-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KukgwXzwcXZFp3KODgMcS++P6ihc+gxhLeK3DhbYnM96WMlgktCz+5L0wAULloAX Ylcgu+E+CUNjTGbs+KPD5Q== 0000950114-94-000087.txt : 19940727 0000950114-94-000087.hdr.sgml : 19940727 ACCESSION NUMBER: 0000950114-94-000087 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONSANTO CO CENTRAL INDEX KEY: 0000067686 STANDARD INDUSTRIAL CLASSIFICATION: 2800 IRS NUMBER: 430420020 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02516 FILM NUMBER: 94539729 BUSINESS ADDRESS: STREET 1: 800 N LINDBERGH BLVD CITY: ST LOUIS STATE: MO ZIP: 63167 BUSINESS PHONE: 3146941000 FORMER COMPANY: FORMER CONFORMED NAME: MONSANTO CHEMICAL CO DATE OF NAME CHANGE: 19711003 10-Q 1 MONSANTO COMPANY 10-Q 1 ======================================================================== FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-2516 ------ MONSANTO COMPANY ---------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 43-0420020 -------- ---------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 800 NORTH LINDBERGH BLVD., ST. LOUIS, MISSOURI 63167 ---------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (314) 694-1000 -------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING TWELVE MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO --- ---- INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE. OUTSTANDING AT CLASS JUNE 30, 1994 ----- -------------- COMMON STOCK, $2 PAR VALUE 117,876,051 SHARES - - -------------------------- ------------------ ======================================================================== 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The Statement of Consolidated Income of Monsanto Company and subsidiaries for the three months and six months ended June 30, 1994 and 1993, the Statement of Consolidated Financial Position as of June 30, 1994 and December 31, 1993, the Statement of Consolidated Cash Flow for the six months ended June 30, 1994 and 1993 and related Notes to Financial Statements follow. 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. Unless otherwise indicated by the context, "Monsanto" means Monsanto Company and consolidated subsidiaries, and "the Company" means Monsanto Company only. MONSANTO COMPANY AND SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME (DOLLARS IN MILLIONS, EXCEPT PER SHARE)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, -------------------- -------------------- 1994 1993 1994 1993 ---- ---- ---- ---- Net Sales.................................................... $2,269 $2,230 $4,270 $4,171 Cost of Goods Sold........................................... 1,224 1,271 2,332 2,377 ------ ------ ------ ------ Gross Profit................................................. 1,045 959 1,938 1,794 Marketing Expenses........................................... 326 326 602 620 Administrative Expenses...................................... 137 121 264 250 Technological Expenses....................................... 165 167 316 330 Amortization of Intangible Assets............................ 20 19 40 37 ------ ------ ------ ------ Operating Income............................................. 397 326 716 557 Interest Expense............................................. (35) (34) (67) (66) Interest Income.............................................. 13 10 19 18 Other Income (Expense)-Net................................... 1 13 2 16 ------ ------ ------ ------ Income Before Income Taxes................................... 376 315 670 525 Income Taxes................................................. 118 115 218 184 ------ ------ ------ ------ Net Income................................................... $ 258 $ 200 $ 452 $ 341 ------ ------ ------ ------ Earnings per Share........................................... $ 2.19 $ 1.66 $ 3.82 $ 2.83 ------ ------ ------ ------ Dividends per Share.......................................... $ 0.63 $ 0.58 $ 1.21 $ 1.14 ------ ------ ------ ------ Weighted Average Number of Common and Common Equivalent Shares (in millions)........................................ 118.5 120.8 ------ ------
1 3 MONSANTO COMPANY AND SUBSIDIARIES STATEMENT OF CONSOLIDATED FINANCIAL POSITION (DOLLARS IN MILLIONS, EXCEPT PER SHARE)
JUNE 30, DECEMBER 31, 1994 1993 -------- ------------ ASSETS Current Assets: Cash and cash equivalents.................................................................. $ 269 $ 273 Trade receivables, net of allowances of $47 in 1994 and $51 in 1993........................ 2,064 1,445 Miscellaneous receivables and prepaid expenses............................................. 351 388 Deferred income tax benefit................................................................ 338 342 Inventories................................................................................ 1,207 1,224 ------- ------- Total Current Assets................................................................... 4,229 3,672 ------- ------- Property, Plant and Equipment................................................................ 7,471 7,382 Less Accumulated Depreciation................................................................ 4,695 4,580 ------- ------- Net Property, Plant and Equipment.......................................................... 2,776 2,802 ------- ------- Investments in Affiliates.................................................................... 235 227 Intangible Assets, net of accumulated amortization of $490 in 1994 and $450 in 1993.......... 1,172 1,189 Other Assets................................................................................. 772 750 ------- ------- Total Assets................................................................................. $ 9,184 $ 8,640 ------- ------- LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Accounts payable........................................................................... $ 535 $ 538 Accrued liabilities........................................................................ 1,558 1,534 Short-term debt............................................................................ 379 223 ------- ------- Total Current Liabilities.............................................................. 2,472 2,295 ------- ------- Long-Term Debt............................................................................... 1,476 1,502 Deferred Income Taxes........................................................................ 63 54 Postretirement Liabilities................................................................... 1,317 1,256 Other Liabilities............................................................................ 660 678 Shareowners' Equity: Common stock (authorized, 200,000,000 shares, par value $2) Issued, 164,394,194 shares in 1994 and 1993.............................................. 329 329 Additional contributed capital........................................................... 831 826 Treasury stock, at cost (49,008,493 shares in 1994 and 48,418,545 shares in 1993)........ (2,434) (2,348) Reserve for ESOP debt retirement........................................................... (214) (218) Net unrealized investment holding gains.................................................... 26 Accumulated currency adjustment............................................................ 23 (59) Reinvested earnings........................................................................ 4,635 4,325 ------- ------- Total Shareowners' Equity.............................................................. 3,196 2,855 ------- ------- Total Liabilities and Shareowners' Equity.................................................... $ 9,184 $ 8,640 ------- -------
2 4 MONSANTO COMPANY AND SUBSIDIARIES STATEMENT OF CONSOLIDATED CASH FLOW (DOLLARS IN MILLIONS)
SIX MONTHS ENDED JUNE 30, ------------------------ 1994 1993 ---- ---- Increase (Decrease) in Cash and Cash Equivalents Operating Activities: Net income................................................................................. $ 452 $ 341 Add income taxes........................................................................... 218 184 ----- ----- Income before income taxes................................................................. 670 525 Adjustments to reconcile to Cash Provided by Continuing Operations: Income tax payments...................................................................... (123) (130) Items that did not use (provide) cash: Depreciation and amortization.......................................................... 271 280 Other.................................................................................. 27 9 Working capital changes that provided (used) cash: Accounts receivable.................................................................... (622) (411) Inventories............................................................................ 15 59 Accounts payable and accrued liabilities............................................... (176) (63) Other.................................................................................. 83 13 Other items.............................................................................. 30 (80) ----- ----- Cash Provided by Continuing Operations....................................................... 175 202 Cash Used in Discontinued Operations......................................................... (291) ----- ----- Total Cash Provided by (Used in) Operations.................................................. 175 (89) ----- ----- Investing Activities: Property, plant and equipment purchases.................................................... (155) (199) Acquisition and investment payments........................................................ (65) (457) Investment and property disposal proceeds.................................................. 142 99 ----- ----- Cash Used in Investing Activities............................................................ (78) (557) ----- ----- Financing Activities: Net change in short-term financing......................................................... 156 268 Long-term debt proceeds.................................................................... 41 216 Long-term debt reductions.................................................................. (74) (208) Treasury stock purchases................................................................... (149) (48) Dividend payments.......................................................................... (142) (137) Other financing activities................................................................. 67 13 ----- ----- Cash Provided by (Used in) Financing Activities.............................................. (101) 104 ----- ----- Increase (Decrease) in Cash and Cash Equivalents............................................. (4) (542) Cash and Cash Equivalents: Beginning of year.......................................................................... 273 729 ----- ----- End of period.............................................................................. $ 269 $ 187 ----- ----- The effect of exchange rate changes on cash and cash equivalents was not material. Cash payments for interest (net of amounts capitalized) were $66 million in 1994 and $67 million in 1993. In October 1992, Monsanto sold the worldwide Fisher Controls business. Cash used for discontinued operations in 1993 was for income taxes related to the sale of Fisher Controls.
3 5 MONSANTO COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (DOLLARS IN MILLIONS) 1. Effective January 1, 1994, Monsanto adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The adoption of this standard resulted in an increase to investment balances and shareowners' equity. Net income and cash flow were unaffected by this adoption. SFAS No. 115 requires that certain investments, primarily equity securities, are recorded at their market values. The aggregate fair value and the net unrealized holding gain of these equity securities at January 1, 1994, were $105 million and $22 million, respectively. Debt securities held by Monsanto are generally recorded at amortized cost, as the Company has the intent and ability to hold those securities to their maturity date. The total amortized cost of these securities was $173 million at January 1, 1994. The majority of these securities mature in less than 5 years. 2. In February 1994, the Company established a grantor trust to hold shares of Monsanto common stock to be used to satisfy compensation and benefit arrangements and obligations, including the issuance of shares upon the exercise of performance stock options. Monsanto contributed 2.5 million shares of treasury stock to the grantor trust in February 1994. These shares, with an aggregate cost of $121 million, have been restricted for use in the grantor trust. 3. Earnings per share were computed using the weighted average number of common shares and common share equivalents outstanding each period (118,517,416 and 120,825,866 in 1994 and 1993, respectively). Common share equivalents (2,566,435 and 805,214 in 1994 and 1993, respectively) consist of common stock issuable upon exercise of outstanding stock options. Earnings per share assuming full dilution were not significantly different from the primary amounts. 4. Components of inventories at June 30, 1994 and December 31, 1993 were as follows:
JUNE 30, DECEMBER 31, 1994 1993 -------- ------------ Finished goods............................................. $ 720 $ 734 Goods in process........................................... 312 319 Raw materials and supplies................................. 437 430 ------ ------ Inventories, at FIFO cost.................................. 1,469 1,483 Excess of FIFO over LIFO cost.............................. (262) (259) ------ ------ Total.................................................... $1,207 $1,224 ------ ------
5. On April 20, 1994, a federal court jury verdict was returned against Monsanto in a lawsuit related to a Superfund site in La Marque, Texas. The lawsuit was brought by IT Corporation ("IT"), a subsidiary of International Technologies, claiming fraud, negligent misrepresentation and breach of a contract calling for IT to perform incineration and remediation work at the site. The verdict awarded to IT $52.8 million in compensatory damages, $28.6 million in punitive damages and $2.6 million in fees. No provision has been made in the Company's consolidated financial statements with respect to this verdict. The Company intends to vigorously pursue all available means to set the verdict aside. 6. Monsanto is a party to a number of lawsuits and claims, which it is vigorously defending. Such matters arise out of the normal course of business and relate to product liability, government regulation, including environmental issues, and other issues. Certain of the lawsuits and claims seek damages in very large amounts. While the results of litigation cannot be predicted with certainty, management believes, based upon the advice of Company counsel, that the final outcome of such litigation will not have a material adverse effect on Monsanto's consolidated financial position, profitability or liquidity in any one year. 4 6 MONSANTO COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. Operating unit segment data for the three months and six months ended June 30, 1994 and 1993 were as follows:
THREE MONTHS ENDED JUNE 30, ----------------------------------------------------------- 1994 1993 -------------------------- -------------------------- OPERATING OPERATING NET INCOME NET INCOME SALES (LOSS) SALES (LOSS) ----- -------- ----- -------- Operating Unit: The Agricultural Group..................................... $ 753 $260 $ 743 $258 The Chemical Group......................................... 926 103 933 75 Searle..................................................... 415 3 368 (37) The NutraSweet Company..................................... 175 47 186 42 Corporate.................................................. (16) (12) ------ ----- ------ ----- Total........................................................ $2,269 $397 $2,230 $326 ------ ---- ------ ---- SIX MONTHS ENDED JUNE 30, ----------------------------------------------------------- 1994 1993 -------------------------- -------------------------- OPERATING OPERATING NET INCOME NET INCOME SALES (LOSS) SALES (LOSS) ----- -------- ----- -------- Operating Unit: The Agricultural Group..................................... $1,388 $466 $1,255 $443 The Chemical Group......................................... 1,779 188 1,831 125 Searle..................................................... 795 15 729 (64) The NutraSweet Company..................................... 308 76 356 76 Corporate.................................................. (29) (23) ------ ----- ------ ----- Total........................................................ $4,270 $716 $4,171 $557 ------ ---- ------ ----
Financial information for the first six months of 1994 should not be annualized. Monsanto's sales and operating income are historically higher during the first half of the year, primarily because of the concentration of generally more profitable sales of The Agricultural Group in the first half of the year. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Note 7 of the Notes to Financial Statements indicates operating results by operating unit, including the concentration of the generally more profitable sales of The Agricultural Group in the first half of the year. RESULTS OF OPERATIONS-SECOND QUARTER 1994 COMPARED WITH THE SECOND QUARTER 1993 Net income for the second quarter of 1994 was a record $258 million, or $2.19 per share, compared with net income of $200 million, or $1.66 per share, in the second quarter of last year. Net sales of $2,269 million were 2 percent higher than the comparable figure in 1993. Net sales for The Agricultural Group were slightly higher compared with the second quarter of 1993. Net sales for the quarter benefited from sales from the Ortho lawn-and-garden business, acquired in May 1993, and from sales of new-product introductions, such as Posilac(R) bovine somatotropin. However, these factors were partially offset by lower net sales of Roundup(R) herbicide and from the acetanilide family of herbicides, which include Lasso(R) herbicide and newly-introduced Harness(R) Plus herbicide. Worldwide sales volumes for Roundup improved modestly over the same period last year. However, sales volumes for Roundup in the second quarter of 1993 were favorably affected by unusually wet weather during March 1993 in several U.S. 5 7 markets, which delayed the onset of the peak agricultural season into the second quarter. Sales volumes of Lasso(R) herbicide declined compared with those in the same period last year; however, sales of newly- introduced Harness(R) Plus herbicide have replaced those of Lasso in some U.S. markets. Operating income in the second quarter of 1994 was a record $260 million compared with 1993's strong second-quarter results of $258 million. Operating income in the second quarter of 1994 benefited from inclusion of Ortho results and from sales of new products. These factors were offset, in part, by the effect of lower acetanilide sales volumes into the Commonwealth of Independent States ("CIS"). Net sales of The Chemical Group were slightly lower than those for the same period last year; however, 1993 sales included those from businesses later divested as part of the previously announced restructuring program. Excluding net sales from these divested businesses, 1994 net sales for the second quarter would have increased 4 percent over those in the second quarter of 1993. Net sales benefited from continuing strong demand in North America. Operating income increased $28 million, or 37 percent, compared with the same period in 1993. Operating income continued to benefit from increased sales volumes to the North American and certain Western European automotive markets, strong demand for nylon carpet fibers resulting from the continued strength in U.S. housing starts and resales, improved worldwide capacity utilization levels, and savings from continuing cost reduction efforts. Partially offsetting these gains were higher raw material costs and global pricing pressures, particularly in the Plastics Division and the Rubber Chemicals business. Searle's net sales for the second quarter of 1994 were 13 percent higher compared with last year primarily because of increased sales of recently-introduced products, led by Ambien(R), a short-term treatment for insomnia, and Daypro(R), a once-daily arthritis treatment. Sales of Calan(R) brand calcium channel blocker in the second quarter of 1994 were essentially the same as those in the same period last year. The 1994 improvement in operating results was largely due to sales of recently-introduced products, lower new-product introduction costs, and cost savings from restructuring actions. The NutraSweet Company's net sales decreased 6 percent compared with the amounts for the second quarter of 1993. Sales volumes of aspartame for the quarter decreased slightly compared with those of last year's second quarter, due primarily to the timing of shipments to major customers. However, net sales of tabletop sweeteners, which include NutraSweet(R) Spoonful(R) and Equal(R) brand tabletop sweeteners, were higher compared with those in the same period last year. Operating income increased $5 million, or 12 percent, from that in the same period in 1993, primarily due to lower operating expenses and increased sales of tabletop sweeteners. For Monsanto, other income decreased compared with that in the second quarter of 1993, primarily due to lower income from equity affiliates. The effective income tax rate for the second quarter of 1994 was lower than the rate for the comparable period of 1993 principally because of lower effective ex-U.S. tax rates. RESULTS OF OPERATIONS-FIRST SIX MONTHS 1994 COMPARED WITH FIRST SIX MONTHS 1993 Net income for the first six months of 1994 was $452 million, or a record $3.82 per share, compared with net income of $341 million, or $2.83 per share, in the first six months of last year. Net sales of $4,270 million were 2 percent higher than the comparable figure in 1993. Net sales for The Agricultural Group were 11 percent higher compared with those in the first half of 1993. Net sales in 1994 benefited from higher worldwide sales volumes for Roundup(R) herbicide, higher sales of lawn-and-garden products, and from sales of new products. However, these factors were partially offset by lower net sales from the acetanilide family of herbicides, which include Lasso herbicide and newly-introduced Harness Plus herbicide. Sales volumes of Lasso herbicide declined compared with those in the same period last year; however, sales of newly-introduced Harness Plus herbicide have replaced those of Lasso in some U.S. markets. This trend is expected to continue in future periods with some incremental growth anticipated. Operating income in 1994 increased $23 million, or 5 percent, compared with results for the first six months of 1993. Operating income in 1993 was increased by $35 million, or 18 cents per share aftertax, resulting from reimbursement by insurance companies of various costs incurred in 1992 from damage to a manufacturing site that produces a key raw material for Roundup herbicide. These costs had been expensed in 1992 pending resolution of the claim. Worldwide sales volume for Roundup herbicide improved 6 8 16 percent over the same period last year, reflecting strong demand in most key worldwide markets. Operating income of the Solaris lawn-and- garden group increased from that in the prior year, primarily due to inclusion of Ortho results. Operating income in 1994 also benefited from sales of new products. These factors were offset, in part, by the effect of lower acetanilide sales volumes into the CIS. Net sales of The Chemical Group decreased 3 percent compared with those in the same period last year, solely because 1993 sales included those from businesses later divested as part of the previously announced restructuring program. Excluding net sales from these divested businesses, net sales for the first six months of 1994 would have increased 2 percent over those for the comparable period in 1993. Operating income improved 50 percent compared with operating income in the first half of 1993. Operating income benefited from increased demand in the North American automotive markets, increases in U.S. housing starts and resales, improved worldwide capacity utilization levels, lower raw material costs, and savings from continuing cost reduction efforts. Partially offsetting these gains were global pricing pressures, particularly in the Plastics Division and the Rubber Chemicals business. Searle's net sales for the first six months of 1994 were 9 percent higher than those in the same period last year. Increased sales of recently-introduced products, such as Ambien(R), a short-term treatment for insomnia, and Daypro(R) and Arthrotec(R) arthritis treatments, more than offset a small decline in sales of Calan(R) brand calcium channel blocker. Sales of Calan for the first six months of 1994 declined 3 percent compared with those in 1993, reflecting primarily the effect of generic competition in the United States. Operating income was $15 million for the first six months of 1994, compared with an operating loss of $64 million for the same period in 1993. The improvement in operating income was attributed principally to increased sales of recently-introduced products, lower new-product introduction costs in 1994, and cost savings from restructuring actions. The NutraSweet Company's net sales decreased 13 percent compared with the amount for the first six months of 1993. Aspartame sales volumes for the period decreased 12 percent compared with those in the same period last year, due primarily to the timing of shipments to major customers. Net sales of tabletop sweeteners, which include NutraSweet(R) Spoonful(R) and Equal(R) brand tabletop sweeteners, were higher compared with those in the same period last year. Operating income was level, however, compared with that in the same period last year due largely to lower overall operating costs resulting from cost reduction efforts and increased sales of tabletop sweeteners. CHANGES IN FINANCIAL CONDITION-JUNE 30, 1994 COMPARED WITH DECEMBER 31, 1993 Working capital at June 30, 1994 increased to $1,757 million from $1,377 million at December 31, 1993, primarily due to a seasonal increase in trade receivables offset, in part, by higher short-term debt. The current ratio was 1.7 at June 30, 1994 and 1.6 at year-end 1993. The percent of total debt to total capitalization declined to 37 percent at quarter-end compared with 38 percent at year-end 1993, primarily because of the increase in shareowners' equity from year-end 1993. Operating activities from continuing operations provided a net $175 million of cash in 1994, compared with a net $202 million of cash provided by 1993 continuing operations. The decline in cash provided by continuing operations resulted primarily from higher seasonal working capital levels for The Agricultural Group, offset by higher net income. Cash used in discontinued operations in 1993 was for income tax payments related to the sale of Fisher Controls. Investing activities in 1994 used $78 million, principally for property, plant and equipment purchases. The increase in short-term financing was due primarily to the higher seasonal working capital levels for The Agricultural Group. Throughout the first six months of 1994, Monsanto purchased in the market 1.9 million shares of its stock for $149 million, the market value on the dates of the purchases. 7 9 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company's Report on Form 10-K for the year ended December 31, 1993, and the Company's Report on Form 10-Q for the quarter ended March 31, 1994, described a number of lawsuits resulting from alleged exposure to substances present at or emanating from the Brio Superfund site near Houston, Texas. Developments have occurred in the following cases: (a) The Company is one of a number of defendants in 14 cases brought in Harris County District Court on behalf of 1,012 plaintiffs who own homes or live in the Southbend or Sageglen subdivisions, attended school in the Southbend subdivision, or used nearby recreational baseball facilities. (b) The Company is a defendant in a case brought in Harris County District Court on behalf of the Clear Creek Independent School District for property damage and consequential damages. On May 16, 1994, an order of dismissal without prejudice was entered against the Company and certain other of the defendants in this matter. The Company will continue to vigorously defend remaining actions. The Company's Report on Form 10-K for the year ended December 31, 1993, and the Company's Report on Form 10-Q for the quarter ended March 31, 1994, described a number of product liability lawsuits arising out of sales by G. D. Searle & Co. ("Searle"), a subsidiary of the Company acquired in 1985, of the Cu-7(R), an intrauterine device. As of July 1, 1994, there were approximately 97 cases pending in various state and federal courts in the United States and approximately 345 cases filed outside the United States (the vast majority in Australia). Searle believes it has meritorious defenses and is vigorously defending each of these lawsuits. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of stockholders on April 22, 1994, seven matters were submitted to a vote of stockholders. 1. The following directors were elected, each to hold office until the next Annual Meeting or until a successor is elected and has qualified or until his or her earlier death, resignation, or removal. Votes were cast as follows:
VOTES VOTES "WITHHOLD NAME "FOR" AUTHORITY" ---- ----- ---------- Joan T. Bok................................................ 101,424,229 1,487,832 Robert M. Heyssel.......................................... 101,458,763 1,453,298 Gwendolyn S. King.......................................... 101,319,023 1,593,038 Philip Leder............................................... 96,172,880 6,739,181 Howard M. Love............................................. 100,569,987 2,342,074 Richard J. Mahoney......................................... 101,119,741 1,792,320 Frank A. Metz, Jr. ........................................ 101,412,827 1,499,234 Buck Mickel................................................ 101,425,044 1,487,017 Jacobus F. M. Peters....................................... 96,657,362 6,254,699 Nicholas L. Reding......................................... 100,616,327 2,295,734 John S. Reed............................................... 101,474,567 1,437,494 William D. Ruckelshaus..................................... 101,474,028 1,438,033 Robert B. Shapiro.......................................... 101,338,145 1,573,916 John B. Slaughter.......................................... 101,435,225 1,476,836
2. The Monsanto Management Incentive Plan of 1994 was ratified by the stockholders. A total of 72,840,114 votes were cast in favor of it, a total of 21,931,023 votes were cast against it, a total of 1,234,379 votes were counted as abstentions, and a total of 6,906,545 votes were counted as broker non-votes. 8 10 3. The Searle/Monsanto Stock Plan of 1994 was ratified by the stockholders. A total of 71,639,899 votes were cast in favor of it, a total of 22,999,284 votes were cast against it, a total of 1,366,333 votes were counted as abstentions, and a total of 6,906,545 votes were counted as broker non-votes. 4. The NutraSweet/Monsanto Stock Plan of 1994 was ratified by the stockholders. A total of 83,099,571 votes were cast in favor of it, a total of 11,514,952 votes were cast against it, a total of 1,390,993 votes were counted as abstentions, and a total of 6,906,545 votes were counted as broker non-votes. 5. The annual incentive program for executive officers was ratified by the stockholders. A total of 79,278,379 votes were cast in favor of it, a total of 22,483,058 votes were cast against it, and a total of 1,150,624 votes were counted as abstentions. 6. The long-term incentive program for executive officers was ratified by the stockholders. A total of 80,313,134 votes were cast in favor of it, a total of 21,357,768 votes were cast against it, and a total of 1,241,159 votes were counted as abstentions. 7. The appointment by the Board of Directors of Deloitte & Touche as principal independent auditors for the year 1994 was ratified by the stockholders. A total of 100,831,482 votes were cast in favor of ratification, a total of 1,263,568 votes were cast against it, and a total of 817,011 votes were counted as abstentions. Brokers were permitted to vote on the election of directors, incentive programs, and ratification of auditors in the absence of instructions from street-name holders; therefore broker non-votes did not occur in those matters. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits-See the Exhibit Index at page 10 of this report. (b) No reports on Form 8-K were filed by the Company during the quarter ended June 30, 1994. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MONSANTO COMPANY -------------------------------------- (Registrant) BRUCE R. SENTS ...................................... Bruce R. Sents Vice President and Controller (On behalf of the Registrant and as Principal Accounting Officer) Date: July 22, 1994 9 11 EXHIBIT INDEX These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
EXHIBIT NUMBER DESCRIPTION ------ ----------- 2 Omitted - Inapplicable 4 Omitted - Inapplicable 10 1. Monsanto Management Incentive Plan of 1994 (incorporated herein by reference to Appendix A of the Monsanto Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994) 2. Searle/Monsanto Stock Plan of 1994 (incorporated herein by reference to and filed with the Monsanto Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994) 3. NutraSweet/Monsanto Stock Plan of 1994 (incorporated herein by reference to and filed with the Monsanto Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994) 4. Annual Incentive Program for Executive Officers (incorporated herein by reference to the description on pages 22-23 of the Monsanto Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994) 5. Long-Term Incentive Program for Executive Officers (incorporated herein by reference to the description on page 23 of the Monsanto Company Notice of Annual Meeting and Proxy Statement dated March 14, 1994) 6. G. D. Searle & Co. Deferred Compensation Plan, as amended in 1994 7. G. D. Searle & Co. Executive Relocation Plan, as amended in 1994 8. Acquisition Agreement dated as of September 11, 1992, between Emerson Electric Co. and Monsanto Company relating to the purchase and sale of Fisher Controls International, Inc. and related businesses, plus identification of contents of omitted schedules and agreement to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request (incorporated herein by reference to Form 8-K dated as of October 1, 1992 and filed on October 9, 1992) 11 Omitted - Inapplicable; see Note 3 of Notes to Financial Statements on page 4 12 Statement re Computation of the Ratio of Earnings to Fixed Charges-See Exhibit 99 below 15 Omitted - Inapplicable 18 Omitted - Inapplicable 19 Omitted - Inapplicable 22 Omitted - Inapplicable 23 Consent of Company Counsel 24 Omitted - Inapplicable 27 Not required 99 Computation of the Ratio of Earnings to Fixed Charges for Monsanto Company and Subsidiaries
10 12 APPENDIX TO FORM 10-Q Throughout the narrative of the printed Form 10-Q, trademarks are initially designated on each page by the letter "R" in a circle. EX-10.6 2 SEARLE DEFERRED COMPENSATION PLAN 1 EXECUTIVE BENEFITS PROGRAM DEFERRED COMPENSATION PLAN JUNE, 1994 SEARLE 2 SEARLE DEFERRED COMPENSATION PLAN TABLE OF CONTENTS
PAGE ---- Overview . . . . . . . . . . . . . . . . . . . . . . . . 2 Eligibility. . . . . . . . . . . . . . . . . . . . . . . 3 How The Plan Works What Am I Deferring . . . . . . . . . . . . . . . . 3 Deferral Choices. . . . . . . . . . . . . . . . . . 4 Interest. . . . . . . . . . . . . . . . . . . . . . 5 What If I Want My Money Early . . . . . . . . . . . 6 Things To Consider. . . . . . . . . . . . . . . . . 6 Pension Impact. . . . . . . . . . . . . . . . . . . 7 Taxes . . . . . . . . . . . . . . . . . . . . . . . 7 What To Do Now. . . . . . . . . . . . . . . . . . . 8 Beneficiary Designation . . . . . . . . . . . . . . 9 Legal Information . . . . . . . . . . . . . . . . . 9
June, 1994 3 SEARLE DEFERRED COMPENSATION PLAN OVERVIEW* FEATURE OVERVIEW - - ------- -------- PURPOSE Provide participants an opportunity for additional timing choices for receiving incentive awards. ELIGIBILITY Employees in grades 8004/9014 or above are eligible to participate in the Searle Deferred Compensation Plan. DEFERRAL ELECTION @ Before June 30 of the applicable performance year for amounts that would otherwise be distributed after the end of the performance year. @ Before June 30, 1994, for amounts banked for 1994, 1995 and 1996, as well as any adjustments to the bank. MINIMUM DEFERRAL $1,000 per deferral election. MAXIMUM DEFERRAL Entire amount of award (including the banked amount) and any performance adjustments to the bank. INTEREST EQUIVALENTS CREDITING RATE Based on Moody's BAA Bonds. PAYMENT DATE Two options are available: @ A "date certain" election - you specify the month and year when you will receive amounts deferred, @ A "retirement" election - you may elect to receive payment after retirement in one lump sum or in annual installments over a specified number of years (maximum 15). PAYMENT FORM There are two options: @ A lump sum payment, @ Payment in annual installments over a specified number of years. IN CASE OF In the event of termination of employment with Searle TERMINATION for any reason other than transfer to another Monsanto unit or retirement while you have a "retirement" election in effect, you or your beneficiary will receive a lump sum after your termination. INDIVIDUAL TAX @ Taxed as ordinary income at the time the award is distributed. @ FICA tax on deferred awards must be collected at the time the award would otherwise be payable, absent a deferral. *This overview is intended as a general reference. Please read the entire booklet carefully for some important details of the terms and conditions affecting deferrals. 2 4 The purpose of the Searle Deferred Compensation Plan is to provide participants with additional choices for receiving incentive awards under the Management Incentive Plan. ELIGIBILITY Employees eligible to participate in the Management Incentive Plan are also eligible for this plan, if they are in grade 9014 or above and are also U.S. citizens residing in the U.S. or citizens of other countries permanently assigned to and residing in the U.S. Citizens of the U.S. on international assignment and citizens of other countries not permanently assigned to the U.S. are not eligible to participate in the Deferred Compensation Plan. The plan will be administered by the Pension Committee. The Pension Committee has chosen to delegate day-to-day administration of the Deferred Compensation Plan to the Pension Administration Committee. All references to "the Committee" refer to the Pension Committee or the Pension Administration Committee, as appropriate. HOW THE PLAN WORKS WHAT AM I DEFERRING? Each year, you have the opportunity to defer some or all of any bonus you are awarded under the Searle Management Incentive Plan of 1994-1996. This deferral election relates only to the annual amount that would be distributed after the end of the performance year. This annual deferral election does not apply to any amounts for the performance year that are "banked". To meet U.S. tax rules, you must decide whether or not to make this annual deferral election no later than June 30 of the applicable performance year: June 30, 1994 for the 1994 performance year; June 30, 1995 for the 1995 performance year; and June 30, 1996 for the 1996 performance year. In addition to the annual deferral election, the Searle Deferred Compensation plan also provides you the opportunity to defer some or all of any award under the Searle Management Incentive Plan for 1994-1996 that is "banked", as well as any adjustments to the banked amount. 3 5 To meet U.S. tax rules, you must decide no later than June 30, 1994 whether or not to defer the banked amounts for 1994, 1995 and 1996, as well as any adjustments to the banked amounts -- all of which would otherwise be payable after the end of the three year cycle (first quarter 1997). Whether you elect to defer or not, you must complete and return the Deferral Election form to your Human Resources Department. WHAT ARE MY DEFERRAL CHOICES? YOUR ELECTION IS IRREVOCABLE. First of all, you will have three choices as to how much you defer. Thus, you can defer: ------------------ @ A cash amount specified by you, but not less than $1,000, or @ All of your incentive payment in excess of an amount you specify. No deferral will be made if the amount deferred turns out to be less than $1,000. @ A specified percentage of your incentive award from 10% to 100%. Again, no deferral will be made if the amount deferred turns out to be less than $1,000. Second, you will have two choices as to when you -------- will receive the deferred payment. You can ---------------------------------- specify: @ The month and year when you want to receive the payment - a "date certain" election - which must be later than March of the year following the performance year, when you would normally receive your payment (or, with respect to banked amounts which are deferred, later than March, 1997), or @ You want to receive the payment in January following the year in which you retire. Finally, you have two choices as to the form of ---- your distribution. You must specify whether you want your distribution to be paid: @ In the form of a lump sum cash payment, or @ In annual payments over a specified number of years, not in excess of 15. 4 6 If prior to the time of payment which you have specified you terminate employment with Searle for any reason (e.g., retirement prior to a "date certain" date, death, termination*, disability), you or, in the event of your death, your beneficiary will receive a cash lump sum payment within a reasonable time. If you die after retirement, but before you have received all of your deferred payment(s), the remaining balance will be paid to your beneficiary within a reasonable time. If you defer, you will need to designate a beneficiary(ies). This designation will apply to all future deferrals and all amounts in your account. You can change your beneficiary at any time. The deferral election will not advance the normal payment date of any award. The term of deferral may be changed by the Committee to enable the Company to comply with wage controls, guidelines, or other governmental requirements. WILL I RECEIVE INTEREST ON THE DEFERRED MONEY? The deferred amount will accumulate "interest equivalents" at an annually adjusted rate as determined by the Committee. The current rate is the average yield during the preceding calendar year for Moody's BAA Bonds. This index is composed of investment grade securities with a twenty-year maturity. Normally, interest equivalents will begin to accumulate April 1, following your March award. They will be credited monthly and will be paid at the end of the deferral period. If you elect to receive annual installments, you'll be credited with interest equivalents on the declining balance. The rate and amount of interest equivalents will be communicated to you annually in a statement showing your year-end account balance. *Termination for cause will result in forfeiture of all amounts which you have banked. 5 7 WHAT HAPPENS IF I WANT MY MONEY EARLIER THAN I SPECIFY? All elections to defer awards (including the amount, time and method of payment) are irrevocable. However, on the request of you or your legal representative, the Committee may allow withdrawal of deferred awards or acceleration of post-retirement installments for cases of severe hardship (as determined by the Committee), death, or total and permanent disability (as determined by the Committee). You or your legal representative must submit a request for withdrawal in writing to the Committee. WHAT ARE SOME OF THE THINGS I SHOULD CONSIDER? If you defer an incentive award: @ You will not have the use of your money during the deferral period, @ You can't transfer your money to other types of investments, or use it as collateral for a loan, @ Deferral may not fit with your retirement and estate plans, @ Tax laws on deferred payments such as these may change, @ You must pay FICA taxes on the amounts deferred in the year the amounts would otherwise be payable, @ Your deferred compensation and interest equivalents will not be put into a trust; --- payment will be made from the general funds of the Company. On the other hand, @ You will be credited with compounded interest equivalents on the full pre-tax amount of your cash award during the deferral period, @ You don't pay income taxes until you receive payment, but then you'll pay ordinary income tax on both the deferred amount and interest, as it is received, 6 8 @ You can defer payments until after retirement as part of your election and can then receive annual installments as supplemental income, @ This will not disqualify you from Social Security benefits to which you would otherwise be entitled after you retire. Refer to the section on taxes for more information. IS THERE ANY EFFECT ON MY PENSION IF I DEFER? Deferral of management incentive awards may impact the amount of benefits you receive under the tax- qualified Retirement Plan, but not the total amount of your pension. "Pensionable earnings" includes base salary and any annual award received, as well as the portion of any award that would have been received had it not been banked. For the year of deferral, IRS regulations will not allow deferred compensation to be considered as "pensionable earnings" under a qualified plan like the Retirement Plan. Consequently, deferring all or a portion of your management incentive award may impact the amount you receive under the Retirement Plan. The key question, however, is: Will the amount of your total pension be less? The answer is "no". To make up the difference--in other words, to ensure that you receive exactly the same pension whether you defer or not-- Searle has established a non-qualified, unfunded retirement plan (a "non-qualified supplemental" retirement plan). Thus, you can defer your award prior to retirement and there will be no effect on your pension amount. WHAT ABOUT TAXES? Electing to defer cash incentive award payments has certain tax considerations. If you are considering deferral, we recommend you review the following information with your tax or estate planning advisor. As noted above, ordinary income tax will be due on the deferred amount and interest equivalents in the year of payment. 7 9 If you die before receiving all deferred amounts, the value of the unpaid balance will be included in your gross estate for federal estate tax purposes. If you request and receive a lump sum distribution of your pension benefits at retirement, the amount coming from the non-qualified supplemental plan is not eligible for long-term capital gains or special averaging treatment available to certain distributions from qualified plans. Also, the non-qualified portion of the lump sum distribution cannot be rolled over to an Individual Retirement Account (IRA). Finally, the value of any post-death payments to your estate from either the qualified or the non- qualified retirement plan will be included in your gross estate for federal estate tax purposes. In addition, FICA tax is due at the time the award is granted, whether you defer or not. The maximum wage base for the old-age, survivor and disability insurance portion (6.2%) will be $60,600 for 1994. Effective January 1, 1994, the dollar limit on compensation subject to the Medicare portion of FICA has been eliminated. Thus, beginning in 1994, the 1.45% Medicare tax will apply to all of an employee's compensation. WHAT DO I NEED TO DO NOW? Once you have made your decision, complete and return the attached transmittal memo. If you wish to defer, also include signed "Deferral Election" form(s). Specifically, if you wish to defer some or all of any annual cash award, complete the 1994 Cash Portion of Annual Incentive Award Deferral Election" form for the annual incentive award by June 30, 1994. In addition, if you wish to defer some or all of any award that is "banked" for 1994, 1995 and 1996, as well as any adjustments to the bank, complete the Banked Portion of Annual Incentive Award: 1994-1996 Deferral Election" form by June 30, 1994. 8 10 BENEFICIARY DESIGNATION FORM If you have previously made a beneficiary designation under the Searle Deferred Compensation Plan, that designation will continue to be in effect. However, if you elect for the first time to defer an incentive award, or if you wish to change your beneficiary designation from a previous incentive award deferral election, this form must be completed and returned. When you have completed the Deferral Election and Beneficiary Designation forms, return a copy to your Human Resources Representative and retain a copy for your personal records. The deferral form for the annual award must be completed and received no later than June 30 of the performance year or June 30, 1994 in the case of the "banked" awards. LEGAL INFORMATION In all events, whether any award is made to a participant and the amount of the award will be dependent on management's recommendation and the decision of the Executive Compensation and Development Committee (ECDC). If in any performance year, the regular common stock cash dividend is reduced, all awards for that year will be reviewed by the ECDC to determine whether changes, if any, are appropriate. All awards are subject to the sole discretion of the Committee, and nothing in this Deferred Compensation Plan or any booklet or other document describing or referring to this Deferred Compensation Plan shall confer any right whatsoever on any person to be considered for any incentive commitments or awards. Nothing in this Deferred Compensation Plan or any booklet or other document describing or referring to this Deferred Compensation Plan shall confer on any employee or participant the right to continue in the employ of the Company or affect the right of the Company to terminate the employment of any such person with or without cause. Nothing contained herein shall require the Company to segregate any monies from its general funds or to create any trusts, or to make any special deposits for any immediate or deferred amounts payable to any participant. 9 11 Neither an incentive commitment nor an unpaid incentive award shall be pledged or transferred except as provided for herein in the case of death. If any participant makes such a pledge or transfer in violation hereof, any obligation of the Company shall terminate. The Company will withhold any federal, state or local, domestic or foreign taxes as required by law or regulation or as the Company deems appropriate from any payments that they make to participants hereunder. This Deferred Compensation Plan and all actions taken hereunder shall be governed by the laws of the State of Illinois. This Deferred Compensation Plan may be amended or terminated by the Committee at any time. However, no such action will reduce the amount which you have deferred or the interest equivalents with which you have been credited. 10 EX-10.7 3 SEARLE EXECUTIVE RELOCATION PLAN 1 SEARLE. . . THE RIGHT MOVE 2 SEARLE. . .THE RIGHT MOVE CONTENTS G.D. Searle Real Estate Co..........................p. 2 Sale of Former Residence ...........................p. 2 Marketing Assistance................................p. 3 Guaranteed Offer....................................p. 3 Amended Value ......................................p. 4 Equity Advances.....................................p. 4 Home Maintenance....................................p. 4 Relocation Expense Budget Payment...................p. 5 Homefinding ........................................p. 5 Home Purchase.......................................p. 6 For Renters.........................................p. 6 Shipment of Household Goods.........................p. 7 Transporting Family.................................p. 8 Tax Assistance .....................................p. 8 Expense Reports Handling............................p. 8 Benefit At A Glance.................................p. 9
This handbook is designed to guide an employee in managing the relocation process as set forth by SEARLE Corporate Relocation Policy. It does not constitute a contract of employment. Policy administration will be consistent with all Federal tax laws as regulated by the Internal Revenue Service. Relocation policy is administered solely for the benefit of SEARLE full-time, exempt employees who are asked to relocate by the Company. 1 3 SEARLE. . .THE RIGHT MOVE The decision to relocate is never a simple one. Coordinating the elements of a relocation is a complex and challenging process. Searle provides you with a comprehensive relocation benefit that is designed to reduce the process to simplicity. Further supporting you is a dedicated, professional, relocation staff whose experience will prove invaluable to you in managing your move. This handbook will guide you through the various features of your relocation benefit. You may direct any questions to your Relocation Administrator at Searle. Our aim is to make your transition from community to community as smooth and problem free as possible. A move with Searle is. . .The Right Move. REAL ESTATE ASSISTANCE G. D. SEARLE REAL ESTATE COMPANY Real estate assistance is provided to our relocating employees through a unique subsidiary of Searle. The real estate subsidiary operates as a corporate brokerage of referrals to the real estate community. If you are selling a home as a result of your move and/or you are planning to purchase a home in your new location, you must contact us BEFORE you talk with a Realtor. We work on a national basis with excellent real estate companies and would be happy to recommend a professional agent to you. If you do not require a recommendation, simply tell us the name and telephone number of the Realtor you wish to work with, and we'll get the process started for you. SALE OF FORMER RESIDENCE If you own a home now, its sale will be one of your primary considerations. Our specialized Relocation Staff works with people on the move every day, so we understand the concern you may have about dealing with the complexities of selling your home. Preparing your home for showings, selecting the best listing agent, and implementing a focused, marketing strategy should be your first priority. While it remains your responsibility to sell your home, Searle's relocation benefit provides you with a comprehensive homesale program to assist you. 2 4 SEARLE. . .THE RIGHT MOVE MARKETING ASSISTANCE The first component of your homesale program is professional assistance in listing and marketing your home. Choosing the most qualified listing agent can be compared to interviewing candidates for employment. It should be an objective process based on a Realtor's past performance, knowledge of your local market, compatibility with your work style, and willingness to work harder than usual to sell your home for you. A Relocation Counselor will manage the Realtor interview and selection process for you. Even if you have predetermined the Realtor you'd like to use, it is recommended that you interview at least one other Realtor to be sure. Your Relocation Counselor will review detailed marketing information about your home that the Realtors provide to formulate a marketing strategy for you. Recommendations will be given to you regarding a realistic list price and how best to prepare your home for showings. Your Counselor will monitor your agent's performance, give you feedback on showings, and help you negotiate offers. The overriding objective of the marketing assistance program is to give you specialized guidance in selling your home for the most money possible while minimizing cost for Searle in avoiding the expense of acquiring your property. You are required to list your home in order to qualify for the guaranteed offer component of the homesale program. GUARANTEED OFFER The second component of the homesale program is a "guaranteed offer" to purchase your home if your marketing efforts are unsuccessful. You must have actively listed your home for no less than two weeks to qualify for initiation of these services through our provider, Coldwell Banker Relocation Services (CBRS). CBRS is in the third party equity business. They provide the service of buying transferees' homes on behalf of corporations at a price determined by independent appraisals. They share our mutual goal of helping you sell your home for the most money possible. A "Relocation Counselor" at CBRS will work with you to coordinate the appraisal process that will formulate your guarantee. You will choose independent fee appraisers who will evaluate your home and predict its most probable sales price based on comparable market data and current market conditions. Two appraisals are ordered, and providing they are within acceptable guidelines (no more than 5% apart), they are averaged to determine your guaranteed offer. You have sixty (60) days to consider the offer and may accept it at any time. Once you do, CBRS will distribute your equity based on your contract and vacate date. CBRS then assumes responsibility for the resale on behalf of Searle. 3 5 SEARLE. . .THE RIGHT MOVE AMENDED VALUE If you are able to obtain a sale through your marketing efforts, CBRS will "amend" their offer to match your sales price once they are sure that any contingencies will likely be met. You will receive your equity based on your sales price and can move to your new location free of further financial responsibility for your home, or the inconvenience of dealing with the details of closing. If something unforeseen happens to the sale and it doesn't close, your guarantee is unaffected. You have essentially "sold" the house to CBRS at the higher, sales price. The real estate commission and normal Seller's costs associated with your sale will be paid by Searle on your behalf. EQUITY ADVANCES CBRS can provide an early equity advance to you while you are marketing your home if you require funds for purchase of your new residence. Up to 90% of your equity in your old home based on the appraised price can be advanced to you interest-free for this purpose. Contact your Relocation Counselor at CBRS if you need to request an advance. HOME MAINTENANCE Should the timing of closing on your new home overlap with ownership of your old home, this feature of the benefit protects you from paying duplicate expenses for up to a period of three months. Mortgage interest, real estate taxes, the cost to maintain (lawn care, utilities, etc.) and the cost to insure your former home will be reimbursed to you during the period of duplication. This means that with the availability of equity advances through CBRS, you may close on your new home without discontinuing your efforts to market your old home for the maximum price. As a result you have a great deal of flexibility in utilizing the program to your benefit. TOGETHER. . . All aspects of the homesale program combined allow you the opportunity to aggressively test the market with professional guidance while retaining the assurances of a guaranteed offer. The guarantee represents Searle's commitment to you to purchase your home at the appraised price for a period of up to sixty days. With the safety net of your guaranteed offer firmly in place you will have powerful leverage to negotiate the highest price possible with potential buyers. 4 6 SEARLE. . .THE RIGHT MOVE If you sell your home and the contract contains terms that preclude CBRS' involvement, or reject the guaranteed offer and subsequently secure a sale, the costs to sell your home will be directly reimbursed to you. Such costs would include: [ ] Licensed real estate broker's commission in accordance with local custom [ ] Advertising expense on sale of home if sale is not handled by broker [ ] Unavoidable expense resulting from mortgage cancellation penalties [ ] State and local transfer taxes [ ] Attorney's fee for closing the sale [ ] Tax stamps [ ] Title policy fee or legal fee for title guarantee [ ] Abstract fees [ ] Survey of lot Your Relocation Administrator can offer you further guidance in this area. The real estate assistance your Relocation benefit provides presents you with many options in coordinating your move. The Relocation staff will help you select the best options and make The Right Move with Searle. EXPENSE BUDGET PAYMENT You will be provided a payment of $20,000.00 to manage expenses involved with homefinding trips, temporary living and other miscellaneous relocation expenses. You are not required to account for your use of the expense budget payment. If your expense control efforts result in partial use of the allowance, the remainder is yours to keep. The expense budget payment will be distributed through the payroll system and the applicable Federal and State taxes will be withheld. HOMEFINDING One of your first visits to your new hometown will probably be a homefinding expedition. Ideally you should know the sales price of your former home before committing to purchase a new home. If your home has not yet sold, or you have not received your guaranteed offer, and wish to contract on a new home, make any offers contingent on the sale of your former home to protect yourself from buying beyond your means. The staff in the Relocation Department will contact a Realtor to work with you in finding a new home. Even if you have a preference for a real estate company or agent, you must allow your Searle Relocation Administrator to call the agent on your behalf. 5 7 SEARLE. . .THE RIGHT MOVE HOME PURCHASE If you are a homeowner in your old location, the Company will assist you in covering expenses to purchase a home in your new location. These expenses would include: [ ] Costs to finance the new home, up to 2% of the borrowed amount, to cover points or loan origination fees [ ] State and local transfer taxes [ ] Attorney's fee for closing the sale, including any fee for recording of the deed [ ] Tax stamps [ ] Title policy fee or legal fee for title insurance [ ] Survey of lot [ ] Abstract fee [ ] Loan application fee [ ] Appraisal fee [ ] Home inspection costs We have preferred relationships with several mortgage providers, and will be happy to provide you with their names. Within days of making loan application to finance your new home, you will be provided a statement estimating your closing costs by your lender. This statement is generally referred to as the "Good Faith Estimate of Closing Costs". The Relocation Department can advance against the expenses covered by the relocation policy upon receipt of a copy of this statement. Please allow sufficient processing time to be sure you have your money in time for your closing. Once your closing is complete, submit a copy of your final closing statement to reconcile the advance. FOR RENTERS If you currently rent your home, there may be a penalty associated with the cancellation of your lease. The Relocation Benefit provides for reimbursement to you of reasonable expenses related to lease cancellation. Ask your landlord to provide you with a receipt for the payment of the penalty, and simply submit it to the Relocation Department along with a completed Relocation Expense Voucher. 6 8 SEARLE. . .THE RIGHT MOVE SHIPMENT OF HOUSEHOLD GOODS If you can point your finger, you can pack and move with Searle. The Company provides you with a full service move through a carefully selected van-line. Full service includes packing, crating, appliance service, van transportation, unpacking and insurance. Insurance is provided for your goods at replacement value. It is recommended that you do not ship items of unusual worth or irreplaceable nature. Appliance service will be provided for you through the carrier if needed. This would include disconnection at your old home and reconnection at destination. Be sure the mover is aware of your needs so this can be coordinated with your moving service. One car will be shipped along with the household goods shipment and mileage expenses at the prevailing corporate mileage rate will be reimbursed to drive a second car to your new location. Shipment will not be made of items commonly disallowed by the carrier such as: [ ] Perishable plants and food [ ] Combustible items [ ] Articles whose contents could cause damage to other articles in the shipment (i.e. paint, caustic substances, cleaning fluid, etc.) Additionally the policy will not cover: [ ] In transit pickups [ ] Alterations to carpets and drapes [ ] Cleaning of old or new residence [ ] Shipment of horses, livestock, pets, boats, tractors, airplanes, antennas and construction materials [ ] Shipment of hobby or recreational equipment of unusual weight, bulk or value (i.e. above-ground swimming pools, rock gardens, large playground equipment, etc.) If storage becomes a consideration in your move, the Company will pay storage charges for up to sixty (60) days. Ultimate delivery out of storage is also paid for by the Company. 7 9 SEARLE. . .THE RIGHT MOVE TRANSPORTING FAMILY One round trip is provided for you to accomplish your move to the new location. Transportation charges are paid for each of your family members to travel to your new home. If you decide to drive rather than fly on your final trip, mileage reimbursement will be made for the most direct route at the corporate mileage rate. Meals and lodging expenses en route will be reimbursed if you drive at least 350 miles daily. Hotel and meals charges are also covered for you and your family during the packing process, if applicable. TAX ASSISTANCE The Internal Revenue Service requires that certain relocation expenses which are either reimbursed to you or paid by Searle on your behalf, be reported as gross income in the year in which the relocation activity occurred. The Company will provide tax protection, based on your earnings, for the incremental Federal and State tax increase resulting from the addition of relocation expenses to your income. No tax protection is provided when it is reasonable to assume that the expense may be claimed as a deduction. Any tax liability resulting from automobile or bonus buy-outs will be your responsibility. Should you leave the Company in a year where relocation expenses have been paid, any tax liability resulting from the addition of these expenses to your earnings will be your responsibility. Itemization of these expenses will be provided to you via Internal Revenue Service Form #4782 to aid in the computation of taxes. The Company offers no interpretation of the IRS regulations applicable to your expenses. You should consult your personal tax advisor regarding these issues. EXPENSE REPORTS All relocation expenses will be reimbursed to you after receipt and review of a completed Relocation Expense Voucher. Attach all original receipts and submit to the Relocation Department. If you are making interim business trips for the company while relocating, be sure to keep these receipts separate to submit as regular business expenses. If you are doubtful about the categorization of any expense, contact your Relocation Administrator. LAST BUT NOT LEAST Whether this is your first or a consecutive move, we hope to make it your best. You and SEARLE are a great combination. 8 10 SEARLE. . .THE RIGHT MOVE YOUR RELOCATION BENEFIT AT A GLANCE [ ] Real estate referral network nationwide [ ] Marketing Assistance Program [ ] Guaranteed offer to purchase your old residence [ ] Duplicate Home Maintenance Costs [ ] Relocation Expense Budget Payment for Homefinding, Temporary Living and Miscellaneous Expenses [ ] New Home Closing Costs [ ] Reimbursement of Lease Cancellation Penalty for Renters [ ] Shipment of Household Goods [ ] One round trip for you to transport family, one one-way for each family member to move to your new home [ ] Storage charges paid for up to sixty days [ ] Tax Assistance for taxable relocation expenses 9 EX-23 4 CONSENT OF COMPANY COUNSEL 1 EXHIBIT 23 CONSENT OF COMPANY COUNSEL I hereby consent to the incorporation by reference in Monsanto Company's Registration Statements on Form S-8 (Nos. 2-36636, 2-76696, 2-90152, 33-13197, 33-21030, 33-39704, 33-39705, 33-39706, 33-39707, 33-49717, 33-53363, 33-53365, and 33-53367) and on Form S-3 (No. 33-46845) of the reference to Company counsel in Note 6 to the Notes to Financial Statements in the Company's Form 10-Q Report for the quarter ended June 30, 1994. In giving this consent I do not thereby admit that I am within the category of persons whose consent is required under Section 7 of the Securities Act of 1933. RICHARD W. DUESENBERG RICHARD W. DUESENBERG General Counsel Monsanto Company Saint Louis, Missouri July 22, 1994 EX-99 5 COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 99 MONSANTO COMPANY AND SUBSIDIARIES COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN MILLIONS)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, ------------------- ---------------------------------------------------------- 1994 1993 1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- ---- ---- Income from continuing operations before provision for income taxes........................... $670 $525* $729* $(174)* $354* $716 $ 954 Add Fixed charges.................. 94 95 184 231 233 248 233 Less capitalized interest...... (5) (6) (12) (16) (24) (29) (22) Dividends from affiliated companies..................... - - 5 5 5 6 7 Less equity income (add equity loss) of affiliated companies... (4) (14) (20) (1) (3) 11 (1) ---- ---- ---- ----- ---- ---- ------ Income as adjusted............... $755 $600 $886 $ 45 $565 $952 $1,171 ---- ---- ---- ----- ---- ---- ------ Fixed charges Interest expense............... $ 67 $ 66 $129 $ 169 $166 $176 $ 176 Capitalized interest........... 5 6 12 16 24 29 22 Portion of rents representative of interest factor............ 22 23 43 46 43 43 35 ---- ---- ---- ----- ---- ---- ------ Fixed charges.................... $ 94 $ 95 $184 $ 231 $233 $248 $ 233 ---- ---- ---- ----- ---- ---- ------ Ratio of earnings to fixed charges......................... 8.03 6.32 4.82 0.19 2.42 3.84 5.03 ---- ---- ---- ---- ---- ---- ---- - - ----- *Includes unusual gain of $35 million for the first six months of 1993, restructuring expense and other unusual items of $(61) million, $699 million and $457 million for the full-year 1993, 1992 and 1991, respectively. Excluding this restructuring expense and other unusual items, the ratio of earnings to fixed charges would have been 5.95 for the six months ended June 30, 1993 and 4.48, 3.22 and 4.39 for the full-year 1993, 1992 and 1991, respectively.
-----END PRIVACY-ENHANCED MESSAGE-----