MONSANTO COMPANY
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FIRST QUARTER 2014 FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
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Delaware
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43-1878297
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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800 North Lindbergh Blvd.,
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63167
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St. Louis, MO
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(Zip Code)
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(Address of principal executive offices)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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MONSANTO COMPANY
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FIRST QUARTER 2014 FORM 10-Q
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CAUTION REGARDING FORWARD-LOOKING STATEMENTS
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MONSANTO COMPANY
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FIRST QUARTER 2014 FORM 10-Q
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TABLE OF CONTENTS
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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MONSANTO COMPANY
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FIRST QUARTER 2014 FORM 10-Q
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PART I—FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL STATEMENTS
|
Unaudited
(Dollars in millions)
|
Three Months Ended
|
||||||
Nov. 30, 2013
|
|
Nov. 30, 2012
|
|||||
Net Sales
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$
|
3,143
|
|
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$
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2,939
|
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Cost of goods sold
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1,580
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|
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1,542
|
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||
Gross Profit
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1,563
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1,397
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||
Operating Expenses:
|
|
|
|
||||
Selling, general and administrative expenses
|
589
|
|
|
542
|
|
||
Research and development expenses
|
409
|
|
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346
|
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||
Total Operating Expenses
|
998
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|
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888
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||
Income from Operations
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565
|
|
|
509
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||
Interest expense
|
53
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|
|
51
|
|
||
Interest income
|
(24
|
)
|
|
(23
|
)
|
||
Other expense, net
|
20
|
|
|
17
|
|
||
Income from Continuing Operations Before Income Taxes
|
516
|
|
|
464
|
|
||
Income tax provision
|
152
|
|
|
122
|
|
||
Income from Continuing Operations Including Portion Attributable to Noncontrolling Interest
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$
|
364
|
|
|
$
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342
|
|
Discontinued Operations:
|
|
|
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||||
Income from operations of discontinued businesses
|
14
|
|
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11
|
|
||
Income tax provision
|
5
|
|
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4
|
|
||
Income from Discontinued Operations
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9
|
|
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7
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||
Net Income
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$
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373
|
|
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$
|
349
|
|
Less: Net income attributable to noncontrolling interest
|
5
|
|
|
10
|
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||
Net Income Attributable to Monsanto Company
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$
|
368
|
|
|
$
|
339
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|
Amounts Attributable to Monsanto Company:
|
|
|
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||||
Income from continuing operations
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$
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359
|
|
|
$
|
332
|
|
Income from discontinued operations
|
9
|
|
|
7
|
|
||
Net Income Attributable to Monsanto Company
|
$
|
368
|
|
|
$
|
339
|
|
Basic Earnings per Share Attributable to Monsanto Company:
|
|
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||||
Income from continuing operations
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$
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0.68
|
|
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$
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0.62
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|
Income from discontinued operations
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0.02
|
|
|
0.01
|
|
||
Net Income Attributable to Monsanto Company
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$
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0.70
|
|
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$
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0.63
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|
Diluted Earnings per Share Attributable to Monsanto Company:
|
|
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||||
Income from continuing operations
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$
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0.67
|
|
|
$
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0.62
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|
Income from discontinued operations
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0.02
|
|
|
0.01
|
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||
Net Income Attributable to Monsanto Company
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$
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0.69
|
|
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$
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0.63
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Weighted Average Shares Outstanding:
|
|
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||||
Basic
|
526.9
|
|
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534.8
|
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||
Diluted
|
532.6
|
|
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540.4
|
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||
Dividends Declared per Share
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$
|
—
|
|
|
$
|
—
|
|
Unaudited
(Dollars in millions)
|
Three Months Ended
|
||||||
Nov. 30, 2013
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|
Nov. 30, 2012
|
|||||
Comprehensive Income Attributable to Monsanto Company
|
|
|
|
||||
Net Income Attributable to Monsanto Company
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$
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368
|
|
|
$
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339
|
|
Other Comprehensive Income, Net of Tax:
|
|
|
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||||
Foreign currency translation, net of tax of $(8) and $0, respectively
|
127
|
|
|
52
|
|
||
Postretirement benefit plan activity, net of tax of $5 and $7, respectively
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8
|
|
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11
|
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||
Unrealized net gains on investment holdings, net of tax of $3 and $3, respectively
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5
|
|
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6
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||
Realized net gains on investment holdings, net of tax of $0 and $1, respectively
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—
|
|
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1
|
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||
Unrealized net derivative losses, net of tax of $(25) and $(6), respectively
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(43
|
)
|
|
(12
|
)
|
||
Realized net derivative gains (losses), net of tax of $3 and $(5), respectively
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5
|
|
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(10
|
)
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||
Total Other Comprehensive Income, Net of Tax
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102
|
|
|
48
|
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||
Comprehensive Income Attributable to Monsanto Company
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$
|
470
|
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$
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387
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Comprehensive Income (Loss) Attributable to Noncontrolling Interests
|
|
|
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||||
Net Income Attributable to Noncontrolling Interests
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5
|
|
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10
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||
Other Comprehensive (Income) Loss
|
|
|
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||||
Foreign currency translation
|
5
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(4
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)
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||
Total Other Comprehensive Income (Loss)
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5
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|
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(4
|
)
|
||
Comprehensive Income Attributable to Noncontrolling Interests
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$
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10
|
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|
$
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6
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Total Comprehensive Income
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$
|
480
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|
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$
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393
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Unaudited
(Dollars in millions)
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As of
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||||||
Nov. 30, 2013
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Aug. 31, 2013
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|||||
Assets
|
|
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||||
Current Assets:
|
|
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||||
Cash and cash equivalents (variable interest entity restricted - 2014: $31 and 2013: $140)
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$
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4,496
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|
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$
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3,668
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Short-term investments
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249
|
|
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254
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||
Trade receivables, net (variable interest entity restricted - 2014: $116 and 2013: $0)
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2,283
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|
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1,715
|
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||
Miscellaneous receivables
|
774
|
|
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748
|
|
||
Deferred tax assets
|
631
|
|
|
579
|
|
||
Inventory, net
|
3,873
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|
|
2,947
|
|
||
Other current assets
|
190
|
|
|
166
|
|
||
Total Current Assets
|
12,496
|
|
|
10,077
|
|
||
Total property, plant and equipment
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9,660
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|
|
9,491
|
|
||
Less accumulated depreciation
|
4,974
|
|
|
4,837
|
|
||
Property, Plant and Equipment, Net
|
4,686
|
|
|
4,654
|
|
||
Goodwill
|
4,325
|
|
|
3,520
|
|
||
Other Intangible Assets, Net
|
1,367
|
|
|
1,226
|
|
||
Noncurrent Deferred Tax Assets
|
484
|
|
|
454
|
|
||
Long-Term Receivables, Net
|
153
|
|
|
237
|
|
||
Other Assets
|
566
|
|
|
496
|
|
||
Total Assets
|
$
|
24,077
|
|
|
$
|
20,664
|
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Liabilities and Shareowners’ Equity
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Short-term debt, including current portion of long-term debt
|
$
|
262
|
|
|
$
|
51
|
|
Accounts payable
|
853
|
|
|
995
|
|
||
Income taxes payable
|
101
|
|
|
91
|
|
||
Accrued compensation and benefits
|
281
|
|
|
492
|
|
||
Accrued marketing programs
|
756
|
|
|
1,078
|
|
||
Deferred revenues
|
2,866
|
|
|
517
|
|
||
Grower production accruals
|
634
|
|
|
60
|
|
||
Dividends payable
|
—
|
|
|
228
|
|
||
Customer payable
|
2
|
|
|
12
|
|
||
Miscellaneous short-term accruals
|
943
|
|
|
812
|
|
||
Total Current Liabilities
|
6,698
|
|
|
4,336
|
|
||
Long-Term Debt
|
3,057
|
|
|
2,061
|
|
||
Postretirement Liabilities
|
348
|
|
|
357
|
|
||
Long-Term Deferred Revenue
|
113
|
|
|
138
|
|
||
Noncurrent Deferred Tax Liabilities
|
544
|
|
|
469
|
|
||
Long-Term Portion of Environmental and Litigation Liabilities
|
186
|
|
|
193
|
|
||
Other Liabilities
|
392
|
|
|
382
|
|
||
Shareowners’ Equity:
|
|
|
|
||||
Common stock (authorized: 1,500,000,000 shares, par value $0.01)
|
|
|
|
||||
Issued 602,861,098 and 601,631,267 shares, respectively
|
|
|
|
||||
Outstanding 524,936,480 and 529,029,712 shares, respectively
|
6
|
|
|
6
|
|
||
Treasury stock 77,924,618 and 72,601,555 shares, respectively, at cost
|
(4,701
|
)
|
|
(4,140
|
)
|
||
Additional contributed capital
|
10,887
|
|
|
10,783
|
|
||
Retained earnings
|
7,556
|
|
|
7,188
|
|
||
Accumulated other comprehensive loss
|
(1,176
|
)
|
|
(1,278
|
)
|
||
Total Monsanto Company Shareowners’ Equity
|
12,572
|
|
|
12,559
|
|
||
Noncontrolling Interest
|
167
|
|
|
169
|
|
||
Total Shareowners’ Equity
|
12,739
|
|
|
12,728
|
|
||
Total Liabilities and Shareowners’ Equity
|
$
|
24,077
|
|
|
$
|
20,664
|
|
Unaudited
(Dollars in millions)
|
Three Months Ended
|
||||||
Nov. 30, 2013
|
|
Nov. 30, 2012
|
|||||
Operating Activities:
|
|
|
|
||||
Net Income
|
$
|
373
|
|
|
$
|
349
|
|
Adjustments to reconcile cash provided by operating activities:
|
|
|
|
||||
Items that did not require (provide) cash:
|
|
|
|
||||
Depreciation and amortization
|
162
|
|
|
152
|
|
||
Bad-debt expense
|
11
|
|
|
7
|
|
||
Stock-based compensation expense
|
27
|
|
|
24
|
|
||
Excess tax benefits from stock-based compensation
|
(15
|
)
|
|
(15
|
)
|
||
Deferred income taxes
|
(6
|
)
|
|
13
|
|
||
Equity affiliate (income) expense, net
|
3
|
|
|
(2
|
)
|
||
Net gain on sales of a business or other assets
|
(1
|
)
|
|
(12
|
)
|
||
Other items
|
20
|
|
|
(16
|
)
|
||
Changes in assets and liabilities that required cash, net of acquisitions:
|
|
|
|
||||
Trade receivables, net
|
(478
|
)
|
|
(196
|
)
|
||
Inventory, net
|
(898
|
)
|
|
(740
|
)
|
||
Deferred revenues
|
2,319
|
|
|
2,426
|
|
||
Accounts payable and other accrued liabilities
|
332
|
|
|
(341
|
)
|
||
Pension contributions
|
(23
|
)
|
|
(16
|
)
|
||
Other items
|
(128
|
)
|
|
(64
|
)
|
||
Net Cash Provided by Operating Activities
|
1,698
|
|
|
1,569
|
|
||
Cash Flows (Required) Provided by Investing Activities:
|
|
|
|
||||
Purchases of short-term investments
|
(105
|
)
|
|
(118
|
)
|
||
Maturities of short-term investments
|
110
|
|
|
110
|
|
||
Capital expenditures
|
(303
|
)
|
|
(133
|
)
|
||
Acquisition of businesses, net of cash acquired
|
(917
|
)
|
|
—
|
|
||
Purchases of long-term debt and equity securities
|
(12
|
)
|
|
—
|
|
||
Technology and other investments
|
(21
|
)
|
|
(23
|
)
|
||
Other proceeds
|
7
|
|
|
68
|
|
||
Net Cash Required by Investing Activities
|
(1,241
|
)
|
|
(96
|
)
|
||
Cash Flows Provided (Required) by Financing Activities:
|
|
|
|
||||
Net change in financing with less than 90-day maturities
|
117
|
|
|
60
|
|
||
Short-term debt proceeds
|
2
|
|
|
—
|
|
||
Short-term debt reductions
|
—
|
|
|
(7
|
)
|
||
Long-term debt proceeds
|
999
|
|
|
16
|
|
||
Long-term debt reductions
|
(1
|
)
|
|
—
|
|
||
Payments on other financing
|
(39
|
)
|
|
—
|
|
||
Debt issuance costs
|
(8
|
)
|
|
—
|
|
||
Treasury stock purchases
|
(561
|
)
|
|
(27
|
)
|
||
Stock option exercises
|
64
|
|
|
31
|
|
||
Excess tax benefits from stock-based compensation
|
15
|
|
|
16
|
|
||
Tax withholding on restricted stock and restricted stock units
|
(2
|
)
|
|
(3
|
)
|
||
Dividend payments
|
(228
|
)
|
|
(201
|
)
|
||
Dividend payments to noncontrolling interests
|
(12
|
)
|
|
(1
|
)
|
||
Net Cash Provided (Required) by Financing Activities
|
346
|
|
|
(116
|
)
|
||
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
25
|
|
|
(3
|
)
|
||
Net Increase in Cash and Cash Equivalents
|
828
|
|
|
1,354
|
|
||
Cash and Cash Equivalents at Beginning of Period
|
3,668
|
|
|
3,283
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
4,496
|
|
|
$
|
4,637
|
|
|
Monsanto Shareowners
|
|
|
|
|
||||||||||||||||||||||
Unaudited
(Dollars in millions, except per share data)
|
Common Stock
|
|
Treasury Stock
|
|
Additional Contributed Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
(1)
|
|
Non-Controlling
Interest
|
|
Total
|
||||||||||||||
Balance as of Aug. 31, 2012
|
$
|
6
|
|
|
$
|
(3,045
|
)
|
|
$
|
10,371
|
|
|
$
|
5,537
|
|
|
$
|
(1,036
|
)
|
|
$
|
203
|
|
|
$
|
12,036
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
2,482
|
|
|
—
|
|
|
43
|
|
|
2,525
|
|
|||||||
Other comprehensive loss for 2013
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(242
|
)
|
|
(27
|
)
|
|
(269
|
)
|
|||||||
Treasury stock purchases
|
—
|
|
|
(1,095
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,095
|
)
|
|||||||
Restricted stock withholding
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||||
Issuance of shares under employee stock plans
|
—
|
|
|
—
|
|
|
257
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
257
|
|
|||||||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|||||||
Cash dividends of $1.56 per common share
|
—
|
|
|
—
|
|
|
—
|
|
|
(831
|
)
|
|
—
|
|
|
—
|
|
|
(831
|
)
|
|||||||
Dividend payments to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(174
|
)
|
|
(174
|
)
|
|||||||
Acquisition of noncontrolling interest
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(10
|
)
|
|||||||
Proceeds from noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
133
|
|
|
133
|
|
|||||||
Balance as of Aug. 31, 2013
|
$
|
6
|
|
|
$
|
(4,140
|
)
|
|
$
|
10,783
|
|
|
$
|
7,188
|
|
|
$
|
(1,278
|
)
|
|
$
|
169
|
|
|
$
|
12,728
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
368
|
|
|
—
|
|
|
5
|
|
|
373
|
|
|||||||
Other comprehensive income for 2014
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102
|
|
|
5
|
|
|
107
|
|
|||||||
Treasury stock purchases
|
—
|
|
|
(561
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(561
|
)
|
|||||||
Restricted stock withholding
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||||
Issuance of shares under employee stock plans
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|||||||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||||
Dividend payments to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
|||||||
Balance as of Nov. 30, 2013
|
$
|
6
|
|
|
$
|
(4,701
|
)
|
|
$
|
10,887
|
|
|
$
|
7,556
|
|
|
$
|
(1,176
|
)
|
|
$
|
167
|
|
|
$
|
12,739
|
|
(1)
|
See Note
17
—
Accumulated Other Comprehensive Loss
— for further details of the components of accumulated other comprehensive income (loss).
|
NOTE 1.
|
BACKGROUND AND BASIS OF PRESENTATION
|
NOTE 2.
|
NEW ACCOUNTING STANDARDS
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
NOTE 3.
|
BUSINESS COMBINATIONS
|
(Dollars in millions)
|
2014 Acquisition
|
||
Current Assets
|
$
|
59
|
|
Property, Plant & Equipment
|
9
|
|
|
Goodwill
|
785
|
|
|
Other Intangible Assets
|
145
|
|
|
Total Assets Acquired
|
998
|
|
|
Current Liabilities
|
10
|
|
|
Other Liabilities
|
56
|
|
|
Total Liabilities Assumed
|
66
|
|
|
Net Assets Acquired
|
$
|
932
|
|
Supplemental Information:
|
|
|
|
Net assets acquired
|
$
|
932
|
|
Cash acquired
|
15
|
|
|
Cash paid, net of cash acquired
|
$
|
917
|
|
(Dollars in millions)
|
Weighted-Average Life (Years)
|
|
Useful Life
(Years)
|
|
2014 Acquisition
|
||
Acquired Intellectual Property
|
10
|
|
10
|
|
$
|
141
|
|
Customer Relationships
|
1
|
|
1
|
|
4
|
|
|
Other Intangible Assets
|
|
|
|
|
$
|
145
|
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
NOTE 4.
|
CUSTOMER FINANCING PROGRAMS
|
|
As of
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Aug. 31, 2013
|
||||
Transactions that Qualify for Sales Treatment
|
|
|
|
||||
U.S. agreement to sell trade receivables
(1)
|
|
|
|
||||
Outstanding balance
|
$
|
128
|
|
|
$
|
348
|
|
Maximum future payout under recourse provisions
|
9
|
|
|
19
|
|
||
European and Latin American agreements to sell trade receivables
(2)
|
|
|
|
||||
Outstanding balance
|
$
|
28
|
|
|
$
|
44
|
|
Maximum future payout under recourse provisions
|
28
|
|
|
41
|
|
||
Agreements with Lenders
(3)
|
|
|
|
||||
Outstanding balance
|
$
|
60
|
|
|
$
|
45
|
|
Maximum future payout under the guarantee
|
44
|
|
|
32
|
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
Gross Amount of Receivables Sold
|
||||||
|
Three Months Ended
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
||||
Transactions that Qualify for Sales Treatment
|
|
|
|
||||
U.S. agreement to sell trade receivables
(1)
|
$
|
23
|
|
|
$
|
2
|
|
European and Latin American agreements to sell trade receivables
(2)
|
7
|
|
|
—
|
|
(1)
|
Monsanto has an agreement in the United States to sell trade receivables up to a maximum outstanding balance of
$500 million
and to service such accounts. These receivables qualify for sales treatment under the Transfers and Servicing topic of the ASC and, accordingly, the proceeds are included in net cash provided by operating activities in the Statements of Consolidated Cash Flows. The agreement includes recourse provisions and thus a liability is established at the time of sale that approximates fair value based upon the company’s historical collection experience and a current assessment of credit exposure.
|
(2)
|
Monsanto has various agreements in European and Latin American countries to sell trade receivables, both with and without recourse. The sales within these programs qualify for sales treatment under the Transfers and Servicing topic of the ASC and, accordingly, the proceeds are included in net cash provided by operating activities in the Statements of Consolidated Cash Flows. The liability for the guarantees for sales with recourse is recorded at an amount that approximates fair value, based on the company’s historical collection experience for the customers associated with the sale of the receivables and a current assessment of credit exposure.
|
(3)
|
Monsanto has additional agreements with lenders to establish programs that provide financing for select customers in the United States, Brazil, Latin America and Europe. Monsanto provides various levels of recourse through guarantees of the accounts in the event of customer default. The term of the guarantee is equivalent to the term of the customer loans. The liability for the guarantees is recorded at an amount that approximates fair value, based on the company’s historical collection experience with customers that participate in the program and a current assessment of credit exposure. If performance is required under the guarantee, Monsanto may retain amounts that are subsequently collected from customers.
|
NOTE 5.
|
VARIABLE INTEREST ENTITIES
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
Financing Program VIE
|
||||||
|
As of
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Aug. 31, 2013
|
||||
Cash and cash equivalents
|
$
|
31
|
|
|
$
|
140
|
|
Trade receivables, net
|
116
|
|
|
—
|
|
||
Total Assets
|
$
|
147
|
|
|
$
|
140
|
|
Total Liabilities
|
—
|
|
|
—
|
|
||
Maximum Exposure to Loss
|
$
|
14
|
|
|
$
|
—
|
|
NOTE 6.
|
RECEIVABLES
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
(Dollars in millions)
|
|
||
Balance as of Aug. 31, 2012
|
$
|
141
|
|
Incremental Provision
|
7
|
|
|
Recoveries
|
(1
|
)
|
|
Write-offs
|
(47
|
)
|
|
Other
(1)
|
4
|
|
|
Balance as of Aug. 31, 2013
|
$
|
104
|
|
Incremental Provision
|
4
|
|
|
Recoveries
|
—
|
|
|
Write-offs
|
(1
|
)
|
|
Other
(1)
|
5
|
|
|
Balance as of Nov. 30, 2013
|
$
|
112
|
|
NOTE 7.
|
INVENTORY
|
|
As of
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Aug. 31, 2013
|
||||
Finished Goods
|
$
|
1,820
|
|
|
$
|
1,079
|
|
Goods In Process
|
1,744
|
|
|
1,619
|
|
||
Raw Materials and Supplies
|
477
|
|
|
418
|
|
||
Inventory at FIFO Cost
|
4,041
|
|
|
3,116
|
|
||
Excess of FIFO over LIFO Cost
|
(168
|
)
|
|
(169
|
)
|
||
Total
|
$
|
3,873
|
|
|
$
|
2,947
|
|
NOTE 8.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
(Dollars in millions)
|
Seeds and
Genomics
|
|
Agricultural
Productivity
|
|
Total
|
||||||
Balance as of Aug. 31, 2013
|
$
|
3,461
|
|
|
$
|
59
|
|
|
$
|
3,520
|
|
Acquisition activity (see Note 3)
|
785
|
|
|
—
|
|
|
785
|
|
|||
Effect of foreign currency translation adjustments
|
21
|
|
|
(1
|
)
|
|
20
|
|
|||
Balance as of Nov. 30, 2013
|
$
|
4,267
|
|
|
$
|
58
|
|
|
$
|
4,325
|
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
As of Nov. 30, 2013
|
|
As of Aug. 31, 2013
|
||||||||||||||||||||
(Dollars in millions)
|
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Acquired Intellectual Property
|
$
|
1,259
|
|
|
$
|
(799
|
)
|
|
$
|
460
|
|
|
$
|
1,095
|
|
|
$
|
(791
|
)
|
|
$
|
304
|
|
Acquired Germplasm
|
1,120
|
|
|
(728
|
)
|
|
392
|
|
|
1,113
|
|
|
(717
|
)
|
|
396
|
|
||||||
Trademarks
|
343
|
|
|
(135
|
)
|
|
208
|
|
|
341
|
|
|
(131
|
)
|
|
210
|
|
||||||
Customer Relationships
|
314
|
|
|
(186
|
)
|
|
128
|
|
|
306
|
|
|
(179
|
)
|
|
127
|
|
||||||
Other
|
170
|
|
|
(95
|
)
|
|
75
|
|
|
177
|
|
|
(91
|
)
|
|
86
|
|
||||||
Total Other Intangible Assets, Finite Lives
|
$
|
3,206
|
|
|
$
|
(1,943
|
)
|
|
$
|
1,263
|
|
|
$
|
3,032
|
|
|
$
|
(1,909
|
)
|
|
$
|
1,123
|
|
In Process Research & Development, Indefinite Lives
|
104
|
|
|
—
|
|
|
104
|
|
|
103
|
|
|
—
|
|
|
103
|
|
||||||
Total Other Intangible Assets
|
$
|
3,310
|
|
|
$
|
(1,943
|
)
|
|
$
|
1,367
|
|
|
$
|
3,135
|
|
|
$
|
(1,909
|
)
|
|
$
|
1,226
|
|
(Dollars in millions)
|
Amount
|
||
2014
|
$
|
173
|
|
2015
|
171
|
|
|
2016
|
123
|
|
|
2017
|
97
|
|
|
2018
|
87
|
|
NOTE 9.
|
INVESTMENTS
|
NOTE 10.
|
DEFERRED REVENUE
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
NOTE 11.
|
INCOME TAXES
|
NOTE 12.
|
DEBT AND OTHER CREDIT ARRANGEMENTS
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
NOTE 13.
|
FAIR VALUE MEASUREMENTS
|
|
Fair Value Measurements at Nov. 30, 2013, Using
|
|||||||||||
(Dollars in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Assets at Fair Value:
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
3,762
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,762
|
|
Short-term investments
|
249
|
|
—
|
|
—
|
|
249
|
|
||||
Equity securities
|
43
|
|
—
|
|
—
|
|
43
|
|
||||
Derivative assets related to:
|
|
|
|
|
||||||||
Foreign currency contracts
|
—
|
|
18
|
|
—
|
|
18
|
|
||||
Commodity contracts
|
1
|
|
2
|
|
—
|
|
3
|
|
||||
Total Assets at Fair Value
|
$
|
4,055
|
|
$
|
20
|
|
$
|
—
|
|
$
|
4,075
|
|
Liabilities at Fair Value:
|
|
|
|
|
||||||||
Derivative liabilities related to:
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
—
|
|
$
|
8
|
|
$
|
—
|
|
$
|
8
|
|
Commodity contracts
|
61
|
|
4
|
|
—
|
|
65
|
|
||||
Total Liabilities at Fair Value
|
$
|
61
|
|
$
|
12
|
|
$
|
—
|
|
$
|
73
|
|
Liabilities Not Recorded at Fair Value:
|
|
|
|
|
||||||||
Short-term debt instruments
(1)
|
$
|
—
|
|
$
|
262
|
|
$
|
—
|
|
$
|
262
|
|
Long-term debt instruments
(1)
|
—
|
|
3,216
|
|
—
|
|
3,216
|
|
||||
Total Liabilities Not Recorded at Fair Value
|
$
|
—
|
|
$
|
3,478
|
|
$
|
—
|
|
$
|
3,478
|
|
Total Liabilities Recorded and Not Recorded at Fair Value
|
$
|
61
|
|
$
|
3,490
|
|
$
|
—
|
|
$
|
3,551
|
|
(1)
|
Short-term and long-term debt instruments are not recorded at fair value on a recurring basis; however, they are measured at fair value for disclosure purposes, as required by the Fair Value Measurements and Disclosures topic of the ASC.
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
Fair Value Measurements at Aug. 31, 2013, Using
|
|||||||||||
(Dollars in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Assets at Fair Value:
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
2,865
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,865
|
|
Short-term investments
|
254
|
|
—
|
|
—
|
|
254
|
|
||||
Equity securities
|
22
|
|
—
|
|
—
|
|
22
|
|
||||
Derivative assets related to:
|
|
|
|
|
|
|||||||
Foreign currency contracts
|
—
|
|
5
|
|
—
|
|
5
|
|
||||
Commodity contracts
|
13
|
|
6
|
|
—
|
|
19
|
|
||||
Total Assets at Fair Value
|
$
|
3,154
|
|
$
|
11
|
|
$
|
—
|
|
$
|
3,165
|
|
Liabilities at Fair Value:
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
$
|
—
|
|
$
|
40
|
|
$
|
40
|
|
Derivative liabilities related to:
|
|
|
|
|
||||||||
Foreign currency contracts
|
—
|
|
8
|
|
—
|
|
8
|
|
||||
Commodity contracts
|
73
|
|
12
|
|
—
|
|
85
|
|
||||
Total Liabilities at Fair Value:
|
$
|
73
|
|
$
|
20
|
|
$
|
40
|
|
$
|
133
|
|
Liabilities Not Recorded at Fair Value:
|
|
|
|
|
||||||||
Short-term debt instrument
(1)
|
$
|
—
|
|
$
|
51
|
|
$
|
—
|
|
$
|
51
|
|
Long-term debt instruments
(1)
|
—
|
|
2,231
|
|
—
|
|
2,231
|
|
||||
Total Liabilities Not Recorded at Fair Value
|
$
|
—
|
|
$
|
2,282
|
|
$
|
—
|
|
$
|
2,282
|
|
Total Liabilities Recorded and Not Recorded at Fair Value
|
$
|
73
|
|
$
|
2,302
|
|
$
|
40
|
|
$
|
2,415
|
|
(1)
|
Short-term and long-term debt instruments are not recorded at fair value on a recurring basis; however, they are measured at fair value for disclosure purposes, as required by the Fair Value Measurements and Disclosures topic of the ASC.
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
(Dollars in millions)
|
Contingent
Consideration
|
||
Balance as of Aug. 31, 2013
|
$
|
40
|
|
Settlement
|
(40
|
)
|
|
Balance as of Nov. 30, 2013
|
$
|
—
|
|
NOTE 14.
|
FINANCIAL INSTRUMENTS
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
As of
|
|||||
(Dollars in millions)
|
Nov. 30, 2013
|
Aug. 31, 2013
|
||||
Derivatives Designated as Hedges:
|
|
|
||||
Foreign exchange contracts
|
$
|
315
|
|
$
|
261
|
|
Commodity contracts
|
916
|
|
872
|
|
||
Total Derivatives Designated as Hedges
|
$
|
1,231
|
|
$
|
1,133
|
|
Derivatives Not Designated as Hedges:
|
|
|
||||
Foreign exchange contracts
|
$
|
1,667
|
|
$
|
1,188
|
|
Commodity contracts
|
113
|
|
217
|
|
||
Interest rate contracts
|
138
|
|
—
|
|
||
Total Derivatives Not Designated as Hedges
|
$
|
1,918
|
|
$
|
1,405
|
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
|
|
As of Nov. 30, 2013
|
||||||||||||||||||||
(in millions)
|
Gross Amounts Recognized
|
Gross Amounts Offset in the Statement of Consolidated Financial Position
|
Net Amounts Included in the Statement of Consolidated Financial Position
|
Collateral Pledged
|
Net Amounts Reported in the Statement of Consolidated Financial Position
|
Other Items Included in the Statement of Consolidated Financial Position
|
Statement of Consolidated Financial Position Balance
|
||||||||||||||||
Asset Derivatives:
|
|
|
|
|
|
|
|
||||||||||||||||
Miscellaneous receivables
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Foreign exchange contracts
|
$
|
3
|
|
$
|
—
|
|
$
|
3
|
|
$
|
—
|
|
$
|
3
|
|
|
|
||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Foreign exchange contracts
|
15
|
|
—
|
|
15
|
|
—
|
|
15
|
|
|
|
|||||||||
|
|
Commodity contracts
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|
|
|||||||||
Total miscellaneous receivables
|
19
|
|
—
|
|
19
|
|
—
|
|
19
|
|
$
|
755
|
|
$
|
774
|
|
|||||||
Other current assets
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
1
|
|
(39
|
)
|
(38
|
)
|
38
|
|
—
|
|
|
|
|||||||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|
|
|||||||||
Total other current assets
|
2
|
|
(39
|
)
|
(37
|
)
|
38
|
|
1
|
|
189
|
|
190
|
|
|||||||||
Other assets
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
—
|
|
(23
|
)
|
(23
|
)
|
23
|
|
—
|
|
|
|
|||||||||
Total other assets
|
—
|
|
(23
|
)
|
(23
|
)
|
23
|
|
—
|
|
566
|
|
566
|
|
|||||||||
Total Asset Derivatives
|
$
|
21
|
|
$
|
(62
|
)
|
$
|
(41
|
)
|
$
|
61
|
|
$
|
20
|
|
|
|
||||||
Liability Derivatives:
|
|
|
|
|
|
|
|
||||||||||||||||
Other current assets
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
$
|
39
|
|
$
|
(39
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
||||
Total other current assets
|
39
|
|
(39
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||||
Other assets
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
23
|
|
(23
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||
Total other assets
|
23
|
|
(23
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||||
Miscellaneous short-term accruals
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Foreign exchange contracts
|
3
|
|
—
|
|
3
|
|
—
|
|
3
|
|
|
|
|||||||||
|
|
Commodity contracts
|
2
|
|
—
|
|
2
|
|
—
|
|
2
|
|
|
|
|||||||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Foreign exchange contracts
|
5
|
|
—
|
|
5
|
|
—
|
|
5
|
|
|
|
|||||||||
|
|
Commodity contracts
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|
|
|||||||||
Total miscellaneous short-term accruals
|
11
|
|
—
|
|
11
|
|
—
|
|
11
|
|
$
|
932
|
|
$
|
943
|
|
|||||||
Total Liability Derivatives
|
$
|
73
|
|
$
|
(62
|
)
|
$
|
11
|
|
$
|
—
|
|
$
|
11
|
|
|
|
(1)
|
As allowed by the Derivatives and Hedging topic of the ASC, commodity derivative assets and liabilities have been offset by collateral subject to an enforceable master netting arrangement or similar arrangement. Therefore, these commodity contracts that are in an asset or liability position are included in asset accounts within the Statements of Consolidated Financial Position.
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
|
|
As of Aug. 31, 2013
|
||||||||||||||||||||
(in millions)
|
Gross Amounts Recognized
|
Gross Amounts Offset in the Statement of Consolidated Financial Position
|
Net Amounts Included in the Statement of Consolidated Financial Position
|
Collateral Pledged
|
Net Amounts Reported in the Statement of Consolidated Financial Position
|
Other Items Included in the Statement of Consolidated Financial Position
|
Statement of Consolidated Financial Position Balance
|
||||||||||||||||
Asset Derivatives:
|
|
|
|
|
|
|
|
||||||||||||||||
Trade receivables, net
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
$
|
1
|
|
$
|
(6
|
)
|
$
|
(5
|
)
|
$
|
5
|
|
$
|
—
|
|
|
|
|
|||
Total trade receivables, net
|
1
|
|
(6
|
)
|
(5
|
)
|
5
|
|
—
|
|
$
|
1,715
|
|
$
|
1,715
|
|
|||||||
Miscellaneous receivables
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Foreign exchange contracts
|
3
|
|
—
|
|
3
|
|
—
|
|
3
|
|
|
|
|||||||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Foreign exchange contracts
|
2
|
|
—
|
|
2
|
|
—
|
|
2
|
|
|
|
|||||||||
|
|
Commodity contracts
|
4
|
|
—
|
|
4
|
|
—
|
|
4
|
|
|
|
|||||||||
Total miscellaneous receivables
|
9
|
|
—
|
|
9
|
|
—
|
|
9
|
|
739
|
|
748
|
|
|||||||||
Other current assets
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
9
|
|
(61
|
)
|
(52
|
)
|
52
|
|
—
|
|
|
|
|||||||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
5
|
|
(4
|
)
|
1
|
|
—
|
|
1
|
|
|
|
|||||||||
Total other current assets
|
14
|
|
(65
|
)
|
(51
|
)
|
52
|
|
1
|
|
165
|
|
166
|
|
|||||||||
Other assets
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
—
|
|
(9
|
)
|
(9
|
)
|
9
|
|
—
|
|
|
|
|
||||||||
Total other assets
|
—
|
|
(9
|
)
|
(9
|
)
|
9
|
|
—
|
|
496
|
|
496
|
|
|||||||||
Total Asset Derivatives
|
$
|
24
|
|
$
|
(80
|
)
|
$
|
(56
|
)
|
$
|
66
|
|
$
|
10
|
|
|
|
|
|
||||
Liability Derivatives:
|
|
|
|
|
|
|
|
||||||||||||||||
Trade receivables, net
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
$
|
6
|
|
$
|
(6
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
||||
Total trade receivables, net
|
6
|
|
(6
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||||
Other current assets
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
61
|
|
(61
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
4
|
|
(4
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||
Total other current assets
|
65
|
|
(65
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||||
Other assets
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
(1)
|
9
|
|
(9
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||
Total other assets
|
9
|
|
(9
|
)
|
—
|
|
—
|
|
—
|
|
|
|
|||||||||||
Miscellaneous short-term accruals
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Foreign exchange contracts
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|
|
|||||||||
|
|
Commodity contracts
|
4
|
|
—
|
|
4
|
|
—
|
|
4
|
|
|
|
|||||||||
|
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Foreign exchange contracts
|
7
|
|
—
|
|
7
|
|
—
|
|
7
|
|
|
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
Total miscellaneous short-term accruals
|
12
|
|
—
|
|
12
|
|
—
|
|
12
|
|
$
|
800
|
|
$
|
812
|
|
|||||||
Other liabilities
|
|
|
|
|
|
|
|
||||||||||||||||
|
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Commodity contracts
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|
|
|||||||||
Total other liabilities
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
381
|
|
382
|
|
|||||||||
Total Liability Derivatives
|
$
|
93
|
|
$
|
(80
|
)
|
$
|
13
|
|
$
|
—
|
|
$
|
13
|
|
|
|
|
|
(1)
|
As allowed by the Derivatives and Hedging topic of the ASC, commodity derivative assets and liabilities have been offset by collateral subject to an enforceable master netting arrangement or similar arrangement. Therefore, these commodity contracts that are in an asset or liability position are included in asset accounts within the Statements of Consolidated Financial Position.
|
|
Amount of Gain (Loss)
Recognized in AOCI
(1)
(Effective
Portion)
|
|
Amount of Gain (Loss)
Recognized in Income
(2)
|
|
|
||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
|
Statement of Consolidated Operations Classification
|
||||||||||
(Dollars in millions)
|
Nov. 30, 2013
|
Nov. 30, 2012
|
|
Nov. 30, 2013
|
Nov. 30, 2012
|
|
|||||||||
Derivatives Designated as Hedges:
|
|
|
|
|
|
|
|
||||||||
Fair value hedges:
|
|
|
|
|
|
|
|
||||||||
Commodity contracts
(3)
|
|
|
|
$
|
(2
|
)
|
$
|
6
|
|
|
Cost of goods sold
|
||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
$
|
(2
|
)
|
$
|
(1
|
)
|
|
(2
|
)
|
(2
|
)
|
|
Net sales
|
||
Foreign currency contracts
|
(3
|
)
|
(4
|
)
|
|
—
|
|
3
|
|
|
Cost of goods sold
|
||||
Commodity contracts
(4)
|
(61
|
)
|
(13
|
)
|
|
(3
|
)
|
17
|
|
|
Cost of goods sold
|
||||
Interest rate contracts
(5)
|
(2
|
)
|
—
|
|
|
(3
|
)
|
(3
|
)
|
|
Interest expense
|
||||
Total Derivatives Designated as Hedges
|
(68
|
)
|
(18
|
)
|
|
(10
|
)
|
21
|
|
|
|
||||
Derivatives Not Designated as Hedges:
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
(6)
|
|
|
|
22
|
|
31
|
|
|
Other expense, net
|
||||||
Commodity contracts
|
|
|
|
2
|
|
5
|
|
|
Net sales
|
||||||
Commodity contracts
|
|
|
|
5
|
|
4
|
|
|
Cost of goods sold
|
||||||
Total Derivatives Not Designated as Hedges
|
|
|
|
29
|
|
40
|
|
|
|
||||||
Total Derivatives
|
$
|
(68
|
)
|
$
|
(18
|
)
|
|
$
|
19
|
|
$
|
61
|
|
|
|
(1)
|
Accumulated other comprehensive income (loss) (AOCI).
|
(2)
|
For derivatives designated as cash flow hedges under the Derivatives and Hedging topic of the ASC, this represents the effective portion of the gain (loss) reclassified from AOCI into income during the period.
|
(3)
|
Loss and gain on fair value hedges includes a loss of
$1 million
and a loss of less than
$1 million
from ineffectiveness during the
three months ended
Nov. 30, 2013
, and
Nov. 30, 2012
, respectively.
|
(4)
|
Loss and gain on commodity cash flow hedges includes a loss of
$1 million
and a loss of less than
$1 million
from ineffectiveness for the
three months ended
Nov. 30, 2013
, and
Nov. 30, 2012
, respectively.
No
gains or losses were excluded from the assessment of hedge effectiveness during the
three months ended
Nov. 30, 2013
, and
Nov. 30, 2012
.
|
(5)
|
Loss on interest rate cash flow hedges includes a loss of less than
$1 million
from ineffectiveness for the
three months ended
Nov. 30, 2013
.
|
(6)
|
Gain on foreign currency contracts not designated as hedges is offset by a foreign currency transaction loss of
$41 million
and
$48 million
during the
three months ended
Nov. 30, 2013
, and
Nov. 30, 2012
, respectively.
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
NOTE 15.
|
POSTRETIREMENT BENEFITS — PENSIONS, HEALTH CARE AND OTHER
|
|
Three Months Ended Nov. 30, 2013
|
|
Three Months Ended Nov. 30, 2012
|
||||||||||||||||||||
Pension Benefits
(Dollars in millions)
|
U.S.
|
|
Outside the
U.S.
|
|
Total
|
|
U.S.
|
|
Outside the
U.S.
|
|
Total
|
||||||||||||
Service Cost for Benefits Earned During the Period
|
$
|
15
|
|
|
$
|
3
|
|
|
$
|
18
|
|
|
$
|
20
|
|
|
$
|
3
|
|
|
$
|
23
|
|
Interest Cost on Benefit Obligation
|
23
|
|
|
2
|
|
|
25
|
|
|
22
|
|
|
2
|
|
|
24
|
|
||||||
Assumed Return on Plan Assets
|
(35
|
)
|
|
(2
|
)
|
|
(37
|
)
|
|
(40
|
)
|
|
(2
|
)
|
|
(42
|
)
|
||||||
Amortization of Unrecognized Net Loss
|
16
|
|
|
1
|
|
|
17
|
|
|
21
|
|
|
1
|
|
|
22
|
|
||||||
Curtailment and Settlement Charge
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Total Net Periodic Benefit Cost
|
$
|
19
|
|
|
$
|
5
|
|
|
$
|
24
|
|
|
$
|
23
|
|
|
$
|
5
|
|
|
$
|
28
|
|
Health Care and Other Postretirement Benefits
|
Three Months Ended
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
||||
Service Cost for Benefits Earned During the Period
|
$
|
3
|
|
|
$
|
5
|
|
Interest Cost on Benefit Obligation
|
3
|
|
|
3
|
|
||
Amortization of Unrecognized Net Gain
|
(4
|
)
|
|
(3
|
)
|
||
Total Net Periodic Benefit Cost
|
$
|
2
|
|
|
$
|
5
|
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
NOTE 16.
|
STOCK-BASED COMPENSATION PLANS
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
||||
Cost of Goods Sold
|
$
|
2
|
|
|
$
|
4
|
|
Selling, General and Administrative Expenses
|
20
|
|
|
15
|
|
||
Research and Development Expenses
|
5
|
|
|
5
|
|
||
Pre-Tax Stock-Based Compensation Expense
|
27
|
|
|
24
|
|
||
Income Tax Benefit
|
(9
|
)
|
|
(8
|
)
|
||
Net Stock-Based Compensation Expense
|
$
|
18
|
|
|
$
|
16
|
|
|
Monsanto Stock Plans
|
|
Director Plan
|
||||||||||||
|
Stock
Options
|
|
|
Restricted
Stock Units
|
|
|
Deferred
Stock
|
|
|
Restricted
Stock
|
|
||||
Granted
|
2,264,046
|
|
|
826,959
|
|
|
18,520
|
|
|
2,554
|
|
||||
Weighted-average grant date fair value per share
|
$
|
38.44
|
|
|
$
|
101.08
|
|
|
$
|
97.89
|
|
|
$
|
97.89
|
|
Pre-tax unrecognized compensation expense, net of estimated forfeitures as applicable in millions
|
$
|
105.1
|
|
|
$
|
120.9
|
|
|
$
|
1.4
|
|
|
$
|
0.2
|
|
Remaining weighted-average period of expense recognition/requisite service periods in years
|
3
|
|
|
3
|
|
|
1
|
|
|
1
|
|
NOTE 17.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
(Dollars in millions)
|
Foreign Currency Translation Adjustments
|
Net Unrealized Gain on Available for Sale Securities
|
Cash Flow Hedges
|
Postretirement Benefit Items
|
Total Accumulated Other Comprehensive Loss
|
||||||||||
Balance as of Aug. 31, 2013
|
$
|
(831
|
)
|
$
|
8
|
|
$
|
(115
|
)
|
$
|
(340
|
)
|
$
|
(1,278
|
)
|
Other comprehensive income (loss) before reclassifications
|
127
|
|
5
|
|
(43
|
)
|
—
|
|
89
|
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
—
|
|
5
|
|
8
|
|
13
|
|
|||||
Net current-period other comprehensive income (loss)
|
127
|
|
5
|
|
(38
|
)
|
8
|
|
102
|
|
|||||
Balance as of Nov. 30, 2013
|
$
|
(704
|
)
|
$
|
13
|
|
$
|
(153
|
)
|
$
|
(332
|
)
|
$
|
(1,176
|
)
|
Details about Accumulated Other Comprehensive Loss components
|
Amount Reclassified from Accumulated Other Comprehensive Loss
|
|
Affected Line Item in the Statement of Consolidated Operations
|
||
Cash Flow Hedges:
|
|
|
|
||
Foreign Exchange Contracts Net Loss
|
$
|
2
|
|
|
Net sales
|
Commodity Contracts Net Loss
|
3
|
|
|
Cost of goods sold
|
|
Interest Rate Contracts Net Loss
|
3
|
|
|
Interest expense
|
|
|
8
|
|
|
Total before income taxes
|
|
|
(3
|
)
|
|
Income tax provision
|
|
|
$
|
5
|
|
|
Net of tax
|
|
|
|
|
||
Postretirement Benefit Items:
|
|
|
|
||
Amortization of Unrecognized Net Loss
|
$
|
3
|
|
|
Inventory / Cost of goods sold
(1)
|
Amortization of Unrecognized Net Loss
|
10
|
|
|
Selling and administrative expenses
|
|
|
13
|
|
|
Total before income taxes
|
|
|
(5
|
)
|
|
Income tax provision
|
|
|
$
|
8
|
|
|
Net of tax
|
|
|
|
|
||
Total Reclassifications For The Period
|
$
|
13
|
|
|
Net of tax
|
(1)
|
The amortization of unrecognized net loss is recorded to net periodic benefit cost, which is allocated to selling, general and administrative expenses and to inventory, which is recognized through cost of goods sold. The company recorded
$3 million
of net periodic benefit cost to inventory, of which approximately
$1 million
was recognized in cost of goods sold during the three months ended Nov. 30, 2013. See Note 15 - Postretirement Benefits - Pensions, Health Care and Other - for additional information.
|
NOTE 18.
|
EARNINGS PER SHARE
|
|
Three Months Ended
|
||||
(Shares in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
||
Weighted-Average Number of Common Shares
|
526.9
|
|
|
534.8
|
|
Dilutive Potential Common Shares
|
5.7
|
|
|
5.6
|
|
Antidilutive Potential Common Shares
|
1.8
|
|
|
4.2
|
|
Shares Excluded From Computation of Dilutive Potential Shares with Exercise Prices greater than the Average Market Price of Common Shares for the Period
|
0.1
|
|
|
4.1
|
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
||||
Interest
|
$
|
42
|
|
|
$
|
49
|
|
Taxes
|
102
|
|
|
147
|
|
NOTE 20.
|
COMMITMENTS AND CONTINGENCIES
|
•
|
As described in our Report on Form 10-K for the fiscal year ended Aug. 31, 2013, on Dec. 17, 2004, 15 plaintiffs filed a purported class action lawsuit, styled Virdie Allen, et al. v. Monsanto, et al., in the Putnam County, West Virginia, state court against Monsanto, Pharmacia and seven other defendants. Monsanto is named as the successor in interest to the liabilities of Pharmacia. The alleged class consists of all current and former residents, workers, and students who, between 1949 and the present, were allegedly exposed to dioxins/furans contamination in counties surrounding Nitro, West Virginia. The complaint alleges that the source of the contamination is a chemical plant in Nitro, formerly owned and operated by Pharmacia and later by Flexsys, a joint venture between Solutia and Akzo Nobel Chemicals, Inc. (Akzo Nobel). Akzo Nobel and Flexsys were named defendants in the case but Solutia was not, due to its then pending bankruptcy proceeding. The suit seeks damages for property cleanup costs, loss of real estate value, funds to test property for contamination levels, funds to test for human exposure, and future medical monitoring costs. The complaint also seeks an injunction against further contamination and punitive damages. Monsanto has agreed to indemnify and defend Akzo Nobel and the Flexsys defendant group, but on May 27, 2011, the judge dismissed both Akzo Nobel and Flexsys from the case. The class action certification hearing was held on Oct. 29, 2007. On Jan. 8, 2008, the trial court issued an order certifying the Allen (now Zina G. Bibb et al. v. Monsanto et al., because Bibb replaced Allen as class representative) case as a class action for property damage and for medical monitoring. On Nov. 2, 2011, the court, in response to defense motions, entered an order decertifying the property class. After the trial for the Bibb medical monitoring class action began on Jan. 3, 2012, the parties reached a settlement in principle as to both the medical monitoring and the property class claims. The proposed settlement provides for a 30 year medical monitoring program consisting of a primary fund of up to
$21 million
and an additional fund of up to
$63 million
over the life of the program, and a three year property remediation plan with funding up to
$9 million
. On Feb. 24, 2012, the court preliminarily approved the parties’ proposed settlement. A fairness hearing was held June 18, 2012, resulting in the trial court's final approval of the settlement. Certain plaintiffs objected to the approval of the settlement and appealed to the West Virginia Supreme Court of Appeals. On Nov. 22, 2013, the West Virginia Supreme Court of Appeals dismissed the appeal and upheld the fairness of the class action settlements. On Dec. 20, 2013, the objector moved for a stay, pending his petition for writ of certiorari with the U.S. Supreme Court.
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
NOTE 21.
|
SEGMENT INFORMATION
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
||||
Net Sales
(1)
|
|
|
|
||||
Corn seed and traits
|
$
|
1,054
|
|
|
$
|
1,139
|
|
Soybean seed and traits
|
267
|
|
|
231
|
|
||
Cotton seed and traits
|
137
|
|
|
185
|
|
||
Vegetable seeds
|
157
|
|
|
156
|
|
||
All other crops seeds and traits
|
61
|
|
|
44
|
|
||
Total Seeds and Genomics
|
$
|
1,676
|
|
|
$
|
1,755
|
|
Agricultural productivity
|
1,467
|
|
|
1,184
|
|
||
Total Agricultural Productivity
|
$
|
1,467
|
|
|
$
|
1,184
|
|
Total
|
$
|
3,143
|
|
|
$
|
2,939
|
|
Gross Profit
|
|
|
|
||||
Corn seed and traits
|
$
|
650
|
|
|
$
|
686
|
|
Soybean seed and traits
|
168
|
|
|
118
|
|
||
Cotton seed and traits
|
92
|
|
|
127
|
|
||
Vegetable seeds
|
68
|
|
|
83
|
|
||
All other crops seeds and traits
|
27
|
|
|
11
|
|
||
Total Seeds and Genomics
|
$
|
1,005
|
|
|
$
|
1,025
|
|
Agricultural productivity
|
558
|
|
|
372
|
|
||
Total Agricultural Productivity
|
$
|
558
|
|
|
$
|
372
|
|
Total
|
$
|
1,563
|
|
|
$
|
1,397
|
|
EBIT
(2)(3)
|
|
|
|
|
||||
Seeds and Genomics
|
|
$
|
104
|
|
|
$
|
220
|
|
Agricultural Productivity
|
|
450
|
|
|
270
|
|
||
Total
|
|
$
|
554
|
|
|
$
|
490
|
|
Depreciation and Amortization Expense
|
|
|
|
||||
Seeds and Genomics
|
$
|
131
|
|
|
$
|
123
|
|
Agricultural Productivity
|
31
|
|
|
29
|
|
||
Total
|
$
|
162
|
|
|
$
|
152
|
|
(1)
|
Represents net sales from continuing operations.
|
(2)
|
EBIT is defined as earnings before interest and taxes; see the following table for reconciliation. Earnings is intended to mean net income as presented in the Statements of Consolidated Operations under generally accepted accounting principles. EBIT is an operating performance measure for the two reportable segments.
|
(3)
|
Agricultural Productivity EBIT includes income from operations of discontinued businesses of
$14 million
and
$11 million
for the
three months ended Nov. 30, 2013
, and
Nov. 30, 2012
, respectively.
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)
|
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
||||
EBIT
(1)
|
|
$
|
554
|
|
|
$
|
490
|
|
Interest Expense — Net
|
|
29
|
|
|
28
|
|
||
Income Tax Provision
(2)
|
|
157
|
|
|
123
|
|
||
Net Income Attributable to Monsanto Company
|
|
$
|
368
|
|
|
$
|
339
|
|
(1)
|
Includes the income from operations of discontinued businesses and pre-tax noncontrolling interests.
|
(2)
|
Includes the income tax benefit on noncontrolling interest and the income tax provision on discontinued operations.
|
NOTE 22.
|
SUBSEQUENT EVENTS
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
OVERVIEW
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
RESULTS OF OPERATIONS
|
|
Three Months Ended
|
|||||||||
(Dollars in millions, except per share amounts)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
|
Change
|
|||||
Net Sales
|
$
|
3,143
|
|
|
$
|
2,939
|
|
|
7
|
%
|
Cost of goods sold
|
1,580
|
|
|
1,542
|
|
|
2
|
%
|
||
Gross Profit
|
1,563
|
|
|
1,397
|
|
|
12
|
%
|
||
Operating Expenses:
|
|
|
|
|
|
|||||
Selling, general and administrative expenses
|
589
|
|
|
542
|
|
|
9
|
%
|
||
Research and development expenses
|
409
|
|
|
346
|
|
|
18
|
%
|
||
Total Operating Expenses
|
998
|
|
|
888
|
|
|
12
|
%
|
||
Income from Operations
|
565
|
|
|
509
|
|
|
11
|
%
|
||
Interest expense
|
53
|
|
|
51
|
|
|
4
|
%
|
||
Interest income
|
(24
|
)
|
|
(23
|
)
|
|
4
|
%
|
||
Other expense, net
|
20
|
|
|
17
|
|
|
18
|
%
|
||
Income from Continuing Operations Before Income Taxes
|
516
|
|
|
464
|
|
|
11
|
%
|
||
Income tax provision
|
152
|
|
|
122
|
|
|
25
|
%
|
||
Income from Continuing Operations Including Portion Attributable to Noncontrolling Interest
|
364
|
|
|
342
|
|
|
6
|
%
|
||
Discontinued Operations:
|
|
|
|
|
|
|||||
Income from operations of discontinued businesses
|
14
|
|
|
11
|
|
|
NM
|
|
||
Income tax provision
|
5
|
|
|
4
|
|
|
NM
|
|
||
Income from Discontinued Operations
|
9
|
|
|
7
|
|
|
NM
|
|
||
Net Income
|
$
|
373
|
|
|
$
|
349
|
|
|
7
|
%
|
Less: Net income attributable to noncontrolling interest
|
5
|
|
|
10
|
|
|
NM
|
|
||
Net Income Attributable to Monsanto Company
|
$
|
368
|
|
|
$
|
339
|
|
|
9
|
%
|
Diluted Earnings per Share Attributable to Monsanto Company:
|
|
|
|
|
|
|||||
Income from continuing operations
|
$
|
0.67
|
|
|
$
|
0.62
|
|
|
8
|
%
|
Income from discontinued operations
|
0.02
|
|
|
0.01
|
|
|
NM
|
|
||
Net Income Attributable to Monsanto Company
|
$
|
0.69
|
|
|
$
|
0.63
|
|
|
10
|
%
|
NM = Not Meaningful
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
Effective Tax Rate
|
29
|
%
|
|
26
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Comparison as a Percent of Net Sales:
|
|
|
|
|
|
|||||
Cost of Goods Sold
|
50
|
%
|
|
52
|
%
|
|
|
|||
Gross Profit
|
50
|
%
|
|
48
|
%
|
|
|
|||
Selling, general and administrative expenses
|
19
|
%
|
|
18
|
%
|
|
|
|||
Research and development expenses
|
13
|
%
|
|
12
|
%
|
|
|
|||
Total operating expenses
|
32
|
%
|
|
30
|
%
|
|
|
|||
Income from continuing operations before income taxes
|
16
|
%
|
|
16
|
%
|
|
|
|||
Net income attributable to Monsanto Company
|
12
|
%
|
|
12
|
%
|
|
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
|
First Quarter 2014 Percentage Change in Net Sales vs. First Quarter 2013
|
|||||||
|
Volume
|
|
Price
|
|
Currency
|
|
Total
|
|
Seeds and Genomics Segment
|
(11)%
|
|
10%
|
|
(4)%
|
|
(5)%
|
|
Agricultural Productivity Segment
|
8%
|
|
21%
|
|
(5)%
|
|
24%
|
|
Total Monsanto Company
|
(4)%
|
|
15%
|
|
(4)%
|
|
7%
|
|
|
First Quarter 2014 Percentage Change in Cost of Goods Sold vs. First Quarter 2013
|
|||||||
|
Volume
|
|
Costs
|
|
Currency
|
|
Total
|
|
Seeds and Genomics Segment
|
(8)%
|
|
2%
|
|
(2)%
|
|
(8)%
|
|
Agricultural Productivity Segment
|
8%
|
|
7%
|
|
(3)%
|
|
12%
|
|
Total Monsanto Company
|
—%
|
|
5%
|
|
(3)%
|
|
2%
|
|
SEEDS AND GENOMICS SEGMENT
|
|
Three Months Ended
|
|||||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
|
Change
|
|||||
Net Sales
|
|
|
|
|
|
|||||
Corn seed and traits
|
$
|
1,054
|
|
|
$
|
1,139
|
|
|
(7
|
)%
|
Soybean seed and traits
|
267
|
|
|
231
|
|
|
16
|
%
|
||
Cotton seed and traits
|
137
|
|
|
185
|
|
|
(26
|
)%
|
||
Vegetable seeds
|
157
|
|
|
156
|
|
|
1
|
%
|
||
All other crops seeds and traits
|
61
|
|
|
44
|
|
|
39
|
%
|
||
Total Net Sales
|
$
|
1,676
|
|
|
$
|
1,755
|
|
|
(5
|
)%
|
Gross Profit
|
|
|
|
|
|
|||||
Corn seed and traits
|
$
|
650
|
|
|
$
|
686
|
|
|
(5
|
)%
|
Soybean seed and traits
|
168
|
|
|
118
|
|
|
42
|
%
|
||
Cotton seed and traits
|
92
|
|
|
127
|
|
|
(28
|
)%
|
||
Vegetable seeds
|
68
|
|
|
83
|
|
|
(18
|
)%
|
||
All other crops seeds and traits
|
27
|
|
|
11
|
|
|
145
|
%
|
||
Total Gross Profit
|
$
|
1,005
|
|
|
$
|
1,025
|
|
|
(2
|
)%
|
EBIT
(1)
|
$
|
104
|
|
|
$
|
220
|
|
|
(53
|
)%
|
(1)
|
EBIT is defined as earnings before interest and taxes. Interest and taxes are recorded on a total company basis. We do not record these items at the segment level. See Note
21
— Segment Information and the “Overview — Non-GAAP Financial Measures” section of MD&A for further details.
|
AGRICULTURAL PRODUCTIVITY SEGMENT
|
|
Three Months Ended
|
|||||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
|
Change
|
|||||
Net Sales
|
|
|
|
|
|
|||||
Agricultural productivity
|
$
|
1,467
|
|
|
$
|
1,184
|
|
|
24
|
%
|
Total Net Sales
|
$
|
1,467
|
|
|
$
|
1,184
|
|
|
24
|
%
|
Gross Profit
|
|
|
|
|
|
|||||
Agricultural productivity
|
$
|
558
|
|
|
$
|
372
|
|
|
50
|
%
|
Total Gross Profit
|
$
|
558
|
|
|
$
|
372
|
|
|
50
|
%
|
EBIT
(1)
|
$
|
450
|
|
|
$
|
270
|
|
|
67
|
%
|
(1)
|
EBIT is defined as earnings before interest and taxes. Interest and taxes are recorded on a total company basis. We do not record these items at the segment level. See Note
21
— Segment Information — and the “Overview — Non-GAAP Financial Measures” section of MD&A for further details.
|
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
|
Working Capital and Financial Condition
|
|
|
|
|
|
||||||
|
As of
|
|
As of Aug. 31,
|
||||||||
(Dollars in millions, except current ratio)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
|
2013
|
||||||
Cash and Cash Equivalents
(1)
|
$
|
4,496
|
|
|
$
|
4,637
|
|
|
$
|
3,668
|
|
Trade Receivables, Net
(1)
|
2,283
|
|
|
2,168
|
|
|
1,715
|
|
|||
Inventory, Net
|
3,873
|
|
|
3,571
|
|
|
2,947
|
|
|||
Other Current Assets
(1)(2)
|
1,844
|
|
|
1,684
|
|
|
1,747
|
|
|||
Total Current Assets
|
$
|
12,496
|
|
|
$
|
12,060
|
|
|
$
|
10,077
|
|
Short-Term Debt, including current portion of long-term debt
|
$
|
262
|
|
|
$
|
26
|
|
|
$
|
51
|
|
Accounts Payable
|
853
|
|
|
785
|
|
|
995
|
|
|||
Accrued Liabilities
(3)
|
5,583
|
|
|
5,350
|
|
|
3,290
|
|
|||
Total Current Liabilities
|
$
|
6,698
|
|
|
$
|
6,161
|
|
|
$
|
4,336
|
|
Working Capital
(4)
|
$
|
5,798
|
|
|
$
|
5,899
|
|
|
$
|
5,741
|
|
Current Ratio
(4)
|
1.87:1
|
|
|
1.96:1
|
|
|
2.32:1
|
|
(1)
|
May include restrictions as a result of our variable interest entity. See the Statements of Consolidated Financial Position and Note
5
—
Variable Interest Entities
— for more information.
|
(2)
|
Includes short-term investments, miscellaneous receivables, deferred tax assets and other current assets.
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
(3)
|
Includes income taxes payable, accrued compensation and benefits, accrued marketing programs, deferred revenues, grower production accruals, dividends payable, customer payable and miscellaneous short-term accruals.
|
(4)
|
Working capital is total current assets less total current liabilities; current ratio represents total current assets divided by total current liabilities.
|
•
|
Cash and cash equivalents increased $828 million between respective periods primarily because of customer prepayments, offset by marketing program payments that occur in the first quarter of the fiscal year, which is consistent with the seasonality of our business. The net increase was offset by treasury share repurchases and dividends paid during the quarter. See cash flow section in this MD&A for additional detail.
|
•
|
Trade receivables, net increased $568 million between respective periods primarily due to the seasonality of our business.
|
•
|
Inventory, net increased
$926 million
between respective periods primarily because of the seasonality of our U.S. corn and soybean seed business in which the fall harvest of seed products occurs in the first quarter of the fiscal year resulting in a higher inventory balance.
|
•
|
Accrued liabilities increased
$2,293 million
between respective periods primarily due to the following fluctuations:
|
◦
|
Deferred revenue increased
$2,349 million
due to customer prepayments that occur in the first quarter of the fiscal year as discussed above.
|
◦
|
Grower production accruals increased
$574 million
due to corn and soybean deliveries in advance of the 2014 fiscal year commercial selling season due to the seasonality of our business.
|
◦
|
Accrued marketing programs decreased
$322 million
due to the payout of several programs during the first quarter of 2014 consistent with the seasonality of our programs.
|
◦
|
Dividends payable decreased
$228 million
as there were no dividends declared in the first quarter 2014.
|
•
|
Accrued liabilities increased $233 million between respective periods primarily due to the following fluctuation:
|
◦
|
Miscellaneous short-term accruals increased $240 million due to the timing of payments to a U.S. customer financing program for which we are the administrator.
|
•
|
Short-term debt increased $236 million between respective periods due to the use of commercial paper in the first quarter of fiscal year 2014 as discussed below.
|
•
|
Inventory, net increased $302 million primarily due to anticipation of increased sales plans for fiscal year 2014.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
||||
Net Cash Provided by Operating Activities
|
$
|
1,698
|
|
|
$
|
1,569
|
|
Net Cash Required by Investing Activities
|
(1,241
|
)
|
|
(96
|
)
|
||
Free Cash Flow
(1)
|
457
|
|
|
1,473
|
|
||
Net Cash Provided (Required) by Financing Activities
|
346
|
|
|
(116
|
)
|
||
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
25
|
|
|
(3
|
)
|
||
Net Increase in Cash and Cash Equivalents
|
828
|
|
|
1,354
|
|
||
Cash and Cash Equivalents at Beginning of Period
|
3,668
|
|
|
3,283
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
4,496
|
|
|
$
|
4,637
|
|
(1)
|
Free cash flow represents the total of net cash provided or required by operating activities and provided or required by investing activities (see the “Non-GAAP Financial Measures” section in MD&A for a further discussion).
|
•
|
Increased trade accounts receivable due to higher sales, offset by increased market funding rebates applied against customer receivables.
|
•
|
Increased inventory primarily due to larger crop production plans in our seeds and genomics segment.
|
|
As of
|
|
As of Aug. 31,
|
||||||||
(Dollars in millions, except debt-to-capital ratio)
|
Nov. 30, 2013
|
|
Nov. 30, 2012
|
|
2013
|
||||||
Short-Term Debt
|
$
|
262
|
|
|
$
|
26
|
|
|
$
|
51
|
|
Long-Term Debt
|
3,057
|
|
|
2,054
|
|
|
2,061
|
|
|||
Total Monsanto Company Shareowners’ Equity
|
12,572
|
|
|
12,259
|
|
|
12,559
|
|
|||
Debt-to-Capital Ratio
(1)
|
21
|
%
|
|
15
|
%
|
|
14
|
%
|
(1)
|
Debt-to-Capital ratio represents short-term and long-term debt divided by total Monsanto Company shareowners' equity, short-term and long-term debt.
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
OUTLOOK
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
PART II—OTHER INFORMATION
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
(a) Total Number of Shares Purchased
|
|
|
(b) Average Price Paid per Share
(1)
|
|
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
September 2013:
|
|
|
|
|
|
|
|
|
||||||
Sep. 1, 2013, through Sep. 30, 2013
|
1,400,500
|
|
|
|
$
|
103.69
|
|
|
1,400,500
|
|
|
$
|
1,824,868,472
|
|
October 2013:
|
|
|
|
|
|
|
|
|
||||||
Oct. 1, 2013, through Oct. 31, 2013
|
2,898,263
|
|
|
|
$
|
105.22
|
|
|
2,898,263
|
|
|
$
|
1,519,916,985
|
|
November 2013:
|
|
|
|
|
|
|
|
|
||||||
Nov. 1, 2013, through Nov. 30, 2013
|
1,071,700
|
|
(2)
|
|
$
|
107.70
|
|
|
1,024,300
|
|
|
$
|
1,409,471,602
|
|
Total
|
5,370,463
|
|
|
|
$
|
105.32
|
|
|
5,323,063
|
|
|
$
|
1,409,471,602
|
|
(1)
|
The average price paid per share is calculated on a trade date basis and excludes commission.
|
(2)
|
Includes 47,400 shares purchased by affiliated purchaser.
|
ITEM 6.
|
EXHIBITS
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
SIGNATURE
|
|
MONSANTO COMPANY
|
|
(Registrant)
|
|
|
By:
|
/s/ NICOLE M. RINGENBERG
|
|
Nicole M. Ringenberg
|
|
Vice President and Controller
|
|
(On behalf of the Registrant and as Principal Accounting Officer)
|
MONSANTO COMPANY
|
|
FIRST QUARTER 2014 FORM 10-Q
|
EXHIBIT INDEX
|
|
|
Three Months Ended Nov. 30,
|
|
Year Ended Aug. 31,
|
||||||||||||||||||||
|
|
2013
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||||
EARNINGS:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from Continuing Operations Before Income Taxes
|
|
$
|
516
|
|
|
$
|
3,429
|
|
|
$
|
2,988
|
|
|
$
|
2,374
|
|
|
$
|
1,490
|
|
|
$
|
2,918
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges
|
|
73
|
|
|
246
|
|
|
257
|
|
|
234
|
|
|
227
|
|
|
178
|
|
||||||
Equity affiliate income — net
|
|
3
|
|
|
(15
|
)
|
|
(10
|
)
|
|
(21
|
)
|
|
(16
|
)
|
|
(17
|
)
|
||||||
Amortization of capitalized interest
|
|
4
|
|
|
16
|
|
|
15
|
|
|
15
|
|
|
14
|
|
|
13
|
|
||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capitalized interest
|
|
(7
|
)
|
|
(23
|
)
|
|
(21
|
)
|
|
(22
|
)
|
|
(25
|
)
|
|
(34
|
)
|
||||||
Earnings available for fixed charges
|
|
$
|
589
|
|
|
$
|
3,653
|
|
|
$
|
3,229
|
|
|
$
|
2,580
|
|
|
$
|
1,690
|
|
|
$
|
3,058
|
|
FIXED CHARGES:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
(3)
|
|
$
|
54
|
|
|
$
|
176
|
|
|
$
|
191
|
|
|
$
|
172
|
|
|
$
|
167
|
|
|
$
|
107
|
|
Capitalized interest
|
|
7
|
|
|
23
|
|
|
21
|
|
|
22
|
|
|
25
|
|
|
34
|
|
||||||
Portion of rents representative of interest factor
|
|
12
|
|
|
47
|
|
|
45
|
|
|
40
|
|
|
35
|
|
|
37
|
|
||||||
Total fixed charges
|
|
$
|
73
|
|
|
$
|
246
|
|
|
$
|
257
|
|
|
$
|
234
|
|
|
$
|
227
|
|
|
$
|
178
|
|
Ratio of Earnings to Fixed Charges
|
|
8.07
|
|
|
14.85
|
|
|
12.56
|
|
|
11.03
|
|
|
7.44
|
|
|
17.18
|
|
(1)
|
Monsanto has not paid any preference security dividends and, therefore, has not included the ratio of combined fixed charges and preference security dividends to earnings for the relevant periods.
|
(2)
|
The operating results of the Dairy business has been conformed to discontinued operations presentation for all relevant fiscal years presented.
|
(3)
|
Includes amortization of deferred debt issuance costs and the interest component of the income tax provision.
|
1.
|
I have reviewed this report on Form 10-Q of Monsanto Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Hugh Grant
|
Hugh Grant
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q of Monsanto Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Pierre Courduroux
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Pierre Courduroux
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Senior Vice President and Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Hugh Grant
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Hugh Grant
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Chairman and Chief Executive Officer
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/s/ Pierre Courduroux
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Pierre Courduroux
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Senior Vice President and Chief Financial Officer
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