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1999
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-2516
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MONSANTO COMPANY
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(Exact name of Registrant as specified in its charter)
DELAWARE 43-0420020
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 NORTH LINDBERGH BLVD., ST. LOUIS, MO 63167
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 694-1000
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Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock $2 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Adjustable Conversion-Rate Equity Security Units New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
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 12 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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant: approximately $24.7 billion as of the
close of business on February 29, 2000.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable date:
635,054,641 shares of Common Stock, $2 par value, outstanding at
February 29, 2000.
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PART I
ITEM 1. BUSINESS.
Monsanto Company is a life sciences company, committed to finding
solutions to the growing global needs for food and health by applying
common forms of science and technology among agriculture, nutrition and
health. Monsanto makes, researches and markets high-value agricultural
products, pharmaceuticals and nutrition-based health products. Monsanto
Company was incorporated in 1933 under Delaware law and is the successor
to a Missouri corporation, Monsanto Chemical Works, organized in 1901.
"Monsanto" and the "Company" are used interchangeably to refer to
Monsanto Company or to Monsanto Company and its subsidiaries, as
appropriate to the context.
For 1999, Monsanto reported its business under three segments:
Agricultural Products, Pharmaceuticals, and Corporate and Other. In
1999, Monsanto announced its intention to sell the artificial sweetener
and biogum businesses. The results of operations, financial position,
and cash flows of these businesses, and of the alginates and Ortho(R)
lawn-and-garden products businesses, the dispositions of which were
approved by Monsanto's Board of Directors in 1998, have been
reclassified as discontinued operations; and, for all periods presented,
the consolidated financial statements and notes have been reclassified
to conform to this presentation. In addition, Monsanto transferred the
Roundup(R) lawn-and-garden and nutrition research operations of the
former Nutrition and Consumer Products segment to the Agricultural
Products and Corporate and Other segments, respectively.
The first and last paragraphs appearing under "Definitions" on
page 3, the information regarding sales of certain herbicides in 1999,
1998 and 1997 appearing under "Agricultural Products" on pages 11 and 12,
the information regarding sales of certain arthritis treatments in 1999,
1998 and 1997 appearing under "Pharmaceuticals" on pages 14 and 15, and the
tabular and narrative information appearing in "Note 3: Geographic Data"
on page 32 and in "Note 23: Segment Information" on pages 52 and 53, all
appearing in Exhibit 99.1 of this Report, are incorporated herein by
reference.
PRINCIPAL PRODUCTS
Monsanto's principal products for 1999, categorized by segments
reclassified as described above, include the following:
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AGRICULTURAL PRODUCTS
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MAJOR PRODUCTS END-USE PRODUCTS AND APPLICATIONS
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Roundup(R) herbicide and other glyphosate-based herbicides Nonselective agricultural and industrial applications
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Roundup(R) herbicide Residential lawn and garden applications
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Lasso(R) and Harness(R) herbicides and other Corn, soybean, peanut and milo (sorghum) crops
acetanilide-based herbicides
Corn only
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Avadex(R) BW herbicide, Far-Go(R) herbicide Wheat crops
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Machete(R) herbicide Rice crops
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Permit(R), Manage(R) and Sempra(R) herbicides Postemergence control of sedges and broadleaf weeds in corn and
grain sorghum, turf and sugarcane crops
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Roundup Ready(R) traits in canola, cotton, soybeans Crops tolerant of Roundup(R) and other glyphosate herbicides
and corn
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Bollgard(R) trait in cotton; Crops protected against certain viruses and insect pests
NewLeaf(R), NewLeaf(R) Y and NewLeaf(R) Plus
traits in potatoes; YieldGard(R) trait in corn
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Bollgard(R) and Roundup Ready(R) trait in cotton, Crops tolerant of Roundup(R) and other glyphosate herbicides
YieldGard(R) and Roundup Ready(R) trait in corn and protected against certain insect pests
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AgriPro(R), Agroceres(TM), Asgrow(R), Cargill(R), Corn hybrids, soybean varieties, alfalfa, grain sorghum and
DEKALB(R), Hartz(R), Hybritech(R) and Monsoy(TM) forage varieties, sunflowers, oilseed rape and barley
branded seeds; Holden's Foundation Seeds(TM); varieties, cotton varieties, wheat varieties and hybrids
PBi(R) foundation seed
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Posilac(R) bovine somatotropin Increase efficiency of milk production in dairy cows
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PHARMACEUTICALS
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MAJOR PRODUCTS END-USE PRODUCTS AND APPLICATIONS
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Celebrex(R) (celecoxib), Anti-inflammatory
Daypro(R) (oxaprozin),
Arthrotec(R) (misoprostol/diclofenac)
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Aldactone(R) (spironolactone), Cardiovascular
Aldactazide(R) (spironolactone/ hydrochlorothiazide),
Calan(R) formulations and
Covera-HS(R) (verapamil hydrochloride)
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Ambien(R) (zolpidem tartrate) Central nervous system (sleep)
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CORPORATE AND OTHER
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MAJOR PRODUCTS END-USE PRODUCTS AND APPLICATIONS
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Enviro-Chem(R) engineering and construction management Processing plants for fertilizer producers, basic metals
services for processing plants using sulfuric acid; production, oil refining
proprietary equipment and air pollution control systems
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Products may be sold under different brand names outside the United
States.
Monsanto's products are sold and/or licensed directly to customers in
various industries, to wholesalers and other distributors, to retailers and
to the ultimate user or consumer, principally by its own sales force, or,
in some cases, through third parties. With respect to pharmaceuticals, such
sales force concentrates on detailing to physicians and managed health care
providers. The Pharmaceuticals segment's anti-arthritis product Celebrex(R)
will be co-promoted with Yamanouchi Pharmaceutical Co. Ltd. in Japan and with
Pfizer Inc. in most other countries of the world.
PRINCIPAL EQUITY AFFILIATES
Monsanto participates in a number of joint ventures in which it
shares management control with other companies. For example, Monsanto has a
60% ownership interest in a joint venture with Solutia Inc., from which it
purchases elemental phosphorus. In addition, Monsanto and Cargill
Incorporated have established Renessen LLC, a worldwide joint
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venture in which Monsanto has a 50% interest, to create and market new
products enhanced through biotechnology for the crop processing and animal
feed markets.
SALE OF PRODUCTS
Monsanto's net income has been historically higher during the first
half of the year, primarily because of the concentration of generally more
profitable sales of the Agricultural Products segment during that part of
the year. Monsanto's marketing and distribution practices do not result in
unusual working capital requirements on a consolidated basis, although the
seasonality of sales of the Agricultural Products segment results in short-
term borrowings to finance customer accounts receivable and inventories.
Inventories of finished goods, goods in process and raw materials are
maintained to meet customer requirements and Monsanto's scheduled
production. In general, Monsanto does not manufacture its products against
a backlog of firm orders; production is geared primarily to the level of
incoming orders and to projections of future demand.
Monsanto generally is not dependent upon one or a group of customers
and Monsanto has no material contracts with the government of the United
States or any state, local or foreign government. However, pursuant to
contracts executed under U.S. federal and state laws, the Pharmaceuticals
segment pays rebates to state governments for pharmaceuticals sold under
state Medicaid programs and under state-funded programs for the indigent.
The Pharmaceuticals segment also grants discounts to certain managed health
care providers. Sales through managed health care providers constitute an
increasing percentage of that segment's sales.
Introduction of new products by the Agricultural Products and
Pharmaceuticals segments typically is, and introduction of new products by
other segments may be, subject to prior review and approval by the FDA, the
U.S. Environmental Protection Agency and/or the U.S. Department of
Agriculture (or comparable agencies of governments outside the United
States) before they can be sold. Such reviews are often time-consuming and
costly. These agencies also have continuing jurisdiction over many existing
products of these segments. Governmental actions may also affect or
determine the pricing of certain products, particularly in the
Pharmaceuticals segment.
RAW MATERIALS AND ENERGY RESOURCES
Monsanto is both a producer and significant purchaser of a wide
spectrum of its basic and intermediate raw material requirements. Major
requirements for key raw materials and fuels are typically purchased
pursuant to long-term contracts. Monsanto is not dependent on any one
supplier for a material amount of its raw materials or fuel requirements,
but certain important raw materials are obtained from a few major
suppliers. Monsanto purchases its North American supply, and has the option
to purchase its ex-North American supplies, of elemental phosphorus, a key
raw material for the production of Roundup(R) brand herbicides, from P4
Production, L.L.C., a joint venture between the Company and Solutia Inc. In
general, where Monsanto has limited sources of raw materials, it has
developed contingency plans to minimize the effect of any interruption or
reduction in supply.
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While temporary shortages of raw materials and fuels may occasionally
occur, these items are generally sufficiently available to cover current
and projected requirements. However, their continuing availability and
price are subject to unscheduled plant interruptions occurring during
periods of high demand, or due to domestic and world market and political
conditions, as well as to the direct or indirect effect of U.S. and other
countries' government regulations. The impact of any future raw material
and energy shortages on Monsanto's business as a whole or in specific world
areas cannot be accurately predicted. Operations and products may, at
times, be adversely affected by legislation, shortages or international or
domestic events.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS
Monsanto owns a large number of patents which relate to a wide
variety of products and processes and has pending a substantial number of
patent applications. United States Plant Variety Protection Act
Certificates and foreign plant registrations are also significant to the
Agricultural Products segment. In addition, Monsanto holds a number of
licenses granted by other parties, some of which may be significant.
Monsanto also owns a considerable number of established trademarks in many
countries under which it markets its products. Monsanto's patents and
trademarks in the aggregate are of material importance to the Agricultural
Products and Pharmaceuticals segments. Certain proprietary products are
covered by patents. Certain of Monsanto's patents and licenses are
currently the subject of litigation; see "Legal Proceedings" below.
Although patents protecting Roundup(R) herbicide have expired in most
countries, compound per se patent protection for the active ingredient in
Roundup(R) herbicide continues in the United States until September 20,
2000. Monsanto's insect-resistant seed traits (including NewLeaf(R) traits
in potato, YieldGard(R) trait in corn and Bollgard(R) trait in cotton) are
protected by patents which extend until at least 2013. Monsanto's
herbicide-resistant seed traits (Roundup Ready(R) traits in cotton, corn,
canola and soybeans) are protected by patents which extend until at least
2014. Posilac(R) bovine somatotropin is protected by a United States patent
that expires in 2008, and by corresponding patents in other countries, most
of which expire in 2005. Other patents protect various aspects of bovine
somatotropin manufacture in the United States and expire as late as 2012;
corresponding patents in other countries have varying terms.
Calan(R) SR, an antihypertensive pharmaceutical, is licensed through
the year 2004 to Searle by a third party, which has retained co-marketing
rights. The product no longer has patent protection nor non-patent
regulatory exclusivity conferred by the Waxman-Hatch amendments to the U.S.
Food, Drug and Cosmetics Act. Cytotec(R) ulcer preventive drug is protected
by a U.S. composition patent until July 29, 2000. Ambien(R) short-term
treatment for insomnia is licensed to a joint venture of which Searle is a
general partner for the duration of the venture. Pursuant to the joint
venture agreement, the other partner has agreed to purchase Searle's
interest and thereby terminate the venture in April 2002. Ambien(R) is
protected by a U.S. patent until October 21, 2006. Daypro(R) once-a-day
arthritis treatment is licensed to Searle until January 5, 2003 in the U.S.
and varying dates in other countries. This product is protected by a U.S.
process patent that expires on February 26, 2002 and by non-patent
regulatory exclusivity extending to April 29, 2000. Arthrotec(R)
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arthritis treatment is protected by a U.S. patent until February 11, 2014.
Celebrex(R), a COX-2 inhibitor for the treatment of osteoarthritis and
rheumatoid arthritis is protected by a U.S. patent to November 30, 2013 and
by regulatory exclusivity under the Waxman-Hatch Act to December 31, 2003.
COMPETITION
Monsanto encounters substantial competition in each of its industry
segments. This competition, from other manufacturers of the same products
and from manufacturers of different products designed for the same uses, is
expected to continue in both U.S. and ex-U.S. markets. Depending on the
product involved, various types of competition are encountered, including
price, delivery, service, performance, product innovation, product
recognition and quality.
The number of Monsanto's principal competitors varies from product to
product. It is not practical to discuss Monsanto's numerous competitors
because of the large variety of Monsanto's products, the markets served and
the worldwide business interests of Monsanto. Overall, however, Monsanto
regards its principal product groups to be competitive with many other
products of other producers and believes that it is an important producer
of many of such product groups.
RESEARCH AND DEVELOPMENT
Research and development constitute an important part of Monsanto's
activities. See "Development and Commercialization of New Products Continue
to be Priorities," and "Note 21: Supplemental Data", on pages 8 and 51,
respectively, appearing in Exhibit 99.1 of this Report and incorporated
herein by reference.
ENVIRONMENTAL MATTERS
Monsanto remains strongly committed to complying with various laws
and government regulations concerning environmental matters and employee
safety and health in the United States and other countries. Monsanto is
dedicated to long-term environmental protection and compliance programs
that reduce and monitor emissions of hazardous materials into the
environment, as well as to the remediation of identified existing
environmental concerns. While the costs of compliance with environmental
laws and regulations cannot be predicted with certainty, Monsanto does not
expect such costs to have a material adverse effect upon its capital
expenditures, earnings, or competitive position. See information regarding
remediation of waste disposal sites appearing in "Note 20: Commitments and
Contingencies" on page 50 appearing in Exhibit 99.1 of this Report and
incorporated herein by reference.
On November 22, 1999, Monsanto, Solutia Inc. and P4 Production,
L.L.C. ("P4 Production") received notice that the Department of Justice
("DOJ") was preparing a federal court enforcement action against the
companies on behalf of the Environmental Protection Agency (EPA). P4
Production is a joint venture formed by Monsanto and Solutia Inc.
("Solutia"), and operated by Solutia under an operating agreement with P4
Production. The potential action concerned alleged violations of Wyoming's
environmental laws and
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regulations, and an air permit issued in 1994 by the Wyoming Department of
Environmental Quality to Sweetwater Resources, Inc., a former subsidiary of
Monsanto's. The permit was issued for a coal coking facility in Rock
Springs, Wyoming that is currently owned by P4 Production. The DOJ
recommended a proposed settlement of $2.5 million. After discussions with
the DOJ, Monsanto, Solutia and P4 Production filed a lawsuit in the United
States District Court for the District of Wyoming on January 18, 2000
against the EPA seeking a declaratory judgment that the threatened
enforcement action is precluded by the doctrine of res judicata on the
grounds that the companies had already fully resolved the underlying
allegations in a consent decree entered in the First Judicial District
Court in Laramie County, Wyoming on June 25, 1999.
EMPLOYEE RELATIONS
As of December 31, 1998, Monsanto had approximately 29,900 employees
worldwide, 1,700 of whom were associated with businesses classified as
discontinued operations. Satisfactory relations have prevailed between
Monsanto and its employees.
INTERNATIONAL OPERATIONS
Monsanto and affiliated companies are engaged in manufacturing, sales
and/or research and development in the United States, Europe, Canada, Latin
America, Australia, Asia and Africa. A number of products are manufactured
abroad. Ex-U.S. operations are potentially subject to a number of unique
risks and limitations, including: fluctuations in currency values; exchange
control regulations; import and trade restrictions, including embargoes;
governmental instability; economic conditions in other countries; and other
potentially detrimental domestic and foreign governmental practices or
policies affecting U.S. companies doing business abroad. See "Note 3:
Geographic Data" on page 32 appearing in Exhibit 99.1 of this Report and
incorporated herein by reference.
LEGAL PROCEEDINGS
Because of the size and nature of its business, Monsanto is a party
to numerous legal proceedings. Most of these proceedings have arisen in the
ordinary course of business and involve claims for money damages or seek to
restrict Monsanto's business activities. While the results of litigation
cannot be predicted with certainty, Monsanto does not believe these matters
or their ultimate disposition will have a material adverse effect on
Monsanto's financial position, profitability or liquidity in any one year,
as applicable.
In 1974, Searle introduced in the United States an intrauterine
contraceptive product, commonly referred to as an intrauterine device
("IUD"), under the name Cu-7(R). Following extensive testing by Searle and
review by the FDA, the Cu-7(R) was approved for sale as a prescription drug
in the United States. It was marketed internationally as the Gravigard(R).
Searle has been named as a defendant in a number of product liability
lawsuits alleging that this IUD caused personal injury resulting from
pelvic inflammatory disease, perforation, pregnancy or ectopic pregnancy.
As of March 1, 2000, there remains 1 case pending in the United States, and
approximately 270 cases filed outside the United States (the vast majority
in Australia). On February 22, 1999, Searle received a defense verdict
after a trial of the nine lead Australian plaintiffs. Though not
technically a class
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action, these nine individuals are considered representative of the entire
group of Australian plaintiffs. Plaintiffs' are appealing that verdict.
The lawsuits seek damages in varying amounts, including compensatory and
punitive damages, with most suits seeking at least $50,000 in damages.
Searle believes it has meritorious defenses and is vigorously defending
each of these lawsuits. On January 31, 1986, Searle voluntarily
discontinued the sale of the Cu-7(R) in the United States, citing the cost
of defending such litigation. Ex-U.S. sales were discontinued in 1990.
Searle has been named, together with numerous other prescription
pharmaceutical manufacturers and in some cases wholesalers or distributors,
as a defendant in a large number of related actions brought in federal
and/or state court, based on the practice of providing discounts or rebates
to managed care organizations and certain other large purchasers. The
federal cases have been consolidated for pre-trial proceedings in the
Northern District of Illinois. The federal suits include a certified class
action on behalf of retail pharmacies representing the majority of retail
pharmacy sales in the United States. The class plaintiffs alleged an
industry-wide agreement in violation of the Sherman Act to deny favorable
pricing on sales of brand-name prescription pharmaceuticals to certain
retail pharmacies in the United States. The other federal suits, brought as
individual claims by several thousand pharmacies, allege price
discrimination in violation of the Robinson-Patman Act as well as Sherman
Act claims. Several defendants, not including Searle, settled the federal
class action case. On November 30, 1998, Searle and its co-defendants in
the Federal class action case received a verdict for the defense and all
claims were dismissed. On July 13, 1999, the U. S. Court of Appeals for
the Seventh Circuit upheld most of the lower court's decision to throw out
price fixing charges against the manufacturers as well as the wholesalers,
but reversed the trial judge on one discrete issue involving the Consumer
Price Index. Petitions for a rehearing on that issue have been denied.
Cases relating to the chain pharmacies that had opted out of the class are
in the final stages of discovery. In addition, consumers and a number of
retail pharmacies have filed suit in various state courts throughout the
country alleging violations of state antitrust and pricing laws. While many
of these suits have been settled, suits remain pending in a number of
states including California, Alabama, New Mexico and West Virginia.
On December 14, 1999, suit was filed against Monsanto in the United
States District Court for the District of Columbia (Cause No. 1:99CV03337)
by six farmers as representative of a putative class action alleging that
purchasers of genetically modified soybean and corn seed may assert
antitrust and other claims against Monsanto. The suit alleges that
Monsanto has violated various antitrust laws and unspecified international
laws through its patent license agreements and has breached an implied
warranty of merchantability by offering for sale genetically modified seed.
Nine other companies are accused in the lawsuit of participating in an
international cartel to violate the antitrust laws but Monsanto is the only
named defendant. The suit claims anti-competitive behavior and
monopolistic practices by artificially inflating the prices of genetically
modified seed and imposing excessive technology fees, prohibiting the reuse
of modified seed, or requiring the use of specified herbicides with the
seed. The suit claims that despite governmental approval for the sale of
the genetically modified products there are uncertain risks posed by the
technology which subjects Monsanto to liability regardless of the actual
safety of the products. Plaintiffs seek declaratory and injunctive relief
in addition to antitrust, treble,
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compensatory and punitive damages and attorneys' fees. On November 8,
1999, a similar lawsuit was filed by a single plaintiff in United States
District Court for the Northern District of Mississippi (Cause No.
2:99CV218-P-B) alleging to represent a putative class of soybean farmers
who have purchased genetically-modified soybeans which contain Monsanto's
patented technology. The complaint asserts claims under the Racketeer
Influenced and Corrupt Organizations Act (RICO) and various antitrust acts
and also asserts claims for breach of contract. The suit seeks an award of
antitrust damages, treble damages and compensatory damages and attorneys'
fees. On February 14, 2000, a similar lawsuit was filed in United States
District Court for the Southern District of Illinois (Cause No. 00-403JLF),
on behalf of five farmers purporting to represent various classes of
farmers and alleging claims virtually identical to those in the District of
Colombia and Mississippi cases. Monsanto has filed motions to dismiss the
District of Columbia and Mississippi cases with prejudice. Subsequently,
plaintiffs filed motions to dismiss these cases without prejudice, and have
expressed their intention to refile in connection with the Illinois case.
Monsanto is vigorously defending these lawsuits and has meritorious
defenses to all claims in the lawsuits, including: failure to state any
claim under existing law, no breach of any legal duty, lack of damage,
legal authorization to extend technology licenses under the patent laws and
other defenses. Monsanto will maintain in the litigation that its products
are safe, approved for sale by regulatory authorities and that its actions
have been pro-competitive under the antitrust laws and protected under the
patent laws.
In 1996 Monsanto was the first to commercially introduce cotton
containing a gene encoding for Bacillus thuringiensis ("Bt") endotoxin.
Monsanto is a leader in this scientific field and has engaged in Bt
research and biotechnology development over many years and owns a number of
present and pending patents which relate to this technology. On October 22,
1996, Mycogen Corporation ("Mycogen") filed suit in U.S. District Court in
Delaware seeking damages and injunctive relief against Monsanto, DEKALB
Genetics Corporation ("DEKALB") (subsequently acquired by Monsanto) and
Delta & Pine Land Company alleging infringement of Bt related U.S. Patent
Nos. 5,567,600 and 5,567,862 issued to Mycogen on that date. Jury trial in
this matter concluded on February 3, 1998 with a verdict in favor of all
defendants. The patents of Mycogen were found invalid on the basis that
Monsanto was a prior inventor. On September 8, 1999, the District Court
issued a revised order which upheld the jury verdict and also ruled that
Mycogen's patents were invalid due to their lack of enablement. Mycogen's
appeal was filed in the Court of Appeals for the Federal Circuit on
December 6, 1999, as appeal number 00-1001-1051. Monsanto has meritorious
legal positions and will continue to vigorously oppose Mycogen's claims in
the appeal.
On May 19, 1995, Mycogen Plant Science Inc. initiated suit in U.S.
District Court in California against Monsanto alleging infringement of U.S.
Patent No. 5,380,831 involving synthetic Bt genes and seeking damages and
injunctive relief. On November 10, 1999, the District Court granted summary
judgment in Monsanto's favor dismissing all of Mycogen's patent claims and
finding the patent invalid on the basis of prior invention by Monsanto.
Previously, the District Court had also held that products containing Bt
genes made prior to January 1995 did not infringe the patent. Mycogen has
filed an appeal with the Court of Appeals for the Federal Circuit (Appeal
Number 00-1127) seeking to overturn the dismissal. Monsanto has various
meritorious defenses against all claims of Mycogen
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including non-infringement, lack of validity, prior invention and
collateral estoppel as a result of the outcome in the jury trial in which
Mycogen's related patents were found invalid. Monsanto will continue to
vigorously oppose the claims of Mycogen in the litigation. Monsanto is
also a party in interference proceedings against Mycogen in the U.S. Patent
and Trademark Office to determine the first party to invent certain
inventions related to Bt technology and has requested a stay of the
interference pending determination of the appeals. In all of the foregoing
actions Monsanto has meritorious legal positions which it is vigorously
litigating to establish that the final judgment in the Delaware litigation
is dispositive of Mycogen's claims and that all Mycogen Bt patents are
invalid as a result of prior judicial determinations.
On December 22, 1999, Mycogen Plant Science, Inc. ("MPS"), filed a
patent suit in the Federal Court of Australia, Victoria District Registry
as Cause No. V746 of 1999, against Monsanto Australia Limited and DeltaPine
Australia Limited. The suit alleges that the respondents have infringed
certain claims of two Australian patents (574101 and 623429) associated
with Bt technology. These patents are Australian counterparts to patents
and inventions found invalid in other jurisdictions. Monsanto has
meritorious defenses against the lawsuit, including patent invalidity due
to lack of enablement, prior art and obviousness. Monsanto will vigorously
defend against MPS's claims in the action.
Monsanto and/or DEKALB are involved in various legal actions
involving herbicide-resistant and/or insect-resistant fertile, transgenic
corn. The DEKALB patents involved in the most significant DEKALB-initiated
transactions are: U.S. Patent No. 5,484,956 covering fertile, transgenic
corn plants expressing genes encoding Bacillus thuringiensis (Bt)
insecticidal proteins; U.S. Patent No. 5,489,520 covering the
microprojectile method for producing fertile, transgenic corn plants
covering a bar or pat gene, as well as the production and breeding of
progeny of such plants; U.S. Patent Nos. 5,538,880 and 5,538,877 directed
to methods of producing either herbicide-resistant or insect-resistant
transgenic corn; and U.S. Patent No. 5,550,318 directed to transgenic corn
plants containing a bar or pat gene (all lawsuits related to this patent
have been stayed pending resolution of an interference proceeding at the
U.S. Patent and Trademark Office). (a) DEKALB has filed infringement
actions in U.S. District Court for the Northern District of Illinois (the
"Rockford Litigation"). These include actions initially filed on April 30,
1996, against Pioneer Hi-Bred International, Inc. ("Pioneer") and Mycogen
Corporation and two of its subsidiaries; and on August 27, 1996, against
several Hoechst Schering AgrEvo GmbH entities. In each case DEKALB has
asked the court to determine that infringement has occurred, to enjoin
further infringement and to award unspecified compensatory and exemplary
damages. By order dated June 30, 1999, a special master appointed in the
Rockford Litigation construed the patent claims in a manner largely in
accord with the position of DEKALB. The judge has adopted the findings of
the special master and appointed a settlement mediator to conduct
discussions among the parties. (b) On July 2, 1999, DEKALB sued Pioneer in
United States District Court for the Northern District of Illinois in a
patent interference action to declare that DEKALB was the first inventor of
the microprojectile method of producing fertile transgenic corn. Pioneer's
motion to dismiss that litigation has been denied. On July 30, 1999,
DEKALB moved to consolidate this suit with the remainder of the Rockford
Litigation for purposes of trial but the consolidation request has been
provisionally denied. (c) On November 23, 1999, Pioneer sued Monsanto,
DEKALB and Novartis Seeds Inc. in United States District Court for the
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Eastern District of Iowa (Cause No 4-99-CV90666) for alleged infringement
of its new patent (United States Patent No. 5,990,387) pertaining to
microprojectile transformation of corn. Suit was also filed by DEKALB (CA
99-C-50385) on the same date in the federal court responsible for the
Rockford Litigation seeking an interference action to declare that DEKALB
was the first inventor of the microprojectile method of producing fertile
transgenic corn.
On March 19, 1996, Monsanto was issued U.S. Patent No. 5,500,365
pertaining to synthetic Bt genes and filed suit in U.S. District Court in
Delaware seeking damages and injunctive relief against Mycogen Plant
Science, Inc., Agrigenetics, Inc. and Ciba-Geigy Corporation (Seed
Division) (now Novartis Seeds, Inc.) for infringement of that patent. Trial
of this matter ended June 30, 1998, with a jury verdict that while the
patent was literally infringed by defendants, the patent was not
enforceable due to a finding of prior invention (now owned by Monsanto) by
another party, and not infringed due to the defense of the reverse
doctrine of equivalents. On September 8, 1999 the District Court affirmed
in part the jury's verdict on the issue of prior invention but overturned
the finding of non-infringement on the reverse doctrine of equivalents.
The matter remains pending on appeal and Monsanto is continuing to litigate
vigorously its position on appeal.
On March 27, 1997, Pioneer Hi-Bred International Inc. ("Pioneer")
filed an action against Monsanto which is now pending in U.S. District
Court for the Eastern District of Missouri (4:97CV01609-ERW). In the
lawsuit, Pioneer alleged that it was entitled to obtain via Monsanto a
license to the corn transformation patents of DEKALB which were being
enforced against Pioneer in the Rockford Litigation. Pioneer's license
claims all have been denied by the District Court and Pioneer's claims have
been dismissed. The litigation remains pending only to consider Monsanto's
counterclaim to terminate the 1993 license to Pioneer pertaining to Bt corn
technology, including the Yieldgard(R) corn product which is currently sold
by Pioneer. Monsanto's counterclaims allege that Pioneer's actions
breached the contract. All of Pioneer's summary judgment motions have been
denied. Compensatory damages and equitable relief to terminate Pioneer's
existing rights under the 1993 license for Yieldgard(R) Bt corn product and
technology are sought by Monsanto in the litigation. The case is set for
jury trial commencing in August 2000.
On November 30, 1999, Monsanto filed suit against Pioneer Hi-Bred
International Inc. (4:99CV0917-LOD) ("Pioneer") in U.S. District Court for
the Eastern District of Missouri to terminate a technology license for
glyphosate tolerant soybeans and canola which had been previously extended
to Pioneer and was assigned by Pioneer in connection with its merger with
E.I. DuPont De Nemours and Company. The lawsuit alleges that the
assignment resulted in unauthorized sales of herbicide tolerant soybeans
and canola and thereby infringed Monsanto patents and violated certain of
its trademark rights. Monsanto seeks injunctive relief and is vigorously
pursuing its claims against Pioneer in the lawsuit.
In 1997 Monsanto commercially introduced corn containing a gene
providing glyphosate resistance. On November 20, 1997, Aventis CropScience
S.A. (formerly Rhone Poulenc Agrochimie S. A.) ("Aventis") filed suit in
U.S. District Court in North Carolina (Charlotte) against Monsanto and DEKALB
(now a subsidiary of Monsanto) alleging that a 1994 license agreement (the
"1994 Agreement") between DEKALB and Aventis was
11
induced by fraud stemming from DEKALB's nondisclosure of a research report
involving testing of plants to determine glyphosate tolerance. Aventis
also alleged that DEKALB did not have a right to license, make or sell
products using Aventis technology for glyphosate resistance under the terms
of the 1994 Agreement. The subject of the 1994 Agreement and of the
lawsuit is certain technology incorporated in herbicide-resistant corn
known as "GA21 corn". On April 5, 1999, the trial court rejected Aventis's
claim that the contract language did not convey a license but found that a
disputed issue of fact existed as to whether the contract was obtained by
fraud. Jury trial of the fraud claims ended April 22, 1999, with a verdict
for Aventis and against DEKALB, under which the jury awarded $15 million in
actual damages for "unjust enrichment" and $50 million in punitive damages.
The trial was bifurcated to allow claims for patent infringement and
misappropriation of trade secrets to be tried before a different jury.
Jury trial of the patent infringement and misappropriation claims ended
June 3, 1999, with a verdict for Aventis and against DEKALB. On or about
February 8, 2000, the District Court issued its order affirming both the
fraud and infringement/misappropriation jury verdicts against DEKALB and
enjoining DEKALB from future sales of GA21 corn (other than materials held
in DEKALB's inventory on June 2, 1999). The District Court suspended entry
of the injunction for 30 days to allow DEKALB to file an appeal and request
a stay of the injunction. Notice of Appeal has been filed by DEKALB and
the matter is now on appeal to the U. S. Court of Appeals for the Federal
Circuit, which has extended the stay and is considering whether the stay
should be extended for the duration of the appeal. DEKALB will vigorously
appeal the injunction and verdicts and will assert its meritorious defenses
to all remaining claims in the litigation. DEKALB is continuing to defend
the litigation and maintains that it also remains licensed to use any
Aventis technology incorporated in GA21 corn notwithstanding the verdict or
any subsequent action that may occur to rescind the 1994 license between
Aventis and DEKALB. In addition to the claim of license, DEKALB believes
that it has other meritorious defenses to the patent and trade secret
allegations, including patent invalidity and absence of trade secret status
due to Aventis's own public disclosure of the alleged trade secret. The
District Court had dismissed Monsanto from both phases of the trial prior
to verdict on the legal basis that it was a bona fide licensee of the GA21
corn technology. Monsanto, its licensees and DEKALB (to the extent
permitted under the District Court's order and an agreement with Aventis)
continue to sell GA21 corn pursuant to a royalty-bearing agreement with
Aventis, entered into prior to the June 3, 1999 jury verdict. Previously,
Monsanto and DEKALB had announced their intention to replace GA21 corn,
commencing in 2001, with new technology that is not associated with the
claims asserted by Aventis in the litigation.
In June 1996, Mycogen Corporation ("Mycogen"), Agrigenetics Inc. and
Mycogen Plant Sciences, Inc. ("MPS") filed suit against Monsanto in
California State Superior Court in San Diego, alleging damage by an alleged
failure of Monsanto to license, under an option agreement, technology
relating to Bt corn and to glyphosate resistant corn, cotton and canola. On
September 9, 1996, Monsanto successfully demurred to all claims but
plaintiffs were permitted to amend to file a damage claim seeking recovery
under a theory of continuing breach. On October 20, 1997, the court
construed the contract as involving only a license to receive genes rather
than a license to receive germplasm. Jury trial of the remaining damage
claim for lost future profits from the alleged delay in performance ended
March 20, 1998, with a verdict against Monsanto awarding damages totaling
$174.9 million. The case is now on appeal as Appeal No. D031336 before the
California Court of
12
Appeal for the Fourth Appellate District. Mycogen, Agrigenetics Inc. and
MPS have filed a cross appeal seeking to reinstate claims for damages that
were dismissed prior to trial. This cross appeal has been consolidated for
all purposes on appeal. Monsanto has numerous meritorious defenses and
grounds to overturn the award, including the speculative nature of the
damages for lost future profits, improper splitting of the causes of
action, lack of continuing breach, and trial error in directing a verdict
against Monsanto on the issue of liability. Mycogen and MPS are also
seeking to overturn an award of monetary sanctions against them in
connection with this litigation and to obtain a determination that the
contract entitles Mycogen and MPS to a license to germplasm from Monsanto.
Monsanto will continue to vigorously litigate its position on appeal.
On October 28, 1998, two related lawsuits were filed in U.S. District
Court in Iowa: one against Asgrow Seed Company, L.L.C. ("Asgrow"), a
subsidiary of Monsanto (No. 4-98-CV-70577); and the other against DEKALB
(since acquired by Monsanto) (No. 4-98-CV-90578). The lawsuits allege that
defendants misappropriated trade secrets of Pioneer in their corn breeding
programs. On October 8, 1999, Pioneer added the prior owners of Asgrow and
DEKALB (The Upjohn Company and Pfizer Inc.) and Monsanto as defendants in
the litigation. In addition to claims under Iowa state law for trade
secret misappropriation, Pioneer alleges violations of the Lanham Act and
the patent law. Actual and exemplary damages and injunctive relief are
sought. Pioneer also asserts that defendants have violated an unspecified
contractual obligation not to breed with Pioneer germplasm. On July 17,
1999, the court denied without prejudice defendants' motions to dismiss the
initial trade secret claims. On January 4, 2000, the District Court
allowed Pioneer to amend its claims in the litigation to assert claims that
the defendants infringed numerous patents. As a consequence of the new
claims the prior trial date has been vacated and no trial date has been
assigned. The defendants have meritorious defenses including non-
infringement of patents, lack of validity of the patents on numerous
grounds, preemption, laches, statute of limitations, lack of trade secrets,
ownership of the germplasm, bona fide purchaser status and other defenses.
The defendants will vigorously defend against Pioneer's claims in the
litigation.
Monsanto is engaged in litigation relating to the failed merger with
Delta and Pine Land Company ("D&PL"). On December 20, 1999, Monsanto
announced that it had withdrawn its filing for U.S. antitrust clearance of
the proposed merger. The filing was withdrawn in light of the U.S.
Department of Justice's unwillingness to approve the transaction on
commercially reasonable terms. (a) Following the announcement on May 11,
1998, of the merger agreement between Monsanto and D&PL, five alleged
holders of D&PL common stock filed suits, now consolidated (the "D&PL
Shareholder Suit"), in the Delaware Court of Chancery in and for New Castle
County against Monsanto, D&PL, and members of the D&PL Board of Directors
(the "D&PL Board"). Seeking to represent a purported class of D&PL
shareowners, plaintiffs in the D&PL Shareholder Suit alleged that the
consideration that was to be received by holders of D&PL common stock in
the merger was unfair and inadequate, that the members of the D&PL Board
breached their fiduciary duties by approving the transaction and that
Monsanto aided and abetted such breaches. Plaintiffs in the D&PL
Shareholder Suit sought judgment declaring that each Delaware action is
maintainable as a class action, preliminarily and permanently enjoining
consummation of the merger or rescinding the transaction in the event that
it was consummated, awarding unspecified compensatory damages against
defendants, and
13
awarding plaintiffs their attorneys' fees and expenses. On or about
November 18, 1998, the parties in the D&PL Shareholder Suit entered into
a Memorandum of Understanding to settle the litigation. That Memorandum
of Understanding, however, appears to be null and void because of the
failure of completion of the merger. (b) On December 30, 1999, a
derivative and class action lawsuit was filed (Civil Action 17707) (the
"Delaware Suit"), by two alleged holders of D&PL common stock, in the
Delaware Court of Chancery. Defendants include Monsanto, D&PL and
members of the D&PL Board. The Delaware Suit relates to Monsanto's
withdrawal of its filing for U.S. antitrust clearance of the proposed
merger, and alleges that D&PL has been harmed by the termination of the
effort to complete the transaction and that the individual defendants
have a continuing duty to seek a value-maximizing transaction for the
shareholders. The suit seeks a declaration that the individual
defendants have violated their fiduciary duties and a direction that the
individual defendants take certain actions to maximize shareholder
value. The suit also requests compensatory damages, costs,
disbursements and fees. (c) On January 18, 2000, suit was reinstituted
against Monsanto by D&PL (Cause No. 2000-2) in Circuit Court of the
First Judicial District of Bolivar County, Mississippi, seeking
compensatory and punitive damages allegedly as a result of the failure
to complete the merger pursuant to the exercise of reasonable efforts.
Monsanto did exercise commercially reasonable efforts to complete the
transaction and believes it has meritorious defenses to the claims in
the lawsuits and will vigorously defend the actions. Monsanto has
requested a stay of the Bolivar County suit during the pendency of the
previously-filed Delaware Suit.
On April 15, 1996, one hundred ten (110) current and former
employees of Fisher Controls International, Inc. ("Fisher"), a former
subsidiary of Monsanto, filed suit against Monsanto in the District
Court of Brazoria County, Texas, 149th Judicial District (Cause No.
96M0975), alleging breach of contract, breach of a duty of good faith
and fair dealing, and fraud. Plaintiffs challenged Monsanto's
decision, pursuant to the terms of the stock option plans in effect, to
curtail the duration of plaintiffs' options to purchase common stock of
Monsanto following the divestiture of Fisher from the Monsanto corporate
family in 1992. On June 24, 1997, the trial court granted Monsanto's
motion for summary judgment and dismissed the case with prejudice.
Plaintiffs appealed the judgment to the Court of Appeals for the First
District of Texas (No. 01-97-01142-CV). On September 7, 1999, the Court
of Appeals issued an opinion reversing the summary judgment and
remanding the case to the trial court for further proceedings.
Monsanto's motion for rehearing or, in the alternative, for rehearing en
banc, was denied. Monsanto believes that the decision of the trial
court was correct and that its actions regarding the Fisher employees
were in accordance with the terms of the stock option plans and entitled
to substantial deference under Delaware law. Monsanto intends to pursue
its efforts to overturn the decision of the Court of Appeals and will
continue to vigorously defend against all claims of plaintiffs.
On December 2, 1999, a complaint was filed in United States
District Court for the Eastern District of Pennsylvania as a putative
class action purporting to represent the claims of over 9,000 Korean and
1,000 U.S. service persons allegedly exposed to the herbicide Agent
Orange and other defoliants, including Agent Blue and Monuran, sprayed
during 1967-1970 in or near the demilitarized zone separating North
Korea from South Korea. The complaint names Monsanto and five other
manufacturers of the defoliants which were made and sold to the U.S.
government for use in Vietnam. The complaint does
14
not assert any specific causes of action or demand a specified amount in
damages. The Judicial Panel on Multidistrict Litigation has granted
provisional transfer of the case to the United States District Court for
the Eastern District of New York for coordinated pretrial proceedings as
part of In re "Agent Orange" Product Liability Litigation, MDL 381
(which is the multidistrict litigation proceeding established in 1977
to coordinate Agent Orange related litigation in the United States).
Various other claims by veterans or civilians alleging personal injury
from exposure to herbicides used in Vietnam have been filed since a 1984
settlement in the MDL proceeding concluded all class action litigation
filed on behalf of U.S. and certain other groups of plaintiffs. In a
suit filed against Dow Chemical Company and Monsanto in Seoul Korea
during October 1999, approximately 13,760 Korean veterans of the Vietnam
war alleged they were exposed to herbicides and suffered injuries as a
result. The suit involves three separate complaints which were filed
and are being handled collectively as Case No. 99 Kahap 84147 (84123;
84130), 13th Civil Division, Seoul District Court. The complaints fail
to assert any specific causes of action but seek damages of 300 million
won (approximately $250,000) per plaintiff. Other ancillary actions are
also pending in Korea, including a request for provisional relief
pending resolution of the main action. In all of the above referenced
matters Monsanto has numerous meritorious defenses including: lack of
jurisdiction; absence of injury; lack of causation; lack of negligence
or legal liability; acting under the supervision and direction of the
U.S. government; and statutes of limitations. In all of the actions
Monsanto is vigorously defending the actions.
RISK MANAGEMENT
Monsanto continually evaluates risk retention and insurance levels
for product liability, property damage and other potential areas of
risk. Monsanto devotes significant effort to maintaining and improving
safety and internal control programs, which reduce its exposure to
certain risks. Management decides the amount of insurance coverage to
purchase from unaffiliated companies and the appropriate amount of risk
to retain, based on the cost and availability of insurance and the
likelihood of a loss. Since 1986, Monsanto's liability insurance has
been on the "claims made" policy form. Management believes that the
current levels of risk retention are consistent with those of other
companies in the various industries in which Monsanto operates and are
reasonable for Monsanto. There can be no assurance that Monsanto will
not incur losses beyond the limits of, or outside the coverage of, its
insurance. Monsanto's liquidity, financial position and profitability
are not expected to be affected materially by the levels of risk
retention that the Company accepts.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Information regarding forward-looking statements, and factors that
could cause actual performance or results to differ materially from
those described in this Report, are set forth under the heading
"Cautionary Statements Regarding Forward-Looking Information" described
on pages 21 through 23 of Exhibit 99.1, accompanying this Report and
incorporated herein by reference.
15
ITEM 2. PROPERTIES.
The General Offices of the Company are located on a 245-acre tract
of land in St. Louis County, Missouri. The Company also owns a 210-acre
tract in St. Louis County on which additional research facilities are
located. These two office and research facilities serve the
Agricultural Products, Pharmaceuticals and Corporate and Other segments.
In addition, Monsanto and its subsidiaries own or lease manufacturing
facilities, laboratories, agricultural facilities, office space,
warehouses, and other land parcels in North America, South America,
Europe, Asia, Australia and Africa.
In addition to the facilities in St. Louis County, Missouri,
Monsanto's principal properties include the following locations, serving
the segments noted: Alvin, Texas (Agricultural Products); Antwerp,
Belgium (Agricultural Products); Augusta, Georgia (Agricultural
Products, Pharmaceuticals); Barceloneta, Puerto Rico (Pharmaceuticals);
Caguas, Puerto Rico (Pharmaceuticals); Fayetteville, North Carolina
(Agricultural Products); Feucht, Germany (Pharmaceuticals); Luling,
Louisiana (Agricultural Products); Morpeth, United Kingdom
(Pharmaceuticals); Muscatine, Iowa (Agricultural Products); Sao Jose dos
Campos, Brazil (Agricultural Products); Skokie (Old Orchard), Illinois
(Pharmaceuticals); Skokie (Searle Parkway), Illinois (Pharmaceuticals);
and Zarate, Argentina (Agricultural Products). All of these properties
are manufacturing facilities, except for the research building in Skokie
(Searle Parkway), Illinois, and the office building in Skokie (Old
Orchard), Illinois. The Company is also constructing a new Agricultural
Products manufacturing facility at Camacari, Brazil.
Monsanto's principal properties are suitable and adequate for
their use. Utilization of these facilities may vary with seasonal,
economic and other business conditions, but none of the principal
properties is substantially idle. The facilities generally have
sufficient capacity for existing needs and expected near-term growth,
and expansion projects are undertaken as necessary to meet future needs.
Most of these properties are owned in fee. However, the Company leases
the land underlying facilities that it owns at Alvin, Texas. In certain
instances, Monsanto has granted leases on portions of plant sites not
required for current operations.
ITEM 3. LEGAL PROCEEDINGS.
For information concerning certain legal proceedings involving
Monsanto, see "Business--Environmental Matters", "Business--Legal
Proceedings" and "Business--Cautionary Statements Regarding Forward-
Looking Information" in Item 1 of this Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the security holders during the
fourth quarter of 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers is contained in Item 10
of Part III of this Report (General Instruction G) and is incorporated
herein by reference.
16
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
SHAREOWNER MATTERS
The narrative information appearing under "Shareowner Matters" on
page 18, and the tabular information regarding Dividends Per Share and
Common Stock Price (for the years 1999 and 1998) appearing in "Note 25:
Quarterly Data" on pages 54 and 55, all appearing in Exhibit 99.1 of this
Report, are incorporated herein by reference.
SALE OF UNREGISTERED SECURITIES
On December 19, 1999, Monsanto and Pharmacia & Upjohn, Inc.
("Pharmacia & Upjohn") entered into a Stock Option Agreement (the "Stock
Option Agreement"), dated as of December 19, 1999, pursuant to which
Monsanto granted an option (the "Option") to Pharmacia & Upjohn to
purchase up to 94,774,810 shares (the "Option Shares") of the Company's
common stock at a price of $41.75 per share. The Option was granted by
the Company as an inducement to Pharmacia & Upjohn (1) to enter into the
Agreement and Plan of Merger (the "Merger Agreement"), dated as of
December 19, 1999 (and subsequently amended as of February 18, 2000),
among the Company, a wholly owned subsidiary of the Company and
Pharmacia & Upjohn, pursuant to which such wholly owned subsidiary of
the Company will merger with and into Pharmacia & Upjohn (the "Merger")
and (2) to grant to Monsanto a substantially similar option to purchase
up to 77,388,932 shares of Pharmacia & Upjohn's common stock, par value
$0.01 per share, at an exercise price of $50.25.
The number of Option Shares is subject to adjustment in certain
circumstances, provided that the aggregate number of Option Shares may
not exceed 14.9% of the total outstanding shares of the Company's common
stock immediately prior to the time of exercise. The option will,
subject to certain limitations, become exercisable upon the occurrence
of an event the result of which is that the total fee or fees required
to be paid by the Company to Pharmacia & Upjohn pursuant to the Merger
Agreement equals $575 million (a "Purchase Event"). The Stock Option
Agreement provides that Monsanto may, after the occurrence of a Purchase
Event, repurchase all or a portion of the Option for a specified price
in cash. In no event may the "Total Profit" (as defined in the Stock
Option Agreement) of Pharmacia & Upjohn under the Stock Option Agreement
and the Merger Agreement exceed $635 million. No Purchase Event has
occurred at the time of this filing. The Option will terminate upon the
occurrence of certain events, including the consummation of the Merger.
The granting of the Option was deemed to be exempt from
registration under the Securities Act or 1933, as amended (the
"Securities Act"), in reliance on Section 4(2) of the Securities Act, as
a transaction by an issuer not involving a public offering.
17
ITEM 6. SELECTED FINANCIAL DATA.
The following information, appearing on the pages indicated of
Exhibit 99.1 of this Report, is incorporated herein by reference: (a)
the second sentence of the first paragraph under "Definitions" on
page 3; and (b) the tabular information regarding Net Sales, Income
(Loss) From Continuing Operations, Income (Loss) From Continuing Operations
(per share), Total Assets, Long-Term Debt, and Dividends (per share),
appearing under "Financial Summary" on page 2.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The following information, appearing on the pages indicated of
Exhibit 99.1 of this Report, is incorporated herein by reference: (a)
the four paragraphs under "Definitions" on page 3; and (b) the tabular
and narrative information appearing under "Management's Discussion and
Analysis of Financial Condition and Results of Operation" on pages 4
through 23.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
The tabular and narrative information appearing under "Market Risk
Management" on pages 19 and 20 of Exhibit 99.1 of this Report is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following information, appearing on the pages indicated of
Exhibit 99.1 of this Report, is incorporated herein by reference: (a)
the first and last paragraphs under "Definitions" on page 3; (b) the
consolidated financial statements of Monsanto appearing on pages 24 through
55 (excluding "Key Financial Measures" on page 28); and (c) the Independent
Auditors' Report appearing on page 56.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS: The following information is as of March 1, 2000.
The following Directors have been elected to terms expiring at the
annual meeting of shareowners to be held in 2000:
Year First
Became a
Name--Age Principal Occupation Director Business Experience since January 1, 1995; and Directorships
--------- -------------------- -------- ------------------------------------------------------------
Michael Kantor, 60 Partner, Mayer, Brown & Platt 1997 Business Experience: Partner, Mayer, Brown & Platt,
--------------------
since 1997; U.S. Secretary of Commerce, 1996-97; U.S. Trade
Representative, 1993-96; National Chairman for the Clinton/Gore
Campaign, 1992; Partner, Manatt, Phelps, Phillips and Kantor,
1975-92.
Gwendolyn S. King, 59 Retired Senior Vice President, 1993 Business Experience: Senior Vice President, Corporate and
Corporate and Public Affairs, --------------------
PECO Energy Company Public Affairs, PECO Energy Company (formerly Philadelphia
Electric Company), 1992-98; Commissioner, Social Security
Administration, 1989-92.
Director: Lockheed Martin Corp.; Marsh & McLennan Companies,
---------
Inc.; Erie Indemnity Co.
John S. Reed, 61 Chairman and Co-Chief Executive 1985 Business Experience: Chairman and Co-Chief Executive
Officer, Citigroup, Inc. --------------------
Officer, Citigroup Inc. since 1998; Chairman and Chief
Executive Officer, Citicorp and Citibank, N.A., 1984-98.
Director: Citigroup Inc.; Philip Morris Companies, Inc.;
---------
Member: The Business Council
The following Directors have been elected to terms expiring at the annual meeting of shareowners to be held in 2001:
Year First
Became a
Name--Age Principal Occupation Director Business Experience since January 1, 1995; and Directorships
--------- -------------------- -------- ------------------------------------------------------------
Philip Leder, 65 Chairman, Department of 1990 Business Experience: Chairman, Department of Genetics,
Genetics, Harvard Medical --------------------
School; Senior Investigator, Harvard Medical School since 1980; John Emory Andrus
Howard Hughes Medical Institute Professor of Genetics since 1980; Senior Investigator,
Howard Hughes Medical Institute since 1986.
Director: Genome Therapeutics Corporation; Trustee: The General
---------
Hospital Corporation; The Hadassah Medical Organization;
Massachusetts General Hospital; The Charles A. Revson Foundation
19
Year First
Became a
Name--Age Principal Occupation Director Business Experience since January 1, 1995; and Directorships
--------- -------------------- -------- ------------------------------------------------------------
John E. Robson, 69 Senior Advisor, Robertson 1996 Business Experience: Senior Advisor, Robertson Stephens,
Stephens --------------------
since 1993; Distinguished Faculty Fellow, Yale University
School of Management and Visiting Fellow, The Heritage
Foundation, 1993; Deputy Secretary of the U.S. Department of
the Treasury, 1989-92; Dean, Emory University Business School,
1986-89; President and Chief Executive Officer, G.D. Searle &
Co., 1985-86; Executive Vice President and Chief Operating
Officer, G.D. Searle & Co., 1978-85.
Director: Exide Corporation; Northrop Grumman Corp.; ProLogis
---------
Trust; First Horizon Pharmaceutical Company
William D. Principal, Madrona Investment 1985 Business Experience: Former Chairman, Browning-Ferris
Ruckelshaus, 67 Group, L.L.C. --------------------
Industries, Inc., 1995-1999; Principal, Madrona Investment
Group L.L.C., since 1996; Chairman and Chief Executive Officer,
Browning-Ferris Industries, Inc., 1988-95; Of Counsel, Perkins
Coie, 1985-88; Administrator, Environmental Protection Agency,
1983-85.
Director: Coinstar, Inc.; Cummins Engine Co., Inc.; Nordstrom,
---------
Inc.; Solutia Inc.; Weyerhaeuser Company
The following Directors have been elected to terms expiring at the annual meeting of shareowners to be held in 2002:
Year First
Became a
Name--Age Principal Occupation Director Business Experience since January 1, 1995; and Directorships
--------- -------------------- -------- ------------------------------------------------------------
Richard U. De Vice Chairman and Chief 1999 Business Experience: Director, Vice Chairman and Chief
Schutter, 59 Administrative Officer, --------------------
Monsanto Company; Chairman Administrative Officer, Monsanto Company, 1999; Vice
and Chief Executive Officer, Chairman, Monsanto Company, 1997; Advisory Director,
G.D. Searle & Co. Monsanto Company, 1995; Chairman, President and Chief
Executive Officer, G. D. Searle & Co., 1994.
Director: Pharmaceutical Research and Manufacturers of America;
---------
Northwestern University Board of Trustees; Evanston Northwestern
Healthcare Board of Directors, where he additionally serves as
chairman of Research Institute; U.S. Japan Business Council Inc.;
General Binding Corporation; ReliaStar
20
Year First
Became a
Name--Age Principal Occupation Director Business Experience since January 1, 1995; and Directorships
--------- -------------------- -------- ------------------------------------------------------------
Jacobus F. M. Retired Chairman of the 1993 Business Experience: Chairman of the Executive Board and
Peters, 68 Executive Board and Chief --------------------
Executive Officer, AEGON N.V. Chief Executive Officer, AEGON N.V., 1984-93.
Director: Kleinwort Endowment Policy Trust Plc; Chairman of
---------
Supervisory Board: Bank Dutch Municipalities; Member of
Supervisory Board: AEGON N.V.; Amsterdam Company for Town
Restoration Ltd.; Gilde Investment Funds; Randstad Holding
N.V.; SAMAS Group N.V.; United Flower Auctions Aalsmeer, KEMA
Robert B. Shapiro, 61 Chairman and Chief Executive 1996 Business Experience: Chairman and Chief Executive Officer,
Officer, Monsanto Company --------------------
Monsanto Company since 1997; Chairman, President and Chief
Executive Officer, Monsanto Company, 1995; Director, President
and Chief Operating Officer, Monsanto Company, 1993.
Director: Citigroup Inc.; Northwestern Memorial Hospital, Silicon
---------
Graphics, Inc.; Rockwell International Corporation; Trustee:
Washington University; Member: The Business Council; American
Society of Corporate Executives; The Business Roundtable
Hendrik A. Verfaillie, President and Chief Operating 1999 Business Experience: President, Chief Operating Officer and
54 Officer, Monsanto Company --------------------
Director, Monsanto Company, 1999; President, Monsanto Company,
1997; Advisory Director and Vice President, Monsanto
Company, 1995; Advisory Director, Vice President and President
of The Agricultural Group, Monsanto Company, 1993.
21
EXECUTIVE OFFICERS
The following information with respect to the Executive Officers of
the Company on March 1, 2000, is included pursuant to Instruction 3 of Item
401(b) of Regulation S-K:
Year First
Became an
Present Position Executive
Name--Age with Registrant Officer Other Business Experience since January 1, 1995
--------- ---------------- ------- -----------------------------------------------
Bruce P. Bickner, 56 Executive Vice President, 1999 Chairman and Chief Executive Officer - DEKALB Genetics
Agricultural Sector- Corporation, 1988 to present; Co-President, Global Seed
Monsanto Company Group - Monsanto Company, 1999; and present position, 1999.
Martin E. Blaylock, Vice President, 1999 Director, Manufacturing Operations - Monsanto Company, 1993;
59 Manufacturing Operations and present position, 1995.
- Monsanto Company
Gary L. Crittenden, 46 Senior Vice President, 1998 Executive Vice President and Chief Financial Officer -
Chief Financial Officer Melville Corp., 1994; Executive Vice President, Strategy and
- Monsanto Company Business Development - Sears Roebuck & Co., 1996; President,
Hardware Stores Division - Sears Roebuck & Co., 1996; Executive Vice
President and Chief Financial Officer - Sears Roebuck & Co., 1998;
and present position, 1998.
Richard U. Vice Chairman and Chief 1995 Chairman, Chief Executive Officer and President - G.D.
De Schutter, 59 Administrative Officer - Searle & Co., 1994; Advisory Director-Monsanto Company,
Monsanto Company; Chairman 1995; Vice Chairman - Monsanto Company, 1997-1999; and
and Chief Executive Officer, present positions, 1999.
G.D. Searle & Co.
Steven L. Engelberg, Senior Vice President - 1995 Vice President, Worldwide Government Affairs - Monsanto
57 Monsanto Company Company, 1994; and present position, 1996.
Robert Fraley, 47 Co-President, Agricultural 1999 Group Vice President and General Manager, New Products
Sector - Monsanto Company Division - Monsanto Company, 1993; President, Ceregen-
Monsanto Company, 1995; and present position, 1997.
Hugh Grant, 41 Co-President, Agricultural 1999 Director, Global Roundup(R) Product Strategy - Monsanto
Sector - Monsanto Company Company, 1994; General Manager, Agricultural Sector for
Southeast Asia, Australia, New Zealand & South Korea - Monsanto
Company, 1995; and present position, 1998.
Alan L. Heller, 46 Co-President - 1999 Vice President, Finance - G.D. Searle & Co. 1994; President,
G.D. Searle & Co. Americas, G.D. Searle & Co.; 1995; Chief Operating Officer-G.D.
Searle & Co., 1997; and present position, 1999.
22
Year First
Became an
Present Position Executive
Name--Age with Registrant Officer Other Business Experience since January 1, 1995
--------- ---------------- ------- -----------------------------------------------
R. William Ide III, 59 Senior Vice President, 1996 President, American Bar Association, 1993-1994; partner,
General Counsel and Long, Aldridge & Norman, 1993; and present position, 1996.
Secretary - Monsanto
Company
Madonna A. Kindl, 42 Senior Vice President - 1996 Director of Human Resources, Staff of the Vice Chairman -
Monsanto Company Monsanto Company, 1993; Director, Human Resources, Crop
Protection Business Unit - Monsanto Company, 1995; Vice President -
Human Resources-Monsanto Company, 1996; and present position, 1999.
Ganesh M. Kishore, 46 Co-President, Nutrition 1999 Director of Technology, Agricultural Sector - Monsanto
and Consumer Products - Company, 1994; Director of Technology, Ceregen-Monsanto
Monsanto Company Company, 1995; Director of Crop Enhancement, Ceregen-
Monsanto Company, 1996; Distinguished Science Fellow - Monsanto
Company, 1996; and present position, 1997.
David L. Morley, 43 Senior Vice President 1998 Global Strategies and Operations - The Agricultural Group,
1993; Group Vice President and General Manager, Americas Division,
Crop Protection Business Unit, 1995; President, Nutrition and
Consumer Products, 1997; and present position, 1998.
Philip Needleman, 61 Senior Vice President, 1991 Senior Vice President, Research and Development and Chief
Research and Development Scientist-Monsanto Company; President, Research and
and Chief Scientist; Development - G.D. Searle & Co., 1993; Co-President,
Co-President, G.D. Searle Pharmaceuticals Sector-Monsanto Company, 1996; and present
& Co. position, 1996.
Nicholas E. Rosa, 48 Senior Vice President - 1999 Executive Vice President - The NutraSweet Company, 1994;
Monsanto Company President, Benevia-Monsanto Company, 1996; President,
Nutrition and Consumer Products - Monsanto Company, 1997;
Co-President, Nutrition and Consumer Products Sector, 1999;
and present position, 1999.
Robert B. Shapiro, 61 Chairman and Chief Executive 1987 Director, President and Chief Operating Officer - Monsanto
Officer - Monsanto Company Company, 1993; Director, Chairman, Chief Executive Officer
and President - Monsanto Company, 1995; and present position, 1997.
23
Year First
Became an
Present Position Executive
Name--Age with Registrant Officer Other Business Experience since January 1, 1995
--------- ---------------- ------- -----------------------------------------------
Hendrik A. Verfaillie, President and Chief 1993 Vice President and Advisory Director - Monsanto Company;
54 Operating Officer President - The Agricultural Group - Monsanto Company, 1993;
- Monsanto Company Vice President and Advisory Director - Monsanto Company, 1995;
Executive Vice President and Advisory Director - Monsanto Company,
1995; President-Monsanto Company, 1997; and present positions, 1999.
Joan H. Walker, 52 Senior Vice President 1999 President and Chief Executive Officer - Bozell Public
Relations, 1993; Senior Vice President, Corporate Communications -
Ameritech Corporation, 1996; and present position, 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires all Company executive officers, directors, and persons owning more
than 10% of any registered class of Company stock to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. During 1999, Mr. Nick E. Rosa was inadvertently late in filing
his initial report on Form 3.
24
ITEM 11. EXECUTIVE COMPENSATION.
DIRECTORS' FEES AND OTHER ARRANGEMENTS
Non-employee directors receive annual compensation having an anticipated
total annual value of $90,000 ($100,000 for directors who serve as Chair of
a Board Committee). One-half of this amount is in the form of stock options
to purchase shares of the Company's common stock. Each director may elect
the form of the other half of compensation, choosing any combination of
additional options, cash paid currently, deferred cash, common stock that
is subject to forfeiture if the director does not complete his or her term,
or common stock the delivery of which is deferred. Each director makes this
election at the beginning of each term for which he or she is elected.
The number of options granted as compensation to each director is
determined in accordance with the Black-Scholes option valuation method
used for employee option grants, with an exercise price equal to the value
of a share of the Company's common stock on the date of grant. Options
granted for a term will vest in pro rata installments on the day before
each Annual Meeting of Shareowners during that term. After vesting, options
will generally be exercisable until the tenth anniversary of the date of
grant. When a director's service as a director of the Company ends, any
unvested options will be forfeited automatically.
The portion of his or her compensation, if any, which a director elects
to receive in cash is paid on a pro rata basis throughout the director's term.
Deferred cash will accrue interest at an interest rate equal to the average
Moody's Baa Bond Index Rate for the prior calendar year until it is paid
either in a lump sum or in installments after the director's service as a
director terminates.
A director who elects to receive a portion of Board compensation in
restricted stock will be issued the number of shares of the Company's
common stock having a value, as of the first day of the term to which the
compensation relates, equal to such portion. Restricted stock will be
forfeitable and nontransferable until it vests in pro rata installments on
the day before each Annual Meeting of Shareowners during the term. The
portion, if any, of director compensation that a director elects to receive
in deferred stock will be provided by crediting a stock unit account
maintained by the Company for the director with a number of stock units
representing hypothetical shares of the Company's common stock having a
value, as of the first day of the term to which the compensation relates,
equal to such portion. Stock units are paid in shares of the Company's
common stock either in a lump sum or in installments after the director's
service as a director terminates. Whenever the Company declares a dividend
or other distribution with respect to its common stock, deferred stock
accounts will be credited with additional stock units equal to the number
of shares of the Company's common stock having a value equal to the
dividend or other distribution that the director would have received had
the stock units on the record date of such dividend or other distribution
been shares of the Company's common stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the People Committee of the Board of Directors is
or has been an
25
officer or employee of Company. However, until his consulting agreement
with the Company expired in January 2000, Dr. Leder, who is a member of the
Committee, provided consulting services and the benefit of his considerable
professional skills, knowledge, experience, and judgment in areas of
interest to the Company, particularly in the field of biological sciences.
In 1999, Dr. Leder received $143,400 under the consulting agreement.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------ -------
(A) (B) (C) (D) (E) (G) (H)
OTHER (F) SECURITIES (I)
ANNUAL RESTRICTED UNDER- ALL OTHER
NAME AND COMPEN- STOCK LYING LTIP COMPEN-
PRINCIPAL SATION AWARDS OPTIONS PAYOUTS SATION
POSITION YEAR SALARY($) BONUS($) ($) ($) (#) ($) ($)
- ----------------------- -------- --------- ---------- ------- ------------- ---------- ------------- ---------
R. B. Shapiro 1999 850,000 1,440,000 61,207 0 394,064 0 120,185
Chairman, CEO 1998 800,000 800,000 --- 0 0 0 101,070
and Director 1997 800,000 965,000 69,466 0 79,811 750,365 171,624
G. L. Crittenden 1999 565,000 900,000 --- 445,000 146,777 0 64,379
Senior Vice President 1998 176,667 800,000 --- 1,359,435 303,289 0 6,492
and Chief Financial 1997 --- --- --- --- --- --- ---
Officer
R. U. De Schutter 1999 650,000 950,000 --- 0 160,339 0 156,452
Vice Chairman, Chief 1998 600,000 810,000 --- 0 0 0 60,236
Administrative Officer 1997 525,000 700,000 --- 0 460,391 6,757,745 66,339
and Director; Chairman
and CEO, G.D.
Searle & Co.
P. Needleman 1999 550,000 1,100,000 --- 0 96,005 0 105,221
Senior Vice President; 1998 495,833 700,000 --- 0 193,588 0 67,761
Co-President, G.D. 1997 450,000 700,000 --- 0 76,904 4,570,360 53,367
Searle & Co.
H. A. Verfaillie 1999 650,000 900,000 --- 0 222,115 0 138,932
President, Chief 1998 600,000 810,000 --- 0 0 0 72,439
Operating Officer and 1997 566,667 645,000 --- 0 34,917 979,000 96,146
Director
NOTE: Information regarding shares and stock options reported in this
table and in succeeding tables has been adjusted to reflect the
spinoff of the Company's chemicals business in 1997.
Applicable regulations set reporting levels for certain non-
cash compensation. The 1999 and 1997 amounts for Mr. Shapiro
include $36,938 and $53,891, respectively, for personal use, as
directed by resolution of the Board of Directors, of Company
aircraft, and other perquisites totaling $24,269 and $15,575,
respectively.
The annual incentive program for the years 1994 through 1996
was designed to encourage sustained performance by withholding
a percentage (i) of each annual award (15% of the 1994 award
and 30% of the awards for each of 1995 and 1996) and, (ii) for
certain employees working in selected business units, including
Mr. Verfaillie, of such employees' cash long-term incentive
opportunity.
These withheld amounts were adjusted upward or downward based
on sustained
26
performance during the three-year period. The amounts shown
represent the March 1997 payment of the withheld amounts after
application of the sustained performance adjustment.
Gary L. Crittenden commenced employment with the Company on
September 1, 1998.
Prior to February 1997, Messrs. De Schutter and Needleman
participated in the Searle Phantom Stock Option Plan of 1986
("Searle Phantom Plan"), which gave participants the
opportunity to receive the appreciation in the value of a
hypothetical share of the common stock of G.D. Searle & Co.
("Searle"), now a wholly-owned subsidiary of the Company. Such
"shares" represented units of valuation created solely for
purposes of measuring the increase, if any, in the value of
Searle. Options to receive the appreciation in the value of
these units were granted for a ten-year period. In February
1997, the Executive Compensation and Development Committee
decided to terminate the Searle Phantom Plan and to credit
Messrs. De Schutter and Needleman and other active participants
with a combination of cash and options on Company common stock
representing current and anticipated future appreciation of the
units. The amount shown for Mr. De Schutter represents payment
of $1,495,000 in cash, $2,445,000 in deferred cash (deferred to
avoid losing the compensation deduction under Section 162(m) of
the Code), and the value of 227,474 Company stock options, with
an exercise price equal to the fair market value per underlying
share on the date of grant, paid to Mr. De Schutter in cash in
connection with the termination of the Searle Phantom Plan,
plus $403,848 in payment of the withheld amounts, after
application of the sustained performance adjustment, as
discussed in footnote 2 to this Summary Compensation Table. The
amount shown for Mr. Needleman represents payment of $660,000
in cash, $1,770,000 in deferred cash (deferred to avoid losing
the compensation deduction under Section 162(m) of the Code),
and the value of 162,162 Company stock options, with an
exercise price equal to the fair market value per underlying
share on the date of grant, paid to Mr. Needleman in cash in
connection with the termination of the Searle Phantom Plan,
plus $421,605 in payment of the withheld amounts, after
application of the sustained performance adjustment, as
discussed in footnote 2 to this Summary Compensation Table.
Amounts shown for 1999 include: contributions to savings plans
for Mr. Shapiro, $120,185; Mr. Crittenden, $64,379; Mr. De
Schutter, $74,148; Mr. Needleman, $103,491; and Mr.
Verfaillie, $116,432; split dollar life insurance premiums for
Mr. Shapiro, $7,497; Mr. De Schutter, $32,002; Mr. Needleman,
$10,721; and Mr. Verfaillie, $11,391; compensation for changes
made to the Company's vacation program: Mr. De Schutter
$31,154 and Mr. Verfaillie $22,500; performance match payments
on deferred bonus awards: Mr. De Schutter $51,150 and Mr.
Needleman $1,400; and costs for executive travel accident plans
for each of the named executive officers of $146.
Mr. Crittenden held a total of 35,410 shares of restricted
stock on December 31, 1999, none of which had vested. The
value of such shares based on the closing price of the
Company's common stock on such date of $35.625 was $1,261,481.
Dividends are paid in cash on the restricted shares.
27
OPTION GRANTS IN 1999
INDIVIDUAL GRANTS GRANT DATE VALUE
----------------- ----------------
(A) (B) (C) (D) (E) (F)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE ($)
---- ---------- ------------ --------- ---------- -------------
R. B. Shapiro 102,960 0.2 75 4/23/07 1,350,835
229,344 0.3 75 4/23/07 4,790,996
61,760 .01 51 6/30/09 1,248,787
G. L. Crittenden 50,000 .01 42.406 1/12/09 788,000
13,642 .01 75 4/23/07 178,983
62,548 .01 75 4/23/07 1,306,628
20,587 .01 51 6/30/09 416,269
R. U. De Schutter 15,444 .01 75 4/23/07 202,625
62,548 .01 75 4/23/07 1,306,628
82,347 .01 51 6/30/09 1,665,056
P. Needleman 12,870 .01 75 4/23/07 168,854
62,548 .01 75 4/23/07 1,306,628
20,587 .01 51 6/30/09 416,269
H. A. Verfaillie 77,220 .01 75 4/23/07 1,013,126
62,548 .01 75 4/23/07 1,306,628
82,347 .01 51 6/30/09 1,665,056
In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant
date present value of the options set forth in this table. The
Company's use of this model should not be construed as an endorsement
of its accuracy at valuing options. Accordingly, there is no
assurance that the value realized by an executive, if any, will be at
or near the value estimated by the Black-Scholes model. Future
compensation resulting from option grants is based solely on the
performance of the Company's stock price. For the options granted
under the 1999 Premium Option Purchase Program, the option purchase
price of $7.77 per share was subtracted from the Black-Scholes value
before the grant date value was determined. The following weighted-
average assumptions were made for purposes of calculating the
original Grant Date Present Value: an option term of ten years,
average volatility of 42.5%, dividend yield of 0.28%, and a risk-free
interest rate equal to the then current ask yield of ten-year
Treasury Bonds.
The units represent shares purchased under the 1999 Premium Option
Purchase Program. Pursuant to this Program, the named executive
officers purchased these options at a price of $7.77 per share. The
purchase price is being paid through base salary or bonus reductions
over a four year period. These options become exercisable on the
latest to occur of (i) the date on which payment is made for such
option, and (ii) the first to occur of (a) April 23, 2000 and (b) the
date, if any, on which the average of the highest and lowest sales
price of a share of the Company's common stock has been equal to or
greater than $75 for at least ten consecutive trading days (the
"Stock Price Target").
These options will instead expire on April 23, 2005 if, prior to such
date, the Stock Price Target is not achieved.
The units represent long-term compensation awards for 2000 and were
granted in tandem with the Premium Option Purchase Program. The
options are exercisable on a pro-rata basis based upon the number of
months of employment in 2000, but in no event prior to April 23,
2000.
28
Represents the grant of 1999 Premium Priced Options. These options
are exercisable in the later of (i) the first business day next
following a period of the consecutive trading days during which the
optional shares equals or exceeds $51 per share, or (ii) March 1,
200l.
The exercise price of $42.406 for this tranche of options, granted to
Mr. Crittenden for retention purposes, was the fair market value on
January 13, 1999, the date of grant. These options will become
exercisable on January 14, 2002.
AGGREGATED OPTION EXERCISES IN 1999 AND OPTION VALUES ON DECEMBER 31, 1999
(A) (B) (C) (D) (E)
- ----------------- ----------- --------- ----------------- -----------------
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FY-END (#) FY-END ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- --------- ----------------- -----------------
R. B. Shapiro 229,865 8,077,456 2,407,887/425,988 3,400,051/63,050
G. L. Crittenden 0 0 106,052/344,015 0/0
R. U. De Schutter 0 0 921,425/174,305 4,919,640/27,583
P. Needleman 0 0 926,018/185,479 12,887,310/24,826
H. A. Verfaillie 0 0 1,365,841/236,081 14,534,090/27,583
The amount in column (c) reflects the value of shares received on the
exercises of options granted February 24, 1995 at a fair market value
of $14.36.
Unexercised options shown in columns (d) and (e) reflect grants
received over an extended period of time.
LONG-TERM INCENTIVE PLANS--AWARDS IN 1999
There were no long-term incentive awards to the named executive officers
in 1999.
PENSION PLAN
The named executive officers (as well as other employees of the Company)
are eligible for retirement benefits payable under the Company's tax-
qualified and non-qualified defined benefit pension plans. Effective
January 1, 1997, the U.S. defined benefit pension plans for the Company,
Searle and The NutraSweet Company, a wholly owned subsidiary of the Company
("NutraSweet"), were amended and unconsolidated. The amended defined
benefit pension plan consists of two accounts: a "Prior Plan Account" and a
"Cash Balance Account."
The opening balance of the Prior Plan Account was the lump sum value of
the executive's December 31, 1996 monthly retirement benefit earned prior to
January 1, 1997 under the old defined benefit pension plans described
below, calculated using the assumption that the monthly benefit would be
payable at age 55 with no reduction for early payment. The formula used to
calculate the opening balance for employment with the Company was the
29
greater of 1.4% (1.2% for employees hired by the Company on or after April
1, 1986) of average final compensation multiplied by years of service,
without reduction for Social Security or other offset amounts, or 1.5% of
average final compensation multiplied by years of service, less a 50%
Social Security offset. Average final compensation for purposes of
determining the opening balance was the greater of (1) average compensation
received during the 36 months of employment prior to 1997 or (2) average
compensation received during the highest three of the five calendar years
of employment prior to 1997. The annual normal retirement benefits under
the Searle and NutraSweet pension plans used to determine the opening
balance for employment with Searle or NutraSweet was (1) 1.8% of average
compensation (the average compensation for the highest consecutive 60 of
the last 120 months of employment preceding 1997) multiplied by years of
service (up to a maximum of 30 years) less (2) 1.67% of estimated annual
Social Security benefits at age 65 multiplied by years of service (up to a
maximum of 30 years).
For each year of the executive's continued employment with the Company,
the executive's Prior Plan Account will be increased by 4% to recognize that
prior plan benefits would have grown as a result of pay increases.
For each year that the executive is employed by the Company after 1996,
3% of annual eligible compensation in excess of the Social Security wage base
and a percentage (based on age) of annual compensation (salary and annual
bonus) will be credited to the Cash Balance Account. The applicable
percentages and age ranges are: 3% before age 30, 4% for ages 30 to 39, 5%
for ages 40 to 44, 6% for ages 45 to 49, and 7% for age 50 and over. In
addition, the Cash Balance Account of executives who earned benefits under
the Company's old defined benefit pension plan will be credited each year
(for up to 10 years based on prior years of service with the Company),
during which the executive is employed after 1996, with an amount equal to
a percentage (based on age) of annual compensation. The applicable
percentages and age ranges are: 2% before age 30, 3% for ages 30 to 39, 4%
for ages 40 to 44, 5% for ages 45 to 49, and 6% for age 50 and over.
The estimated annual benefits payable as a single life annuity beginning
at age 65 (assuming that each executive officer remains employed by the
Company until age 65 and receives 4% annual compensation increases) are as
follows: Mr. Shapiro, $751,290; Mr. Crittenden, $660,375; Mr. De Schutter,
$828,269; Mr. Needleman, $280,810; and Mr. Verfaillie, $785,296.
Mr. Shapiro will be provided supplemental retirement benefits to recognize
his experience prior to employment by the Company. The Company will provide
Mr. Shapiro with supplemental retirement benefits equal to 12% of average
final compensation. The supplemental retirement benefits become non-
revocable immediately in the event of a change of control of the Company.
The estimated annual supplemental benefits payable to Mr. Shapiro upon
retirement at age 65 are $222,837. Mr. Shapiro will also receive the same
Company contribution to the retiree medical plan as an eligible retiree
with 30 years of service. The value of his benefits will be determined at
retirement based on age, the premium paid for medical coverage, and
projected premium cost increases.
If the total of the benefits payable to Mr. De Schutter under the
Company's defined benefit pension plans described above do not equal the
benefit Mr. De Schutter would have
30
received if all his service had been with the Company, he will be provided
supplemental retirement benefits in an amount equal to the benefits he
would have received under the Company's plans had all his years of service
been with the Company, less the benefits provided by the Searle plans. It
is estimated that there will be no annual supplemental benefit payable to
Mr. De Schutter if he retires at age 65.
Mr. Needleman will be provided supplemental retirement benefits equal to
14% of his annual compensation to recognize his experience prior to
employment by the Company. The supplemental retirement benefits become
non-revocable immediately in the event of a change of control of the
Company. The estimated annual supplemental benefits payable to Mr.
Needleman upon retirement at age 65 are $196,952.
In addition to the retirement benefits for Mr. Verfaillie based on his
years of service as a Company employee in the U.S., Mr. Verfaillie is also
eligible for regular retirement benefits based on his years of service as
an employee outside the U.S. In addition, he participates in the Company's
regular, non-qualified pension plan designed to protect retirement benefits
for employees serving in more than one country. However, his total
retirement benefits from the combined plans when considering his total
service are expected to be generally comparable to the benefits described
in this section.
CERTAIN AGREEMENTS
The Company has entered into Change of Control Employment Agreements
with each of the executive officers who are named in the Summary Compensation
Table and certain other key executives. Each such Change of Control
Employment Agreement becomes effective upon a "change of control" of the
Company (as defined in the Change of Control Employment Agreement). Each
Change of Control Employment Agreement provides for the continuing
employment of the executive after the change of control on terms and
conditions no less favorable than those in effect before the change of
control. If the executive's employment is terminated by the Company without
"cause" or if the executive terminates his or her own employment for "good
reason" (each as defined in the Change of Control Employment Agreement),
the executive is entitled to severance benefits equal to a "multiple" of
his or her annual compensation (including bonus) and continuation of
certain benefits for a number of years equal to the multiple. For two
executives, including Mr. Crittenden, the severance benefits calculation
also includes such executive's long-term incentive opportunity. The
multiple is three for the executive officers who are named in the Summary
Compensation Table and two or three for the other executives (or, in either
case, the shorter number of years until the executive's normal retirement
date). In addition, each of the executive officers who are named in the
Summary Compensation Table and the other executives who are entitled to a
severance multiple of three is entitled to receive the severance benefits
if he or she voluntarily terminates his or her own employment during the
30-day period beginning on the first anniversary of the occurrence of
certain changes of control. Finally, the executives are entitled to an
additional payment, if necessary, to make them whole as a result of any
excise tax imposed by the Code on certain change of control payments
(unless the safe harbor below which the excise tax is imposed is not
exceeded by more than 10%, in which event the payments will be reduced to
avoid the excise tax). A cash medical allowance of $15,000 for payment of
medical insurance premiums will also be provided to Mr. Verfaillie if he
does not qualify for retiree
31
medical coverage.
In addition to any payments that may be due to him pursuant to his Change
of Control Employment Agreement, under a supplemental agreement Mr. De
Schutter will be entitled to receive a payment from the Company in the
event his employment is terminated for any reason other than cause. This
supplemental agreement was entered into to retain Mr. De Schutter's
employment with the Company. If triggered, the payment will be equal to
one year of base salary and annual incentive at one-half of Mr. De
Schutter's opportunity at an outstanding level of performance if such
termination occurs prior to December 31, 2000 and two years of base salary
and annual incentive at one-half his opportunity at an outstanding level of
performance if such termination occurs after December 31, 2000. The
estimated amounts that would be payable to Mr. De Schutter pursuant to this
agreement prior to and after December 31, 2000, are $1,820,000 and
$3,640,000, respectively.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information is set forth below regarding beneficial ownership of common
stock of the Company by (i) each person who is a director or nominee; (ii)
each executive officer named in the Summary Compensation Table on page 24;
and (iii) all directors and executive officers as a group. Except as
otherwise noted, each person has sole voting and investment power as to his
or her shares. All information is as of December 31, 1999.
SHARES OF SHARES UNDERLYING
COMMON STOCK OPTIONS EXERCISABLE
OWNED DIRECTLY WITHIN 60
NAME OR INDIRECTLY DAYS TOTAL
---- ----------------- ------------------- ----------
Gary L. Crittenden 35,544 53,026 88,570
Richard U. De Schutter 243,806 921,425 1,165,231
Michael Kantor 800 13,637 14,437
Gwendolyn S. King 3,865 7,387 11,252
Philip Leder 9,002 13,636 22,638
Phil Needleman 204,807 926,018 1,130,825
Jacobus F. M. Peters 4,705 10,227 14,932
John S. Reed 91,947 14,395 106,342
John E. Robson 6,093 10,546 16,639
William D. Ruckelshaus 16,286 8,919 25,205
Robert B. Shapiro 1,042,353 2,407,887 3,450,240
Hendrik A. Verfaillie 231,894 1,365,841 1,597,735
23 directors and executive
officers as a group 2,074,038 9,048,549 11,122,587
Includes shares held under Monsanto Company's Savings and Investment
Plan ("SIP"): Mr. Crittenden, 404; Mr. De Schutter, 16,996;
Mr. Needleman, 3,216; Mr. Shapiro, 4,274; Mr. Verfaillie, 16,285; and
directors and executive officers as a group, 86,155. With respect to
shares held under the SIP, employee directors and officers have sole
discretion as to voting and, within limitations provided by the SIP,
investment of shares. Shares are voted by the trustees in accordance
with instructions from participants. If instructions are not received
by the trustees as to the voting of particular shares, shares are to
be voted in proportion to instructions actually received from other
participants in SIP. With respect to shares held under other benefit
and incentive plans, employee directors and officers have sole voting
power and no current investment power.
32
The Securities and Exchange Commission deems a person to have
beneficial ownership of all shares which that person has the right to
acquire within 60 days of December 31, 1999. The shares indicated
represent stock options granted under incentive plans. The shares
underlying options cannot be voted.
Includes 1,378 shares owned jointly by Mr. Robson and his wife.
Includes 150,374 shares owned jointly by Mr. Verfaillie and his wife.
Includes 1,999 shares as to which certain executive officers not
named above have shared voting and investment power; and 54,485
shares under contract pursuant to the Company's Employee Stock
Purchase Plan.
The percentage of shares of outstanding common stock of the Company,
including options exercisable within 60 days of December 31, 1999,
beneficially owned by all directors and executive officers as a group is
approximately 1.7%. The percentage of such shares beneficially owned by any
director or nominee does not exceed 1%.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
TRANSACTIONS AND RELATIONSHIPS
Mr. Michael Kantor is a partner at the law firm of Mayer, Brown & Platt,
which provided services to the Company in 1999 and is providing services to
the Company in 2000.
Mr. John E. Robson is Senior Advisor of BancBoston Robertson Stephens,
which provided services to the Company in 1999 and is expected to provide
services to the Company in 2000.
INDEBTEDNESS
In May 1996, the Company's shareowners approved a plan whereby each of
the Company's executive officers received full-recourse, interest bearing
loans for the purchase price of Company common stock purchased pursuant to the
Monsanto Executive Stock Purchase Incentive Plan ("Executive Plan"). The
loans have an eight-year term and accrue interest at the applicable federal
rate (as determined pursuant to Section 1274(d) of the Code) on the
purchase date for loans of such maturity, compounded annually. Interest is
payable prior to maturity to the extent of dividends paid on the purchased
shares, with the balance due at the maturity of the loan. The proceeds of
the deferred cash incentives awarded during the performance cycle under the
Executive Plan must also be applied to prepay the loans. Following such
prepayment, the balance of the loans at the end of the performance cycle,
together with accrued and unpaid interest thereon, will generally be
payable in three equal installments (plus interest) on the first three
anniversaries after the end of the performance cycle. The payment of the
loan will be accelerated if the executive officer's service is terminated
during the performance cycle for any reason other than retirement or
following a change of control. In the event of retirement, there is no loan
acceleration. In the event of a change of control, the loan must be repaid
over a three-year period following such event. The loan may also be prepaid
at any time at the executive officer's option.
33
In addition to the Executive Plan, executive officers may also participate
in the Company's Employee Stock Purchase Plan ("Employee Plan"). The Employee
Plan is open to all regular U.S., Canada, and Singapore full-time
and regular part-time employees of the Company for shares of stock they
contracted to purchase over a period of months by means of payroll
deductions. No interest is charged on loans granted under the Employee Plan.
The following table describes the indebtedness of the executive officers
under the Executive Plan, except where otherwise indicated:
GREATEST AGGREGATE
AMOUNT OF AGGREGATE AMOUNT OF
INDEBTEDNESS IN INDEBTEDNESS AS OF
INTEREST RATE 1999 DECEMBER 31, 1999
NAME YEAR OF LOAN (%) ($) ($)
---- ------------ ------------- ------------------ -------------------
M. L. Blaylock 1997 6.8 553,004 553,004
R. U. De Schutter 1996/1998 6.36/5.69 1,721,672 1,721,672
A. W. Donald 1996 6.36 728,146 728,146
S. L. Engelberg 1,279,787 1,275,118
R. T. Fraley 835,178 797,153
H. Grant 1998 19,670 12,682
R. W. Ide III 1,096,121 1,082,655
D. A. Kindl 1996 6.20 1,224,985 1,224,985
G. M. Kishore 1997 6.80 434,134 434,134
D. L. Morley 1997 6.80 434,134 434,134
P. Needleman 1996 6.36 728,146 728,146
N. E. Rosa 1996 6.36 728,146 728,146
R. B. Shapiro 1996 6.36 6,553,310 6,553,310
H. A. Verfaillie 1996 6.36 2,366,473 2,366,473
Mr. Engelberg obtained loans under the Executive Plan in 1996 and
1997, with applicable interest rates of 6.36% and 6.80%,
respectively. In addition, Mr. Engelberg obtained a no-interest loan
under the Employee Plan in 1996.
Mr. Fraley obtained a loan under the Executive Plan in 1996, with an
applicable interest rate of 6.36%. In addition, Mr. Fraley obtained a
no-interest loan under the Employee Plan in 1998.
Mr. Grant obtained a no-interest loan under the Employee Plan in
1998.
Mr. Ide obtained a loan under the Executive Plan in 1996, with an
applicable interest rate of 6.60%. In addition, Mr. Ide obtained a
no-interest loan under the Employee Plan in 1998.
The aggregate amount of indebtedness for Messrs. Engelberg, Fraley,
Grant and Ide includes amounts owed under the Employee Plan as of
February 28, 2000.
34
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this Report:
1. The financial statements set forth at page 24 through the top
of page 28 of Exhibit 99.1 to this Report
2. Financial Statement Schedules
None required
3. Exhibits--See the Exhibit Index beginning at page 39 of this
Report. For a listing of all management contracts and
compensatory plans or arrangements required to be filed as
exhibits to this Form 10-K, see the Exhibits listed under
Exhibit No. 10, items 4 through 30 on pages 40 through 43 of
the Exhibit Index. The following Exhibits listed in the Exhibit
Index are filed with this Report:
3 2. By-Laws of the Company, as amended effective
February 10, 2000
10 4. Monsanto Company Non-Employee Director Deferred
Compensation Plan, as amended February 25, 2000
29. Supplemental Retirement Plan and Amendment to
Supplemental Retirement Plan for Philip Needleman
21 Subsidiaries of the registrant
23 Consent of Independent Auditors
24 1. Powers of attorney submitted by Richard U. De
Schutter, Michael Kantor, Gwendolyn S. King, Philip
Leder, Jacobus F.M. Peters, John S. Reed, John E.
Robson, William D. Ruckelshaus, Robert B. Shapiro,
Hendrik A. Verfaillie, Gary L. Crittenden and
Richard B. Clark
2. Certified copy of Board resolution authorizing Form
10-K filing utilizing powers of attorney
27 Financial Data Schedule (part of electronic submission
only)
99 1. Financial Information for Fiscal Year Ended
December 31, 1999
35
2. Computation of the Ratio of Earnings to Fixed
Charges for Monsanto Company and Subsidiaries
(b) Reports on Form 8-K during the quarter ended December 31, 1999:
The following reports on Form 8-K were filed by the Company on the
dates indicated: December 21, 1999 (announcement of merger with Pharmacia &
Upjohn, Inc.); December 22, 1999 (additional financial information
regarding the merger); December 29, 1999 (merger agreement and stock option
agreements); and December 30, 1999 (preferred share purchase rights).
36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By: /s/ Richard B. Clark
---------------------------------
Richard B. Clark
Vice President and Controller
(Principal Accounting Officer)
Date: March 17, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Chairman March 17, 2000
----------------------- President and Director
(Robert B. Shapiro) (Principal Executive Officer)
Vice Chairman, Chief March 17, 2000
----------------------- Administrative Officer,
(Richard U. De Schutter and Director
Director March 17, 2000
-----------------------
(Michael Kantor)
Director March 17, 2000
-----------------------
(Gwendolyn S. King)
Director March 17, 2000
-----------------------
(Philip Leder)
Director March 17, 2000
-----------------------
(Jacobus F. M. Peters)
Director March 17, 2000
-----------------------
(John S. Reed)
Director March 17, 2000
-----------------------
(John E. Robson)
Director March 17, 2000
-----------------------
(William D. Ruckelshaus)
37
President, Chief Operating March 17, 2000
----------------------- Officer and Director
(Hendrik A. Verfaillie)
Senior Vice President, March 17, 2000
----------------------- Chief Financial Officer
(Gary L. Crittenden) (Principal Financial Officer)
/s/ Richard B. Clark Vice President and March 17, 2000
------------------------ Controller (Principal
(Richard B. Clark) Accounting Officer)
Sonya M. Davis by signing his/her name hereto, does sign this document
on behalf of the above noted individuals, pursuant to powers of attorney duly
executed by such individuals which have been filed as an Exhibit to this
Report.
/s/ Sonya M. Davis
--------------------------
Sonya M. Davis
Attorney-in-Fact
38
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item
601 of Regulation S-K.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2 1. Agreement and Plan of Merger, dated as of December 19,
1999, as amended by Amendment No. 1 dated as of February
18, 2000, among Monsanto Company, MP Sub, Incorporated
and Pharmacia & Upjohn, Inc. (incorporated herein by
reference to Exhibit 2.1 of the Company's Form S-4 filed
on February 22, 2000, File No. 333-30824)
2. Stock Option Agreement, dated as of December 19, 1999,
by and between Monsanto Company, as Issuer, and Pharmacia
& Upjohn, Inc., as Grantee (incorporated herein by
reference to Exhibit 2.2 of the Company's Form S-4 filed
on February 22, 2000, File No. 333-30824)
3. Stock Option Agreement, dated as of December 19, 1999,
by and between Pharmacia & Upjohn, Inc. and Monsanto
Company, as Grantee (incorporated herein by reference to
Exhibit 2.3 of the Company's Form S-4 filed on February
22, 2000, File No. 333-30824)
3 1. Restated Certificate of Incorporation of the Company
as of October 28, 1997 (incorporated herein by reference
to Exhibit 3(i) of the Company's Form 10-Q for the
quarter ended September 30, 1997)
2. By-Laws of the Company, as amended effective February
10, 2000
4 1. Form of Rights Agreement, dated as of December 19,
1999 between the Company and EquiServe Trust Company
N.A., First Chicago Trust Company as successor to The
First National Bank of Boston (incorporated herein by
reference to Form 8-A filed on December 30, 1999)
2. Master Unit Agreement, dated as of November 30, 1998,
by and between the Company and The First National Bank of
Chicago, as Unit Agent (incorporated herein by reference
to Exhibit 4.2 of the Company's Form 8-K filed on
December 14, 1998)
3. Call Option Agreement, dated as of November 30, 1998,
by and between Goldman, Sachs & Co., as Call Option
Holder, and The First National Bank of Chicago, as Unit
Agent and as Attorney-In- Fact (incorporated herein by
reference to Exhibit 4.3 of the Company's Form 8-K filed
on December 14, 1998)
39
4. Pledge Agreement, dated as of November 30, 1998, by
and among the Company, Goldman, Sachs & Co., as Call
Option Holder, First Union National Bank, as Collateral
Agent and Securities Intermediary, and The First National
Bank of Chicago, as Unit Agent and as Attorney-In-Fact
(incorporated herein by reference to Exhibit 4.4 of the
Company's Form 8-K filed on December 14, 1998)
5. Registrant agrees to furnish to the Securities and
Exchange Commission upon request copies of instruments
defining the rights of holders of certain long-term debt
not being registered of the registrant and all
subsidiaries for which consolidated or unconsolidated
financial statements are required to be filed.
9 Omitted--Inapplicable
10 1. Distribution Agreement by and between Monsanto Company
and Solutia Inc., as of September 1, 1997, plus
identification of contents of omitted schedules and
exhibits and agreement to furnish supplementally a copy
of any omitted schedule or exhibit to the Securities and
Exchange Commission upon request (incorporated herein by
reference to Exhibit 2.1 of the Company's Form 8-K filed
September 16, 1997)
2. Employee Benefits and Compensation Allocation
Agreement between Monsanto Company and Solutia Inc.,
dated as of September 1, 1997 (incorporated herein by
reference to Exhibit 99.1 of the Company's Form 8-K filed
September 16, 1997)
3. Tax Sharing and Indemnification Agreement dated as
of September 1, 1997, by and between Monsanto Company and
Solutia Inc. (incorporated herein by reference to Exhibit
99.2 of the Company's Form 8-K filed September 16, 1997)
4. Monsanto Company Non-Employee Director Deferred
Compensation Plan, as amended February 25, 2000
5. Monsanto Company Non-Employee Director Equity
Incentive Compensation Plan (incorporated herein by
reference to Exhibit 10.4 of the Company's Form 10-Q for
the quarter ended September 30, 1997)
6. Non-Employee Directors Stock Plan, as amended in 1991
(incorporated herein by reference to Exhibit 19(ii)1 of
the Company's Form 10-Q for the quarter ended June 30,
1991)
7. Amendment to Non-Employee Directors Stock Plan
(incorporated herein by reference to Exhibit 10.8 of the
Company's Form 10-Q for the quarter ended June 30, 1997)
40
8. Charitable Contribution Program effective April 1,
1992 (incorporated herein by reference to Exhibit 19(i)1
of the Company's Form 10-K for the year ended December
31, 1991)
9. Deferred Compensation Plan for Non-Employee Directors,
as amended in 1983 and 1991 (incorporated herein by
reference to Exhibit 19(ii)1 of the Company's Form 10-K
for the year ended December 31, 1991)
10. Excerpt of Resolutions of Monsanto Company Board of
Directors Regarding Directors' Compensation, adopted by
Unanimous Consent effective August 4, 1997 (incorporated
herein by reference to Exhibit 10.5 of the Company's Form
10-Q for the quarter ended September 30, 1997)
11. Monsanto Management Incentive Plan of 1988/I, as
amended in 1988, 1989, 1991, 1992, April 1997, July 1997,
and 1999 (incorporated herein by reference to Exhibit
10.2 of the Company's Form 10-Q for the quarter ended
September 30, 1999)
12. Monsanto Management Incentive Plan of 1988/II, as
amended in 1989, 1991, 1992, April 1997, July 1997, and
1999 (incorporated herein by reference to Exhibit 10.3 of
the Company's Form 10-Q for the quarter ended September
30, 1999)
13. Monsanto Management Incentive Plan of 1994, as
amended in April 1997, July 1997, and 1999 (incorporated
herein by reference to Exhibit 10.4 of the Company's Form
10-Q for the quarter ended September 30, 1999)
14. Monsanto Management Incentive Plan of 1996 as amended
April 25, 1997, July 25, 1997, August 18, 1997, February
26, 1998, September 25, 1998, April 23, 1999, and October
22, 1999, and as Adjusted to Reflect Stock Split as of
May 15, 1996 and Spinoff as of September 1, 1997
(incorporated herein by reference to Exhibit 10.1 of the
Company's Form 10-Q for the quarter ended September 30,
1999)
15. Monsanto Executive Stock Purchase Incentive Plan
(incorporated herein by reference to Appendix B of the
Monsanto Company Notice of Annual Meeting and Proxy
Statement dated March 14, 1996)
41
16. Form of Non-Qualified Purchased and Year 2000 Premium
Stock Option Certificate (incorporated herein by
reference to Exhibit 10 of the Company's Form 10-Q for
the quarter ended March 31, 1999)
17. Form of Non-Qualified Premium Stock Option
Certificate (incorporated herein by reference to Exhibit
10.2 of the Company's Form 10-Q for the quarter ended
June 30, 1998)
18. Form of Monsanto Company 1999 Non-Qualified Premium
Stock Option Certificate (incorporated herein by
reference to Exhibit 10.5 of the Company's Form 10-Q for
the quarter ended September 30, 1999)
19. Annual Incentive Program for Executive Officers
(incorporated herein by reference to the description on
pages 25-26 of the Monsanto Company Notice of Annual
Meeting and Proxy Statement dated March 15, 1999)
20. Split-dollar Life Insurance Plan (incorporated herein
by reference to Exhibit 10(iii)19 of the Company's Form
10-K for the year ended December 31, 1987)
21. Form of Employment Agreement for Executive Officers
(incorporated herein by reference to Exhibit 10.7 of the
Company's Form 10-Q for the quarter ended September 30,
1997)
22. 1999 Form of Employment Agreement for Executive
Officers (incorporated herein by reference to Exhibit
10.24 of the Company's Form 10-K/A filed January 21,
2000)
23. Letter Agreement between the Company and Robert B.
Shapiro entered into as of July 23, 1990 (incorporated
herein by reference to Exhibit 19(i)3 of the Company's
Form 10-Q for the quarter ended September 30, 1990)
24. Amendment to Letter Agreement between the Company and
Robert B. Shapiro entered into as of July 23, 1990
(incorporated herein by reference to Exhibit 10.23 of the
Company's Form 10-K for the year ended December 31, 1996)
25. Agreement between Monsanto Company and Robert B.
Shapiro dated as of December 19, 1999 (incorporated
herein by reference to Exhibit 10.1 of the Company's Form
S-4 filed February 22, 2000, File No. 333-30824)
26. Letter Agreement between the Company and Hendrik A.
Verfaillie entered into as of June 27, 1988 (incorporated
herein by reference to Exhibit 10.20 of the Company's
Form 10-K for the year ended December 31, 1996)
27. Supplemental Retirement Plan regarding Richard U. De
Schutter (incorporated herein by reference to Exhibit
10.26 of the Company's Form 10-K for the year ended
December 31, 1996)
42
28. Letter Agreement between the Company and Richard U.
De Schutter, dated February 7, 1997 (incorporated herein
by reference to Exhibit 10.2 of the Company's Form 10-Q
for the quarter ended June 30, 1999)
29. Supplemental Retirement Plan and Amendment to
Supplemental Retirement Plan for Philip Needleman
30. G. D. Searle & Co. Split Dollar Life Insurance Plan,
as amended in 1989 (incorporated herein by reference to
Exhibit 19(ii)3 of the Company's Form 10-Q for the
quarter ended June 30, 1989)
11 Omitted--Inapplicable; see "Note 18: Earnings per Share" on page
49 of Exhibit 99.1 to this Report
12 Statement re Computation of the Ratio of Earnings to
Fixed Charges - See Exhibit 99.2 below
13 Omitted - Inapplicable
18 Omitted--Inapplicable
21 Subsidiaries of the registrant
22 Omitted--Inapplicable
23 Consent of Independent Auditors
24 1. Powers of attorney submitted by Richard U. De
Schutter, Michael Kantor, Gwendolyn S. King, Philip
Leder, Jacobus F.M. Peters, John S. Reed, John E. Robson,
William D. Ruckelshaus, Robert B. Shapiro Hendrik A.
Verfaillie, Gary L. Crittenden and Richard B. Clark
2. Certified copy of Board resolution authorizing Form
10-K filing utilizing powers of attorney
27 Financial Data Schedule (part of electronic submission
only)
99 1. Financial Information for Fiscal Year Ended December
31, 1999
2. Computation of the Ratio of Earnings to Fixed Charges
for Monsanto Company and Subsidiaries
[FN]
- -------------
Only Exhibits Nos. 21, 23, 99.1 and 99.2 have been included in the printed
copy of this Report.
43
APPENDIX
1. Throughout the electronic submission, trademarks are designated on
each page by the letter "R" in parentheses or the letters "TM" in
parentheses. In the printed copy of the Form 10-K, trademarks are
indicated by the "R" registered symbol or the "TM" symbol.