-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ADRqRF/9AvLD9skDxxFtUkcHDXz4H2UZMaKk+NIP8aG5Wfiu1v61yGcT1OjsUMPh yRzODz5UmKE3oueIWS0UFg== 0000898822-00-000075.txt : 20000214 0000898822-00-000075.hdr.sgml : 20000214 ACCESSION NUMBER: 0000898822-00-000075 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20000211 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MONSANTO CO CENTRAL INDEX KEY: 0000067686 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 430420020 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: SEC FILE NUMBER: 001-02516 FILM NUMBER: 535318 BUSINESS ADDRESS: STREET 1: 800 N LINDBERGH BLVD CITY: ST LOUIS STATE: MO ZIP: 63167 BUSINESS PHONE: 3146941000 MAIL ADDRESS: STREET 1: 800 NORTH LINDBERGH BLVD CITY: ST LOUIS STATE: MO ZIP: 63167 FORMER COMPANY: FORMER CONFORMED NAME: MONSANTO CHEMICAL CO DATE OF NAME CHANGE: 19711003 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MONSANTO CO CENTRAL INDEX KEY: 0000067686 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 430420020 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 800 N LINDBERGH BLVD CITY: ST LOUIS STATE: MO ZIP: 63167 BUSINESS PHONE: 3146941000 MAIL ADDRESS: STREET 1: 800 NORTH LINDBERGH BLVD CITY: ST LOUIS STATE: MO ZIP: 63167 FORMER COMPANY: FORMER CONFORMED NAME: MONSANTO CHEMICAL CO DATE OF NAME CHANGE: 19711003 425 1 425 Filed by Monsanto Company Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: Monsanto Company Commission File No. 001-02516 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION The following information has been provided to aid you in your analysis of the financial aspects of the merger. This information was derived from the audited consolidated financial statements of each of Monsanto and Pharmacia & Upjohn for the years 1996 through 1998 and the unaudited consolidated condensed financial statements of each of Monsanto and Pharmacia & Upjohn for the nine months ended September 30, 1999. The information is only a summary and should be read together with the historical financial statements and related notes contained in the annual reports and quarterly reports and other information that we have filed with the SEC and incorporated by reference. POOLING OF INTERESTS ACCOUNTING TREATMENT The merger is expected to be accounted for as a "pooling of interests." This means that, for accounting and financial reporting purposes, the companies will be treated as if they had always been combined. We have presented unaudited pro forma condensed combined financial information that reflects the pooling of interests method of accounting to provide a picture of what the businesses might have looked like had they always been combined. The pro forma condensed combined statements of income and pro forma condensed combined statement of financial position were prepared by combining the historical amounts of each company. The companies would have performed differently had they always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have occurred or the future results that will occur after the merger. PERIODS COVERED The following unaudited pro forma combined condensed statement of financial position as of September 30, 1999, is presented as if the merger had occurred on September 30, 1999. The unaudited pro forma combined condensed statements of income for the nine months ended September 30, 1999, and for the years ended December 31, 1998, 1997 and 1996, are presented as if the companies had always been merged. PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) (AMOUNTS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS COMBINED ----------------------- ----------- ----------- PHARMACIA MONSANTO & UPJOHN -------- -------- Net Sales.................................. $ 6,804 $ 5,310 $12,114 Costs, Expenses and Other: Cost of Goods Sold....................... 2,450 1,421 3,871 Selling, General and Administrative 2,107 2,019 4,126 Expenses................................. Research and Development ................ 1,008 1,050 2,058 Amortization of Intangible Assets........ 259 68 327 Restructuring, Merger and Special Charges.................................. 10 32 42 Interest Expense......................... 287 41 328 Interest Income.......................... (30) (54) (84) Other (Income) Expense, net.............. 13 (111) (98) -------- -------- -------- Income from Continuing Operations Before Income Taxes............................. 700 844 1,544 Income Tax Expense......................... 243 255 498 -------- -------- -------- Income from Continuing Operations.......... $ 457 $ 589 $ 1,046 ======== ======== ======== Earnings from continuing operations per common share: Basic.................................... $ 0.72 $ 1.12 $ 0.83 Diluted.................................. $ 0.70 $ 1.09 $ 0.81 Weighted average shares outstanding: Basic.................................... 632.6 517.2 98.3 1,248.1 Diluted.................................. 648.6 534.5 101.6 1,284.7
See accompanying notes to unaudited pro forma condensed combined financial information. PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (LOSS) YEAR ENDED DECEMBER 31, 1998 (UNAUDITED) (AMOUNTS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS COMBINED ----------------------- ----------- ----------- PHARMACIA MONSANTO & UPJOHN ----------- ---------- Net Sales.................................. $ 7,237 $ 6,758 $13,995 Costs, Expenses and Other: Cost of Goods Sold....................... 2,912 2,031 4,943 Selling, General and Administrative Expenses................................. 2,129 2,552 4,681 Research and Development................. 1,308 1,234 2,542 Acquired In-Process Research and Development.............................. 402 0 402 Amortization and Adjustment of Intangible Assets................................... 286 98 384 Restructuring, Merger and Special Charges.................................. 153 92 245 Interest Expense......................... 210 26 236 Interest Income.......................... (47) (92) (139) Other Income, net........................ (31) (160) (191) -------- -------- -------- Income (Loss) from Continuing Operations Before Income Taxes...................... (85) 977 892 Income Tax Expense......................... 46 346 392 -------- -------- -------- Income (Loss) from Continuing Operations... $ (131) $ 631 $ 500 ======== ======== ======== Earnings (loss) from continuing operations per common share: Basic.................................... $ (0.22) $ 1.20 $ 0.40 Diluted.................................. $ (0.22) $ 1.17 $ 0.39 Weighted average shares outstanding: Basic.................................... 603.5 517.5 98.4 1,219.4 Diluted.................................. 603.5 534.0 129.6 1,267.1
See accompanying notes to unaudited pro forma condensed combined financial information. PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1997 (UNAUDITED) (AMOUNTS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS COMBINED ----------------------- ----------- ----------- PHARMACIA MONSANTO & UPJOHN ----------- ---------- Net Sales.................................. $ 6,058 $ 6,586 $12,644 Costs, Expenses and Other: Cost of Goods Sold....................... 2,382 2,047 4,429 Selling, General and Administrative Expenses................................. 1,745 2,642 4,387 Research and Development................. 1,049 1,246 2,295 Acquired In-Process Research and Development.............................. 633 0 633 Amortization of Intangible Assets........ 121 107 228 Restructuring, Merger and Special Charges.................................. 0 316 316 Interest Expense......................... 135 33 168 Interest Income.......................... (45) (113) (158) Other Income, net........................ (89) (127) (216) -------- -------- -------- Income from Continuing Operations Before Income Taxes............................. 127 435 562 Income Tax Expense (Benefit)............... (22) 177 155 -------- -------- -------- Income from Continuing Operations.......... $ 149 $ 258 $ 407 ======== ======== ======== Earnings from continuing operations per common share: Basic.................................... $ 0.26 $ 0.48 $ 0.33 Diluted.................................. $ 0.24 $ 0.48 $ 0.32 Weighted average shares outstanding: Basic.................................... 590.2 516.0 98.0 1,204.2 Diluted.................................. 610.5 529.9 105.1 1,245.5
See accompanying notes to unaudited pro forma condensed combined financial information. PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME YEAR ENDED DECEMBER 31, 1996 (UNAUDITED) (AMOUNTS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS COMBINED ----------------------- ----------- ----------- PHARMACIA MONSANTO & UPJOHN ----------- ---------- Net Sales.................................. $ 4,862 $ 7,176 $12,038 Costs, Expenses and Other: Cost of Goods Sold....................... 1,953 2,116 4,069 Selling, General and Administrative Expenses................................. 1,540 2,453 3,993 Research and Development............... 657 1,283 1,940 Amortization and Adjustment of Intangible Assets................................... 98 119 217 Restructuring, Merger and Special Charges.................................. 312 585 897 Interest Expense......................... 83 56 139 Interest Income.......................... (51) (161) (212) Other Income, net........................ (86) (93) $ 8(g)(2) (171) -------- -------- -------- -------- Income from Continuing Operations Before Income Taxes............................. 356 818 (8) 1,166 Income Tax Expense......................... 77 268 345 -------- -------- -------- -------- Income from Continuing Operations.......... $ 279 $ 550 $ (8) $ 821 ======== ======== ======== ======== Earnings from continuing operations per common share: Basic.................................... $ 0.48 $ 1.04 $ 0.68 Diluted.................................. $ 0.47 $ 1.03 $ 0.67 Weighted average shares outstanding: Basic.................................... 581.2 515.1 97.9 1,194.2 Diluted.................................. 598.9 530.5 100.2 1,229.6
See accompanying notes to unaudited pro forma condensed combined financial information. PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION SEPTEMBER 30, 1999 (UNAUDITED) (AMOUNTS IN MILLIONS)
PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS COMBINED ----------------------- ----------- ----------- PHARMACIA MONSANTO & UPJOHN ----------- ---------- ASSETS Current assets: Cash and cash equivalents................... $ 84 $ 1,245 $ 1,329 Short term investments...................... - 137 137 Receivables................................. 2,791 1,420 4,211 Inventories................................. 1,598 1,118 2,716 Other current assets........................ 1,174 776 1,950 -------- -------- -------- Total current assets........................ 5,647 4,696 10,343 Net property, plant and equipment........... 3,050 3,278 6,328 Intangible assets, net of accumulated amortization................................ 4,645 1,176 5,821 Other assets................................ 1,055 1,308 $ 26(d) 2,389 Net assets of discontinued operations....... 1,586 0 1,586 -------- -------- -------- -------- Total assets................................ $15,983 $10,458 $ 26 $26,467 ======== ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt............................. $ 915 $ 1,056 $ 1,971 Accounts payable............................ 472 333 805 Accrued liabilities......................... 2,168 1,857 $ 110(d) 4,135 -------- -------- -------- -------- Total current liabilities................... 3,555 3,246 110 6,911 Long-term debt.............................. 5,961 339 6,300 Other liabilities........................... 1,224 1,325 2,549 -------- -------- -------- -------- Total liabilities........................... 10,740 4,910 110 15,760 -------- -------- -------- -------- Shareholders' equity: Preferred stock (Monsanto).................. 0 0 273(g)(3) 273 Preferred stock (Pharmacia & Upjohn)........ 0 273 (273)(g)(3) 0 Common stock issued......................... 1,694 5 1,231(g)(l) 2,930 Additional contributed capital.............. 1,467 1,492 70(d) 1,789 (1,240)(g)(1) Treasury stock.............................. (2,449) (9) 9(g)(l) (2,449) Retained earnings........................... 5,101 5,501 (154)(d) 10,448 Reserve for ESOP debt retirement............ (91) (247) (338) Accumulated other comprehensive loss........ (479) (1,467) (1,946) -------- -------- -------- -------- Total shareholders' equity.................. 5,243 5,548 (84) 10,707 -------- -------- -------- -------- Total liabilities, and shareholders' equity. $15,983 $10,458 $ 26 $26,467 ======== ======== ======== ========
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION (a) BASIS OF PRESENTATION The unaudited pro forma condensed combined statements of income (loss) are based on the unaudited consolidated condensed financial statements of each of Monsanto and Pharmacia & Upjohn for the nine months ended September 30, 1999, and the audited consolidated financial statements of each of Monsanto and Pharmacia & Upjohn for the years ended December 31, 1998, 1997 and 1996. The unaudited pro forma condensed combined statement of financial position is based on the unaudited consolidated condensed financial statements of each of Monsanto and Pharmacia & Upjohn at September 30, 1999. In the opinion of Monsanto and Pharmacia & Upjohn management, all adjustments and/or disclosures necessary for a fair presentation of the pro forma data have been made. These unaudited pro forma combined condensed financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results or the financial position that would have been achieved had the merger been consummated as of the dates indicated or of the results that may be obtained in the future. (b) ACCOUNTING POLICIES AND FINANCIAL STATEMENT CLASSIFICATIONS The accounting policies of Monsanto and Pharmacia & Upjohn are substantially comparable, except for their accounting policies for the sale of stock by a subsidiary as described in "Other Pro Forma Adjustments". Certain revenues, costs and other deductions in the consolidated statements of earnings of Pharmacia & Upjohn have been reclassified to conform to the line item presentation in the pro forma condensed combined statements of income (loss). Certain assets and liabilities in the consolidated statements of financial position of Monsanto and Pharmacia & Upjohn have been reclassified to conform to the line item presentation in the pro forma condensed combined statement of financial position. (c) PRO FORMA EARNINGS PER SHARE The pro forma combined basic earnings per share is based on income from continuing operations less preferred stock dividends ($10 million for the nine months ended September 30, 1999, and $13 million for each of the years ended December 31, 1998, 1997 and 1996, respectively) and the weighted average number of outstanding common shares. Diluted income per share includes the dilutive effect of incentive stock options, convertible preferred stock and certain convertible debt securities. The weighted average number of outstanding common shares has been adjusted to reflect the exchange ratio of 1.19 shares of Monsanto common stock for each share of Pharmacia & Upjohn common stock. (d) MERGER-RELATED EXPENSES A one-time charge for direct incremental Merger-related transaction costs will be recorded in the quarter in which the Merger is consummated. The direct incremental Merger-related transaction costs consist principally of charges related to investment banking fees, professional services, registration and other regulatory costs (approximately $110 million) and stock compensation arrangements (approximately $70 million before taxes of approximately $26 million). The charges for stock compensation arrangements consist of accounting charges related to certain Monsanto stock options which were granted with exercise prices above the fair market value of Monsanto Common Stock on the date such options were granted (the "Premium Options"). Pursuant to the terms of the Premium Options, at consummation of the Merger, the exercise price of such Premium Option will be reduced to equal the fair market value on the date of grant. (e) INTEGRATION-RELATED EXPENSES Monsanto and Pharmacia & Upjohn expect to incur pre-tax charges to operations, currently estimated to be between $500 and $800 million, to reflect costs associated with combining the operations of the two companies. These costs will be recorded subsequent to consummation of the merger. These amounts are preliminary estimates and are therefore subject to change. Additional unanticipated expenses may be incurred in the integration of the businesses of Monsanto and Pharmacia & Upjohn. Although Monsanto and Pharmacia & Upjohn expect that the elimination of duplicative expenses as well as the realization of other efficiencies related to the integration of the businesses may result in cost savings, no assurance can be given that these benefits will be achieved in the near term or at all. The unaudited pro forma condensed combined financial statements reflect neither the impact of these charges nor the benefits from the expected synergies. (f) AGRICULTURAL INITIAL PUBLIC OFFERING Monsanto and Pharmacia & Upjohn have announced an intention to reorganize the Monsanto agricultural business, as a subsidiary of the combined company and sell up to 19.9% of this subsidiary by means of an initial public offering. The agricultural business would become a separate legal entity, with a stand-alone board of directors and its own publicly traded stock upon completion of the intended initial public offering. At the time of the initial public offering for a minority interest in the agricultural business, any difference between the fair market value (expressed as the offering price) and the net book value of the minority interest at the time of the offering will be recorded as an adjustment to stockholders' equity. No price for the intended offering has been established. Subsequent to an offering, the combined company would reflect a minority interest in the equity of a consolidated subsidiary on its statement of financial position and a minority interest in the earnings of a consolidated subsidiary on its statement of income. (g) OTHER PRO FORMA ADJUSTMENTS (1) A pro forma adjustment has been made to reflect the assumed issuance of approximately 618 million shares of Monsanto common stock in exchange for all of the outstanding Pharmacia & Upjohn common stock (based on the exchange ratio of 1.19). The actual number of shares of Monsanto common stock to be issued in connection with the merger will be based on the number of shares of Pharmacia & Upjohn common stock issued and outstanding at the effective time. (2) In 1996, Pharmacia & Upjohn recorded a gain of $8 million on the issuance of new shares by one of its subsidiaries in an initial public offering. The accounting policy of Monsanto for this type of transaction requires that the resulting gain be recorded as a credit to shareowners' equity rather than as income. Therefore, the pro forma condensed combined statement of income for the year ended December 31, 1996, has been adjusted to conform accounting policies and eliminate the gain that was recorded by Pharmacia & Upjohn. (3) Under the merger agreement, each outstanding share of Pharmacia & Upjohn convertible perpetual preferred stock will be converted into the right to receive one share of Monsanto convertible perpetual preferred stock. The terms of the Monsanto convertible perpetual preferred stock are substantially identical to the terms of the Pharmacia & Upjohn convertible perpetual preferred stock. Each outstanding Pharmacia & Upjohn option will be converted into an option with respect to common stock of the combined company, in a manner that maintains the intrinsic value of the converted options. The number of shares of common stock of the combined company to which any such converted option will pertain will equal the number of Pharmacia & Upjohn shares subject to the option multiplied by 1.19 (the exchange ratio for the merger), and the exercise price of such award will be its current exercise price divided by 1.19. Monsanto and Pharmacia & Upjohn have filed a preliminary joint proxy statement and prospectus with the United States Securities and Exchange Commission (the "SEC"). In addition, Monsanto and Pharmacia & Upjohn will be filing a definitive joint proxy statement/prospectus and other relevant documents concerning the merger with the SEC. WE URGE INVESTORS TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the documents free of charge at the SEC's website, http://www.sec.gov. In addition, documents filed with the SEC by Monsanto will be available free of charge from the Secretary of Monsanto at 800 North Lindbergh Blvd., St. Louis, Missouri 63167, Telephone (314) 694-3155. Documents filed with the SEC by Pharmacia & Upjohn will be available free of charge from the Corporate Secretary of Pharmacia & Upjohn, 100 Route 206 North, Peapack, NJ 07977, Telephone (888) 768-5501. READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER. Monsanto, its directors, executive officers and certain other members of management and employees may be soliciting proxies from Monsanto stockholders in favor of the merger. Information concerning the participants in the solicitation is set forth in the Current Report on Form 8-K filed by Monsanto with the SEC on January 25, 2000. Pharmacia & Upjohn, its directors, executive officers and certain other members of management and employees may be soliciting proxies from Pharmacia & Upjohn stockholders in favor of the merger. Information concerning the participants in the solicitation is included in filings under Rule 425 made by Pharmacia & Upjohn with the SEC on January 27, 2000. -----END PRIVACY-ENHANCED MESSAGE-----