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MONSANTO CHEMICAL COMPANY 1 Annual Report 1954
December 31, 1954
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MAR 000385
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MAR 000386
BOARD OF DIRECTORS
EDGAR M. QUEENY, Chairman......................................... St. Louis CHARLES S. CHESTON.................................................... Philadelphia ROBERT R. COLE.....................................................................St. Louis FRANCIS J. CURTIS.................................................................... St. Louis FREDRICK M. EATON.......................................................... New York CARROLL A. HOCHWALT.........................................................St. Louis WILLIAM W. SCHNEIDER.........................................................St. Louis CHARLES ALLEN THOMAS................................................... St. Louis FELIX N. WILLIAMS...............................................................St. Louis
EXECUTIVE COMMITTEE
CHARLES ALLEN THOMAS, Chairman
ROBERT R. COLE
CARROLL A. HOCHWALT
EDGAR M. QUEENY
FELIX N. WILLIAMS
FINANCE COMMITTEE
CHARLES S. CHESTON, Chairman
FREDRICK M. EATON
EDGAR M. QUEENY
WILLIAM W. SCHNEIDER
CHARLES ALLEN THOMAS
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TRANSFER AGENT Common and Preference Stocks GUARANTY TRUST COMPANY OF NEW YORK
REGISTRAR Common and Preference Stocks THE CHASE NATIONAL BANK OF THE CITY OF NEW YORK
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msarnisiAi Nimrot e wtxsxxsix: of December 31, 7954
EDGAR M. QUEENY . .
Chairman, Board of Directors
CHARLES ALLEN THOMAS ...............................................President
ROBERT R. COLE . . .
Executive Vice President
FRANCIS J. CURTIS . .
........................................ Vice President
JOHN L. GILLIS . . .
........................................ Vice President
CARROLL A. HOCHWALT
........................................ Vice President
FELIX N. WILLIAMS . .
........................................ Vice President
WILLIAM W. SCHNEIDER
Vice President and Treasurer
ROY L. BRANDENBURGER
........................................ Vice President;
General Manager, Merchandising Division
J. L. CHRISTIAN . . .
................................... Vice President;
General Manager, inorganic Chemicals Division
R. K. MUELLER . . .
........................................ Vice President;
General Manager, Plastics Division
EDWARD A. O'NEAL JR. ......................................... Vice President;
General Manager, Overseas Division
CHARLES H. SOMMER . ......................................... Vice President;
General Manager, Organic Chemicals Division
J. RUSSELL WILSON . . ..............................................Vice President;
General Manager, Research and Engineering Division
DANIEL M. SHEEHAN
Vice President and Controller
EDWIN J. PUTZELL JR. .....................................................Secretary
JOHN F. MARTIN . . . ........................................Assistant Treasurer
J. ROBERT MATLOCK
........................................Assistant Treasurer
ROLLA H. STOCKE . . ........................................Assistant Treasurer
EDWARD D. TOLAND JR. ........................................Assistant Treasurer
EDWIN J. CUNNINGHAM ........................................Assistant Controller
ALFRED W. LONG . . ........................................Assistant Controller
WALTER C. THILKING . ........................................Assistant Controller
EARL J. WIPFLER . . ........................................Assistant Controller
CHARLES E. CASPARI JR........................................Assistant Secretary
r.EC-ION^L EDWARD W. GAMBLE JR.
VICTOR E. WILLIAMS
000387 LAM016446
MONSANTO'S INCOME AND EXPENSES FOR 1954 AND 1953
Income: From sale of our products........................... From licenses, dividends, interest, etc. . . . Our total income was........................
Deductions from Income: For raw materials, fuel, supplies, etc. . . . For depreciation and amortization of buildings and equipment........................... For interest on long term debt................... For our partners in subsidiary companies These expenses totaled................... Which left.......................................................
Distribution of Balance: To employes................................................... To stockholders as dividends....................... For taxes....................................................... Retained for future growth .......................
Net Income...............................................................
Net Income from Each Dollar of Sales................
Per Share of Common Stock:
Net income
.......................................
Dividends paid...............................................
Book value..................................................
Expendedfor Property Additions and Replacements Working Capital..................................................
1954
$341,822,557 3,350,733
$345,173,290
$193,739,454
23,218,833 3,302,812 143,440
$220,404,539 $124,768,751
$ 77,768,562 13,870,175 23,299,679 9,830,335
$ 23,700,510 6.9*
$ 4.39 2.50
41.79 $ 41,302,448 $ 92,144,492
1953
$339,425,418 3,428,571
$342,853,989
$186,424,065
22,796,525 3,313,092 174,135
$212,707,817 $130,146,172
$ 75,817,599 13,714,176 28,045,368 12,569,029
$ 26,283,205 7.7*
$ 4.88 2.50
39.93 $ 26,641,586 $109,143,910
MAR 000388
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For many years Monsanto has included in its consolidated financial statements and accounts all subsidiaries in which the com pany has had a controlling interest, with the exception of the British and Australian companies. Effective in 1954, the Board of Directors elected to exclude all foreign sub sidiaries, except those of Canada, from the consolidated accounts. Financial statements, charts and other data in this report, unless otherwise noted, relate only to Monsanto and its domestic and Canadian subsidiaries.
5
ANNUAL REPORT TO THE STOCKHOLDERS OF MONSANTO CHEMICAL COMPANY
Sales of Monsanto Chemical Company and its consolidated sub sidiaries for 1954 were $341,822,557, an increase of seven-tenths of one per cent over sales for 1953.
Income before taxes for 1954 was $42,554,510, a decrease of 13.7 per cent from pre-tax income of 1953. Net income after taxes was $23,700,510, which, after provision for preference dividends, was equal to $4.39 a share on the 5,270,051 common shares outstanding. Earnings in 1953 were $26,283,205, equal to $4.88 a common share on the same number of outstanding shares.
Among the factors responsible for the company's adverse earnings were the somewhat lower level of business activity which prevailed dur ing the first three quarters, lower selling prices and substantial idle plant charges. Production of acrylonitrile and styrene monomer at Texas City was well below capacity. Sales of acrylonitrile, which is used by The Chemstrand Corporation for its synthetic fiber, Acrilan, were improving at year's end. Reduced sales of styrene monomer resulted from a lesser demand from the synthetic rubber program.
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Consolidated net sales and net income by quarters for 1954 and
1953 are summarized:
SALES: First quarter Second quarter Third quarter
1954
$ 82,931,351 86,783,183 82,921,798
1953
$ 85,285,862 89,407,636 82,510,378
Increase or Decrease
Amount
Per Cent
$2,354,511 2.8
2,624,453 2.9
411,420
.5
Fourth quarter 89,186,225
82,221,542
6,964,683 8.5
TOTAL
$341,822,557 $339,425,418 $2,397,139
.7
INCOME:
First quarter Second quarter Third quarter Fourth quarter
$
5,888,948 5,708,762 5,037,932 7,064,868
TOTAL
$ 23,700,510
$ 5,802,609 7,647,579 6,147,412 6,685,605
$ 26,283,205
$ 86,339 1,938,817 1,109,480 379,263
$2,582,695
1.5 25.4 18.0
5.7
9.8
Less preference dividends
577,500
Earnings for common stock? 23,123,010
Per share of common stock
$4.39
577,500 $ 25,705,705
$4.88
$2,582,695 $ .49
MAR 000390
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WORKING CAPITAL
Reflecting the substantial investment in new plants, working capital decreased from $109,143,910 to $92,144,492, and the ratio of current assets to current liabilities decreased from 4.9 to 1 to 3.7 to 1.
Hence, to restore liquidity, the company has executed an agree ment dated December 1, 1954, for the sale in 1955 of a maximum of $25,000,000 of 3% per cent Income Debentures due January 1, 2002, second series.
ENVlNXOkIlS
Inventories amounted to $58,293,366 at the year's end, a decrease of $3,208,980. The rate of inventory turnover was 4.1 times a year in 1954 compared with 4.2 times in 1953.
INVESTMENTS
Unconsolidated Subsidiaries -- Monsanto's principal unconsolidated companies include Monsanto Chemicals Limited of England and that company's Australian and other subsidiary companies; Monsanto Mexicana, S. A.; and Monsanto Overseas, S. A., at Panama.
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Sales of unconsolidated subsidiaries for 1954 were $48,048,154, an increase of $9,742,022 over those for 1953. Unaudited net income of these companies for the year, applicable to Monsanto Chemical Com pany's interests, amounted to $1,177,715. The payment of dividends from these companies is subject to currency restrictions in the country of incorporation and such dividends, if and when paid, are subject to some U. S. income tax. Dividends received from Monsanto Chemicals Limited amounted to $554,400 after U. S. income taxes.
Monsanto's equity in unconsolidated subsidiaries at the year end, as shown by their unaudited financial statements, was $13,243,840, an
increase of $1,486,176. These investments are carried in our balance sheet at $2,407,322. Associated Companies -- Monsanto's principal associated companies are The Chemstrand Corporation, owned jointly with American Viscose Corporation; Shawinigan Resins Corporation, owned jointly with Shawinigan Products Corporation; and the newly-formed Mobay Chemical Company, owned jointly with Farbenfabriken Bayer, A.G. Comments on these associated companies will be found on page 15.
During 1954 Monsanto invested $5,000,000 in The Chemstrand Corporation, raising our investment to $27,500,000. American Viscose Corporation has an equal investment in Chemstrand.
MAR 000392
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PROPERTY ACCOUNT
DEPRECATION
During 1954 Monsanto spent $41,302,448 for property additions and replacements.
Changes in the property account in 1954 are summarized as follows: Expended for additions and replacements............................ $41,302,448 Less -- Property retired and depletion
of phosphate deposits........................................................... 6,170,351
Net increase................................................................................$35,132,097 The net increase in property during 1953 was $19,250,270.
9
Provision for depreciation and amortization in 1954 amounted to $23,218,833, including $9,059,000 for accelerated amortization at the 20 per cent rate for parts of plant facilities constructed under Certificates of Necessity.
Prior to 1954 Monsanto provided a general obsolescence reserve by continuing depreciation on property which was fully depreciated but still in use. Because the directors deemed the accelerated amortization was adequate to cover any foreseeable obsolescence, this policy was dis continued at the beginning of 1954. A portion of such accelerated amorti zation has been allocated to the general obsolescence reserve. Depreci ation and amortization accrued in 1954 exceeded that of 1953.
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Repair and maintenance charges totaling $20,101,124 were charged to current operating expenses in 1954.
EMPLOYE BONUS AND STOCK OPTION PLANS
On November 11, 1954, options on 48,500 shares at the then market were granted to 36 key junior executives. But 15,000 shares of 150,000 shares which stockholders on March 27, 1951 authorized for option to employes remain available. These options have proved to be stimulating to those receiving them, and we are confident that these re wards will redound to the long-run benefit of Monsanto.
On February 9, 1955, bonus awards totaling $648,904 were granted to 315 employes. The awards comprised $434,999 and 2,366 shares of stock. The amount approximated that reserved from the year's profits in accordance with the bonus plan.
DIVIDENDS
As in the previous year, the usual four quarterly dividends of 62*4 cents each, amounting to $13,148,300, were paid on the common stock. The book value of each common share increased from $39.93 to $41.79.
MAR 000394
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'N'Cr.GANLC CHEMICALS D:\ If:civ
To meet the growing demand for phosphatic products which are consumed in detergents, plasticizers, insecticides, fertilizers, animal feeds, dentifrices and foods, the division's manufacturing facilities were expanded substantially in 1954.
Late in the year another phosphorus furnace was placed in opera tion at Monsanto, Idaho, supplementing the world's largest furnace al ready in operation at that location and six furnaces in operation at Monsanto, Tenn. Facilities for preparation of phosphate ore also were enlarged at the Idaho plant.
The increased availability of elemental phosphorus, keystone chemical of the phosphate industry, was related to other construction of this division. At Long Beach, Calif., a phosphoric acid plant to serve the broadening West Coast industrial area started operating. Construction began at Kearny, N. J., on a plant to produce phosphoric acid and sodium tripolyphosphate by mid-1955. Production of detergents and ammonium phosphates at Trenton, Mich., and of sodium phosphates at Carondelet, Mo., was increased.
Another phosphoric acid unit was installed at Monsanto, 111., where facilities were expanded also for production of phosphorus oxychloride and phosphorus trichloride, both used as chlorinating agents and catalysts in preparation of intermediates, dyestuffs and medicinals. Production of phosphorus pentasulfide began at this plant. A 400-ton-per-day sulfuric acid plant and enlarged facilities for manufacture of dodecylbenzene were completed at this location.
Sales of sodium phosphates to the soap and detergent industry in creased. Farmers consumed larger quantities of phosphatic fertilizer solution. Sodium meta-bisulfite, long used by the paper industry, was marketed successfully as a silage preservative (Medo-Green).
New products introduced included calcium phosphates for the dentifrice industry, a sodium acid pyrophosphate developed for prepared cake mixes and trichlorocyanuric acid, a high-chlorine-content powder for formulating solid bleaches.
Cooperative work with Colorado Fuel and Iron Corporation resulted in proving the use of electric furnace phosphoric acid in the scrubbing of by-product gas from coke ovens to produce a concentrated
fertilizer--diammonium phosphate.
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MERCHANDISING DIVISION
Sales of the Merchandising Division increased substantially. A unique detergent for use in automatic washing machines, all is the largest volume product of the division.
Monsanto developed all in 1947 at the request of a major appli ance manufacturer which had determined that a detergent with all's properties was essential for efficient performance of its automatic washing machines.
Manufactured by Monsanto since its introduction, all was mer chandised by Detergents, Inc., of Columbus, Ohio until that firm was acquired by Monsanto in 1953. The Merchandising Division cooperates with the automatic washing machine manufacturers and appliance distributors who prescribe all.
A spray-dried (or "fluffy") all was introduced successfully as a companion product for the original condensed form.
Sales of Rez surface coatings, for interior and exterior wood finishing, and of Folium water-solublgJertilizer also increased.
ORGANIC CHEMICALS DIVISION
Sales of this division were approximately equal to those of the previous year.
While floods, droughts and a resultantly low insect population caused reduced consumption of insecticides, sales of other agricultural chemicals, including herbicides, increased.
Three new plasticizers were introduced for use in polyvinyl chlo ride for floor tile, garden hose, vinyl-coated fabrics and foams used in automotive arm-rests and shock-absorbent padding. Santicizer M-17, another plasticizer, is being used as a bonding agent for cellulose acetate fiber in filter tips for cigarettes.
Adipic acid, a raw material for polyester resins, was introduced. Other Monsanto products, such as monomeric styrene, maleic and phthalic anhydrides and fumaric acid, are important constituents of polyester resins, which, when reinforced with glass fiber, are finding increased applications because of strength and durability.
Santolene C, a rust inhibitor, was the first such material to be used in military aviation gasoline and jet fuels.
A major expansion of pilot plant and engineering research facilities was completed. These new facilities permit proving more processes on a pilot-plant scale and so provide small quantities of new chemicals for field testing.
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A paper chemicals laboratory for research and sales service was installed, as was a laboratory for nutritional studies involving prepara tion and handling of radioactive chemicals.
At Nitro, W. Va., a chemical engineering research laboratory was nearing completion at year's end.
The John F. Queeny plant's facilities for production of phthalic anhydride were enlarged.
OVERSEAS DIVISION
The Overseas Division is responsible for exports and for operation of plants outside the United States in which the company has a financial interest.
Sales of Monsanto Chemicals Limited (England) and its subsidi aries, including Monsanto Chemicals (Australia) Limited, were 18 per cent greater than those for 1953. Sales of Monsanto Canada Limited were approximately the same as those for the previous year.
While Monsanto Mexicana's volume of business exceeded that for 1953, its sales were affected adversely by the devaluation of the peso in March.
A new, wholly-owned company, Monsanto Argentina, S. A. I. C., was formed with headquarters in Buenos Aires to handle sales and pro duction.
mar 000397
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PLASTICS DIVISION
Facilities for manufacturing Orizon polyethylene were com pleted at Texas City late in the year. The production of Orizon makes Monsanto the only company to produce the six major plastics: phenolics, styrenes, aminoplasts, vinyls, cellulosics and polyethylene.
To strengthen Monsanto's position in this highly competitive industry, the Plastics Division concentrated in 1954 on improvement of present products; on new formulations; and on an expanded advertising program emphasizing customers' applications of Monsanto plastics.
Important new formulations -- a vinyl paste resin, vinyl resins for floor coverings and for phonograph records, and rigid vinyl sheeting-- were introduced.
The advertising program included participation in the CBS-TV "Morning Show." Customers' varied uses of Monsanto plastics were televised nationally. Motion picture films depicting applications of plastics in the home were distributed to television stations, service and social clubs.
Studies of plastics applications will be intensified at a new appli cation research laboratory scheduled for completion at Springfield, Mass., early in 1955. Facilities for expanded production of formaldehyde and Sajlex (safety glass interlayer) were completed at Springfield. Enlarge ment of facilities for manufacture of Lnstrex styrene molding compounds was begun.
A methanol plant, owned jointly with Heyden Chemical Corpora tion, is nearing completion at Texas City.
For the Board of Directors:
MAR 000398
St. Louis, Missouri March 15, 1955
President
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DOMESTIC ASSOCIATED COMPANIES
The shawinigan resins corporation, owned jointly with Shaw-
inigan Products Corporation, expanded its facilities for production of
butvar resin, used by Monsanto's Plastics Division in manufacture of
Safiex (safety glass interlayer).
Monsanto's equity in Shawinigan Resins Corporation is approxi
mately $2,552,000. Dividends of $157,250 were received from Shaw
inigan in 1954.
The mobay chemical company, formed early in 1954 and owned
jointly by Monsanto and Farbenfabriken Bayer, A.G., of Leverkusen,
Germany, is constructing the first full-scale production plant in the United
States for manufacture of isocyanate chemicals. These new chemicals
will be combined with polyester resins, which Mobay also will produce,
in flexible and rigid foamed plastics, wire coatings, paints, synthetic
rubber formulations and adhesives.
Mobay will not manufacture finished products. It will supply
resins, activators, modifiers and catalysts, as well as equipment and
technical service to others who will manufacture finished products under
license. The Mobay plant near New Martinsville, W. Va., is scheduled
for completion in late 1955.
the chemstrand corporation, owned jointly by Monsanto and
American Viscose Corporation, produces Acrilan, an acrylic fiber, at its
Decatur, Ala., plant. At Pensacola, Fla., Chemstrand produces nylon in
the first wholly integrated nylon plant in the United States.
In August Chemstrand turned the comer and made its first profit.
Although capacity operation of the nylon plant will not be reached
until April, 1955, a wide variety of high quality nylon filament is now
being produced.
Acrilan acrylic fiber has made noteworthy advances during the
year. Quality deficiencies which retarded sale of the early product were
overcome. As it is being favorably received in the market, a substantial
demand is anticipated during 1955.
Information concerning Chemstrand's Acrilan and nylon will be
contained in a well-illustrated brochure which will be mailed later to
stockholders.
Osborne Bezanson, who as president and chairman of The Chem
strand Corporation, supervised the company's construction and initial
operations, retired in December. Mr. Bezanson completed 48 years' con
tinuous service with Monsanto and its associated companies. Henry H.
Bitler, formerly a general manager of American Viscose Corporation,
became president December 1, 1953.
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PRODUCT NEWS
Monsanto's all, a controlled-suds detergent and its new companion, an extrafluffy all, are the largest volume products of the Merchandising Division.
New Monsanto resins and plasticizers add beauty to vinyl floor tiles for a growing market.
Santolene C, a rust inhibitor developed by the Organic Chemicals Division, was the first such product approved for use in military aviation gasoline and jet fuels.
Pydraul F-9, a fire-resistant synthetic hydraulic fluid. provides added safety in mills using equipment such as this hydraulically-operated steel billet handling machine.
LAM016460
.( Rez, a wood sealer for interior and exterior uses, in a wide range of colors, is nationally distributed for both construction trades and "do-it-yourself" home decorators.
Monsanto's electric furnace phosphoric acid can now be used to scrub by-product gas from coke ovens to make a concen trated fertilizer, diammonium phosphate. Lustrex, Monsanto's styrene plastic, adds color and appeal to the world's first massproduced transistor (no tubes) pocket and purse radio, now nationally available.
id
\fedo-Green, Monsanto's new grass silage preservative, made the silage sample on the right brighter green, indicating a higher carotene content, thus a better quality 6ilage with higher livestock feed value.
Polyester resins in combination with glass fi.iers make strong, light-weight, durable wall panels and jalousies which give this house an attractive night-time exterior.
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BOARD OF DIRECTORS
Edgar M. Queeny, Chairman of the Board; member of Executive and Finance Committees. Son of John Francis Queeny, founder of the company. Cornell Uni versity. Joined U. S. Navy in April, 1917, as Seaman, 2nd Class; discharged June, 1919, as Lieutenant (j.g.). Monsanto's first advertising manager, 1919. Entered export department in early 1920's; then the general sales department. In 1923 became assistant general manager of sales; the following year a sales manager and Vice President. Elected President in 1928. Member of board since 1919; became Chairman in 1943, a postion he has held continuously since.
Charles Allen Thomas, President; Chairman of Executive Committee; member of Finance Committee. Transylvania College and Massachusetts Institute of Technology. With General Motors Research Corpora tion from 1923 to 1926, active in the development of tetraethyl lead. President of Thomas & Hochwalt Labo ratories from 1926 to 1936. When that organization was acquired by Monsanto in latter year became director Central Research Department. Elected to board in 1942; Vice President and technical director and member Executive Committee in 1945. Executive Vice President in 1947; Vice Chairman of the Executive Committee in 1948, Chairman in 1949; elected President in 1951.
Robert Rast Cole, Executive Vice President; member of Executive Committee. After various industrial posi tions, he joined Southern Manganese Corporation as chief engineer, becoming general superintendent in 1920. That company later was acquired by the Swann Corpo ration which was merged with Monsanto in 1935. Assistant to Vice President in 1935; general manager of Monsanto's former Phosphate Division in 1938; Vice President in 1941; member Board of Directors 1944; member of the Executive Committee 1948. Executive Vice President January 1, 1954.
Charles S. Cheston, Chairman of Finance Com mittee. University of Pennsylvania. Director of various industrial and financial institutions. Formerly senior partner in the investment banking firm of Smith Barney & Co. Served in World War II as Brigadier General in Army Specialists Corps and later as assistant director, O.S.S. Elected to Monsanto's Board of Directors in 1945.
MAR 000404
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Francis J. Curtis, Vice President--Personnel. Harvard University. Joined Merrimac Chemical Company's research department in 1915; production department in 1920; sales department in 1925. Merrimac was acquired by Monsanto in 1929. Director of development 1939; Vice President 1943; elected to board 1949. Served the government in several federal agencies while on leaves of absence from Monsanto. Functional Vice President--Personnel January 1, 1954.
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Fredrick M. Eaton, member of Finance Committee. Harvard University. Partner in New York law firm of Shearman & Sterling & Wright. Director of var'ous industrial, financial and chari table institutions. Elected to Monsanto's board in 1947.
Carroll A. Hochwalt, Vice President-- Research, Development and Engineering; member of Executive Committee. University of Dayton. Joined General Motors Research Corporation in 1920, active in the development of tetraethyl lead. In 1926 joined Dr. Thomas in formation of Thomas & Hochwalt Laboratories which Monsanto acquired in 1936. Director of Monsanto's Central Research Department in 1945; a Vice President in 1947; in 1948 became coordinator of all research, development and patent activities of the company; member of Board of Directors 1949; Executive Committee 1950. Functional Vice President--Research, Development and Engineering on January 1, 1954.
William W. Schneider, Vice President -- General Counsel; member of Finance Committee; Treasurer. St. Louis University. Admitted to bar in 1920, joined Monsanto as an assistant in Law Department; served as Secretary from 1925 to 1951. Elected Vice President 1947; Board of Directors 1951. Elected Treasurer 1953; Functional Vice President --General Counsel January 1, 1954. Member of the Finance Committee October 18, 1954.
E3:
Felix N. Williams, Vice President--Manufacturing; member of Executive Committee. University of Virginia. Joined Swann Corporation 1923. After Swann merged with Monsanto, he supervised design and construction of the Columbia, Tenn. elemental phosphorus plant; became its first plant manager. Production manager of former Phosphate Division 1941; general manager of the Plastics Division and elected a Vice President 1944. Board of Directors 1947; sales coordinator and member Executive Com mittee 1950. Functional Vice President--Manufacturing January 1, 1954.
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MONSANTO CHEMICAL COMPANY
Statement of Consolidated Financial Condition
ASSETS
Current Assets:
Cash...................................................................................... Marketable securities:
United States Government........................................... Other.............................................................................. Receivables, less reserves of $1,144,007 in 1954 and $596,854 in 1953....................................................... Inventories..............................................................................
Total......................................................................
1954
$ 28,576,799
599,181 298,525
38,729,626 58,293,366 $126,497,497
1953
Increase Decrease
$ 29,426,611 $ 849,812
5,983,923 5,277,277
5,384,742 4,978,752
34,739,471 61,502,346 $136,929,628
3,990,155 3,208,980 $10,432,131
Funds Restricted to Government Contracts ....................... $ 1,054,387 $ 1,257,808 $ 203,421
Investments and Miscellaneous Assets: Investment in unconsolidated subsidiaries........................ Investment in associated companies................................... Common capital stock in treasury held for bonus awards . Miscellaneous investments, receivables and deposits . . . Total......................................................................
$ 2,407,322 29,477,400 950,109 2,333,897
$ 35,168,728
$ 1,539,572 23,215,000 1,655,405 2,015,622
$ 28,425,599
$ 867,750 6,262,400 705,296 318,275
$ 6,743,129
Property: Land.................................................................. Buildings.......................................................... Machinery and equipment........................... Phosphate deposits, less depletion................ Total...............................................
Less--Reserves for depreciation, amortization and obsolescence................................... Net property...................................
$ 6,189,926 57,413,062
255,084,519 4,262,995
$322,950,502
$ 5,961,436 51,176,860
226,769,662 3,910,447
$287,818,405
$ 228,490 .6,236,202 28,314,857 352,548
$35,132,097
113,435,467 $209,515,035
95,966,244 17,469,223 $191,852,161 $17,662,874
Patents and Processes.....................................
$ 1$ 1
Deferred Charges................................................ TOTAL ...................................
4,280,515 $376,516,163
3,359,034 $ 921,481 $361,824,231 $14,691,932
See pages 26, 27 and 28 for notes.
MAR 000406
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m AND
CONSOLIDATED
SUBSIDIARIES
m
23
LIABILITIES
Current Liabilities: Estimated income taxes....................................................... Less--United States Government securities....................... Net estimated income tax liability ................................ Accounts payable and accruals........................................... Preference dividend payable............................................... Total......................................................................
1954
$ 19,693,556 14,643,105
$ 5,050,451 29,158,179 144,375
$ 34,353,005
Employes' Bonus Awards Payable Beyond One Year . . $ 1,174,102 Advances on Government Contracts....................................... $ 1,054,387
Long Term Debt: 2.65% Debentures due November 1, 1971....................... 3%% Income Debentures due January 1, 2002 ................ Canadian subsidiaries.......................................................... Total......................................................................
Reserves: Pensions.................................................................................. Employes' bonus--unawarded............................................... Total......................................................................
$ 30,000,000 66,000,000 700,000
$ 96,700,000
$ 5,095,766 698,368
$ 5,794,134
Minority Interests in Subsidiary Companies................... $ 2,202,937
Capital Stock and Surplus:
Preference stock--authorized, 500,000 shares without par value, issuable in series by Board of Directors; out standing in 1954 and 1953, 150,000 shares of Series C, $3.85 dividend -- non-convertible--cumulative and re deemable; at $100 a share...........................................
$ 15,000,000
Common stock--authorized, 6,000,000 shares, par value $5 each; reserved for stock options, 135,000 shares in 1954 and 94,500 shares in 1953; outstanding, 5,270,051 shares in 1954 and 1953 ...................................................
26,350,255
Surplus: Paid-in..................................................................................
93,620,099
Earned..............................................................................
100,267,244
Total...................................................................... $235,237,598
TOTAL ........................................................... $376,516,163
See pages 261 27 and 28 for notes.
MAR 000407
1953
Increase Decrease
$ 23,681,056 21,997,875
$ 1,683,181 26,102,537
$ 27,785,718
S 3,987,500 7,354,770
$ 3,367,270 3,055,642 144,375
$ 6,567,287
$ 1,573,691 S 399,589
$ 1,257,808 $ 203,421
$ 30,000,000 66,000,000 977,500 $ 277,500
$ 96,977,500 $ 277,500
$ 5,979,575 $ 883,809
725,803
27,435
$ 6,705,378 $ 911,244
$ 2,116,873 $ 86,064
$ 15,000,000
26,350,255
93,620,099 90,436,909 $225,407,263 $361,824,231
$ 9,830,335 $ 9,830,335 $14,691,932
LAM016466
24 -.4
ONSANTO CHEMICAL COMPAIf
StafementofConsolidaiedlncome
Income:
1954
Net sales.............................................................................. $341,822,557
Dividends from subsidiary and associated companies . . Other......................................................................................
798,483 2,534,202
$345,155,242
1953
Increase
Decrease
$339,425,418 $2,397,139
697,015
101,468
2,723,807
189,605
$342,846,240 $2,309,002
Deductions: Cost of goods sold....................................... Selling and administrative expenses .... Research expenses....................................... Provision for employes' bonus................... Interest expense.......................................... Net income applicable to minority interests Other..............................................................
$243,057,056 42,167,634 10,651,217 649,319 3,323,372 143,440 2,608,694
$302,600,732 $ 42,554,510
$240,736,297 $2,320,759 36,096,357 6,071,277
10,267,201 1,177,804 3,439,690
174,135 1,644,445
384,016 528,485 116,318
30,695 964,249
$293,535,929 $9,064,803
$ 49,310,311 $6,755,801
Provision for Income Taxes (Including $247,000 of Excess Profits Tax in 1953).......................
Net Income...........................................................
See pages 26, 27 and 28 for notes.
18,854,000 $ 23,700,510
23,027,106 4,173,106 $ 26,283,205 $2,582,695
*
LAM016467
MAR 000408
: #f D CO KSOLIDATED SUBSIDIARIES
25
Earned Surplus
1954
1953
Paid-in Surplus
1954
1953
Balance at Beginning of Year............... $ 90,436,909 $ 77,867,880
$93,620,099 $93,572,705
Additions:
Net income for the year........................... 23,700,510
Adjustment incident to acquisition of minority interest in subsidiary company
26,283,205
Total............................................... $114,137,419
$104,151,085
47,394 $93,620,099 $93,620,099
Deductions:
Cash dividends on capital stock of parent company:
Preference--Series C--at the annual
rate of $3.85 a share (Including
$144,375 in 1954 for the period
December 1, 1954 to February 28,
^
1955)...............................................$
721,875
$ 577,500
Common--at the rate of $2.50 a share 13,148,300
13,136,676
Total....................... ................$ 13,870,175
$ 13,714,176
Balance at End of Year
$100,267,244
$ 90,436,909
$93,620,099 $93,620,099
See pages 26, 27 and 28 for notes.
MAR 000409
U/VJ016468
26
Principle of Consolidation
The consolidated statements include the domestic and Canadian com panies of which Monsanto Chemical Company owns more than 50% of the voting capital stock. Prior to 1954 the accounts of the Mexican and Brazilian subsidiaries were included in the consolidated statements. The 1953 consoli dated statements have been restated on the basis of the 1954 consolidation. The exclusion of these companies had no material effect on net income for either year.
Inventories
Inventories are valued at the lower of cost or market. The valuation of approximately one-third of the inventories at December 31, 1954 has been determined on a last-in, first-out basis.
Equity in Affiliates
The company's approximate equity applicable to its investments in affiliates, as shown by their financial statements at December 31, 1954, was as follows:
Unconsolidated subsidiaries................................ 113,244,000 Associated companies, 50% owned.................... 24,344,000
Total............................................................... $37,588,000
The principal associated company is The Chemstrand Corporation. Reference
is made to Monsanto's investment in The Chemstrana Corporation and to a description of the activities of that company on pages 8 and 15 of this report. Following are statements of The Chemstrand Corporation's financial position:
Statement of Financial Condition at December 31, 1954:
Cash, receivables, inventories and other current assets less current liabilities............................................................ $ 18,372,332
Bond proceeds and contractor's advances not expended....... 5,970,408
Plant and equipment, less depreciation of $11,334,457.......... 123,505,136
Deferred bond expense...............................................................
511,956
Total............................................................................ $148,359,832
Derived from:
First mortgage 3J^% bonds due April 1, 1976..................$110,000,000 Owners' investment:
Subordinated notes with accrued interest. $44,929,929 Capital stock--10,000 shares without par
value and other paid-in capital............ 11,000,000
Total.................................................. $55,929,929 Less--Starting-up costs, deficit................... 17,570,097
38,359,832
Total........................................................................ $148,359,832
MAR 000410
LAM016469
Statement of Income, Expenses and Deficit to December 31, 1954:
Year Ended December 31, 1954: Sales....................................................................................... 334,759,285 Cost of products sold........................................................... 321,755,430 Depreciation....................... ............................................... 8,657,195
Total.............................................................................330,412,625 Gross profit............................................................................3 4,346,660 Deduct:
Research and product development............................... 3 2,575,134 Administrative, advertising and market development.. 2,510,187 Interest expense................................................................ 1,539,736
Total............................................................................. 3 6,625,057 Net loss for year 1954.......................................................... 3 2,278,397
Starting-up Costs, Deficit to December 31, 1953:
Research and product development... 3 4,045,745 Administrative, advertising and
market development........................ 4,050,680 Experimental production and employe
training.............................................. 8,156,413 Depreciation........................................... 2,330,269 Interest and financing expense of
35,536,755, less interest of 34,108,776 charged to construction and bond expense of 3519,939 deferred.............................. 908,040
Total.............................................. 319,491,147 Deduct--Sales of product..................... 4,199,447 Deficit--December 31, 1953............................................ 15,291,700
Deficit--December 31,1954....................................................... 317,570,097
Depreciation, Amortization and Obsolescence
The property accounts at December 31, 1954 include facilities constructed under Certificates of Necessity, the certified portion of which amounts to approximately 348,962,000, or about 51% of the total cost of such facilities. The certified portion is being amortized in the accounts at the rate of 20% annually, the same rate allowed for Federal income tax purposes, and the remainder of the total cost of such facilities is being depreciated at lower rates.
The total charge to income as provision for depreciation, amortization and obsolescence amounted to 323,218,833 for the year 1954 and 322,796,525 for the year 1953. Included in these amounts are 39,059,000 and 37,906,000, respectively, representing amortization at the 20% rate on facilities con structed under Certificates of Necessity.
Prior to 1954, the company provided a general obsolescence reserve by continuing depreciation on fully depreciated assets still in use. The amount charged to operations for the year 1953 under this policy was approximately 31,900,000. The policy was discontinued as of January 1, 1954, since in the opinion of management, the 20% amortization rate on facilities constructed un der Certificates of Necessity was adequate to cover any probable obsolescence.
The company has adopted the sum of the years' digits method for com puting depreciation on applicable property additions of the year 1954. As a result, the provision for depreciation for 1954 was approximately 3216,000 greater than it would have been under the method previously followed; the difference in subsequent years will be significantlv greater.
MAR 000411
28
Debentures
Sinking fund payments of $1,000,000 annually on the 2.65% debentures begin May 1, 1957.
The company executed an agreement dated December 1, 1954 for the sale in 1955 of a maximum of $25,000,000 of 3%% Income Debentures due January 1, 2002, second series.
Stock Options
Under a Stock Option Plan for officers and key employes, 46 options to purchase a total of 135,000 shares of the company's common stock are out standing. The option prices range from $86.50 to $106.00 a share, representing the closing prices of the stock on the New York Stock Exchange on the dates of grant of the options. None of the options has been exercised.
Equity in Net Income of Unconsolidated Subsidiaries
The equity of Monsanto Chemical Company in the unaudited net income of unconsolidated subsidiaries for the year ended December 31, 1954 was approximately $1,178,000. Dividends of $554,400 were received from the British subsidiary during the year 1954 and included in dividend income in the Statement of Consolidated Income.
Contingent Liabilities
Under an agreement dated June 8, 1951, in connection with the construction and operation of plants of The Chemstrand Corporation, a company owned jointly with American Viscose Corporation, Monsanto Chemical Company has obligated itself to pay one-half of all amounts needed by Chemstrand for completion of the Acrilan and Nylon plants over and above the lesser of $110,000,000 or 80% of the total cost of such plants when completed. The Nylon plant was completed on January 31,1955.
HASKINS a SELLS
CINTIFIBO PUBLIC ACCOUNTANT*
OATMIN'I SANK BUILOI
SAINT LOUIS Z
Monsanto Chemical Company:
Accountants' Certificate
We have examined the statement o{ consolidated financial condition of Monsanto Chemical Company and its consolidated subsidiaries as of December 31, 1954 and the related statements of consolidated income and surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the accompanying statement of consolidated financial condition and statements of consolidated income and surplus present fairly the financial condition of the companies at Decem ber 31,1954 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied (except for the changes, which we approve, in the methods of providing for depreciation and obsolescence, explained in the Notes to Financial Statements) on a basis consistent with that of the preceding year.
February 14, 1955
HASKINS & SELLS
MAR 000412
LAM016471
29
MONSANTO CHEMICAL COMPANY AND CONSOLIDATED SUBSIDIARIES
Source and Disposition of Funds
--------------
-------------- ---
tSENDEPPECEMBER31,1954
f In Thousand* of Dollars)
Source of Funds:
Net income.......................................................................................
Total $122,585
Provision for: Depreciation, amortization and obsolescence.................. Employes' bonus, less current liability............................
82,190 1,873
Sale of securities: 3J^% income debentures due January 1, 2002 . . . . 400.000 shares of common capital stock............................ 150.000 shares of $3.85 Series C preference slock. . . Preference stock of Canadian subsidiary company . .
66,000 38.000 15.000
765
Other--net.......................................................................................
962
1954
1953
1952
1951
1950
$23,700 $26,283 $ 23,190 $23,174 $26,238
23,219 427
22,797 194
13,150 436
11,032 1,605
11,992 1,325
66,000 38,000
15,000 765
962
Total....................................................................................... $327,375
$46,492 $48,886 $139,904 $35,811 $562282
Disposition of Funds:
Dividends paid: Preference.............................................................................. Common..................................................................................
Total...................................................................................
Plant additions and replacements.........................................
Investment in associated companies: The Chemstrand Corporation......................................... Other.......................................................................................
Investment in unconsolidated subsidiaries....................... Increase - decrease in working capital (exclusive of cash
and marketable securities)..............................................
Other--net..................................................................................
Total..................................................................................
Increase - decrease in cash and marketable securities . . .
$ 3401 63,112
$ 66,613 192,415
27,490 1,262 1,643
28,757 5,920
$324,100 $ 3,275
$ 577 13.148
$ 577 13,137
$ 577 12486
$ 577 12,140
$ 1,193 11401
$13,725 $13,714 $ 13,463 $12,717 $12,994
41,302
26,642
72,460
38468
13,743
5,000 12262
868
7,500 5
6,500
7400
239 110
990 421
5,641 1,189
7457 2,526
37471 32
8,715 2,173
1,715
$57,705 $57,944 $129,965 $52,053 $26,433
tuai3 $ 9,058 $ 9,939 316M2 $29,849
MAR 000413
LAM016472
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MAR 000415
LAM016474
32
MONSANTO CHEMICAL COMPANf AND CONSOLIDATED SUBSIDIARIES
BE 1954
1102,176,764
Phosphate Products and Detergents................................... 86,309,732
Intermediates, Plasticizers and Resins............................... 54,364,888
Rubber and Petroleum Chemicals....................................... 31,111,586
Pharmaceuticals, Flavors and Condiments.......................
19,737,271
Heavy Chemicals..................................................................
18,963,961
Insecticides, Herbicides, Wood Preservatives and Agricul tural Chemicals...............................................................
14,448,842
Other Products......................................................................
14,709,513
$341,822,557
1953 $109,309,652
72,119,506 52,546,780 35,475,927 19,952,413 18,236,991
13,455,074 18,329,075 $339,425,418
1948 $ 47,823,856
21,514,464 24,342,712 13,779,899 20,740,296 12,248,891
8,595,876 12,538,447 $161,584,441
1 C A L COM PA N Y
Per Cent of Chemical Sales by Major Consuming Industries
Plastics and Synthetic Resina....................... Soap and Synthetic Detergents........................ Rubber............................................................... Paint, Varnish and Printing Ink................... Petroleum........................................................... Stone, Class and Vitreous Products................
1954
%
1 13.6 2 13.3 3 12.2 4 7.2 5 6.9 6 6.1
Textile.............................................................. 7 Food.................................................................. 8 Metal Fabricating........................................... 9 Paper and Printing........................................... 10 Pharmaceuticals....................................................11 Lumber and Timber............................................12 Iron, Steel and Related Products........................ 13 Colors and Dyestuffs............................................14 Explosives............................................................... 15 Other..................................................................
5.1 5.1 4.9 3.9 3.6 3.4 2.9 1.9 1.6 8.3
Total...............................................
100.0
NOTE--Numbers in italics indicate order of importance.
1953
% 1 14.5 3 11.3 2 13.5 4 7.6 6 5.3 5 5.6 8 4.7 7 4.7 9 4.6 11 3.6 10 3.6 12 2.5 13 2.8 14 1.8 15 1.6
12.3
100.0
1952 % 1 12.8 3 10.6 2 12.6 5 6.8 7 5.6 4 6.9 9 4.3 8 5.3 10 4.2 11 3.5 6 6.6 12 3.0 13 2.9 14 1.6 15 1.1 12.2
100.0
~
1951
% 1 13.4 3 10.7 2 11.2 5 6.9 6 6.3 7 6.1 10 4.1 8 5.4 9 4.3 11 3.6 4 7.6 13 2.9 12 3.1 14 2.7 15 1.3
10.4
100.0
MAR 000416
1950
% l 13.9 2 9.8 3 9.2 6 7.7 8 5.7 5 7.8 10 4.0 7 5.8 9 4.1 11 3.6 4 8.2 12 3.4 13 2.9 14 2.8 15 .9
10.2
100.0
#
i
LAM016475
