St. Louis, Missouri
February 5, 2003
Financial Summary
($ in millions, except per share)
Fourth Fourth Full Full
Quarter Quarter % Year Year %
2002 2001 Change 2002 2001 Change
Net Sales $1,220 $1,209 1% $4,673 $5,462 (14)%
Net Income (Loss) $61 $(104) NM $(1,693) $295 NM
Diluted Earnings
(Loss) per Share $0.23 $(0.40) NM $(6.45) $1.12 NM
NM = not meaningful
-- Quarterly sales improved 1 percent, with overall higher trait revenues
in the United States, and higher U.S. and Latin American corn seed
sales, largely offset by lower sales of branded Roundup in Brazil and
the United States.
-- Fourth-quarter net income of $61 million was $165 million better than
last year's fourth-quarter net loss of $104 million.
-- Full-year sales declined to $4.7 billion, compared with 2001 sales of
$5.5 billion, primarily from lower Roundup and seed sales in Latin
America, and lower volumes and prices for Roundup in the United States.
-- Net loss in 2002 included a loss of $6.94 per share from a cumulative
effect of an accounting change for goodwill impairment.
-- Free cash flow for 2002 was $639 million compared with free cash flow
of $183 million in 2001.
Comment from Monsanto Chairman and Interim Chief Executive Officer Frank V.
AtLee:
"Monsanto's shift to a company fueled by its growing technology traits and seeds
business was evident in our fourth-quarter results, although increases in those
businesses were mostly offset by reduced sales from our branded Roundup
herbicide in Brazil and the United States. We implemented a plan with our
customers to reduce the risk of doing business in Latin America in 2002, and
we're well positioned for a return to more normal operations in that region. Our
focus on improving working capital investments in 2002 allowed us to exceed our
free cash flow target."
Fourth-Quarter and Full-Year 2002 Performance Summary:
Net sales of $1.2 billion for the quarter were 1 percent above those in the
fourth quarter of 2001. The slight improvement in the fourth-quarter net sales
comparison is the result of increased demand for the company's biotechnology
traits and strong corn seed sales in the United States, which was largely offset
by lower sales of branded Roundup in Brazil and the United States.
For the full year, net sales were $4.7 billion, compared with 2001 net sales of
$5.5 billion. Continued competitive pressures and unfavorable weather conditions
in the United States contributed to lower sales of Roundup in 2002. In Latin
America, economic conditions caused us to take steps with our customers to
reduce the risk of doing business there. These actions included reducing
distributor inventories of Roundup and seeds in the region, tightening our
credit policies, and selling closer to the time farmers are using our products.
As a result of these changes to our operations, sales of Roundup and seeds were
significantly lower in Argentina and Brazil in 2002.
For a geographic breakdown of net sales, please go to Monsanto's web site and
select "Fourth-Quarter and Full-Year 2002 Supplemental Data" in the Financial
Reports section under the investor information page.
Net income (loss) and earnings (loss) per share: For the fourth quarter of 2002,
the company reported net income of $61 million (23 cents per share). This
compares with a net loss of $104 million (40 cents per share) during the fourth
quarter of 2001. For the full year, Monsanto reported a net loss of $1.7 billion
($6.45 per share), compared with net income of $295 million ($1.12 per share)
for 2001.
Earnings in the fourth quarter and the full year were affected by the same
operational factors that lowered sales in those periods as described above.
In the fourth quarter of 2002, the company recorded net aftertax restructuring
items of $20 million (8 cents per share), compared with net aftertax
restructuring and other special items of $86 million (34 cents per share) in the
fourth quarter of 2001. Results in the fourth quarter of 2001 also included a
net charge for litigation matters of $39 million aftertax (15 cents per share).
Full-year 2002 results also included bad-debt expense of $100 million aftertax
(38 cents per share) established during the second quarter for estimated
uncollectible receivables in Argentina. Net restructuring charges for the year
were $81 million aftertax (31 cents per share), compared with $137 million
aftertax (52 cents per share) in 2001 for restructuring and other special items.
Full-year 2001 results also included a net charge for litigation matters of $39
million aftertax (15 cents per share). EPS in 2002 also benefited from a gain of
8 cents per share related to certain asset sales to Nissan Chemical Industries
Ltd. in the second quarter. The full-year comparison also included the effect of
a $1.8 billion aftertax ($6.94 per share) goodwill impairment related to
Monsanto's corn and wheat businesses.
Cost management: Research-and-development (R&D) expenses were $141 million in
the fourth quarter, and $527 million for the year, down 6 percent compared with
R&D expenses in the same periods of 2001. Selling, general and administrative
(SG&A) expenses of $231 million for the fourth quarter and $1 billion for the
year were down 13 percent and 10 percent, respectively, from the comparable 2001
periods. These declines reflect the company's ongoing efforts to manage costs.
Cash flow and balance sheet: Monsanto reported positive free cash flow (sum of
cash flows from operations and investing activities as reflected in the
Statement of Consolidated Cash Flows included with this news release) of $639
million for 2002, compared with free cash flow of $183 million in 2001. This
improvement was primarily a result of a reduction of the company's investment in
working capital, particularly in Latin America. Net trade receivables were $1.8
billion at the end of 2002, or 24 percent lower, than 2001 year-end net trade
receivables of $2.3 billion. The reduction in 2002 receivables included the
Argentine $154 million pretax ($100 million aftertax) bad-debt reserve
established during the second quarter.
Capital spending in 2002 declined 41 percent to $224 million as the company
completed a number of capital projects during 2001.
For a breakdown of receivables by geography, please go to Monsanto's web site
and select "Fourth Quarter and Full-Year 2002 Supplemental Data" in the
Financial Reports section under the investor information page.
Agricultural Productivity Segment Detail
Product net sales
($ in millions)
Fourth Fourth Full Full
Quarter Quarter % Year Year %
2002 2001 Change 2002 2001 Change
Roundup and other
non-selective
agricultural
herbicides $357 $413 (14)% $1,844 $2,422 (24)%
All other agricultural
productivity
products $251 $269 (7)% $1,244 $1,333 (7)%
TOTAL agricultural
productivity $608 $682 (11)% $3,088 $3,755 (18)%
Agricultural Productivity Segment: The Agricultural Productivity segment
consists primarily of crop protection products, the lawn-and-garden herbicide
business, and the company's animal agriculture business.
In this segment, net sales decreased 11 percent for the quarter, and 18 percent
for the year. EBIT (earnings before the cumulative effect of an accounting
change, interest and income taxes) improved to a loss of $11 million for the
fourth quarter of 2002, compared with a loss of $90 million in the same period
of 2001. For the full year, EBIT declined to $366 million in 2002 versus EBIT of
$772 million in 2001.
For the quarter and the year, net sales declined primarily because of continued
competitive pressures on Roundup herbicide in the United States and actions
taken with our customers to reduce the risk of doing business in Latin America.
EBIT for the fourth quarter of 2002 improved compared with the same period in
2001 for this segment primarily because the fourth quarter of 2001 included a
charge related to the resolution of a legal matter and higher restructuring
charges.
In addition to the factors noted above, full-year net sales and EBIT for the
Agricultural Productivity segment were affected by unfavorable U.S. weather
conditions in the second and third quarters of the year, which reduced volumes
and sales of Roundup.
Seeds and Genomics Segment Detail
Product net sales
($ in millions)
Fourth Fourth Full Full
Quarter Quarter % Year Year %
2002 2001 change 2002 2001 change
TOTAL seeds and
genomics $612 $527 16% $1,585 $1,707 (7)%
Seeds and Genomics Segment: The Seeds and Genomics segment consists of the
global seeds and related traits business, and genetic technology platforms.
Net sales for the Seeds and Genomics segment increased 16 percent in the fourth
quarter, but declined 7 percent for the year. EBIT improved by $197 million
quarter-to-quarter, from a loss of $65 million in the fourth quarter of 2001 to
positive EBIT of $132 million in the same period of 2002. For the full year,
EBIT improved to a loss of $105 million in 2002 from a loss of $240 million in
2001.
Net sales and EBIT for the quarter reflected strong demand by U.S. farmers for
the company's branded corn seed as well as higher sales of Monsanto's
biotechnology traits for corn and soybeans. However, in preparation for the
expected decrease in U.S. soybean acres in 2003, customers purchased less
soybean seed, which somewhat offset the increases for traits.
For the year, EBIT and net sales benefited from a two-point market share gain
for DEKALB and Asgrow brand corn seed in the United States. Corn trait revenue
also increased for the year, even though 2001 results included trait sales for
more than one season because of the company's switch to a royalty payment system
for its licensed traits in corn and soybeans.
These gains were more than offset by economic and market conditions in Latin
America that caused the company to change its operations there, which
significantly reduced corn seed sales in Brazil and Argentina. Lower demand for
soybean seeds by U.S. farmers also affected full-year EBIT for this segment.
EBIT for the Seeds and Genomics segment benefited in both the fourth quarter and
the year, by $27 million and $117 million, respectively, because goodwill is no
longer amortized in accordance with the company's adoption of the Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets.
For a supplemental chart providing an estimate of acreage planted with
Monsanto's technology traits worldwide in 2002, please go to Monsanto's web site
and select "1996 - 2002 Monsanto Biotechnology Trait Acreage" in the Financial
Reports section under the investor information page.
Other Items of Note:
In late December, Monsanto's Bollgard II insect-protected cotton product
received full U.S. regulatory approval when the U.S. Environmental Protection
Agency (EPA) granted environmental clearance for cotton containing the Monsanto
second-generation trait. Limited quantities of seed containing the Bollgard II
trait will be available for the 2003 season.
Also in December, the Philippines' Department of Agriculture's Bureau of Plant
Industry granted commercial approval to Monsanto's YieldGard Corn Borer
insect-protected corn. This is the first biotech crop approved for planting in
the Philippines.
On Jan. 1, 2003, Monsanto adopted SFAS No. 143, Accounting for Asset Retirement
Obligations. This accounting standard addresses the legal obligations associated
with the retirement of tangible long-lived assets. Adoption of this standard
will have a noncash cumulative effect of an accounting change as of Jan. 1,
2003, and is expected to increase depreciation expense for the company in 2003
and beyond.
For a reconciliation of EBIT to net income as reported in Monsanto's Condensed
Statement of Consolidated Operations presented in this news release, please see
the Segment Data table, which is also included in this release.
Supplemental data to this news release, including slides that accompany the
company's financial results conference call, are found at
www.monsanto.com . To
access this supplemental information, please go to the "Financial Reports"
section under the investor information page of the web site.
Outlook Comment from Chairman and Interim Chief Executive Officer Frank V.
AtLee:
"The actions taken in Latin America during 2002 have set the stage for Monsanto
to realize solid business results in 2003. Increased revenues and gross profits
from seeds and traits are expected to help to offset the projected decline in
gross profit from Roundup herbicide."
2003 Earnings and Free Cash Flow Outlook:
Full-year 2003 earnings per share (EPS) are expected to be in the range of $1.20
to $1.40, excluding the cumulative effect of the new accounting standard and the
resulting increase in depreciation expense (see footnote 5). Management expects
free cash flow generation in 2003 to be roughly in the range of $350 million to
$400 million.
Cautionary Statements Regarding Forward-Looking Information:
Certain statements contained in this release, such as statements concerning the
company's anticipated financial results, current and future product performance,
regulatory approvals, currency effects, business and financial plans and other
non-historical facts are "forward-looking statements." These statements are
based on current expectations and currently available information. However,
since these statements are based on factors that involve risks and
uncertainties, the company's actual performance and results may differ
materially from those described or implied by such forward- looking statements.
Factors that could cause or contribute to such differences include, among
others: fluctuations in exchange rates and other developments related to foreign
currencies and economies; increased generic and branded competition for the
company's Roundup herbicide; the accuracy of the company's estimates and
projections, for example, those with respect to product returns and grower use
of our products and related distribution inventory levels; the effect of weather
conditions and commodity markets on the agriculture business; the success of the
company's research and development activities and the speed with which
regulatory authorizations and product launches may be achieved; domestic and
foreign social, legal and political developments, especially those relating to
agricultural products developed through biotechnology; the company's ability to
continue to manage its costs; the company's ability to successfully market new
and existing products in new and existing domestic and international markets;
the company's ability to obtain payment for the products that it sells; the
company's ability to achieve and maintain protection for its intellectual
property; the effects of the company's accounting policies and changes in
generally accepted accounting principles; the company's exposure to lawsuits and
other liabilities and contingencies, including those related to intellectual
property, regulatory compliance (including seed quality), environmental
contamination and antitrust; the company's ability to fund its short-term
financing needs; general economic and business conditions; political and
economic conditions due to threat of future terrorist activity and related
military action; and other risks and factors detailed in the company's filings
with the U.S. Securities and Exchange Commission. Undue reliance should not be
placed on these forward-looking statements, which are current only as of the
date of this release. The company disclaims any current intention to revise or
update any forward-looking statements or any of the factors that may affect
actual results, whether as a result of new information, future events or
otherwise.
Monsanto Company and Subsidiaries
Selected Financial Information
(Dollars in millions, except per share amounts)
Unaudited
Condensed Statement of
Consolidated Operations
Three Three
Months Months Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Net Sales $1,220 $1,209 $4,673 $5,462
Cost of Goods Sold 663 744 2,493 2,817
Gross Profit 557 465 2,180 2,645
Operating Expenses:
Selling, General and
Administrative Expenses 231 267 1,023 1,141
Bad Debt Expense 25 13 208 42
Research and Development
Expenses 141 150 527 560
Amortization and Adjustments of
Goodwill -- 30 -- 121
Restructuring Charges - Net 28 61 103 122
Total Operating Expenses 425 521 1,861 1,986
Income from Operations 132 (56) 319 659
Interest Expense - Net 16 18 59 73
Other Expense - Net (3) 11 99 58 127
Income (Loss) Before Taxes and
Cumulative Effect of Accounting
Change (3) 105 (173) 202 459
Income Tax Expense (Benefit) (3) 44 (69) 73 164
Income (Loss) Before Cumulative
Effect of Accounting Change (3) 61 (104) 129 295
Cumulative Effect of Change in
Accounting Principle - Net of Taxes
of $162 (2) -- -- (1,822) --
Net Income (Loss) $ 61 $(104) $(1,693) $295
EBIT (1) $121 $(155) $261 $532
Basic Earnings (Loss) Per Share
Income (Loss) Before Cumulative
Effect of Accounting
Change (3) $ 0.23 $(0.40) $0.49 $1.14
Cumulative Effect of Accounting
Change - Net of Tax -- -- (6.99) --
Net Income (Loss) $ 0.23 $(0.40) $(6.50) $1.14
Diluted Earnings (Loss) Per Share
Income (Loss) Before Cumulative
Effect of Accounting
Change (3) $ 0.23 $(0.40) $0.49 $1.12
Cumulative Effect of Accounting
Change - Net of Tax -- -- (6.94) --
Net Income (Loss) $ 0.23 $(0.40) $(6.45) $1.12
Shares Outstanding:
Basic Shares 261.4 258.1 260.7 258.1
Diluted Shares 261.4 258.1 262.6 263.6
Monsanto Company and Subsidiaries
Selected Financial Information
(Dollars in millions)
Unaudited
Segment Data:
Agricultural Productivity Segment:
Three Three
Months Months Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Net Sales $608 $682 $3,088 $3,755
EBIT (1) $(11) $(90) $366 $772
Add: Depreciation 60 57 234 220
Add: Amortization -- 1 3 5
EBITDA (1) $49 $(32) $603 $997
Pretax Restructuring and Other
Special Items (4) $16 $89 $52 $137
Seeds and Genomics Segment:
Three Three
Months Months Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Net Sales $612 $527 $1,585 $1,707
EBIT (1) $132 $(65) $(105) $(240)
Add: Depreciation 22 25 95 91
Add: Amortization 30 53 128 234
EBITDA (1) $184 $13 $118 $85
Pretax Restructuring and Other
Special Items (4) $15 $43 $72 $76
Total Monsanto Company and Subsidiaries:
Three Three
Months Months Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Net Sales $1,220 $1,209 $4,673 $5,462
EBIT (1) $121 $(155) $261 $532
Add: Depreciation 82 82 329 311
Add: Amortization 30 54 131 239
EBITDA (1) $233 $(19) $721 $1,082
Pretax Restructuring and Other
Special Items (4) $31 $132 $124 $213
Reconciliation of Income (Loss) Before Cumulative Effect of Accounting
Change to EBIT:
Total Monsanto Company and Subsidiaries:
Three Three
Months Months Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Income (Loss) Before Cumulative
Effect of Accounting Change $61 $(104) $129 $295
Add: Interest Expense - Net 16 18 59 73
Add: Income Tax Expense (Benefit) 44 (69) 73 164
EBIT (1) $121 $(155) $261 $532
Monsanto Company and Subsidiaries
Selected Financial Information
(Dollars in millions)
Unaudited
Condensed Statement of Consolidated Financial Position
Dec. 31, Dec. 31,
2002 2001
Assets
Current Assets:
Cash and Cash Equivalents $428 $307
Short-Term Investments 250 --
Trade Receivables - Net of Allowances of $247
in 2002 and $177 in 2001 1,752 2,307
Related-Party Loan Receivable -- 30
Related-Party Receivable -- 44
Inventories 1,272 1,357
Other Current Assets 722 752
Total Current Assets 4,424 4,797
Property, Plant and Equipment - Net 2,339 2,627
Goodwill - Net 757 2,748
Other Intangible Assets - Net 643 691
Other Assets 727 566
Total Assets $8,890 $11,429
Liabilities and Shareowners' Equity
Current Liabilities:
Short-Term Debt $393 $563
Related Party Short-Term Loan Payable -- 254
Accounts Payable 275 457
Related-Party Payable -- 87
Accrued Liabilities 1,142 1,016
Total Current Liabilities 1,810 2,377
Long-Term Debt 851 893
Postretirement and Other Liabilities 1,049 676
Shareowners' Equity 5,180 7,483
Total Liabilities and Shareowners' Equity $8,890 $11,429
Debt to Capital Ratio: 19% 19%
Monsanto Company and Subsidiaries
Selected Financial Information
(Dollars in millions)
Unaudited
Statement of Consolidated Cash Flows
Year Ended Year Ended
Dec. 31, Dec. 31,
2002 2001
Operating Activities:
Net Income (Loss) $(1,693) $ 295
Adjustments to reconcile cash provided (required)
by operations:
Items that did not require (provide) cash:
Pretax cumulative effect of a change in
accounting principle 1,984 -
Depreciation and amortization 460 554
Bad debt expense 208 42
Noncash restructuring and other special items 50 122
Deferred income taxes (258) 5
Gain on disposal of investments and property,
net (59) (16)
Equity loss, net 43 41
Write-off of retired assets 28 20
Changes in assets and liabilities that provided
(required) cash:
Trade receivables 221 (224)
Inventories 74 (187)
Accounts payable and accrued liabilities (3) (194)
Related-party transactions (46) 161
Tax benefit on employee stock options 11 -
Deferred revenue on supply agreements 42 -
Net investment hedge proceeds 20 -
Other Items 26 (3)
Net Cash Provided by Operations 1,108 616
Cash Flows Provided (Required) by Investing
Activities:
Property, plant and equipment purchases (224) (382)
Acquisitions and investments (347) (81)
Investment and property disposal proceeds 72 10
Loans with related-party 30 20
Net Cash Flows Required by Investing Activities (469) (433)
Free Cash Flow (1) 639 183
Cash Flows Provided (Required) by Financing
Activities:
Net change in short-term financing (934) 372
Loans from related-party (254) (226)
Long-term debt proceeds 856 57
Long-term debt reductions (104) (94)
Debt issuance costs (10) -
Payments on vendor financing (10) -
Stock option exercises 63 -
Dividend payments (125) (116)
Cash Flows Required by Financing Activities (518) (7)
Net Increase in Cash and Cash Equivalents 121 176
Cash and Cash Equivalents Beginning of Year 307 131
Cash and Cash Equivalents at End of Year $428 $307
Monsanto Company and Subsidiaries
Selected Financial Information
(Dollars in millions)
Unaudited
1. EBIT, EBITDA and Free Cash Flow: As reflected in Monsanto's Condensed
Statement of Consolidated Operations presented in this release, EBIT is
net income (loss) before the cumulative effect of an accounting change,
interest and income taxes. EBITDA is EBIT eliminating the effects of
depreciation and amortization expense. Free cash flow represents the
total of cash flows from operations and investing activities, as
reflected in Monsanto's Statement of Consolidated Cash Flows presented
in this release. The presentation of EBIT, EBITDA and free cash flow
is not intended to replace net income (loss), cash flows, financial
position or comprehensive income (loss), and they are not measures of
financial performance as determined in accordance with generally
accepted accounting principles in the United States.
2. Adjustment for New Accounting Standard No. 142: On Jan. 1, 2002,
Monsanto adopted Statement of Financial Accounting Standards (SFAS) No.
142, Goodwill and Other Intangible Assets. SFAS No. 142 changes the
accounting for goodwill from an amortization method to an impairment-
only method. Under SFAS No. 142, all goodwill amortization ceased
effective Jan. 1, 2002. Monsanto completed the transitional impairment
test during the second quarter of 2002 and will test goodwill for
impairment at least annually in the future.
The transitional impairment test resulted in a $2 billion pretax
impairment charge ($1.8 billion aftertax) relating to Monsanto's corn
and wheat reporting units. The impairment charge was recorded as a
cumulative effect of accounting change effective Jan. 1, 2002. As a
result of the transitional goodwill impairment test, goodwill was
reduced by $2 billion and net deferred tax assets increased by
$162 million as a result of the related tax effect. This resulted in a
net loss and net reduction of $1.8 billion to shareowners' equity.
In addition, SFAS No. 142 also required Monsanto to reassess the useful
lives, residual values, and classification of all identifiable and
recognized intangible assets. Any necessary prospective amortization
period adjustments were made Jan. 1, 2002.
SFAS No. 142 did not require that prior years be restated. However, to
provide comparative information, had Monsanto adopted the new
accounting standard as of Jan. 1, 2001, for the three months ended
Dec. 31, 2001, Monsanto would not have recorded $28 million of goodwill
amortization expense, and research-and-development (R&D) expenses would
have increased by $2 million because of the reassessment of useful
lives and classifications. For the year ended Dec. 31, 2001, Monsanto
would not have recorded $119 million of goodwill amortization expense,
but R&D expenses would have increased by $8 million. In addition and
related to these changes, income tax expense would have increased by
$6 million and $5 million for the three months and year ended Dec. 31,
2001, respectively. This financial information is presented for
illustrative purposes only. Because of the seasonality of the
agricultural business, financial information should not be annualized.
3. Loss from Early Retirement of Debt: In the second quarter of 2001, the
Pharmacia Savings and Investment Plan was separated into two separate
plans, one that benefits employees of Pharmacia and one that benefits
employees of Monsanto. As a result, in 2001 Monsanto recognized a
$4 million pretax ($2 million aftertax) extraordinary loss related to
the early retirement of Employee Stock Ownership Plan (ESOP) debt. In
2002, SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13 and Technical Corrections as of
April 2002, was issued and required that the loss from early retirement
of debt be reclassified from extraordinary loss into operating income.
In accordance with SFAS No. 145, the 2001 results have been restated to
reclassify the $4 million pretax extraordinary loss as other expense
and reclassify the $2 million tax benefit as an offset to income tax
expense.
4. Restructuring and Other Special Items: Restructuring items in 2002 are
primarily associated with the 2002 plan related to facility
rationalizations and work force reductions. Restructuring and other
special items in 2001 are primarily associated with the 2000 plan to
focus on our key crops, resulting in the termination of certain
research-and-development programs and noncore activities, and to
eliminate duplicative manufacturing capacity to formulate and package
agricultural chemicals.
Income (loss) related to these items were recorded in the Condensed
Statement of Consolidated Operations in the following categories:
Three Months Three Months Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Cost of Goods Sold $(3) $(69) $(21) $(82)
Selling, General and
Administrative Expenses - (1) - (1)
Amortization and Adjustments
of Goodwill - (2) - (2)
Restructuring Charges - Net (28) (61) (103) (122)
Other Expense - Net - 1 - (6)
Total Before Taxes and Cumulative
Effect of Accounting Change (31) (132) (124) (213)
Income Tax Benefit 11 46 43 76
Total Before Cumulative Effect
of Accounting Change $(20) $(86) $(81) $(137)
The pretax income (loss) components of the Restructuring and Other Special Items
were as follows:
Three Months Three Months Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2002 2001 2002 2001
Restructuring and Other Special
Items
Restructuring Charges $(32) $(56) $(88) $(99)
Reversal of Prior
Restructuring Charges 12 8 13 8
Write-off of Inventories (3) (32) (6) (45)
Write-off of Property, Plant
and Equipment (8) (47) (45) (57)
Goodwill - (2) - (2)
Other Assets - (3) - (9)
Other Intangibles - (1) - (3)
Recoverable amount from third
party* - - 2 -
Other - Net - 1 - (6)
Total Pretax Restructuring and
Other Special Items $(31) $(132) $(124) $(213)
* Recoverable amount from a third party represents a portion of work force
reduction and exit costs that will be reimbursed to Monsanto.
5. Adjustment for New Accounting Standard No. 143: SFAS No. 143,
Accounting for Asset Retirement Obligations, addresses financial
accounting for and reporting of costs and obligations associated with
legal matters related to the retirement of tangible long-lived assets.
In adopting this standard as of Jan. 1, 2003, the company expects to
record a noncash charge for a cumulative effect of accounting change
and to increase property, plant and equipment and asset retirement
obligations (a component of non-current liabilities). In addition, it
is expected that as a result of the adoption of this standard the
company's depreciation expense will increase. Monsanto is in the
process of determining the effect adoption of this standard will have
on its consolidated financial position and results of operations.
Therefore, the company is unable to calculate the effect the adoption
of this standard will have on its EPS guidance. Adoption of this
standard will not affect Monsanto's liquidity or cash flow.
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