.28 per common share | — | — | — | (682 | ) | — | — | — | (682 | ) | |||||||||||||||||||||
Dividend payments to noncontrolling interest | — | — | — | — | — | — | (77 | ) | (77 | ) | |||||||||||||||||||||
Allocation of ESOP shares, net of dividends received | — | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||
Proceeds from noncontrolling interest | — | — | — | — | — | — | 101 | 101 | |||||||||||||||||||||||
Balance as of Aug. 31, 2012 | $ | 6 | $ | (3,045 | ) | $ | 10,371 | $ | 5,537 | $ | (1,036 | ) | $ | — | $ | 203 | $ | 12,036 | |||||||||||||
Net income | — | — | — | 2,731 | — | — | 33 | 2,764 | |||||||||||||||||||||||
Other comprehensive loss for 2013 | — | — | — | — | (86 | ) | — | (6 | ) | (92 | ) | ||||||||||||||||||||
Treasury stock purchases | — | (578 | ) | — | — | — | — | — | (578 | ) | |||||||||||||||||||||
Restricted stock withholding | — | — | (3 | ) | — | — | — | — | (3 | ) | |||||||||||||||||||||
Issuance of shares under employee stock plans | — | — | 234 | — | — | — | — | 234 | |||||||||||||||||||||||
Net excess tax benefits from stock-based compensation | — | — | 69 | — | — | — | — | 69 | |||||||||||||||||||||||
Stock-based compensation expense | — | — | 73 | — | — | — | — | 73 | |||||||||||||||||||||||
Cash dividends of $0.75 per common share | — | — | — | (403 | ) | — | — | — | (403 | ) | |||||||||||||||||||||
Dividend payments to noncontrolling interest | — | — | — | — | — | — | (19 | ) | (19 | ) | |||||||||||||||||||||
Acquisition of noncontrolling interest | — | — | (1 | ) | — | — | — | (2 | ) | (3 | ) | ||||||||||||||||||||
Balance as of May 31, 2013 | $ | 6 | $ | (3,623 | ) | $ | 10,743 | $ | 7,865 | $ | (1,122 | ) | $ | — | $ | 209 | $ | 14,078 |
(1) | See Note 18 — Accumulated Other Comprehensive Loss — for further details of the components of accumulated other comprehensive loss. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED |
NOTE 1. | BACKGROUND AND BASIS OF PRESENTATION |
NOTE 2. | NEW ACCOUNTING STANDARDS |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
NOTE 3. | BUSINESS COMBINATIONS |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
(Dollars in millions) | Aggregate Acquisitions | |
Property, Plant & Equipment | 1 | |
Goodwill | 78 | |
Acquired In-process Research and Development | 43 | |
Total Assets Acquired | 122 | |
Current Liabilities | 2 | |
Total Liabilities Assumed | 2 | |
Net Assets Acquired | 120 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
NOTE 4. | CUSTOMER FINANCING PROGRAMS |
As of May 31, | As of Aug. 31, | ||||||
(Dollars in millions) | 2013 | 2012 | |||||
Transactions that Qualify for Sales Treatment | |||||||
U.S. agreement to sell customer receivables(1) | |||||||
Outstanding balance | $ | 138 | $ | 291 | |||
Maximum future payout under recourse provisions | 7 | 17 | |||||
Other U.S. and European agreements to sell accounts receivables(2) | |||||||
Outstanding balance | $ | 11 | $ | 34 | |||
Maximum future payout under recourse provisions | 11 | 21 | |||||
Agreements with Lenders(3) | |||||||
Outstanding balance | $ | 70 | $ | 85 | |||
Maximum future payout under the guarantee | 51 | 56 |
Gross Amount of Receivables Sold | ||||||||||||||
Three Months Ended May 31, | Nine Months Ended May 31, | |||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||
Transactions that Qualify for Sales Treatment | ||||||||||||||
U.S. agreement to sell customer receivables(1) | $ | 135 | $ | 109 | $ | 137 | $ | 325 | ||||||
Other U.S. and European agreement to sell accounts receivables(2) | 6 | — | 9 | 5 |
(1) | Monsanto has an agreement in the United States to sell customer receivables up to a maximum outstanding balance of $500 million and to service such accounts. These receivables qualify for sales treatment under the Transfers and Servicing topic of the ASC and, accordingly, the proceeds are included in net cash provided by operating activities in the Statements of Consolidated Cash Flows. The agreement includes recourse provisions and thus a liability is established at the time of sale that approximates fair value based upon the company’s historical collection experience and a current assessment of credit exposure. |
(2) | Monsanto also sells account receivables in the United States and European regions, both with and without recourse. The sales within these programs qualify for sales treatment under the Transfers and Servicing topic of the ASC and, accordingly, the proceeds are included in net cash provided by operating activities in the Statements of Consolidated Cash Flows. The liability for the guarantees for sales with recourse is recorded at an amount that approximates fair value, based on the company’s historical collection experience for the customers associated with the sale of the receivables and a current assessment of credit exposure. |
(3) | Monsanto has additional agreements with lenders to establish programs that provide financing for select customers in the United States, Brazil, Latin America and Europe. Monsanto provides various levels of recourse through guarantees of the accounts in the event of customer default. The term of the guarantee is equivalent to the term of the customer loans. The liability for the guarantees is recorded at an amount that approximates fair value, based on the company’s historical collection experience with customers that participate in the program and a current assessment of credit exposure. If performance is required under the guarantee, Monsanto may retain amounts that are subsequently collected from customers. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
NOTE 5. | VARIABLE INTEREST ENTITIES |
Financing Program VIE | |||||||
As of May 31, | As of Aug. 31, | ||||||
(Dollars in millions) | 2013 | 2012 | |||||
Cash and cash equivalents | $ | 175 | $ | 120 | |||
Trade receivables, net | 6 | 52 | |||||
Other current assets | — | — | |||||
Total Assets | 181 | 172 | |||||
Total Liabilities | — | — | |||||
Maximum Exposure to Loss | $ | 30 | $ | 23 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Biotechnology VIEs | |||||||
As of May 31, | As of Aug. 31, | ||||||
(Dollars in millions) | 2013 | 2012 | |||||
Property, plant and equipment, net | $ | 4 | $ | 5 | |||
Other intangible assets, net | 14 | 14 | |||||
Total Non-Current Assets | 18 | 19 | |||||
Total Liabilities | — | — | |||||
Maximum Exposure to Loss | $ | — | $ | — |
NOTE 6. | RESTRUCTURING |
Cumulative Amount through May 31, 2013 | |||||||||||
(Dollars in millions) | Seeds and Genomics | Agricultural Productivity | Total | ||||||||
Work Force Reductions | $ | 229 | $ | 99 | $ | 328 | |||||
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 | $ | 525 | $ | 198 | $ | 723 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
NOTE 7. | RECEIVABLES |
(Dollars in millions) | |||
Balance as of Aug. 31, 2011 | $ | 213 | |
Incremental Provision | 3 | ||
Recoveries | (14 | ) | |
Write-offs | (54 | ) | |
Other(1) | (7 | ) | |
Balance as of Aug. 31, 2012 | $ | 141 | |
Incremental Provision | 2 | ||
Recoveries | (5 | ) | |
Write-offs | (6 | ) | |
Other(1) | 1 | ||
Balance as of May 31, 2013 | $ | 133 |
NOTE 8. | INVENTORY |
As of May 31, | As of Aug. 31, | ||||||
(Dollars in millions) | 2013 | 2012 | |||||
Finished Goods | $ | 1,189 | $ | 1,050 | |||
Goods In Process | 1,480 | 1,537 | |||||
Raw Materials and Supplies | 378 | 395 | |||||
Inventory at FIFO Cost | 3,047 | 2,982 | |||||
Excess of FIFO over LIFO Cost | (163 | ) | (143 | ) | |||
Total | $ | 2,884 | $ | 2,839 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
NOTE 9. | GOODWILL AND OTHER INTANGIBLE ASSETS |
(Dollars in millions) | Seeds and Genomics | Agricultural Productivity | Total | ||||||||
Balance as of Aug. 31, 2012 | $ | 3,378 | $ | 57 | $ | 3,435 | |||||
Acquisition activity (see Note 3) | 78 | — | 78 | ||||||||
Effect of foreign currency translation adjustments | — | (3 | ) | (3 | ) | ||||||
Balance as of May 31, 2013 | $ | 3,456 | $ | 54 | $ | 3,510 |
As of May 31, 2013 | As of Aug. 31, 2012 | ||||||||||||||||||||||
(Dollars in millions) | Carrying Amount | Accumulated Amortization | Net | Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||
Acquired Germplasm | $ | 1,111 | $ | (710 | ) | $ | 401 | $ | 1,144 | $ | (707 | ) | $ | 437 | |||||||||
Acquired Intellectual Property | 1,093 | (785 | ) | 308 | 1,085 | (771 | ) | 314 | |||||||||||||||
Trademarks | 342 | (128 | ) | 214 | 348 | (124 | ) | 224 | |||||||||||||||
Customer Relationships | 305 | (173 | ) | 132 | 285 | (152 | ) | 133 | |||||||||||||||
Other | 160 | (90 | ) | 70 | 168 | (87 | ) | 81 | |||||||||||||||
Total Other Intangible Assets, Finite Lives | $ | 3,011 | $ | (1,886 | ) | $ | 1,125 | $ | 3,030 | $ | (1,841 | ) | $ | 1,189 | |||||||||
In Process Research & Development, Indefinite Lives | 100 | — | 100 | 48 | — | 48 | |||||||||||||||||
Total Other Intangible Assets | $ | 3,111 | $ | (1,886 | ) | $ | 1,225 | $ | 3,078 | $ | (1,841 | ) | $ | 1,237 |
(Dollars in millions) | Amount | ||
2013 | $ | 113 | |
2014 | 125 | ||
2015 | 121 | ||
2016 | 121 | ||
2017 | 107 |
NOTE 10. | INVESTMENTS AND EQUITY AFFILIATES |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
NOTE 11. | DEFERRED REVENUE |
NOTE 12. | INCOME TAXES |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
NOTE 13. | DEBT AND OTHER CREDIT ARRANGEMENTS |
NOTE 14. | FAIR VALUE MEASUREMENTS |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Fair Value Measurements at May 31, 2013, Using | |||||||||||||||||||
(Dollars in millions) | Level 1 | Level 2 | Level 3 | Cash Collateral Offset(1) | Net Balance | ||||||||||||||
Assets at Fair Value: | |||||||||||||||||||
Cash equivalents | $ | 2,429 | $ | — | $ | — | $ | — | $ | 2,429 | |||||||||
Short-term investments | 143 | — | — | — | 143 | ||||||||||||||
Equity securities | 21 | — | — | — | 21 | ||||||||||||||
Derivative assets related to: | |||||||||||||||||||
Foreign currency | — | 13 | — | — | 13 | ||||||||||||||
Commodity contracts | 21 | 9 | — | (21 | ) | 9 | |||||||||||||
Total Assets at Fair Value | $ | 2,614 | $ | 22 | $ | — | $ | (21 | ) | $ | 2,615 | ||||||||
Liabilities at Fair Value: | |||||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 40 | $ | — | $ | 40 | |||||||||
Derivative liabilities related to: | |||||||||||||||||||
Foreign currency | — | 10 | — | — | 10 | ||||||||||||||
Commodity contracts | 35 | 23 | — | (34 | ) | 24 | |||||||||||||
Total Liabilities at Fair Value | $ | 35 | $ | 33 | $ | 40 | $ | (34 | ) | $ | 74 | ||||||||
Liabilities Not Recorded at Fair Value: | |||||||||||||||||||
Short-term debt instruments(2) | $ | — | $ | 169 | $ | — | $ | — | $ | 169 | |||||||||
Long-term debt instruments(2) | — | 2,327 | — | — | 2,327 | ||||||||||||||
Total Liabilities Not Recorded at Fair Value | $ | — | $ | 2,496 | $ | — | $ | — | $ | 2,496 | |||||||||
Total Liabilities Recorded and Not Recorded at Fair Value | $ | 35 | $ | 2,529 | $ | 40 | $ | (34 | ) | $ | 2,570 |
(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. |
(2) | Short-term and long-term debt instruments are not recorded at fair value on a recurring basis; however, they are measured at fair value for disclosure purposes, as required by the Fair Value Measurements and Disclosures topic of the ASC. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Fair Value Measurements at Aug. 31, 2012, Using | |||||||||||||||||||
(Dollars in millions) | Level 1 | Level 2 | Level 3 | Cash Collateral Offset (1) | Net Balance | ||||||||||||||
Assets at Fair Value: | |||||||||||||||||||
Cash equivalents | $ | 2,787 | $ | — | $ | — | $ | — | $ | 2,787 | |||||||||
Short-term investments | 302 | — | — | — | 302 | ||||||||||||||
Equity securities | 35 | — | — | — | 35 | ||||||||||||||
Derivative assets related to: | |||||||||||||||||||
Foreign currency | — | 11 | — | — | 11 | ||||||||||||||
Commodity contracts | 86 | 23 | — | (85 | ) | 24 | |||||||||||||
Total Assets at Fair Value | $ | 3,210 | $ | 34 | $ | — | $ | (85 | ) | $ | 3,159 | ||||||||
Liabilities at Fair Value: | |||||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 39 | $ | — | $ | 39 | |||||||||
Derivative liabilities related to: | |||||||||||||||||||
Foreign currency | — | 7 | — | — | 7 | ||||||||||||||
Commodity contracts | 7 | 22 | — | (7 | ) | 22 | |||||||||||||
Total Liabilities at Fair Value: | $ | 7 | $ | 29 | $ | 39 | $ | (7 | ) | $ | 68 | ||||||||
Liabilities Not Recorded at Fair Value: | |||||||||||||||||||
Short-term debt instrument(2) | $ | — | $ | 36 | $ | — | $ | — | $ | 36 | |||||||||
Long-term debt instruments(2) | — | 2,411 | — | — | 2,411 | ||||||||||||||
Total Liabilities Not Recorded at Fair Value | $ | — | $ | 2,447 | $ | — | $ | — | $ | 2,447 | |||||||||
Total Liabilities Recorded and Not Recorded at Fair Value | $ | 7 | $ | 2,476 | $ | 39 | $ | (7 | ) | $ | 2,515 |
(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. |
(2) | Short-term and long-term debt instruments are not recorded at fair value on a recurring basis; however, they are measured at fair value for disclosure purposes, as required by the Fair Value Measurements and Disclosures topic of the ASC. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
(Dollars in millions) | Contingent Consideration | ||
Balance Aug. 31, 2012 | $ | 39 | |
Loss included in earnings | 1 | ||
Balance May 31, 2013 | $ | 40 |
NOTE 15. | FINANCIAL INSTRUMENTS |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
As of May 31, | As of Aug. 31, | ||||||
(Dollars in millions) | 2013 | 2012 | |||||
Derivatives Designated as Hedges: | |||||||
Foreign exchange contracts | $ | 242 | $ | 397 | |||
Commodity contracts | 1,104 | 590 | |||||
Total Derivatives Designated as Hedges | $ | 1,346 | $ | 987 | |||
Derivatives Not Designated as Hedges: | |||||||
Foreign exchange contracts | $ | 1,216 | $ | 949 | |||
Commodity contracts | 506 | 357 | |||||
Interest rate contracts | 156 | 161 | |||||
Total Derivatives Not Designated as Hedges | $ | 1,878 | $ | 1,467 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Balance Sheet Location | Fair Value | |||||||
As of May 31, | As of Aug. 31, | |||||||
(Dollars in millions) | 2013 | 2012 | ||||||
Asset Derivatives: | ||||||||
Derivatives designated as hedges: | ||||||||
Foreign exchange contracts | Miscellaneous receivables | $ | 5 | $ | 6 | |||
Foreign exchange contracts | Other assets | 1 | — | |||||
Commodity contracts | Other current assets(1) | 15 | 70 | |||||
Commodity contracts | Other assets(1) | 6 | 16 | |||||
Total derivatives designated as hedges | 27 | 92 | ||||||
Derivatives not designated as hedges: | ||||||||
Foreign exchange contracts | Miscellaneous receivables | 7 | 5 | |||||
Commodity contracts | Trade receivables, net | 1 | 12 | |||||
Commodity contracts | Miscellaneous receivables | 6 | 7 | |||||
Commodity contracts | Other current assets(1) | 2 | 4 | |||||
Total derivatives not designated as hedges | 16 | 28 | ||||||
Total Asset Derivatives | $ | 43 | $ | 120 | ||||
Liability Derivatives: | ||||||||
Derivatives designated as hedges: | ||||||||
Foreign exchange contracts | Miscellaneous short-term accruals | $ | — | $ | 3 | |||
Commodity contracts | Other current assets(1) | 32 | — | |||||
Commodity contracts | Miscellaneous short-term accruals | 8 | 7 | |||||
Commodity contracts | Other liabilities | 3 | 3 | |||||
Total derivatives designated as hedges | 43 | 13 | ||||||
Derivatives not designated as hedges: | ||||||||
Foreign exchange contracts | Miscellaneous short-term accruals | 10 | 4 | |||||
Commodity contracts | Trade receivables, net(1) | 7 | 6 | |||||
Commodity contracts | Other current assets(1) | 6 | 6 | |||||
Commodity contracts | Miscellaneous short-term accruals | 2 | 7 | |||||
Total derivatives not designated as hedges | 25 | 23 | ||||||
Total Liability Derivatives | $ | 68 | $ | 36 |
(1) | As allowed by the Derivatives and Hedging topic of the ASC, corn and soybean commodity derivative assets and liabilities have been offset by cash collateral due and paid under a master netting arrangement. Therefore, all commodity contracts that are in an asset or liability position are included in asset accounts within the Statements of Consolidated Financial Position. See Note 14 — Fair Value Measurements — for a reconciliation to amounts reported in the Statements of Consolidated Financial Position as of May 31, 2013, and Aug. 31, 2012. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Amount of Gain (Loss) Recognized in AOCI(1) (Effective Portion) | Amount of Gain (Loss) Recognized in Income(2)(3) | ||||||||||||||||
Three Months Ended | Three Months Ended | Statement of Consolidated Operations Classification | |||||||||||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||||
Derivatives Designated as Hedges: | |||||||||||||||||
Fair value hedges: | |||||||||||||||||
Commodity contracts(4) | $ | (10 | ) | $ | (2 | ) | Cost of goods sold | ||||||||||
Cash flow hedges: | |||||||||||||||||
Foreign exchange contracts | $ | — | $ | 5 | 1 | (2 | ) | Net sales | |||||||||
Foreign exchange contracts | 3 | 11 | 1 | 1 | Cost of goods sold | ||||||||||||
Commodity contracts | 41 | (60 | ) | 55 | 18 | Cost of goods sold | |||||||||||
Interest rate contracts | — | (32 | ) | (3 | ) | (2 | ) | Interest expense | |||||||||
Total Derivatives Designated as Hedges | 44 | (76 | ) | 44 | 13 | ||||||||||||
Derivatives Not Designated as Hedges: | |||||||||||||||||
Foreign exchange contracts(5) | 8 | (29 | ) | Other expense, net | |||||||||||||
Commodity contracts | (2 | ) | 3 | Net sales | |||||||||||||
Commodity contracts | (4 | ) | (7 | ) | Cost of goods sold | ||||||||||||
Total Derivatives Not Designated as Hedges | 2 | (33 | ) | ||||||||||||||
Total Derivatives | $ | 44 | $ | (76 | ) | $ | 46 | $ | (20 | ) |
(1) | Accumulated other comprehensive income (loss) (AOCI). |
(2) | For derivatives designated as cash flow hedges under the Derivatives and Hedging topic of the ASC, this represents the effective portion of the gain (loss) reclassified from AOCI into income during the period. |
(3) | Gain on commodity cash flow hedges includes a loss of $1 million and a gain of less than $1 million from ineffectiveness for the three months ended May 31, 2013, and May 31, 2012, respectively. No gains or losses were excluded from the assessment of hedge effectiveness during the three months ended May 31, 2013, and May 31, 2012. Additionally, the gain on commodity cash flow hedges includes a loss from discontinued hedges of $2 million for the three months ended May 31, 2012. |
(4) | Loss on commodity fair value hedges is offset by a gain of $5 million and includes a loss of $2 million on the underlying hedged inventory for the three months ended May 31, 2013, and May 31, 2012, respectively. A loss of $6 million and $4 million was included in cost of goods sold due to ineffectiveness during the three months ended May 31, 2013, and May 31, 2012, respectively. |
(5) | Gain or loss on foreign exchange contracts not designated as hedges is offset by a foreign currency transaction loss of $21 million and a gain of $23 million during the three months ended May 31, 2013, and May 31, 2012, respectively. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Amount of Gain (Loss) Recognized in AOCI (1) (Effective Portion) | Amount of Gain (Loss) Recognized in Income(2)(3) | ||||||||||||||||
Nine Months Ended | Nine Months Ended | Statement of Consolidated Operations Classification | |||||||||||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||||
Derivatives Designated as Hedges: | |||||||||||||||||
Fair value hedges: | |||||||||||||||||
Commodity contracts(4) | $ | (10 | ) | $ | (9 | ) | Cost of goods sold | ||||||||||
Cash flow hedges: | |||||||||||||||||
Foreign exchange contracts | $ | 3 | $ | 5 | (1 | ) | (5 | ) | Net sales | ||||||||
Foreign exchange contracts | — | 18 | 3 | 2 | Cost of goods sold | ||||||||||||
Commodity contracts | (59 | ) | (144 | ) | 115 | 73 | Cost of goods sold | ||||||||||
Interest rate contracts | — | (73 | ) | (9 | ) | (6 | ) | Interest expense | |||||||||
Total Derivatives Designated as Hedges | (56 | ) | (194 | ) | 98 | 55 | |||||||||||
Derivatives Not Designated as Hedges: | |||||||||||||||||
Foreign exchange contracts(5) | 38 | (41 | ) | Other expense, net | |||||||||||||
Commodity contracts | (9 | ) | — | Net sales | |||||||||||||
Commodity contracts | (3 | ) | (16 | ) | Cost of goods sold | ||||||||||||
Total Derivatives Not Designated as Hedges | 26 | (57 | ) | ||||||||||||||
Total Derivatives | $ | (56 | ) | $ | (194 | ) | $ | 124 | $ | (2 | ) |
(1) | Accumulated other comprehensive income (loss) (AOCI). |
(2) | For derivatives designated as cash flow hedges under the Derivatives and Hedging topic of the ASC, this represents the effective portion of the gain (loss) reclassified from AOCI into income during the period. |
(3) | Gain on commodity cash flow hedges includes a loss of $3 million and a gain of $1 million from ineffectiveness for the nine months ended May 31, 2013, and May 31, 2012, respectively. No gains or losses were excluded from the assessment of hedge effectiveness during the nine months ended May 31, 2013, and May 31, 2012. Additionally, the gain on commodity cash flow hedges includes a loss from discontinued hedges of $2 million for the nine months ended May 31, 2012. |
(4) | Loss on commodity fair value hedges is offset by a gain of $1 million and $3 million on the underlying hedged inventory during the nine months ended May 31, 2013, and May 31, 2012, respectively. A loss of $10 million and $6 million was included in cost of goods sold due to ineffectiveness during the nine months ended May 31, 2013, and May 31, 2012, respectively. |
(5) | Gain or loss on foreign exchange contracts not designated as hedges is offset by a foreign currency transaction loss of $103 million and a gain of $29 million during the nine months ended May 31, 2013, and May 31, 2012, respectively. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
NOTE 16. | POSTRETIREMENT BENEFITS — PENSIONS, HEALTH CARE AND OTHER |
Three Months Ended May 31, 2013 | Three Months Ended May 31, 2012 | ||||||||||||||||||||||
Pension Benefits (Dollars in millions) | U.S. | Outside the U.S. | Total | U.S. | Outside the U.S. | Total | |||||||||||||||||
Service Cost for Benefits Earned During the Period | $ | 17 | $ | 2 | $ | 19 | $ | 12 | $ | 2 | $ | 14 | |||||||||||
Interest Cost on Benefit Obligation | 19 | 2 | 21 | 18 | 3 | 21 | |||||||||||||||||
Assumed Return on Plan Assets | (34 | ) | (3 | ) | (37 | ) | (26 | ) | (3 | ) | (29 | ) | |||||||||||
Amortization of Unrecognized Net Loss | 18 | 2 | 20 | 13 | 1 | 14 | |||||||||||||||||
Curtailment and Settlement Charge | — | 1 | 1 | — | 2 | 2 | |||||||||||||||||
Total Net Periodic Benefit Cost | $ | 20 | $ | 4 | $ | 24 | $ | 17 | $ | 5 | $ | 22 |
Nine Months Ended May 31, 2013 | Nine Months Ended May 31, 2012 | ||||||||||||||||||||||
Pension Benefits (Dollars in millions) | U.S. | Outside the U.S. | Total | U.S. | Outside the U.S. | Total | |||||||||||||||||
Service Cost for Benefits Earned During the Period | $ | 53 | $ | 7 | $ | 60 | $ | 46 | $ | 6 | $ | 52 | |||||||||||
Interest Cost on Benefit Obligation | 59 | 6 | 65 | 70 | 9 | 79 | |||||||||||||||||
Assumed Return on Plan Assets | (106 | ) | (7 | ) | (113 | ) | (101 | ) | (9 | ) | (110 | ) | |||||||||||
Amortization of Unrecognized Net Loss | 56 | 4 | 60 | 50 | 3 | 53 | |||||||||||||||||
Curtailment and Settlement Charge | — | 3 | 3 | — | 6 | 6 | |||||||||||||||||
Total Net Periodic Benefit Cost | $ | 62 | $ | 13 | $ | 75 | $ | 65 | $ | 15 | $ | 80 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Health Care and Other Postretirement Benefits | Three Months Ended | Nine Months Ended | |||||||||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||
Service Cost for Benefits Earned During the Period | $ | 1 | $ | 2 | $ | 7 | $ | 7 | |||||||
Interest Cost on Benefit Obligation | 1 | 2 | 4 | 7 | |||||||||||
Amortization of Unrecognized Net Gain | (1 | ) | (1 | ) | (4 | ) | (5 | ) | |||||||
Total Net Periodic Benefit Cost | $ | 1 | $ | 3 | $ | 7 | $ | 9 |
NOTE 17. | STOCK-BASED COMPENSATION PLANS |
Three Months Ended | Nine Months Ended | ||||||||||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||
Cost of Goods Sold | $ | 2 | $ | 3 | $ | 9 | $ | 15 | |||||||
Selling, General and Administrative Expenses | 19 | 20 | 52 | 63 | |||||||||||
Research and Development Expenses | 5 | 7 | 15 | 23 | |||||||||||
Pre-Tax Stock-Based Compensation Expense | 26 | 30 | 76 | 101 | |||||||||||
Income Tax Benefit | (9 | ) | (10 | ) | (26 | ) | (34 | ) | |||||||
Net Stock-Based Compensation Expense | $ | 17 | $ | 20 | $ | 50 | $ | 67 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
2005 LTIP | Director Plan | ||||||||||||||
Stock Options | Restricted Stock Units | Deferred Stock | Restricted Stock | ||||||||||||
Granted | 1,904,620 | 559,294 | 17,408 | 4,651 | |||||||||||
Weighted-average grant date fair value | $ | 21.45 | $ | 88.57 | $ | 87.58 | $ | 96.06 | |||||||
Pre-tax unrecognized compensation expense, net of estimated forfeitures as applicable | $ | 48.7 | $ | 64.2 | $ | 0.4 | $ | 0.4 | |||||||
Remaining weighted-average period of expense recognition/requisite service periods in years | 1.8 | 2.1 | 0.3 | 1.8 |
NOTE 18. | ACCUMULATED OTHER COMPREHENSIVE LOSS |
As of May 31, | As of Aug. 31, | ||||||
(Dollars in millions) | 2013 | 2012 | |||||
Accumulated Foreign Currency Translation Adjustments | $ | (622 | ) | $ | (602 | ) | |
Net Unrealized Gain on Investments, Net of Tax | 6 | 5 | |||||
Net Accumulated Derivative (Loss) / Gain, Net of Tax | (73 | ) | 29 | ||||
Postretirement Benefit Plan Activity, Net of Tax | (433 | ) | (468 | ) | |||
Accumulated Other Comprehensive Loss | $ | (1,122 | ) | $ | (1,036 | ) |
NOTE 19. | EARNINGS PER SHARE |
Three Months Ended | Nine Months Ended | ||||||||||
(Shares in millions) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||
Weighted-Average Number of Common Shares | 534.1 | 532.9 | 534.5 | 534.2 | |||||||
Dilutive Potential Common Shares | 5.9 | 5.9 | 6.2 | 6.0 | |||||||
Antidilutive Potential Common Shares | 1.9 | 6.7 | 1.9 | 6.9 | |||||||
Shares Excluded From Computation of Dilutive Potential Shares with Exercise Prices greater than the Average Market Price of Common Shares for the Period | 0.1 | 4.5 | 0.1 | 6.7 |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Nine Months Ended | |||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | |||||
Interest | $ | 114 | $ | 112 | |||
Taxes | 673 | 513 |
NOTE 21. | COMMITMENTS AND CONTINGENCIES |
• | As described in our Report on Form 10-K for the fiscal year ended Aug. 31, 2012, and Monsanto’s Report on Form 10-Q for the quarterly periods ended Nov. 30, 2012, and Feb. 28, 2013, 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. After the trial for the Bibb medical monitoring class action began on Jan. 3, 2012, the parties reached a settlement in principle as to both the medical monitoring and the property class claims. The proposed settlement provides for a 30 year medical monitoring program consisting of a primary fund of up to $21 million and an additional fund of up to $63 million over the life of the program, and a three year property remediation plan with funding up to $9 million. On Feb. 24, 2012, the court preliminarily approved the parties’ proposed settlement. A fairness hearing was held June 18, 2012, resulting in the trial court's final approval of the settlement, however, that final approval has been appealed by two objectors to the West Virginia Supreme Court of Appeals. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
NOTE 22. | SEGMENT INFORMATION |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Three Months Ended | Nine Months Ended | ||||||||||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||
Net Sales(1) | |||||||||||||||
Corn seed and traits | $ | 1,559 | $ | 1,515 | $ | 5,978 | $ | 5,226 | |||||||
Soybean seed and traits | 658 | 698 | 1,566 | 1,629 | |||||||||||
Cotton seed and traits | 385 | 490 | 630 | 750 | |||||||||||
Vegetable seeds | 216 | 195 | 571 | 567 | |||||||||||
All other crops seeds and traits | 236 | 230 | 410 | 414 | |||||||||||
Total Seeds and Genomics | $ | 3,054 | $ | 3,128 | $ | 9,155 | $ | 8,586 | |||||||
Agricultural productivity | 1,194 | 1,091 | 3,504 | 2,820 | |||||||||||
Total Agricultural Productivity | $ | 1,194 | $ | 1,091 | $ | 3,504 | $ | 2,820 | |||||||
Total | $ | 4,248 | $ | 4,219 | $ | 12,659 | $ | 11,406 |
Gross Profit | |||||||||||||||
Corn seed and traits | $ | 859 | $ | 927 | $ | 3,628 | $ | 3,305 | |||||||
Soybean seed and traits | 398 | 463 | 911 | 1,079 | |||||||||||
Cotton seed and traits | 295 | 385 | 466 | 567 | |||||||||||
Vegetable seeds | 93 | 94 | 282 | 260 | |||||||||||
All other crops seeds and traits | 170 | 152 | 252 | 217 | |||||||||||
Total Seeds and Genomics | $ | 1,815 | $ | 2,021 | $ | 5,539 | $ | 5,428 | |||||||
Agricultural productivity | 447 | 342 | 1,190 | 736 | |||||||||||
Total Agricultural Productivity | $ | 447 | $ | 342 | $ | 1,190 | $ | 736 | |||||||
Total | $ | 2,262 | $ | 2,363 | $ | 6,729 | $ | 6,164 |
EBIT(2)(3) | |||||||||||||||
Seeds and Genomics | $ | 920 | $ | 1,111 | $ | 2,980 | $ | 2,957 | |||||||
Agricultural Productivity | 284 | 190 | 810 | 354 | |||||||||||
Total | $ | 1,204 | $ | 1,301 | $ | 3,790 | $ | 3,311 |
Depreciation and Amortization Expense | |||||||||||||||
Seeds and Genomics | $ | 123 | $ | 127 | $ | 369 | $ | 382 | |||||||
Agricultural Productivity | 29 | 28 | 88 | 84 | |||||||||||
Total | $ | 152 | $ | 155 | $ | 457 | $ | 466 |
(1) | Represents net sales from continuing operations. |
(2) | EBIT is defined as earnings before interest and taxes; see the following table for reconciliation. Earnings is intended to mean net income as presented in the Statements of Consolidated Operations under generally accepted accounting principles. EBIT is an operating performance measure for the two reportable segments. |
(3) | Agricultural Productivity EBIT includes income from operations of discontinued businesses of $17 million for the nine months ended May 31, 2013. Agricultural Productivity EBIT includes a loss from operations of discontinued businesses of $3 million for the three months ended May 31, 2012, and income from operations of discontinued businesses of $8 million for the nine months ended May 31, 2012. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued) |
Three Months Ended | Nine Months Ended | ||||||||||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||
EBIT(1) | $ | 1,204 | $ | 1,301 | $ | 3,790 | $ | 3,311 | |||||||
Interest Expense — Net | 18 | 18 | 54 | 80 | |||||||||||
Income Tax Provision(2) | 277 | 346 | 1,005 | 957 | |||||||||||
Net Income Attributable to Monsanto Company | $ | 909 | $ | 937 | $ | 2,731 | $ | 2,274 |
(1) | Includes the income from operations of discontinued businesses and pre-tax noncontrolling interests. |
(2) | Includes the income tax benefit on noncontrolling interest and the income tax provision (benefit) on discontinued operations. |
NOTE 23. | SUBSEQUENT EVENTS |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
OVERVIEW |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
RESULTS OF OPERATIONS |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(Dollars in millions, except per share amounts) | May 31, 2013 | May 31, 2012 | Change | May 31, 2013 | May 31, 2012 | Change | |||||||||||||||
Net Sales | $ | 4,248 | $ | 4,219 | 1 | % | $ | 12,659 | $ | 11,406 | 11 | % | |||||||||
Cost of goods sold | 1,986 | 1,856 | 7 | % | 5,930 | 5,242 | 13 | % | |||||||||||||
Gross Profit | 2,262 | 2,363 | (4 | )% | 6,729 | 6,164 | 9 | % | |||||||||||||
Operating Expenses: | |||||||||||||||||||||
Selling, general and administrative expenses | 632 | 638 | (1 | )% | 1,773 | 1,681 | 5 | % | |||||||||||||
Research and development expenses | 392 | 375 | 5 | % | 1,097 | 1,079 | 2 | % | |||||||||||||
Total Operating Expenses | 1,024 | 1,013 | 1 | % | 2,870 | 2,760 | 4 | % | |||||||||||||
Income from Operations | 1,238 | 1,350 | (8 | )% | 3,859 | 3,404 | 13 | % | |||||||||||||
Interest expense | 37 | 39 | (5 | )% | 123 | 139 | (12 | )% | |||||||||||||
Interest income | (19 | ) | (21 | ) | (10 | )% | (69 | ) | (59 | ) | 17 | % | |||||||||
Other (income) expense, net | (4 | ) | 3 | NM | 35 | 46 | (24 | )% | |||||||||||||
Income from Continuing Operations Before Income Taxes | 1,224 | 1,329 | (8 | )% | 3,770 | 3,278 | 15 | % | |||||||||||||
Income tax provision | 292 | 361 | (19 | )% | 1,017 | 971 | 5 | % | |||||||||||||
Income from Continuing Operations Including Portion Attributable to Noncontrolling Interest | 932 | 968 | (4 | )% | 2,753 | 2,307 | 19 | % | |||||||||||||
Discontinued Operations: | |||||||||||||||||||||
Income (loss) from operations of discontinued businesses | — | (3 | ) | NM | 17 | 8 | NM | ||||||||||||||
Income tax provision (benefit) | — | (1 | ) | NM | 6 | 3 | NM | ||||||||||||||
Income (loss) from Discontinued Operations | — | (2 | ) | NM | 11 | 5 | NM | ||||||||||||||
Net Income | $ | 932 | $ | 966 | (4 | )% | $ | 2,764 | $ | 2,312 | 20 | % | |||||||||
Less: Net income attributable to noncontrolling interest | 23 | 29 | NM | 33 | 38 | NM | |||||||||||||||
Net Income Attributable to Monsanto Company | $ | 909 | $ | 937 | (3 | )% | $ | 2,731 | $ | 2,274 | 20 | % | |||||||||
Diluted Earnings per Share Attributable to Monsanto Company: | |||||||||||||||||||||
Income from continuing operations | $ | 1.68 | $ | 1.74 | (3 | )% | $ | 5.03 | $ | 4.20 | 20 | % | |||||||||
Income from discontinued operations | — | — | NM | 0.02 | 0.01 | NM | |||||||||||||||
Net Income Attributable to Monsanto Company | $ | 1.68 | $ | 1.74 | (3 | )% | $ | 5.05 | $ | 4.21 | 20 | % | |||||||||
NM = Not Meaningful | |||||||||||||||||||||
Effective Tax Rate | 24 | % | 27 | % | 27 | % | 30 | % | |||||||||||||
Comparison as a Percent of Net Sales: | |||||||||||||||||||||
Cost of Goods Sold | 47 | % | 44 | % | 47 | % | 46 | % | |||||||||||||
Gross Profit | 53 | % | 56 | % | 53 | % | 54 | % | |||||||||||||
Selling, general and administrative expenses | 15 | % | 15 | % | 14 | % | 15 | % | |||||||||||||
Research and development expenses | 9 | % | 9 | % | 9 | % | 9 | % | |||||||||||||
Total operating expenses | 24 | % | 24 | % | 23 | % | 24 | % | |||||||||||||
Income from continuing operations before income taxes | 29 | % | 32 | % | 30 | % | 29 | % | |||||||||||||
Net income attributable to Monsanto Company | 21 | % | 22 | % | 22 | % | 20 | % |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
Third Quarter 2013 Percentage Change in Net Sales vs. Third Quarter 2012 | ||||||||||||
Volume | Price | Currency | Total | |||||||||
Seeds and Genomics Segment | (3 | )% | 1 | % | — | % | (2 | )% | ||||
Agricultural Productivity Segment | — | % | 11 | % | (2 | )% | 9 | % | ||||
Total Monsanto Company | (2 | )% | 4 | % | (1 | )% | 1 | % |
Third Quarter 2013 Percentage Change in Cost of Goods Sold vs. Third Quarter 2012 | ||||||||||||
Volume | Input Costs | Currency | Total | |||||||||
Seeds and Genomics Segment | 1 | % | 11 | % | — | % | 12 | % | ||||
Agricultural Productivity Segment | 2 | % | — | % | (2 | )% | — | % | ||||
Total Monsanto Company | 1 | % | 7 | % | (1 | )% | 7 | % |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
First Nine Months 2013 Percentage Change in Net Sales vs. First Nine Months 2012 | ||||||||||||
Volume | Price | Currency | Total | |||||||||
Seeds and Genomics Segment | 3 | % | 5 | % | (1 | )% | 7 | % | ||||
Agricultural Productivity Segment | 11 | % | 17 | % | (4 | )% | 24 | % | ||||
Total Monsanto Company | 5 | % | 8 | % | (2 | )% | 11 | % |
First Nine Months 2013 Percentage Change in Cost of Goods Sold vs. First Nine Months 2012 | ||||||||||||
Volume | Input Costs | Currency | Total | |||||||||
Seeds and Genomics Segment | 5 | % | 12 | % | (2 | )% | 15 | % | ||||
Agricultural Productivity Segment | 9 | % | 5 | % | (3 | )% | 11 | % | ||||
Total Monsanto Company | 6 | % | 9 | % | (2 | )% | 13 | % |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
SEEDS AND GENOMICS SEGMENT |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | Change | May 31, 2013 | May 31, 2012 | Change | |||||||||||||||
Net Sales | |||||||||||||||||||||
Corn seed and traits | $ | 1,559 | $ | 1,515 | 3 | % | $ | 5,978 | $ | 5,226 | 14 | % | |||||||||
Soybean seed and traits | 658 | 698 | (6 | )% | 1,566 | 1,629 | (4 | )% | |||||||||||||
Cotton seed and traits | 385 | 490 | (21 | )% | 630 | 750 | (16 | )% | |||||||||||||
Vegetable seeds | 216 | 195 | 11 | % | 571 | 567 | 1 | % | |||||||||||||
All other crops seeds and traits | 236 | 230 | 3 | % | 410 | 414 | (1 | )% | |||||||||||||
Total Net Sales | $ | 3,054 | $ | 3,128 | (2 | )% | $ | 9,155 | $ | 8,586 | 7 | % | |||||||||
Gross Profit | |||||||||||||||||||||
Corn seed and traits | $ | 859 | $ | 927 | (7 | )% | $ | 3,628 | $ | 3,305 | 10 | % | |||||||||
Soybean seed and traits | 398 | 463 | (14 | )% | 911 | 1,079 | (16 | )% | |||||||||||||
Cotton seed and traits | 295 | 385 | (23 | )% | 466 | 567 | (18 | )% | |||||||||||||
Vegetable seeds | 93 | 94 | (1 | )% | 282 | 260 | 8 | % | |||||||||||||
All other crops seeds and traits | 170 | 152 | 12 | % | 252 | 217 | 16 | % | |||||||||||||
Total Gross Profit | $ | 1,815 | $ | 2,021 | (10 | )% | $ | 5,539 | $ | 5,428 | 2 | % | |||||||||
EBIT(1) | $ | 920 | $ | 1,111 | (17 | )% | $ | 2,980 | $ | 2,957 | 1 | % |
(1) | EBIT is defined as earnings before interest and taxes. Interest and taxes are recorded on a total company basis. We do not record these items at the segment level. See Note 22 — Segment Information and the “Overview — Non-GAAP Financial Measures” section of MD&A for further details. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
AGRICULTURAL PRODUCTIVITY SEGMENT |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | Change | May 31, 2013 | May 31, 2012 | Change | |||||||||||||||
Net Sales | |||||||||||||||||||||
Agricultural productivity | $ | 1,194 | $ | 1,091 | 9 | % | $ | 3,504 | $ | 2,820 | 24 | % | |||||||||
Total Net Sales | $ | 1,194 | $ | 1,091 | 9 | % | $ | 3,504 | $ | 2,820 | 24 | % | |||||||||
Gross Profit | |||||||||||||||||||||
Agricultural productivity | $ | 447 | $ | 342 | 31 | % | $ | 1,190 | $ | 736 | 62 | % | |||||||||
Total Gross Profit | $ | 447 | $ | 342 | 31 | % | $ | 1,190 | $ | 736 | 62 | % | |||||||||
EBIT(1) | $ | 284 | $ | 190 | 49 | % | $ | 810 | $ | 354 | 129 | % |
(1) | EBIT is defined as earnings before interest and taxes. Interest and taxes are recorded on a total company basis. We do not record these items at the segment level. See Note 22 — Segment Information — and the “Overview — Non-GAAP Financial Measures” section of MD&A for further details. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
RESTRUCTURING |
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES |
Working Capital and Financial Condition | |||||||||||
As of | As of Aug. 31, | ||||||||||
(Dollars in millions, except current ratio) | May 31, 2013 | May 31, 2012 | 2012 | ||||||||
Cash and Cash Equivalents(1) | $ | 2,921 | $ | 1,716 | $ | 3,283 | |||||
Trade Receivables, Net(1) | 3,610 | 3,727 | 1,897 | ||||||||
Inventory, Net | 2,884 | 2,514 | 2,839 | ||||||||
Other Current Assets(1)(2) | 1,726 | 1,826 | 1,639 | ||||||||
Total Current Assets | $ | 11,141 | $ | 9,783 | $ | 9,658 | |||||
Short-Term Debt, including current portion of long-term debt | $ | 169 | $ | 634 | $ | 36 | |||||
Accounts Payable | 745 | 584 | 794 | ||||||||
Accrued Liabilities(3) | 2,900 | 3,064 | 3,391 | ||||||||
Total Current Liabilities | $ | 3,814 | $ | 4,282 | $ | 4,221 | |||||
Working Capital(4) | $ | 7,327 | $ | 5,501 | $ | 5,437 | |||||
Current Ratio(4) | 2.92:1 | 2.28:1 | 2.29:1 |
(1) | May include restrictions as a result of our variable interest entity. See the Statements of Consolidated Financial Position and Note 5 — Variable Interest Entities — for more information. |
(2) | Includes short-term investments, miscellaneous receivables, deferred tax assets and other current assets. |
(3) | Includes income taxes payable, accrued compensation and benefits, accrued marketing programs, deferred revenues, grower production accruals, dividends payable, customer payable, restructuring reserves and miscellaneous short-term accruals. |
(4) | Working capital is total current assets less total current liabilities; current ratio represents total current assets divided by total current liabilities. |
• | Trade receivables increased $1,713 million due to normal ongoing sales activity because of the seasonality of our business, specifically in our Seeds and Genomics segment, primarily a function of the purchasing and growing patterns in North America. |
• | Accrued marketing programs decreased $518 million primarily as a result of the timing of payments related to our U.S. programs due to seasonality of the programs. |
• | Income taxes payable increased $322 million primarily due to the seasonality of U.S. results coupled with the timing of U.S. income tax payments. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
• | Cash and cash equivalents increased $1,205 million between respective periods primarily due to increased earnings, offset by dividend payments and treasury stock repurchase activity. |
• | Short-term debt decreased $465 million between respective periods primarily due to repayment of outstanding bonds in the fourth quarter of fiscal year 2012. |
• | Inventory increased $370 million between the respective periods primarily because of increased inventories from our seeds and genomics segment specifically in corn due to higher production costs to meet customer demand and higher commodity prices. Production costs increased primarily because of an increase in winter production, which typically carries higher costs, and lower production yields as a result of the prior year drought. Vegetable seeds also contributed to this increase primarily due to higher production yields. |
• | Accounts payable increased $161 million primarily due to the reclassification of cash overdrafts, investments in capital projects and the timing of payments. |
Nine Months Ended | |||||||
(Dollars in millions) | May 31, 2013 | May 31, 2012 | |||||
Net Cash Provided by Operating Activities | $ | 786 | $ | 853 | |||
Net Cash Required by Investing Activities | (387 | ) | (542 | ) | |||
Free Cash Flow(1) | 399 | 311 | |||||
Net Cash Required by Financing Activities | (739 | ) | (1,021 | ) | |||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (22 | ) | (146 | ) | |||
Net Decrease in Cash and Cash Equivalents | (362 | ) | (856 | ) | |||
Cash and Cash Equivalents at Beginning of Period | 3,283 | 2,572 | |||||
Cash and Cash Equivalents at End of Period | $ | 2,921 | $ | 1,716 |
(1) | Free cash flow represents the total of net cash provided or required by operating activities and provided or required by investing activities (see the “Non-GAAP Financial Measures” section in MD&A for a further discussion). |
• | Increase in incentive payments based on increased company results in fiscal year 2012; |
• | Increase in payments, which were accrued in fiscal year 2012, related to marketing programs due to increased fiscal year 2012 sales; |
• | Increase in tax payments due to increased earnings and timing of tax payments; and |
• | Decrease in deferred revenue due to the earlier ordering season and increased prepaids for which delivery is now occurring. |
• | Increased earnings from fiscal year 2012 to fiscal year 2013. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
As of | As of Aug. 31, | ||||||||||
(Dollars in millions, except debt-to-capital ratio) | May 31, 2013 | May 31, 2012 | 2012 | ||||||||
Short-Term Debt | $ | 169 | $ | 634 | $ | 36 | |||||
Long-Term Debt | 2,054 | 1,538 | 2,038 | ||||||||
Total Monsanto Company Shareowners’ Equity | 13,869 | 12,077 | 11,833 | ||||||||
Debt-to-Capital Ratio(1) | 14 | % | 15 | % | 15 | % |
(1) | Debt-to-Capital ratio represents short-term and long-term debt divided by total Monsanto Company shareowners' equity, short-term and long-term debt. |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
OUTLOOK |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
CRITICAL ACCOUNTING POLICIES AND ESTIMATES |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
PART II—OTHER INFORMATION |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share(1) | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||
March 2013: | |||||||||||||
Mar. 1, 2013, through Mar. 31, 2013 | 905,000 | $ | 102.86 | 905,000 | $ | 644,617,573 | |||||||
April 2013: | |||||||||||||
Apr. 1, 2013, through Apr. 30, 2013 | 630,000 | $ | 104.69 | 630,000 | $ | 578,665,078 | |||||||
May 2013: | |||||||||||||
May 1, 2013, through May 31, 2013 | 855,000 | $ | 106.96 | 855,000 | $ | 487,216,771 | |||||||
Total | 2,390,000 | $ | 104.81 | 2,390,000 | $ | 487,216,771 |
(1) | The average price paid per share is calculated on a trade date basis and excludes commission. |
ITEM 6. | EXHIBITS |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
SIGNATURE |
MONSANTO COMPANY | |
(Registrant) | |
By: | /s/ NICOLE M. RINGENBERG |
Nicole M. Ringenberg | |
Vice President and Controller | |
(On behalf of the Registrant and as Principal Accounting Officer) |
MONSANTO COMPANY | THIRD QUARTER 2013 FORM 10-Q |
EXHIBIT INDEX |
Exhibit No. | Description | |
2 | Omitted | |
3.1 | Restated Certificate of Incorporation. | |
3.2 | Monsanto Company Bylaws, as amended and restated effective April 16, 2013 (incorporated by reference to Exhibit 3.2(i) of Form 8-K, filed April 22, 2013, File No. 1-16167). | |
4 | Omitted | |
11 | Omitted — see Note 19 of Notes to Consolidated Financial Statements — Earnings Per Share. | |
12 | Computation of Ratio of Earnings to Fixed Charges. | |
15 | Omitted | |
18 | Omitted | |
19 | Omitted | |
22 | Omitted | |
23 | Omitted | |
24 | Omitted | |
31.1 | Rule 13a-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Executive Officer). | |
31.2 | Rule 13a-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the 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. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
Nine Months Ended May 31, | Year Ended Aug. 31, | |||||||||||||||||||||||
2013 | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
EARNINGS: | ||||||||||||||||||||||||
Income from Continuing Operations Before Income Taxes | $ | 3,770 | $ | 2,988 | $ | 2,374 | $ | 1,490 | $ | 2,918 | $ | 2,926 | ||||||||||||
Add: | ||||||||||||||||||||||||
Fixed charges | 174 | 257 | 234 | 227 | 178 | 162 | ||||||||||||||||||
Equity affiliate income — net | (20 | ) | (10 | ) | (21 | ) | (16 | ) | (17 | ) | (2 | ) | ||||||||||||
Amortization of capitalized interest | 12 | 15 | 15 | 14 | 13 | 16 | ||||||||||||||||||
Less: | ||||||||||||||||||||||||
Capitalized interest | (15 | ) | (21 | ) | (22 | ) | (25 | ) | (34 | ) | (22 | ) | ||||||||||||
Earnings available for fixed charges | $ | 3,921 | $ | 3,229 | $ | 2,580 | $ | 1,690 | $ | 3,058 | $ | 3,080 | ||||||||||||
FIXED CHARGES: | ||||||||||||||||||||||||
Interest expense(3) | $ | 126 | $ | 191 | $ | 172 | $ | 167 | $ | 107 | $ | 110 | ||||||||||||
Capitalized interest | 15 | 21 | 22 | 25 | 34 | 22 | ||||||||||||||||||
Portion of rents representative of interest factor | 33 | 45 | 40 | 35 | 37 | 30 | ||||||||||||||||||
Total fixed charges | $ | 174 | $ | 257 | $ | 234 | $ | 227 | $ | 178 | $ | 162 | ||||||||||||
Ratio of Earnings to Fixed Charges | 22.53 | 12.56 | 11.03 | 7.44 | 17.18 | 19.01 |
(1) | Monsanto has not paid any preference security dividends and, therefore, has not included the ratio of combined fixed charges and preference security dividends to earnings for the relevant periods. |
(2) | The operating results of the Dairy business has been conformed to discontinued operations presentation for all relevant fiscal years presented. |
(3) | Includes amortization of deferred debt issuance costs and the interest component of the income tax provision. |
State of Delaware | ||||
Secretary of State | ||||
Division of Corporations | ||||
Delivered 06:17 PM 04/17/2013 | ||||
FILED 06:02 PM 04/17/2013 | ||||
SRV 130450387 - 3174788 FILE |
(a) | a corporate opportunity (as referenced above in Section 2) offered to any person who is an officer of the Corporation, and who is also a director but not an officer of Pharmacia Corporation, shall belong to the Corporation; |
(b) | a corporate opportunity (as referenced above in Section 2) offered to any person who is a director but not an officer of the Corporation, and who is also a director or officer of Pharmacia Corporation shall belong to the Corporation if such opportunity is expressly offered to such person in his or her capacity as a director of the Corporation, and otherwise shall belong to Pharmacia Corporation; and |
(c) | a corporate opportunity (as referenced above in Section 2) offered to any person who is an officer of both the Corporation and Pharmacia Corporation shall belong to the Corporation if such opportunity is expressly offered to such person in his or her capacity as an officer of the Corporation and otherwise shall belong to Pharmacia Corporation. |
1. | I have reviewed this report on Form 10-Q 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 registrant's 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 registrant's 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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's 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 registrant's 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 registrant's internal control over financial reporting. |
/s/ Hugh Grant |
Hugh Grant |
Chairman and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q 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 registrant's 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 registrant's 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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's 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 registrant's 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 registrant's internal control over financial reporting. |
/s/ Pierre Courduroux |
Pierre Courduroux |
Senior Vice President and Chief Financial Officer |
(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 |
Chairman and Chief Executive Officer |
/s/ Pierre Courduroux |
Pierre Courduroux |
Senior Vice President and Chief Financial Officer |
SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | |
---|---|---|
May 31, 2013
|
May 31, 2012
|
|
Supplemental Cash Flow Information [Abstract] | ||
Interest | $ 114 | $ 112 |
Taxes | $ 673 | $ 513 |
SEGMENT AND GEOGRAPHIC DATA (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2013
|
May 31, 2012
|
May 31, 2013
segment
|
May 31, 2012
|
|||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Number of Operating Segments | 2 | |||||||||||||||||
Net Sales | $ 4,248 | [1] | $ 4,219 | [1] | $ 12,659 | [1] | $ 11,406 | [1] | ||||||||||
Gross Profit | 2,262 | 2,363 | 6,729 | 6,164 | ||||||||||||||
EBIT | 1,204 | [2],[3],[4] | 1,301 | [2],[3],[4] | 3,790 | [2],[3],[4] | 3,311 | [2],[3],[4] | ||||||||||
Depreciation and Amortization Expense | 152 | 155 | 457 | 466 | ||||||||||||||
Income (loss) from operations of discontinued businesses | 0 | (3) | 17 | 8 | ||||||||||||||
Reconciliation of EBIT to Net Income [Abstract] | ||||||||||||||||||
EBIT | 1,204 | [2],[3],[4] | 1,301 | [2],[3],[4] | 3,790 | [2],[3],[4] | 3,311 | [2],[3],[4] | ||||||||||
Interest Expense — Net | 18 | 18 | 54 | 80 | ||||||||||||||
Income Tax Provision | 277 | [5] | 346 | [5] | 1,005 | [5] | 957 | [5] | ||||||||||
Net Income Attributable to Monsanto Company | 909 | 937 | 2,731 | 2,274 | ||||||||||||||
Corn seed and traits [Member]
|
||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Net Sales | 1,559 | [1] | 1,515 | [1] | 5,978 | [1] | 5,226 | [1] | ||||||||||
Gross Profit | 859 | 927 | 3,628 | 3,305 | ||||||||||||||
Soybean seed and traits [Member]
|
||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Net Sales | 658 | [1] | 698 | [1] | 1,566 | [1] | 1,629 | [1] | ||||||||||
Gross Profit | 398 | 463 | 911 | 1,079 | ||||||||||||||
Cotton seed and traits [Member]
|
||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Net Sales | 385 | [1] | 490 | [1] | 630 | [1] | 750 | [1] | ||||||||||
Gross Profit | 295 | 385 | 466 | 567 | ||||||||||||||
Vegetable seeds [Member]
|
||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Net Sales | 216 | [1] | 195 | [1] | 571 | [1] | 567 | [1] | ||||||||||
Gross Profit | 93 | 94 | 282 | 260 | ||||||||||||||
All other crops seeds and traits [Member]
|
||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Net Sales | 236 | [1] | 230 | [1] | 410 | [1] | 414 | [1] | ||||||||||
Gross Profit | 170 | 152 | 252 | 217 | ||||||||||||||
Total Seeds and Genomics [Member]
|
||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Net Sales | 3,054 | [1] | 3,128 | [1] | 9,155 | [1] | 8,586 | [1] | ||||||||||
Gross Profit | 1,815 | 2,021 | 5,539 | 5,428 | ||||||||||||||
EBIT | 920 | [3],[4] | 1,111 | [3],[4] | 2,980 | [3],[4] | 2,957 | [3],[4] | ||||||||||
Depreciation and Amortization Expense | 123 | 127 | 369 | 382 | ||||||||||||||
Reconciliation of EBIT to Net Income [Abstract] | ||||||||||||||||||
EBIT | 920 | [3],[4] | 1,111 | [3],[4] | 2,980 | [3],[4] | 2,957 | [3],[4] | ||||||||||
Agricultural Productivity [Member]
|
||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Net Sales | 1,194 | [1] | 1,091 | [1] | 3,504 | [1] | 2,820 | [1] | ||||||||||
Gross Profit | 447 | 342 | 1,190 | 736 | ||||||||||||||
Total Agricultural Productivity [Member]
|
||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||
Net Sales | 1,194 | [1] | 1,091 | [1] | 3,504 | [1] | 2,820 | [1] | ||||||||||
Gross Profit | 447 | 342 | 1,190 | 736 | ||||||||||||||
EBIT | 284 | [3],[4] | 190 | [3],[4] | 810 | [3],[4] | 354 | [3],[4] | ||||||||||
Depreciation and Amortization Expense | 29 | 28 | 88 | 84 | ||||||||||||||
Reconciliation of EBIT to Net Income [Abstract] | ||||||||||||||||||
EBIT | $ 284 | [3],[4] | $ 190 | [3],[4] | $ 810 | [3],[4] | $ 354 | [3],[4] | ||||||||||
|
INVENTORY
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY | INVENTORY Components of inventory are:
|
VARIABLE INTEREST ENTITIES Business Acquisitions (Details) (Subsequent Event [Member], GrassRoots [Member])
|
Jun. 13, 2013
|
---|---|
Subsequent Event [Member] | GrassRoots [Member]
|
|
Business Acquisition [Line Items] | |
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% |
Statements of Consolidated Comprehensive Income (Loss) (Parenthetical) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
May 31, 2013
|
May 31, 2012
|
May 31, 2013
|
May 31, 2012
|
|
Other Comprehensive Income (Loss), Tax, Parenthetical Disclosures [Abstract] | ||||
Postretirement benefit plan activity, tax | $ 7 | $ 7 | $ 21 | $ 20 |
Unrealized net gain on investment holdings, tax | 0 | 2 | 3 | 4 |
Realized net gain on investment holdings, tax | 0 | 0 | (3) | 0 |
Unrealized net derivative (losses) gains, tax | 16 | (31) | (21) | (79) |
Realized net derivative gains, tax | $ (21) | $ (7) | $ (41) | $ (23) |
BACKGROUND AND BASIS OF PRESENTATION
|
9 Months Ended |
---|---|
May 31, 2013
|
|
BACKGROUND AND BASIS OF PRESENTATION [Abstract] | |
BACKGROUND AND BASIS OF PRESENTATION | BACKGROUND AND BASIS OF PRESENTATION Monsanto Company, along with its subsidiaries, is a leading global provider of agricultural products for farmers. Monsanto’s seeds, biotechnology trait products, and herbicides provide farmers with solutions that improve productivity, reduce the costs of farming, and produce better foods for consumers and better feed for animals. Monsanto manages its business in two segments: Seeds and Genomics and Agricultural Productivity. Through the Seeds and Genomics segment, Monsanto produces leading seed brands, including DEKALB, Asgrow, Deltapine, Seminis and De Ruiter, and Monsanto develops biotechnology traits that assist farmers in controlling insects and weeds. Monsanto also provides other seed companies with genetic material and biotechnology traits for their seed brands. Through the Agricultural Productivity segment, the company manufactures Roundup and Harness brand herbicides and other herbicides. See Note 22 — Segment Information — for further details. In the fourth quarter of 2008, the company announced plans to divest its animal agricultural products business, which focused on dairy cow productivity (the Dairy business) and was previously reported as part of the Agricultural Productivity segment. This transaction was consummated on Oct. 1, 2008. As a result, financial data for this business has been presented as discontinued operations. The accompanying consolidated financial statements have not been audited but have been prepared in conformity with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods reported. This Report on Form 10-Q should be read in conjunction with Monsanto’s Report on Form 10-K for the fiscal year ended Aug. 31, 2012. Financial information for the first nine months of fiscal year 2013 should not be annualized because of the seasonality of the company’s business. |
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FINANCIAL INSTRUMENTS
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2013
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FINANCIAL INSTRUMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS Cash Flow Hedges The company uses foreign currency options and foreign currency forward contracts as hedges of anticipated sales or purchases denominated in foreign currencies. The company enters into these contracts to protect itself against the risk that the eventual net cash flows will be adversely affected by changes in exchange rates. Monsanto’s commodity price risk management strategy is to use derivative instruments to minimize significant unanticipated earnings fluctuations that may arise from volatility in commodity prices. Price fluctuations in commodities, mainly in corn and soybeans, can cause the actual prices paid to production growers for corn and soybean seeds to differ from anticipated cash outlays. Monsanto uses commodity futures and options contracts to manage these risks. Monsanto’s energy and raw material risk management strategy is to use derivative instruments to minimize significant unanticipated manufacturing cost fluctuations that may arise from volatility in natural gas, diesel and ethylene prices. Monsanto’s interest rate risk management strategy is to use derivative instruments, such as forward-starting interest rate swaps, to minimize significant unanticipated earnings fluctuations that may arise from volatility in interest rates of the company’s borrowings and to manage the interest rate sensitivity of its debt. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. The maximum term over which the company is hedging exposures to the variability of cash flow (for all forecasted transactions) is 15 months for foreign currency hedges and 39 months for commodity hedges. During the next 12 months, a pretax net gain of approximately $20 million is expected to be reclassified from accumulated other comprehensive loss into earnings. During the three and nine months ended May 31, 2012, a pretax loss of $2 million was reclassified into earnings as a result of the discontinuance of certain cash flow hedges because it was no longer probable that the forecasted transaction would occur by the end of the originally specified time period. No cash flow hedges were discontinued during the three and nine months ended May 31, 2013. Fair Value Hedges The company uses commodity futures and options contracts as fair value hedges to manage the value of its soybean inventory. For derivative instruments that are designated and qualify as fair value hedges, both the gain or loss on the derivative and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. No fair value hedges were discontinued during the three and nine months ended May 31, 2013, and May 31, 2012. Derivatives Not Designated as Hedging Instruments The company uses foreign currency contracts to hedge the effects of fluctuations in exchange rates on foreign currency denominated third-party and intercompany receivables and payables. Both the gain or loss on the derivative and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. The company uses commodity option contracts to hedge anticipated cash payments to growers in the United States, Mexico and Brazil, which can fluctuate with changes in commodity price. Because these option contracts do not meet the provisions specified by the Derivatives and Hedging topic of the ASC, they do not qualify for hedge accounting treatment. Accordingly, the gain or loss on these derivatives is recognized in current earnings. To reduce credit exposure in Latin America, Monsanto collects payments on certain customer accounts in 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 related to grain, 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 forward sales contracts do not qualify for hedge accounting treatment under the Derivatives and Hedging topic of the ASC. Accordingly, the gain or loss on these derivatives is recognized in current earnings. Monsanto uses interest rate contracts to minimize the variability of forecasted cash flows arising from the company’s VIE. The interest rate contracts do not qualify for hedge accounting treatment under the Derivatives and Hedging Topic of the ASC. Accordingly, the gain or loss on these derivatives is recognized in current earnings. Certain of Monsanto’s grower contracts that include minimum guaranteed payment provisions are considered derivatives under the Derivatives and Hedging Topic of the ASC. These contracts do not qualify for hedge accounting treatment. Accordingly, the gain or loss on these derivatives is recognized in current earnings. Financial instruments are neither held nor issued by the company for trading purposes. The notional amounts of the company’s derivative instruments outstanding as of May 31, 2013, and Aug. 31, 2012, were as follows:
The fair values of the company’s derivative instruments outstanding as of May 31, 2013, and Aug. 31, 2012, were as follows:
The gains and losses on the company’s derivative instruments were as follows:
Several of the company’s outstanding foreign-currency derivatives are covered by International Swap Dealers’ Association (ISDA) Master Agreements with the counterparties. There are no requirements to post collateral under these agreements; however, should Monsanto’s credit rating fall below a specified rating immediately following the merger of the company with another entity, the counterparty may require all outstanding derivatives under the ISDA Master Agreement to be settled immediately at current market value, which equals carrying value. Foreign-currency derivatives that are not covered by ISDA Master Agreements do not have credit-risk-related contingent provisions. Most of Monsanto’s outstanding commodity derivatives are listed commodity futures, and the company is required by the relevant commodity exchange to post collateral each day to cover the change in the fair value of these futures in the case of an unrealized loss position. Non-exchange-traded commodity derivatives are covered by the aforementioned ISDA Master Agreements and are subject to the same credit-risk-related contingent provisions. The aggregate fair value of all derivative instruments under ISDA Master Agreements that are in a liability position was $13 million as of May 31, 2013, and Aug. 31, 2012, which is the amount that would be required for settlement if the credit-risk-related contingent provisions underlying these agreements were triggered. Credit Risk Management Monsanto invests its excess cash in deposits with major banks or money market funds throughout the world in high-quality short-term debt instruments. Such investments are made only in instruments issued or enhanced by high-quality institutions. As of May 31, 2013, and Aug. 31, 2012, the company had no financial instruments that represented a significant concentration of credit risk. Limited amounts are invested in any single institution to minimize risk. The company has not incurred any credit risk losses related to those investments. The company sells a broad range of agricultural products to a diverse group of customers throughout the world. In the United States, the company makes substantial sales to relatively few large wholesale customers. The company’s business is highly seasonal, and it is subject to weather conditions that affect commodity prices and seed yields. Credit limits, ongoing credit evaluation, and account monitoring procedures are used to minimize the risk of loss. Collateral is secured when it is deemed appropriate by the company. Monsanto regularly evaluates its business practices to minimize its credit risk and periodically engages multiple banks in the United States, Argentina, Brazil and Europe in the development of customer financing options that involve direct bank financing of customer purchases. For further information on these programs, see Note 4 — Customer Financing Programs. |
FINANCIAL INSTRUMENTS Narrative (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
May 31, 2013
|
May 31, 2013
Foreign Exchange Contract [Member]
|
May 31, 2013
Commodity Contracts
|
May 31, 2013
ISDA Contracts [Member]
|
May 31, 2012
Cash Flow Hedging [Member]
Commodity Contract [Member]
|
May 31, 2012
Cash Flow Hedging [Member]
Commodity Contract [Member]
|
|
Derivatives, Fair Value [Line Items] | ||||||
Maximum Length of Time Hedged in Cash Flow Hedge | 15 months | 39 months | ||||
Derivative Instruments, Gain Reclassified from Accumulated OCI into Income, Effective Portion | $ 20 | |||||
Derivative, Net Liability Position, Aggregate Fair Value | 13 | |||||
Loss on Discontinuation of Cash Flow Hedge Due to Forecasted Transaction Probable of Not Occurring | $ 2 | $ 2 |
INVENTORY (Details) (USD $)
In Millions, unless otherwise specified |
May 31, 2013
|
Aug. 31, 2012
|
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 1,189 | $ 1,050 |
Goods In Process | 1,480 | 1,537 |
Raw Materials and Supplies | 378 | 395 |
Inventory at FIFO Cost | 3,047 | 2,982 |
Excess of FIFO over LIFO Cost | (163) | (143) |
Total | $ 2,884 | $ 2,839 |
GOODWILL AND OTHER INTANGIBLE ASSETS
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May 31, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the net carrying amount of goodwill for the first nine months of fiscal year 2013, by segment, are as follows:
Goodwill increased during the nine months ended May 31, 2013, due to the acquisitions of Agradis and Rosetta Green. See Note 3 - Business Combinations - for further information. The fiscal year 2013 annual goodwill impairment test was performed as of March 1, 2013, and no goodwill impairment existed as of that date. There were no events or circumstances indicating that goodwill might be impaired as of May 31, 2013. Information regarding the company’s other intangible assets is as follows:
The increase in the carrying amount of total other intangible assets during the nine months ended May 31, 2013, is primarily related to the acquisitions of Agradis and Rosetta Green. Total amortization expense of other intangible assets was $28 million and $25 million in third quarter of fiscal years 2013 and 2012, respectively. Total amortization expense of other intangible assets was $87 million and $101 million for the nine months ended May 31, 2013, and May 31, 2012, respectively. The estimated intangible asset amortization expense for fiscal year 2013 through fiscal year 2017 is as follows:
|
BACKGROUND AND BASIS OF PRESENTATION BACKGROUND AND BASIS OF PRESENTATION (Details)
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9 Months Ended |
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May 31, 2013
segment
|
|
Segment Reporting Information [Line Items] | |
Number of Operating Segments | 2 |
GOODWILL AND OTHER INTANGIBLE ASSETS Schedule of net carrying amount of goodwill (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended |
---|---|
May 31, 2013
|
|
Goodwill [Roll Forward] | |
Balance | $ 3,435 |
Acquisition activity (see Note 3) | 78 |
Effect of foreign currency translation adjustments | (3) |
Balance | 3,510 |
Seeds And Genomics [Member]
|
|
Goodwill [Roll Forward] | |
Balance | 3,378 |
Acquisition activity (see Note 3) | 78 |
Effect of foreign currency translation adjustments | 0 |
Balance | 3,456 |
Agricultural Productivity [Member]
|
|
Goodwill [Roll Forward] | |
Balance | 57 |
Acquisition activity (see Note 3) | 0 |
Effect of foreign currency translation adjustments | (3) |
Balance | $ 54 |
INVENTORY (Tables)
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May 31, 2013
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventory | Components of inventory are:
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ACCUMULATED OTHER COMPREHENSIVE LOSS
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May 31, 2013
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Accumulated Other Comprehensive Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive loss is as follows:
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STOCK BASED COMPENSATION PLANS STOCK BASED COMPENSATION PLANS
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May 31, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK BASED COMPENSATION PLANS | STOCK-BASED COMPENSATION PLANS The following table shows total stock-based compensation expense included in the Statements of Consolidated Operations for the three and nine months ended May 31, 2013, and May 31, 2012. Stock-based compensation cost capitalized in inventory was $3 million and $6 million as of May 31, 2013, and Aug. 31, 2012, respectively.
The following table summarizes stock-based compensation activity for and as of the nine months ended May 31, 2013, for employees under the Monsanto Company 2005 Long-Term Incentive Plan, as amended and restated effective Jan. 24, 2012 (2005 LTIP), and for directors under the Monsanto Non-Employee Director Equity Incentive Compensation Plan (Director Plan):
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SUPPLEMENTAL CASH FLOW INFORMATION SUPPLEMENTAL CASH FLOW INFORMATION (Tables)
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May 31, 2013
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Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Cash Payments For Interest And Taxes | Cash payments for interest and taxes were as follows:
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CUSTOMER FINANCING PROGRAMS (Tables)
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May 31, 2013
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CUSTOMER FINANCING PROGRAMS (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer Financing Programs | Monsanto participates in customer financing programs as follows:
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Customer Financing Programs, Sales of Receivables | The gross amount of receivables sold under transactions that qualify for sales treatment were:
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FAIR VALUE MEASUREMENTS (Tables)
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May 31, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis |
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Level 3 Rollforward | The following table summarizes the change in fair value of the Level 3 liability for the nine months ended May 31, 2013.
|
BUSINESS COMBINATIONS (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 31, 2013
2013 Acquistions [Member]
|
May 31, 2013
Agradis [Member]
|
May 31, 2013
Rosetta Green [Member]
|
Aug. 31, 2012
Precision Planting [Member]
|
Aug. 31, 2012
Precision Planting [Member]
Maximum [Member]
|
Aug. 31, 2012
Beelogics [Member]
|
Jun. 13, 2013
Subsequent Event [Member]
GrassRoots [Member]
|
|
Business Acquisition [Line Items] | |||||||
Acquiree percentage | 100.00% | 100.00% | 100.00% | ||||
Transaction cost | $ 1 | $ 1 | $ 1 | $ 1 | $ 1 | ||
Business Acquisition, Cost of Acquired Entity, Cash Paid | 85 | 35 | 209 | 113 | 20 | ||
Fair Value of Acquisition | 85 | 35 | 255 | 113 | 20 | ||
Contingent Consideration | 39 | 40 | |||||
Business Acquisition, Purchase Price Allocation [Abstract] | |||||||
Property, Plant & Equipment | 1 | ||||||
Goodwill | 78 | ||||||
Acquired In-process Research and Development | 43 | ||||||
Total Assets Acquired | 122 | ||||||
Business Acquisition, Purchase Price Allocation, Current Liabilities | 2 | ||||||
Business Acquisition, Purchase Price Allocation, Liabilities Assumed | 2 | ||||||
Net Assets Acquired | $ 120 |
SEGMENT AND GEOGRAPHIC DATA
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION Monsanto conducts its worldwide operations through global businesses, which are aggregated into reportable segments based on similarity of products, production processes, customers, distribution methods and economic characteristics. The operating segments are aggregated into two reportable segments: Seeds and Genomics and Agricultural Productivity. The Seeds and Genomics segment consists of the global seeds and related traits businesses and biotechnology platforms. Within the Seeds and Genomics segment, Monsanto’s significant operating segments are corn seed and traits, soybean seed and traits, cotton seed and traits, vegetable seeds and all other crops seeds and traits. The Agricultural Productivity reportable segment consists of the Agricultural Productivity operating segment. EBIT is defined as earnings before interest and taxes and is an operating performance measure for the two reportable segments. EBIT is useful to management in demonstrating the operational profitability of the segments by excluding interest and taxes, which are generally accounted for across the entire company on a consolidated basis. Sales between segments were not significant. Certain SG&A expenses are allocated between segments based on the segment’s relative contribution to total Monsanto operations. Allocation percentages remain consistent for fiscal years 2012 and 2013. Data for the Seeds and Genomics and Agricultural Productivity reportable segments, as well as for Monsanto’s significant operating segments, is presented in the table that follows:
A reconciliation of EBIT to net income for each period follows:
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DEBT AND OTHER CREDIT ARRANGEMENTS (Details) (USD $)
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1 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2013
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Aug. 31, 2012
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Jul. 31, 2012
Senior Notes Due 2022 [Member]
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Jul. 31, 2012
Senior Notes Due 2042 [Member]
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May 31, 2013
Credit Facility Agreement 2011 [Member]
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May 31, 2013
Fair Value, Inputs, Level 2 [Member]
|
Aug. 31, 2012
Fair Value, Inputs, Level 2 [Member]
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Debt Instrument [Line Items] | |||||||||||||
Face Amount | $ 250,000,000 | $ 250,000,000 | $ 2,000,000,000 | ||||||||||
Interest Rate | 2.20% | 3.60% | |||||||||||
Maturity Date | Jul. 15, 2022 | Jul. 15, 2042 | |||||||||||
Short-term debt, including current portion of long-term debt | 169,000,000 | 36,000,000 | |||||||||||
Long-term Debt, Fair Value | $ 2,327,000,000 | [1] | $ 2,411,000,000 | [1] | $ 2,327,000,000 | [1] | $ 2,411,000,000 | [1] | |||||
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STOCK BASED COMPENSATION PLANS Schedule of Stock-based Compensation Expense (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||
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May 31, 2013
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Aug. 31, 2012
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May 31, 2013
Cost of Goods Sold [Member]
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May 31, 2012
Cost of Goods Sold [Member]
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May 31, 2013
Cost of Goods Sold [Member]
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May 31, 2012
Cost of Goods Sold [Member]
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May 31, 2013
Selling General And Administrative Expenses [Member]
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May 31, 2012
Selling General And Administrative Expenses [Member]
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May 31, 2013
Selling General And Administrative Expenses [Member]
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May 31, 2012
Selling General And Administrative Expenses [Member]
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May 31, 2013
Research and Development Expenses [Member]
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May 31, 2012
Research and Development Expenses [Member]
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May 31, 2013
Research and Development Expenses [Member]
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May 31, 2012
Research and Development Expenses [Member]
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May 31, 2013
Pre-Tax Stock-Based Compensation Expense [Member]
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May 31, 2012
Pre-Tax Stock-Based Compensation Expense [Member]
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May 31, 2013
Pre-Tax Stock-Based Compensation Expense [Member]
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May 31, 2012
Pre-Tax Stock-Based Compensation Expense [Member]
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May 31, 2013
Income Tax Benefit [Member]
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May 31, 2012
Income Tax Benefit [Member]
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May 31, 2013
Income Tax Benefit [Member]
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May 31, 2012
Income Tax Benefit [Member]
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May 31, 2013
Net Stock Based Compensation [Member]
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May 31, 2012
Net Stock Based Compensation [Member]
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May 31, 2013
Net Stock Based Compensation [Member]
|
May 31, 2012
Net Stock Based Compensation [Member]
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Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||||||||||||||||||||||||
Allocated Stock Based Compensation Expense | $ 2 | $ 3 | $ 9 | $ 15 | $ 19 | $ 20 | $ 52 | $ 63 | $ 5 | $ 7 | $ 15 | $ 23 | $ 26 | $ 30 | $ 76 | $ 101 | $ (9) | $ (10) | $ (26) | $ (34) | $ 17 | $ 20 | $ 50 | $ 67 | ||
Compensation cost capitalized | $ 3 | $ 6 |
INCOME TAXES (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended |
---|---|---|
May 31, 2013
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May 31, 2013
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Income Tax Disclosure [Abstract] | ||
Other Tax Benefit | $ 65 | $ 140 |
STOCK BASED COMPENSATION PLANS (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Stock Based Compensation | The following table shows total stock-based compensation expense included in the Statements of Consolidated Operations for the three and nine months ended May 31, 2013, and May 31, 2012. Stock-based compensation cost capitalized in inventory was $3 million and $6 million as of May 31, 2013, and Aug. 31, 2012, respectively.
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Restricted Stock | The following table summarizes stock-based compensation activity for and as of the nine months ended May 31, 2013, for employees under the Monsanto Company 2005 Long-Term Incentive Plan, as amended and restated effective Jan. 24, 2012 (2005 LTIP), and for directors under the Monsanto Non-Employee Director Equity Incentive Compensation Plan (Director Plan):
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FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENTS Fair Value of Derivatives Outstanding (Details) (USD $)
In Millions, unless otherwise specified |
May 31, 2013
|
Aug. 31, 2012
|
||||
---|---|---|---|---|---|---|
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | $ 43 | $ 120 | ||||
Total Liability Derivatives | 68 | 36 | ||||
Designated as Hedging Instrument
|
||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 27 | 92 | ||||
Total Liability Derivatives | 43 | 13 | ||||
Not Designated as Hedging Instrument
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||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 16 | 28 | ||||
Total Liability Derivatives | 25 | 23 | ||||
Foreign Exchange Contract [Member] | Miscellaneous receivables | Designated as Hedging Instrument
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||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 5 | 6 | ||||
Foreign Exchange Contract [Member] | Miscellaneous receivables | Not Designated as Hedging Instrument
|
||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 7 | 5 | ||||
Foreign Exchange Contract [Member] | Other Assets | Designated as Hedging Instrument
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||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 1 | 0 | ||||
Foreign Exchange Contract [Member] | Miscellaneous short term accruals | Designated as Hedging Instrument
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||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Liability Derivatives | 0 | 3 | ||||
Foreign Exchange Contract [Member] | Miscellaneous short term accruals | Not Designated as Hedging Instrument
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||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Liability Derivatives | 10 | 4 | ||||
Commodity Contracts | Miscellaneous receivables | Not Designated as Hedging Instrument
|
||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 6 | 7 | ||||
Commodity Contracts | Other Assets | Designated as Hedging Instrument
|
||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 6 | [1] | 16 | [1] | ||
Commodity Contracts | Trade receivables, net | Not Designated as Hedging Instrument
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||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 1 | 12 | ||||
Total Liability Derivatives | 7 | [1] | 6 | [1] | ||
Commodity Contracts | Other current assets | Designated as Hedging Instrument
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||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 15 | [1] | 70 | [1] | ||
Total Liability Derivatives | 32 | [1] | 0 | [1] | ||
Commodity Contracts | Other current assets | Not Designated as Hedging Instrument
|
||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Asset Derivatives | 2 | [1] | 4 | [1] | ||
Total Liability Derivatives | 6 | [1] | 6 | [1] | ||
Commodity Contracts | Miscellaneous short term accruals | Designated as Hedging Instrument
|
||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Liability Derivatives | 8 | 7 | ||||
Commodity Contracts | Miscellaneous short term accruals | Not Designated as Hedging Instrument
|
||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Liability Derivatives | 2 | 7 | ||||
Commodity Contracts | Other liabilities | Designated as Hedging Instrument
|
||||||
Derivatives, Fair Value [Line Items] | ||||||
Total Liability Derivatives | $ 3 | $ 3 | ||||
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POSTRETIREMENT BENEFITS - PENSIONS, HEALTH CARE AND OTHER
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
POSTRETIREMENT BENEFITS-PENSIONS, HEALTH CARE AND OTHER | POSTRETIREMENT BENEFITS — PENSIONS, HEALTH CARE AND OTHER Most of Monsanto’s U.S. employees hired prior to July 8, 2012, are covered by noncontributory pension plans sponsored by the company. Effective July 8, 2012, the U.S. pension plan was closed to new entrants; there were no changes to the U.S. pension plan for eligible employees hired prior to that date. The company also provides certain postretirement health care and life insurance benefits for retired employees through insurance contracts. The company’s net periodic benefit cost for pension benefits and health care and other postretirement benefits include the following components:
Monsanto contributed $36 million to its U.S. qualified plan in the nine month period ended May 31, 2013, and $40 million in the nine month period ended May 31, 2012. Monsanto contributed $12 million to plans outside the United States in the nine month period ended May 31, 2013, and $11 million in the nine month period ended May 31, 2012. As of May 31, 2013, management expects to make additional contributions of approximately $24 million and $4 million to the company’s pension plans in the United States and outside the United States, respectively, during the remainder of fiscal year 2013. Employee Savings Plan The Monsanto leveraged employee stock ownership plan debt was restructured in December 2004 and November 2008 to level out the future allocation of stock thereunder in an impartial manner intended to ensure equitable treatment for and generally to be in the best interests of current and future plan participants consistent with the level of benefits that Monsanto intended for the plan to provide to participants. To that end, the terms of the restructuring were determined pursuant to an arm’s length negotiation between Monsanto and an independent trust company serving as fiduciary for the plan for this restructuring. In this role, the independent fiduciary determined that the restructuring, including certain financial commitments and enhancements that were made or will be made in the future by Monsanto to benefit participants and beneficiaries of the plan, was completed in accordance with the best interests of plan participants. As a result of these enhancements, a liability due to the Monsanto Savings and Investment Plan from the company of $19 million and $60 million was recorded as of May 31, 2013, and Aug. 31, 2012, respectively. As of May 31, 2013, the entire balance was considered short-term and is included in accrued compensation and benefits on the Statement of Consolidated Financial Position. As of Aug. 31, 2012, $56 million was considered short-term, while the remaining balance was considered long-term and is included in other liabilities on the Statement of Consolidated Financial Position. |
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