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1998
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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, 1998
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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
- ---------------------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(314) 694-1000
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
COMMON STOCK $2 PAR VALUE NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS 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 $29.0 BILLION AS OF THE
CLOSE OF BUSINESS ON FEBRUARY 26, 1999.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE
REGISTRANT'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:
628,044,729 SHARES OF COMMON STOCK, $2 PAR VALUE, OUTSTANDING AT
FEBRUARY 26, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
1. PORTIONS OF MONSANTO COMPANY ANNUAL REPORT TO SECURITY HOLDERS FOR
THE YEAR ENDED DECEMBER 31, 1998. (PARTS I AND II OF FORM 10-K.)
2. PORTIONS OF MONSANTO COMPANY NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT DATED MARCH 15, 1999. (PART III OF FORM 10-K.)
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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 and markets high-value agricultural products,
pharmaceuticals and food ingredients. 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.
Trademarks and service marks owned or licensed by Monsanto and its
subsidiaries are indicated by special type.
For 1998, Monsanto reported its business under four segments:
Agricultural Products, Nutrition and Consumer Products, Pharmaceuticals,
and Corporate and Other. The tabular and narrative information
appearing under "Geographic Data" and "Segment Data" on pages 30 and 31,
and the two paragraphs immediately following the Table of Contents on page
24, of the Company's Annual Report to shareowners for the year ended
December 31, 1998 (the "1998 Annual Report") is incorporated herein by
reference.
PRINCIPAL PRODUCTS
Monsanto's principal products, categorized by the segments in
which they were reported for 1998, include the following:
AGRICULTURAL PRODUCTS
MAJOR PRODUCTS END-USE PRODUCTS AND APPLICATIONS
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Roundup(R) herbicide and other glyphosate-based Nonselective agricultural and industrial applications
herbicides
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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
- ---------------------------------------------------------------------------------------------------------------------
Roundup Ready(R) canola, Crops tolerant of Roundup(R) herbicide
Roundup Ready(R) cotton,
Roundup Ready(R) soybeans
Roundup Ready(R) corn
- ---------------------------------------------------------------------------------------------------------------------
Bollgard(R)insect-protected cotton, Crops protected against certain insect pests
NewLeaf(R) insect-protected potatoes,
YieldGard(R)insect-protected corn
- ---------------------------------------------------------------------------------------------------------------------
AgriPro(R), Agroceres(TM), Asgrow(R), Cargill(R), Corn hybrids, soybean varieties, alfalfa, grain sorghum and
DEKALB(R), Hartz(R), Hybritech(R), Monsoy(TM) and forage varieties, sunflowers, oilseed rape and barley
Stoneville(R) branded seeds; Holden's(TM) and PBi(R) varieties, cotton varieties, wheat varieties and hybrids
foundation seed
The Company has announced its intention to sell
this business.
- ---------------------------------------------------------------------------------------------------------------------
Posilac(R) bovine somatotropin Increase efficiency of milk production in dairy cows
- ---------------------------------------------------------------------------------------------------------------------
NUTRITION AND CONSUMER PRODUCTS
MAJOR PRODUCTS END-USE PRODUCTS AND APPLICATIONS
- -------------- ---------------------------------
NutraSweet(R) brand sweetener High-intensity sweetener used primarily in beverages and
food products
- ---------------------------------------------------------------------------------------------------------------------
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NUTRITION AND CONSUMER PRODUCTS (CONT'D)
MAJOR PRODUCTS END-USE PRODUCTS AND APPLICATIONS
- -------------- ---------------------------------
Alginate products, under various tradenames Soups, sauces, gravies, dressings, beverages, snack foods,
such as Keltone(R) and Manugel(R) sodium alginates, breadings, batters, bakery products, dairy products, pet
and Kelcoloid(R) propylene glycol alginate; foods
Xanthan gum products under various tradenames
such as Keltrol(R); Kelcogel(TM) gellan gum
The Company has announced its intention to sell
the algins business.
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Equal(R), Canderel(R), NutraSweet(R), SweetMate(R), Tabletop sweeteners
Chuker(R), Misura(R) and other tabletop sweeteners
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Alginate products, under various tradenames Cleaners, textile printing, paper sizings and coatings,
such as Manutex(R) and Kelgin(R) sodium alginates; firefighting foams
Xanthan gum products, under various
tradenames such as Kelzan(R) AR
The Company has announced its intention to sell
the algins business.
- ---------------------------------------------------------------------------------------------------------------------
Xanthan gum products, under various Oil and gas well drilling applications
tradenames such as Kelzan(R) and Xanvis(R);
Biozan(R) welan gum
- ---------------------------------------------------------------------------------------------------------------------
Roundup(R) herbicide Residential lawn and garden applications
- ---------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS
MAJOR PRODUCTS END-USE PRODUCTS AND APPLICATIONS
- -------------- ---------------------------------
Daypro(R) (oxaprozin), Anti-inflammatory
Arthrotec(R) (misoprostol/diclofenac)
- ---------------------------------------------------------------------------------------------------------------------
Aldactone(R) (spironolactone), Cardiovascular
Aldactazide(R)(spironolactone/hydrochlorothiazide),
Calan(R) formulations and
Covera-HS(R)(verapamil hydrochloride)
- ---------------------------------------------------------------------------------------------------------------------
Ambien(R) (zolpidem tartrate) Central nervous system (sleep)
- ---------------------------------------------------------------------------------------------------------------------
Cytotec(R) (misoprostol), Gastrointestinal
Lomotil(R)(diphenoxylate hydrochloride)
- ---------------------------------------------------------------------------------------------------------------------
Demulen(R) (ethynodiol diacetate), Women's health
Flagyl(R) formulations (metronidazole),
Synarel(R) (nafarelin acetate)
- ---------------------------------------------------------------------------------------------------------------------
CORPORATE AND OTHER
MAJOR PRODUCTS END-USE PRODUCTS AND APPLICATIONS
- -------------- ---------------------------------
Enviro-Chem(R) engineering and construction Processing plants for fertilizer producers, basic metals
management services for processing plants using production, oil refining
sulfuric acid; proprietary equipment and air
pollution control systems
- ---------------------------------------------------------------------------------------------------------------------
On December 31, 1998, G. D. Searle & Co. ("Searle"), a subsidiary
of the Company, received approval from the U.S. Food and Drug
Administration ("FDA") to market Celebrex(TM), a new arthritis treatment
for the signs and symptoms of osteoarthritis and adult rheumatoid
arthritis. Celebrex(TM) was launched in the United States in February
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1999 and is expected to be launched in more than a dozen other countries
in 1999. In early 1999, Searle also received approval to market the
drug in Brazil and Mexico.
PRINCIPAL EQUITY AFFILIATES
Monsanto participates in a number of joint ventures in which it
shares management control with other companies. For example, aspartame
is manufactured and sold in Europe by fifty percent-owned joint
ventures; and Monsanto has a 60% ownership interest in a joint venture
with Solutia Inc., from which it purchases elemental phosphorus. In
addition, on January 7, 1999, Monsanto and Cargill Incorporated formed
Renessen LLC, a worldwide joint 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 products are sold 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 new anti-arthritis
product Celebrex(TM) will be co-promoted with Yamanouchi Pharmaceutical
Co. Ltd. in Japan and with Pfizer Inc. in most other countries of the
world.
As indicated on page 46 of the 1998 Annual Report, 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. The Nutrition and Consumer Products segment, however, makes
significant sales to a few companies for use in carbonated soft drinks.
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.
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'
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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. In addition, Monsanto holds a number of licenses
granted by other parties, some of which may be significant. Also,
Monsanto 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 in the operation
of its business, particularly in the Agricultural Products and
Pharmaceuticals segments and with respect to NutraSweet(R) brand
sweetener. Certain proprietary products such as Roundup(R) herbicide 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 plant products
(including NewLeaf(R) potato, YieldGard(R) corn and Bollgard(R) cotton)
are protected by patents which extend until at least 2013. Monsanto's
herbicide-resistant plant products, Roundup Ready(R) 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.
All patents covering the use of aspartame as a sweetener have
expired. NutraSweet(R) brand sweetener is currently manufactured under
several patents owned or licensed by The NutraSweet Company, a
subsidiary of the Company.
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 will
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 October
29, 1999. Arthrotec(R) an arthritis treatment is protected by a U.S.
patent until February 11, 2014. Celebrex(TM), 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.
Monsanto leases or subleases a number of kelp beds off the coast
of California from the State of California and several private parties.
Monsanto also has leases to harvest seaweed off the coasts of Scotland
and (through a joint venture) Ireland. None of these leases taken
individually is deemed by Monsanto to be material, although the leases
to harvest seaweed in the aggregate are significant to the Nutrition and
Consumer Products segment. The leases relate to the algins business and
have varying terms.
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
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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 "Review of Consolidated Results of
Operations--Development and Commercialization of New Products Remain
Priorities," "Agricultural Products--Outlook," "Nutrition and Consumer
Products," "Pharmaceutical Products" and "Notes to Financial Statements--
Supplemental Data" on pages 29, 33-34, 34-35, 36-37 and 57,
respectively, of the 1998 Annual Report, 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 under "Notes to
Financial Statements--Commitments and Contingencies" on page 57 of the
1998 Annual Report, incorporated herein by reference.
EMPLOYEE RELATIONS
As of December 31, 1998, Monsanto had approximately 31,800
employees worldwide. 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 "Geographic Data" on page 30 of the
1998 Annual Report, 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 the Company'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 9,
1999, there were 3 cases pending in various U.S. state and federal
courts and approximately 270 in the Supreme Court of New South Wales,
Australia. On February 22, 1999, Searle received a defense verdict
after a trial of the nine lead Australian plaintiffs. Though not
technically a class action, these nine individuals are considered
representative of the entire group of Australian plaintiffs. They have
indicated their intention to appeal 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.
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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. Trial of
the federal class action case commenced on September 14, 1998. On
November 30, 1998, Searle and its co-defendants received a verdict for
the defense and all claims were dismissed. On January 4, 1999, the
class plaintiffs filed a notice of appeal with the U. S. Court of
Appeals for the Seventh Circuit. 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
most of these suits have been settled, suits remain pending in
California and Alabama.
In 1996 the Company 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
the Company, 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 February 20, 1998 Mycogen filed motions
requesting that the Court set aside the jury's verdict. Due to the other
pending Bt litigation before the Delaware court, no ruling has been issued
regarding any post trial motion and final judgment has not yet been entered
for defendants. The Company has several meritorious defenses in the case
including non-infringement, lack of validity of Mycogen's patent and
prior invention by the Company. The Company will continue to vigorously
defend against Mycogen's lawsuit and will take all appropriate action to
support the verdict in favor of all defendants.
On May 19, 1995, Mycogen initiated suit in U.S. District Court in
California against the Company alleging infringement of U.S. Patent No.
5,380,831 involving synthetic Bt genes and seeking damages and
injunctive relief. The District Court has granted motions dismissing
virtually all of Mycogen's patent claims on the basis that products
containing Bt genes made prior to January 1995 do not infringe the
patent. The Company has various meritorious defenses to the claims of
Mycogen 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. This litigation
has been stayed pending a final judgment determination in the related
Delaware litigation between the parties. The Company 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. In all of the foregoing actions
the Company is vigorously litigating its position.
In 1997 the Company commercially introduced corn containing a gene
encoding for 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 January 21, 1997, Novartis Seeds, Inc. ("Novartis")
filed suits in U.S. District Court in Delaware seeking damages and
injunctive relief against the Company and DEKALB, alleging infringement
of Bt related U.S. Patent No. 5,595,733 issued to Ciba-Geigy Corporation
(Seed Division) and now held by Novartis. The cases of Monsanto and
DEKALB were consolidated and tried to jury verdict in favor of
defendants on November 9, 1998. The jury determined that the Novartis
patent was invalid and not enabled. The matter remains pending on post
trial motions seeking entry of judgment as a matter of law. The Company
and DEKALB have several meritorious defenses to support the verdict
including non-infringement and lack of validity of Novartis' patent. The
Company and/or DEKALB are vigorously defending against Novartis' lawsuit
and will take all appropriate action to support the verdict in favor of
all defendants.
The Company and/or DEKALB is the plaintiff in various legal
actions involving Bt: (a) The most significant of the DEKALB-initiated
actions have been filed in federal district court in the Northern
District of Illinois and allege
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infringement of one or up to five of DEKALB's biotechnology related patents.
The DEKALB patents involved 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. In each such case DEKALB has asked the
court to determine that infringement has occurred, to enjoin further
infringement and to award unspecified compensatory and exemplary
damages. Lawsuits were initially filed on April 30, 1996 against
Pioneer Hi-Bred International, Inc., Mycogen Corporation (and two of its
subsidiaries) and Ciba-Geigy Corporation. A similar lawsuit was filed
against Northrup King Co. on June 10, 1996. In addition, DEKALB sued
Beck's Hybrids, Inc. and Countrymark Cooperative, Inc. on July 23, 1996
and filed against several Hoechst Schering AgrEvo GmbH entities on
August 27, 1996. All lawsuits related to patent No. 5,550,318 have been
stayed pending resolution to an interference proceeding involving that
patent at the U.S. Patent and Trademark Office. (b) On March 19, 1996,
Monsanto was issued U.S. Patent No. 5,500,365 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. Monsanto has filed a
motion for judgment as a matter of law to overturn the jury verdict and
will continue to litigate vigorously its position in the matter.
In 1997 the Company commercially introduced corn containing a gene
providing glyphosate resistance. Monsanto is a leader in this scientific
field and has engaged in such research and biotechnology development
over many years and owns a number of present and pending patents which
relate to this technology. On November 20, 1997, Rhone Poulenc
Agrochimie S. A. ("Rhone Poulenc") filed suit in U. S. District Court in
North Carolina (Charlotte) against the Company and DEKALB contending
they did not have a right to license, make or sell products using Rhone
Poulenc technology for glyphosate resistance. DEKALB has sublicensed to
Monsanto certain technology previously licensed from Rhone Poulenc. The
terms of Rhone Poulenc's license to DEKALB are now in dispute and have
resulted in Rhone Poulenc's claim that the Company's sale of Roundup
Ready(R) corn infringes on the Rhone Poulenc patent. Rhone Poulenc also
contends that Monsanto is in violation of certain antitrust laws. Trial
of this matter is set for April 5, 1999. A lawsuit with similar
allegations was filed in Paris, France in the Tribunal de Grand Instance
on March 13, 1998. The outcome of the North Carolina litigation will be
dispositive of the claims in France. The Company has meritorious
defenses to the allegations, including that the parties are licensed
under an existing agreement, and is vigorously defending the litigation.
On July 30, 1998, Monsanto was served with a lawsuit filed in
United States District Court in Delaware by Zeneca Inc. ("Zeneca"). The
complaint alleges that Monsanto has violated Sections 3, 4 and 16 of the
Clayton Act and Sections 1 and 2 of the Sherman Act and Zeneca seeks
treble damages. In addition to the antitrust allegations, the
complaint seeks a declaration that certain United States patents
assigned to Monsanto (U.S. Patent Nos. 4,940,835; 5,352,605;
4,535,060) are invalid, unenforceable or have not been infringed by
Zeneca. The complaint also asserts a claim for tortious acts of
unfair competition with prospective economic advantage. The
allegations in the complaint center on Monsanto's technology related
to Roundup Ready(R) seed and marketing activity associated with
soybeans. The complaint asserts that Zeneca will be precluded in its
ability to sell a herbicide with respect to which it is seeking
registration for use in application over Roundup Ready(R) seed.
Regulatory approval of this Zeneca herbicide has not occurred. On
August 12, 1998, the complaint was amended, adding Pioneer Hi-Bred
International, Inc. ("Pioneer") as a plaintiff. Pioneer seeks a
declaratory judgment that it did not breach its license agreement with
Monsanto by providing Roundup Ready(R) soybean seed to Zeneca for
testing. The complaint was also amended to add an additional claim for
relief by Zeneca, seeking a declaratory judgment that its obtaining the
Roundup Ready(R) soybean seed from Zeneca was not improper. Monsanto
believes that its activities have been lawful and that the allegations
are without merit. Under agreement of the parties Monsanto has not been
required to file an answer to the complaint. Under an agreement announced
on March 18, 1999, the parties have agreed to dismiss this lawsuit.
In June 1996, Mycogen Corporation, Agrigenetics Inc. and Mycogen
Plant Sciences, Inc. 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.
7
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 the company
awarding damages totaling $174.9 million. The case is now on appeal as
Appeal No. D031336 before the California Court of Appeal for the Fourth
Appellate District. Mycogen and Agrigenetics Inc. 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. The Company 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 the
company on the issue of liability. Mycogen is also seeking to overturn
an award of sanctions against it in connection with this litigation and
to obtain a determination that the contract entititles Mycogen to a
license to germplasm not genes from Monsanto. The Company will continue
to vigorously litigate its position.
On February 4, 1999, Pioneer Hi-Bred International Inc.
("Pioneer") filed suit against Monsanto Company, (Civil Action No.
4-99-CV-90063) in U.S. District Court for the Southern District of Iowa.
The suit seeking equitable relief and jury trial alleges that Monsanto
has misappropriated trade secrets through the acquisition and purchase
of certain international seed operations of Cargill International
("Cargill"). Pioneer alleges that Cargill's employees misappropriated (via
theft) germplasm belonging to Pioneer's corn seed business and then bred the
Pioneer germplasm into the corn lines of Cargill. A related lawsuit, Civil
Action No. 4-98-CV-90576 has been filed by Pioneer against Cargill. On
February 2, 1999 a joint statement issued by Pioneer and Cargill indicated
that a former Cargill employee may have misappropriated technology of Pioneer
and that efforts were underway between those Companies to resolve this issue.
Monsanto purchased the Cargill seed operations pursuant to the warranty and
representation of Cargill's parent that all intellectual property and seed
lines were the property of the business and not any third party. A study is
underway to ascertain the scope of the seed lines that may be affected by the
allegations raised by Pioneer. In the lawsuit Pioneer seeks the return of its
alleged trade secrets, injunction against Monsanto's further use of the
material, an accounting and damages for any sales of the misappropriated
material and other relief. Monsanto will maintain that it is not liable for
damages from its unknowing acquisition of the Cargill International business.
Monsanto has meritorious defenses against liability and will vigorously defend
this action and may assert claims for indemnity, breach and other causes
against Cargill. On October 28, 1998, two related lawsuits were filed
in U.S. District Court in Iowa: one against Asgrow Seed Company,
L.L.C., a subsidiary of the Company (No. 4-98-CV-70577); and the other
against DEKALB (since acquired by the Company) (No. 4-98-CV-90578). The
lawsuits allege that defendants misappropriated trade secrets of Pioneer
in their corn breeding programs. In addition to claims under Iowa state
law for trade secret misappropriation, Pioneer alleges violations of the
Lanham Act. 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.
No answer has been filed by defendants but motions to dismiss were filed
on or about January 22, 1999 asserting that the claims of Pioneer are
preempted by federal law (the Plant Variety Protection Act) which
expressly permits the activities of breeding and research with germplasm
sold in commerce. The Company has meritorious defenses including
preemption, laches, statute of limitations, lack of trade secret,
ownership of the germplasm at issue and other defenses.
Following the announcement of the merger agreement between
Monsanto and American Home Products Corporation ("AHP"), six alleged
holders of Monsanto common stock filed suits in the Delaware Court of
Chancery in and for New Castle County (the "Delaware Actions") against
Monsanto, members of the Monsanto Board of Directors (the "Monsanto
Board") and AHP. Seeking to represent a purported class of Monsanto
shareowners, plaintiffs in each of the Delaware Actions alleged that the
consideration to be received by holders of Monsanto common stock in the
merger was unfair and inadequate, that the members of the Monsanto Board
breached their fiduciary duties by approving the merger, and that AHP
aided and abetted such breaches. By agreement of the parties this
litigation has been dismissed.
Following the announcement on May 11, 1998, of the merger
agreement between Monsanto and Delta and Pine Land Company ("Delta and
Pine Land"), five alleged holders of Delta and Pine Land common stock
filed suits, now consolidated (the "Delta and Pine Land Suit"), in the
Delaware Court of Chancery in and for New Castle County against
Monsanto, Delta and Pine Land, and members of the Delta and
Pine Land Board of Directors (the "Delta and Pine Land Board"). Seeking
to represent a purported class of Delta and Pine Land shareowners,
plaintiffs in the
8
Delta and Pine Land Suit allege that the consideration to be received by
holders of Delta and Pine Land common stock in the merger is unfair and
inadequate, that the members of the Delta and Pine Land Board have breached
their fiduciary duties by approving the transaction and that Monsanto has
aided and abetted such breaches. Plaintiffs in the Delta and Pine
Land Suit seek 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 is consummated, awarding unspecified compensatory damages
against defendants, and awarding plaintiffs their attorneys' fees and
expenses. Plaintiffs and defendants have reached a memorandum of
understanding to settle and resolve the litigation. This agreement will
require court approval which the parties reasonably expect will occur.
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.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Information regarding forward-looking statements, and factors that
could cause actual performance or results to differ materially from
those described, are set forth in Exhibit 99.2, accompanying this Report
and incorporated herein by reference.
ITEM 2. PROPERTIES.
The General Offices of the Company are located on a 285-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. 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 sectors noted: Alvin, Texas (Agricultural Products); Antwerp,
Belgium (Agricultural Products); Augusta, Georgia (Agricultural Products,
Nutrition and Consumer Products, Pharmaceuticals); Barceloneta, Puerto Rico
(Pharmaceuticals); Caguas, Puerto Rico (Pharmaceuticals); Davis, California
(Nutrition and Consumer Products); Fayetteville, North Carolina (Agricultural
Products); Feucht, Germany (Pharmaceuticals); Luling, Louisiana (Agricultural
Products); Mt. Prospect, Illinois (Nutrition and Consumer, Pharmaceuticals);
Morpeth, United Kingdom (Pharmaceuticals); Muscatine, Iowa (Agricultural
Products); Okmulgee, Oklahoma (Nutrition and Consumer Products); San Diego,
California (Nutrition and Consumer Products); Sao Jose dos Campos, Brazil
(Agricultural Products); Skokie (Old Orchard), Illinois (Pharmaceuticals,
Corporate and Other); Skokie (Searle Parkway), Illinois (Pharmaceuticals);
and Zarate, Argentina (Agricultural Products). All of these properties
are manufacturing facilities, except for the research and office building
in Davis, California, the research buildings in Mt. Prospect, Illinois and
Skokie (Searle Parkway), Illinois, and the office building in Skokie (Old
Orchard), Illinois.
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, major portions of
the San Diego, California plant and the Davis, California facilities are
leased. In addition, a portion of a plant at Augusta, Georgia is
currently leased with an option to purchase, pursuant to an industrial
revenue bond financing. The Company also 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.
9
ITEM 3. LEGAL PROCEEDINGS.
For information concerning certain legal proceedings involving
Monsanto, see "Business--Environmental Matters", "Business--Legal
Proceedings" and "Business--Disclosure of Forward-Looking Statements"
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 1998.
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.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The narrative information appearing under "Review of Cash Flow--
Dividend Policy is Unchanged" on page 41, and the tabular information
regarding Dividends Per Share and Common Stock Price (for the years 1997
and 1998) appearing under "Quarterly Data" on page 46, of the 1998 Annual
Report are incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The tabular information under "Financial Summary--Operating
Results, Earnings (Loss) per Share and Year-End Financial Position" and
the amounts of Dividends per Share, all for the years 1994 through 1998,
appearing on page 61, and the two paragraphs immediately following the
Table of Contents on page 24, of the 1998 Annual Report, is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The tabular and narrative information appearing under "Review of
Consolidated Results of Operations" on pages 27 through 29, "Review of
Consolidated Results of Operations--Analysis of Change in Earnings
(Loss) Per Share from Continuing Operations" on page 30, "Segment Data"
and information regarding segments on pages 31 through 37, "Review of
Changes in Financial Position" on page 39, "Review of Cash Flow" on page
41 and "Additional Financial Information" on pages 42-43, and the
narrative information appearing under "Geographic Data" on page 30,
"Disclosure of Forward-Looking Statements" on pages 58-60, and the two
paragraphs immediately following the Table of Contents on page 24, of
the 1998 Annual Report is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
The tabular and narrative information appearing under "Financial
Instruments" on page 44 of the 1998 Annual Report is incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of Monsanto appearing on
pages 26, 38, 40, 41, 45 and 47 through 57; the Independent Auditors'
Report appearing on page 25; the tabular and narrative information
appearing under "Quarterly Data" on page 46; and the two paragraphs
immediately following the Table of Contents on page 24, of the 1998 Annual
Report are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding directors and executive officers appearing
under "Election of Directors" on pages 2 through 4, and "Other
Information Regarding Management--Section 16(a) Beneficial Ownership
Reporting Compliance" on pages 18-19, of the Monsanto Company Notice of
Annual Meeting and Proxy Statement (the "1999 Proxy Statement") dated
March 15, 1999, is incorporated herein by reference. The following
information with respect to the Executive Officers of the Company on
March 1, 1999, 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, 1994
- ---------------------- --------------------------- ---------- -----------------------------------------------------
Bruce P. Bickner, 55 Co-President, Global Seed 1999 Chairman and Chief Executive Officer - DEKALB Energy
Group - Monsanto Company Co., 1986; Chairman and Chief Executive Officer -
DEKALB Genetics Corporation, 1988 to present.
Martin E. Blaylock, 58 Vice President, 1999 Director, Manufacturing Operations - Monsanto
Manufacturing Operations - Company, 1993; and present position, 1995.
Monsanto Company
Gary L. Crittenden, Senior Vice President, 1998 Executive Vice President and Chief Financial Officer -
45 Chief Financial Officer Melville Corp., 1994; Executive Vice President,
- Monsanto Company Strategy and 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- Monsanto 1995 President and Chief Operating Officer - G.D. Searle
De Schutter, 57 Company; Chairman, Chief & Co., 1993; Chairman, Chief Executive Officer and
Executive Officer and President - G.D. Searle & Co.; Advisory Director-
President - G.D. Searle & Co. Monsanto Company, 1995; and present position, 1997.
Arnold W. Donald, 44 Senior Vice President; 1998 Group Vice President North America Division -
Co-President, Nutrition and Monsanto Company, 1993; Group Vice President and
Consumer Products - General Manager - Monsanto Company, 1994; President,
Monsanto Company Crop Protection - Monsanto Company, 1995; Co-
President, Agricultural Sector - Monsanto Company,
1997; Senior Vice President - Monsanto Company,
1998; and present position, 1999.
Steven L. Engelberg, Senior Vice President 1995 Partner-in-Charge, Keck, Mahin & Cate Washington,
55 - Monsanto Company D.C. office, 1986; Chief of Staff of Office of the
United States Trade Representative (on leave from
Keck, Mahin & Cate until May 1993), 1993; Vice
President, Worldwide Government Affairs - Monsanto
Company, 1994; and present position, 1996.
11
Year First
Became An
Present Position Executive
Name--Age with Registrant Officer Other Business Experience since January 1, 1994
- ---------------------- --------------------------- ---------- -----------------------------------------------------
Patrick J. Fortune, 50 Vice President and Chief 1997 Corporate Vice President, Information Management -
Knowledge Officer - Bristol-Myers Squibb, 1991; President and Chief
Monsanto Company Operation Officer - Coram Healthcare Corporation,
1994; Vice President, Information Technology -
Monsanto Company, 1995; Vice President and Chief
Information Officer - Monsanto Company, 1997; and
present position, 1998.
Robert Fraley, 46 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, 40 Co-President, Agricultural 1999 Director, Global Roundup(R) Product Strategy -
Sector - Monsanto Company Monsanto Company, 1994; General Manager,
Agricultural Sector for Southeast Asia, Australia,
New Zealand & South Korea - Monsanto Company, 1995;
and present position, 1998.
Alan L. Heller, 45 Chief Operating Officer - 1999 Vice President, Sales - G.D. Searle & Co., 1992;
G.D. Searle & Co. Vice President, Finance - G.D. Searle & Co., 1994;
President, Americas, G.D. Searle & Co., 1995; and
present position, 1997.
R. William Ide III, 58 Senior Vice President, 1996 President, American Bar Association, 1993-1994;
General Counsel and partner, Long, Aldridge & Norman, 1993; and present
Secretary - Monsanto Company position, 1996.
Madonna A. Kindl, 40 Vice President, Human 1996 Director of Human Resources, Staff of the Vice
Resources - Monsanto Company Chairman - Monsanto Company, 1993; Director, Human
Resources, Crop Protection Business Unit - Monsanto
Company, 1995; and present position, 1996.
Ganesh M. Kishore, 45 Co-President, Nutrition and 1999 Director of Technology, Agricultural Sector -
Consumer Products - Monsanto Monsanto Company, 1994; Director of Technology,
Company Ceregen - Monsanto Company, 1995; Director of Crop
Enhancement, Ceregen - Monsanto Company, 1996;
Distinguished Science Fellow - Monsanto Company, 1996;
and present position, 1997.
Philip Needleman, 60 Senior Vice President, 1991 Vice President, Research and Development; Advisory
Research and Development and Director - Monsanto Company; President, Research and
Chief Scientist; Co-President, Development - G.D. Searle & Co., 1992; Senior Vice
Pharmaceuticals Sector - President, Research and Development and Chief Scientist -
Monsanto Company Monsanto Company; President, Research and Development -
G.D. Searle & Co., 1993; and present position, 1996.
Robert W. Reynolds, 54 Vice Chairman - Monsanto 1994 Vice President and Managing Director, Latin America
Company World Area - Monsanto Company, 1992; Vice President,
International Operations and Development - Monsanto
Company, 1995; and present position, 1997.
12
Year First
Became An
Present Position Executive
Name--Age with Registrant Officer Other Business Experience since January 1, 1994
- ---------------------- --------------------------- ---------- -----------------------------------------------------
Nicholas E. Rosa, 47 Co-President, Nutrition and 1999 President - NutraSweet Europe, 1991; Executive Vice
Consumer Products - Monsanto President - The NutraSweet Company, 1994; President,
Company Benevia - Monsanto Company, 1996; President,
Nutrition and Consumer Products - Monsanto Company,
1997; and present position, 1999.
Robert B. Shapiro, 60 Director; Chairman and Chief 1987 Director, President and Chief Operating Officer -
Executive Officer - Monsanto Monsanto Company, 1993; Director, Chairman, Chief
Company Executive Officer and President - Monsanto Company,
1995; and present position, 1997.
Hendrik A. Verfaillie, President - Monsanto Company 1993 Vice President and Advisory Director - Monsanto
53 Company; President - The Agricultural Group - Monsanto
Company, 1993; Vice President and Advisory Director -
Monsanto Company, 1995; Executive Vice President and
Advisory Director - Monsanto Company, 1995; and present
position, 1997.
Mr. Reynolds has announced his intention to retire April 30, 1999.
13
ITEM 11. EXECUTIVE COMPENSATION.
Information appearing under "Directors' Fees and Other
Arrangements" on pages 8-9, and under "Executive Compensation" beginning
on page 15 and continuing through "Certain Agreements" on page 18 of the
1999 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information appearing under "Stock Ownership of Management and
Certain Beneficial Owners" on pages 5 and 6 of the 1999 Proxy Statement
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information appearing under "Other Information Regarding
Management--Transactions and Relationships" and "--Indebtedness" on
pages 18 through 20 of the 1999 Proxy Statement is incorporated herein
by reference.
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 pages 26, 38, 40, 41, 45
and 47 through 57 of the 1998 Annual Report (See Exhibit 13
under Paragraph (a)3 of this Item 14)
2. Financial Statement Schedules
None required
3. Exhibits--See the Exhibit Index beginning at page 17 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 29 on pages 17 through 19 of
the Exhibit Index. The following Exhibits listed in the
Exhibit Index are filed with this Report:
13 The Company's 1998 Annual Report to shareowners
21 Subsidiaries of the registrant (See page 20)
23 Consent of Independent Auditors (See page 21)
24 1. Powers of attorney submitted by Robert M.
Heyssel, Michael Kantor, Gwendolyn S. King,
Philip Leder, Jacobus F.M. Peters, John S. Reed,
John E. Robson, William D. Ruckelshaus, Robert
B. Shapiro, 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 Computation of the Ratio of Earnings to Fixed Charges
for Monsanto Company and Subsidiaries (See page 22)
99.2 Disclosure Regarding Forward-Looking Statements (See
page 23)
(b) Reports on Form 8-K during the quarter ended December 31, 1998:
The following reports on Form 8-K were filed by the Company on the
dates indicated: October 13, 1998 (termination of merger agreement with
American Home Products Corporation); October 19, 1998 (information
presented to the financial community); October 30, 1998 (financial
information for quarter ended September 30, 1998); November 13 and 16,
1998; (announcement of financing plans); November 27, 1998 (offerings of
common stock and Adjustable Conversion-rate Equity Security Units);
December 8, 1998 (acquisition of DEKALB Genetics Corporation); and
December 14, 1998 (closings of financings and filing of related
documents).
14
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 25, 1999
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, President and March 25, 1999
(Robert B. Shapiro) Director (Principal
Executive Officer)
*
________________________
(Robert M. Heyssel) Director March 25, 1999
*
________________________
(Michael Kantor) Director March 25, 1999
*
________________________
(Gwendolyn S. King) Director March 25, 1999
*
________________________
(Philip Leder) Director March 25, 1999
*
________________________
(Jacobus F. M. Peters) Director March 25, 1999
*
________________________
(John S. Reed) Director March 25, 1999
*
________________________
(John E. Robson) Director March 25, 1999
*
________________________
(William D. Ruckelshaus) Director March 25, 1999
*
________________________ Senior Vice President, March 25, 1999
(Gary L. Crittenden) Chief Financial Officer
(Principal Financial
Officer)
/s/ RICHARD B. CLARK
____________________________ Vice President and March 25, 1999
(Richard B. Clark) Controller (Principal
Accounting Officer)
15
*Barbara L. Blackford, by signing 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/ BARBARA L. BLACKFORD
------------------------------
Barbara L. Blackford
Attorney-in-Fact
16
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item
601 of Regulation S-K.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2 Omitted--Inapplicable
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 26,
1999 (incorporated herein by reference to Exhibit 3.2 of the
Company's Registration Statement on Form S-4 filed March
2, 1999)
4 1. Form of Rights Agreement, dated as of January 26, 1990
between the Company and First Chicago Trust Company as
successor to The First National Bank of Boston (incorporated
herein by reference to Form 8-A filed on January 31, 1990)
2. 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 (incorporated herein by reference to
Exhibit 10.3 of the Company's Form 10-Q for the quarter
ended September 30, 1997)
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)
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)
17
EXHIBIT INDEX (CONT'D)
EXHIBIT NO. DESCRIPTION
- ----------- -----------
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. Consulting Agreement between the Company and Philip Leder
dated January 17, 1990 (incorporated herein by reference to
Exhibit 19(i)3 of the Company's Form 10-K for the year ended
December 31, 1989)
12. Monsanto Management Incentive Plan of 1988/I, as amended
in 1988, 1989, 1991, 1992, April 1997 and July 1997
(incorporated herein by reference to Exhibit 10.3 of the
Company's Form 10-Q for the quarter ended June 30, 1997)
13. Monsanto Management Incentive Plan of 1988/II, as
amended in 1989, 1991, 1992, April 1997 and July 1997
(incorporated herein by reference to Exhibit 10.4 of the
Company's Form 10-Q for the quarter ended June 30, 1997)
14. Monsanto Management Incentive Plan of 1994, as amended
in April 1997 and July 1997 (incorporated herein by
reference to Exhibit 10.5 of the Company's Form 10-Q for
the quarter ended June 30, 1997)
15. Monsanto Management Incentive Plan of 1996 as amended
April 1997, July 1997, August 1997, February 1998 and
September 1998 (incorporated herein by reference to Exhibit
10.1 of the Company's Form 10-Q for the quarter ended
September 30, 1998)
16. 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)
17. Form of Non-Qualified Purchased and Year 2000 Premium
Stock Option Certificate (incorporated herein by reference to
Exhibit 10.2 of the Company's Form 10-Q for the quarter ended
March 31, 1998)
18. 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)
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. Long-Term Incentive Program and Premium Option Purchase
Program for Executive Officers (incorporated herein by
reference to the description on pages 12-13 of the Monsanto
Company Notice of Annual Meeting and Proxy Statement dated
March 15, 1999)
21. 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)
22. 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)
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)
18
EXHIBIT INDEX (CONT'D)
EXHIBIT NO. DESCRIPTION
- ----------- -----------
25. 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)
26. 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)
27. Searle/Monsanto Stock Plan of 1994, as amended in 1995,
April 1997 and July 1997 (incorporated herein by reference
to Exhibit 10.6 of the Company's Form 10-Q for the quarter
ended June 30, 1997)
28. 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)
29. G. D. Searle & Co. Legal/Tax/Financial Counseling Plan
(incorporated herein by reference to Exhibit 19(i)8 of the
Company's Form 10-Q for the quarter ended June 30, 1988)
11 Omitted--Inapplicable; see "Earnings per Share" on page 60
of the 1997 Annual Report
12 Statement re Computation of the Ratio of Earnings to Fixed
Charges--See Exhibit 99.1 below
13 The Company's 1998 Annual Report to shareowners. (The
electronic submission includes only the financial report
section of the Annual Report, appearing on pages 25
through 61 of that Report.) Only those portions expressly
incorporated by reference into this Form 10-K are deemed
"filed"; other portions are furnished only for the
information of the Commission.
18 Omitted--Inapplicable
21 Subsidiaries of the registrant (See page 20)
22 Omitted--Inapplicable
23 Consent of Independent Auditors (See page 21)
24 1. Powers of attorney submitted by Robert M. Heyssel,
Gwendolyn S. King, Philip Leder, Jacobus F.M. Peters,
John S. Reed, John E. Robson, William D. Ruckelshaus,
Robert B. Shapiro, 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. Computation of the Ratio of Earnings to Fixed Charges for
Monsanto Company and Subsidiaries (See page 22)
2. Disclosure Regarding Forward-Looking Statements (See page
23)
_________
Only Exhibits Nos. 13, 21, 23, 99.1 and 99.2 have been included in the
printed copy of this Report.
19