Document 7MZRK1erg209yd8BR9pX9O338

1962 ANNUAL REPORT MONSANTO CHEMICAL COMPANY mar 000697 v LAW1046756 The next Annual Meeting of the shareowners of the Company is to he held on Thursday, March 28, 1963, at the Company's General Offices, 800 North Lindbergh Boulevard, St. Louis County, Missouri. A formal notice of the meeting, together with a proxy statement and form of proxy, is being mailed to each shareowner. CONTENTS Summary of Income and Expenses .... Message............................................................. 1962 Operational Highlights......................... Sales by Product Groups.............................. Statement of Financial Position................. Statement of Income....................................... Statement of Paid-in Surplus and Retained Earnings.................................................... Financial Review............................................... Accountants' Opinion....................................... Source and Disposition of Funds.................. Comparative Financial Data......................... Board of Directors . . . ............................... Directors and Officers....................................... Page 1 .2 . 5 . 20 . 21 . 22 . 24 . 25 . 26 . 30 . 32 SHAREOWNERS OF RECORD 1962 Number of Shareowners Number of Shares Men................................ 28,545 4,557,252 Women........................... 24,657 3,640,656 Joint Accounts.............. 17,375 858,686 Charitable Institutions. 224 87,445 Educational Institutions 117 178,808 Estates and Trusts.... 8,446 1,697,284 Insurance Companies. 201 988,887 Brokers and Nominees 1,133 9,856,764 All Others....................... 1,754 7,144,365 Total..................... 82,452 29,010,147 1961 Number of Share owners Number of Shares 28.722 4,723,196 24,565 3,647,262 17,346 852,952 234 125,849 111 154,489 8,191 1,875,843 190 859,916 1,120 9,090,762 1,724 6,693,171 82,203 28,023,440 1960 Number of Share owners Number of Shares 29,953 4,810,770 24,680 3,682,808 18,173 923,112 263 130,699 107 151,581 7,755 1,804,416 178 782,364 1,063 8,666,965 1,637 6,242,474 83,809 27,195,189 1959 Number of Shareowners Number of Shares 28,830 4,856,599 23,629 3,673,086 16,654 862,573 255 169,421 106 92,336 6,458 1,666,564 177 722,566 1,312 9,953,829 1,254 1,159,883 78,675 23,156,857 1958 Number of Shareowners Number of Shares 24,990 4,752,196 21,460 3,678,163 11,973 724,561 265 179,961 114 131,892 5,260 1,954,219 169 772,671 1,126 8,989,736 1,070 1,073,201 66,427 22,256,600 1958 1959 1960 1961 1962 NUMBER OF SHAREOWNERS (in thousands) MAR 000698 UTHO IN U.S.A P LAM016757 SUMMARY OF INCOME AND EXPENSES (In Thousands of Dollars Except Per Share Figures) Income: From sale of products...................................... From licenses, dividends, interest, etc......... Deductions from Income: For raw materials, fuel, supplies, etc............ For wages and salaries to employes............. For depreciation, obsolescence, depletion.. For taxes............................................................. For interest, principally on long term debt.. For minority interests in subsidiaries............ Which Left as Net Income..................................... Distributed to Shareowners as Cash Dividends Retained for Future Growth.................................. Per Common Share Parent Company: Net income........................................ Cash dividends paid....................... . Book value........................................ Common Shares Outstanding 1962 $1,063,195 11,731 1,074,926 546,286 254,046 97,639 81,565 15,422 1,600 996,558 78,368 29,470 $ 48,898 1961 $932,916 11,755 944,671 478,296 223,790 86,876 75,092 11,579 382 876,015 68,656 27,316 $ 41,340 $ 2.70 1.05 24.74 $ 2.45 1.00 23.24 29,010,147 28,023,440 mar 000699 LAM016758 2 TO THE SHAREOWNERS In 1962, Monsanto's sales exceeded one billion dollars for the first time in the company's history, representing more than a threefold increase in a decade. Net income also advanced to a new peak. Consolidated sales totaled $1,063,195,000; net income was $78,368,000. Both were 14 per cent higher than in the previous year. The full com parison for 1962-1961 is shown on the preceding page. Earnings were $2.70 a share on 29,010,147 shares outstanding, compared to $2.45 a share on 28,023,440 shares the year before. After giving effect to 1962's two per cent stock dividend, the adjusted per-share earnings for 1961 were $2.40. Cash flow -- i.e., earnings before depreciation, ob solescence, depletion, etc. -- amounted to $6.07 a share in 1962, compared to $5.44 a share in 1961, after adjustment for the 1962 stock dividend. During the year, new shares were issued for three purposes: 561,955 were issued for the two per cent stock dividend; 355,771 were issued in connection with the acquisition of the remaining 50 per cent stock interests in Plax Corporation and Societe Monsanto Boussois; 68,981 were issued to employes exercising options. While increased sales volume contributed to improved earnings, several other factors materially affected final results. In the table on this page these various factors are listed with their effects. Declining selling prices again challenged Monsanto, as they have the chemical industry Per-share earnings advanced from $2.45 in 1961 to $2.70 in 1962. The increase of 25 cents a share was accounted for by these factors: Cents a Share Additions to earnings resulting from: Higher sales volume....................................... 83 Lower raw materials prices............................ 28 Manufacturing cost savings.......................... 25 Reductions in earnings caused by: Lower selling prices.............................. Higher selling, administrative, research and other expenses......... Chocolate Bayou start-up costs......... Income charges -- net: Higher interest costs.......... 6 Foreign currency devaluation....................... 6 Other..................................... _4 136 51 34 12 _16113 Increase in earnings from operations................................... Add investment tax credit on property additions..................... 23 11 Less decrease due to common shares issued in 1962............... Increase in earnings......................... 34 9 25 MAR 000700 LAM016759 generally. Among products affected by major price reductions were plastics, resin materials and their derivatives, phosphates and acrylic fibers. But lower raw material prices and increased manufacturing efficiencies more than offset such reductions. For Monsanto again succeeded in building substantial new economies into its manufacturing operations. Two unusual and significant items that reduced the year's earnings were the costs of starting up the new Chocolate Bayou Plant near Alvin, Tex., and devaluation of Argentine and Canadian cur rencies. An important factor which increased income was the reduction in income taxes resulting from the investment credit provided for by the 1962 federal tax law. This tax reduction is explained in the Financial Review, which begins on page 22. Capital outlay for plants and equipment and for property of companies acquired for cash was greater in 1962 than in any prior year. Expenditures totaled $168,833,000, compared to $153,818,000 in 1961. Completion of the big Chocolate Bayou Plant ranks high among 1962's principal events. Its December dedication signaled the start of a new era of Monsanto self-sufficiency in important raw materials. From petroleum feedstock, the new facilities will turn out petrochemicals economically and efficiently. Construction of two other Monsanto plants at new sites also was completed during the year. One, at Muscatine, Iowa, began producing an hydrous ammonia in November. The other, a phosphate plant at Augusta, Ga., started making materials for detergents at year end. By Dec. 31, the number of domestic plants owned and operated by Monsanto had increased to 37. Full ownership of Plax Corporation -- previously an associate company in which Monsanto and Emhart Manufacturing Company each owned a 50 per cent interest -- was acquired in September. Plax now operates as a Monsanto department. Acquisition of this prominent producer of plastic packaging materials -- blown bottles and trans parent sheets -- is one of several recent moves that carry Monsanto products closer to end users. Others occurring in 1962 were the formation of the Building Products Department and the broadening of our program to sell branded farm chemicals through a network of distributor outlets. In addition to this domestic strengthening, several moves are under way to consolidate and improve Monsanto's position abroad in light of current and prospective changes in world-wide economic conditions. Our deep European roots trace back to 1920. Thus, when the day of the Common Market dawned, we were ready with production facilities in several key countries. And, as the whole perspective of international trading areas widens further, we are favorably positioned to share in the benefits. Plans for the formation of Monsanto Europe were crystallized late in the year. Its chief re sponsibilities include managing the growth and consolidation of our wholly owned companies in Western Europe and assisting other companies in the area in which we have interests. The new or ganization is a Belgian corporation with head quarters in Brussels. As part of its further development plans in the Common Market countries, Monsanto has entered into an agreement for gradual disposition over a period of years of its 40 per cent stock interest in Sicedison S.p.A., of Italy, to Societa Edison, owner of the remainder of Sicedison's outstanding shares. However, Monsanto will continue for a number of years to maintain a substantial financial interest in Sicedison and its expanding chemical activities. Monsanto's total marketing effort was further intensified in 1962, symbolizing our mission of service to customers in virtually every major mar 000701 LAM016760 industry of the free world. Backing up our marketing program are the classical necessities of research and engineering capabilities and production efficiencies. Despite the new U.S. trade expansion act and other recent actions of the government which may raise new problems for business, there are several compensating factors on the national scene. We sense an increased awareness in government that business must have a favorable climate if it is to contribute fully to the security and economic health of the nation. Adoption of liberalized tax depreci ation policies by the United States Treasury Department and the new investment credit provide appropriate examples. Vice President and Director William W. Schneider retired on the last day of the year. One of few executives who served under every president of this cqmpany, Mr. Schneider joined Monsanto Chemical Works in 1921 as an assistant in the Legal Depart ment. At the close of his Monsanto career, he was a member of the Board of Directors and of the Executive and Finance Committees. As vice presi dent of finance and law, he was also Monsanto's general counsel. Mr. Schneider has been one of our company's most able leaders and one of its most devoted servants. Monsanto has been truly en riched by his contributions. Our gratitude to employes goes far beyond management echelons, however. It is abundantly clear that attainment of our first billion-dollar sales year is not simply a managerial achievement. Credit is properly shared by the thousands of Monsanto men and women whose joint efforts made this milestone a reality. Monsanto's year is reviewed in more detail on the pages following this letter. Sincerely, 4 ____ Chairman of the Board February 25, 1963 St. Louis, Missouri President COMPARATIVE CONSOLIDATED SALES, INCOME AND EARNINGS A SHARE BY QUARTERS 1962 1961 SALES: (In Thousands) First quarter.. .$ Second quarter Third quarter... Fourth quarter. 259,805 276,785 247,449 279,156 $219,354 246,322 229,338 237,902 $1,063,195 $932,916 Per Cent Increase Decrease 18.4 12.4 7.9 17.3 14.0 INCOME <x>: First quarter___$ Second quarter Third quarter... Fourth quarter. $ 20,048 22,979 16,912 18,429 $ 15,508 19,079 15,545 18,524 78,368 $ 68,656 29.3 20.4 8.8 .5 14.1 1962 1961 Adjusted for 1962 Stock Dividend As Reported EARNINGS A SHARE (2>: First quarter.......... ... $ .69 Second quarter... .79 Third quarter......... .59 Fourth quarter___ .63 $ .54 .67 .54 .65 $ .55 .68 .56 .66 $2.70 $2.40 $2.45 SHARES OUTSTANDING DECEMBER 31: 1962....................................................... 29,010,147 1961........................................................ 28,023,440 (1) Restated for the first three quarters of 1962 to include a pro portionate share of the seven per cent investment credit. (2) Restated for the first three quarters of 1962 to reflect the shares outstanding on December 31. MAR 000702 LAM016761 5 c a G F E RATIONAL HIGHLIGHTS Reviewed in this section of the Annual Report are the 1962 activities and achievements of Mon santo and of those companies in which Monsanto has significant investments. AGRICULTURAL CHEMICALS DiViSION Combined sales of fertilizer materials, pesticides and animal feed supplements rose to new levels. Meanwhile, at home and abroad, Monsanto helped press man's search for new ways to boost farm productivity. Assistance was given to a wide range of private organizations and government agencies of the free world in studies of how best to apply chemicals to food production. Eleven Mon santo pesticides are now being field tested in 15 foreign nations. Fertilizer Materials Despite some temporary price weakness, plant food materials -- ammonia, ammonium nitrate, urea and related products -- matched their strong 1961 sales performance. At Muscatine, Iowa, a new 200-ton-per-day ammonia plant came on stream in November to serve a fast-growing fertilizer market in the Corn Belt. The plant will supply more than 100 anhydrous ammonia stations which carry the Monsanto trademark to Midwestern farmers. Such stations, together with Monsanto dry fertilizer blending plants, help serve all bulk fertilizer needs at the retail level. Pesticides Unlike the year that preceded it, 1962 was one of relatively low rainfall. The dry weather helped check insect pests. Consequently, insecticides were less in demand. Nevertheless, because the demand for proprietary weed killers was robust, total 1962 sales of pesticides equaled those of 1961. Sales of Randox, a herbicide that combats broadleaf and grassy weeds, gained substantially as distribution was broadened and grower confidence in the effectiveness of the weed killer continued to mount. First use of Randox by Florida sugar cane growers also helped sales. Two other herbicides, Avadex BW and Rogue, were successful in their initial season of commercial use. The first, a modification of regular Avadex herbicide, helps rid barley and wheat fields of wild oat. The other kills the grasses that invade rice crops. Also added to Monsanto's line in 1962 was PCNB, a soil fungicide. It is particularly effective against seedling blight, a serious threat to cotton. Feed Supplements Sales of feed chemicals were higher than ever. Biggest gain was registered by Santoquin, an antioxidant that preserves the nutritive value of feeds and dehydrated forage for poultry and live stock. New uses include protection of feed-grade Vitamin A, fishery by-products and pet food. MHA protein supplement had a large sales increase. Its use in growing broiler chickens for market increased. New business resulted from the discovery that MHA can be used effectively in formulating lower cost feeds for laying hens. Feed-grade urea also sold better than in 1961. Blasting Agents Sales of ammonium nitrate for blasting use climbed to a new peak. A successful move into the business of supplying nitrate-fuel oil formulations through special mixing stations was largely re sponsible for the gain. More applications are being developed. **AR 000703 LAM016762 Chemstrand, which became a division of Monsanto in April, had a successful year. Sales of both nylon yarns and acrylic fibers increased. The division's plants operated at near-capacity levels. Nylon Yarns Nylon sales substantially exceeded those of 1961. All major markets continued to enlarge. Demand for nylon by manufacturers of carpets and tires was especially strong. New deep-dye and dyeresistant Cumuloft nylon carpet yarns spurred the acceptance of nylon carpeting with unprecedented design and color effects. An improved tire yarn helped establish nylon as the cord used in about 46 per cent of tires now produced in the United States. Additional gains were made in such applications as woven stretch fabrics; molded fabrics for ap parel, home furnishings and industrial products; and double-knit fabrics for men's and women's wear. Expansions got under way at both nylon plants -- in Pensacola, Fla., and in Greenwood, S.C. Con struction at both locations began in June and was scheduled for completion in the first half of 1963. The effect of the twin expansions will be to increase Chemstrand's total spinning capacity 15 to 20 per cent. A tricot beaming facility and warehouse are under construction at Blacksburg, S.C., to provide better customer service. A new concept in marketing nylon was established in 1962 when Chemstrand's "Big Blue C" quality standards program was introduced in several areas of end use. Such programs not only promote sales but are constant reminders of Monsanto's high regard for the concept of quality. Acrylic Fibers Acrilan acrylic fibers substantially bettered their 1961 sales. High quality and product innovations to fit new end uses contributed to the gain. Manu facturing efficiencies helped offset lower prices which came into effect during the year. Acrilan made good headway in solidifying its position in a number of important applications. They include carpets; pile fabrics for apparel; blankets; fiber-fill products, including pillows and comforters; knit and woven fabrics for many types of apparel; and pads for hospital beds. A particularly strong move was made into the contract carpet business. This is an area in which Acrilan carpeting of special design is made for institutional use. Hotels, motels and schools are among the ultimate customers. Acrilan fibers introduced in 1962 included a new superior performing carpet fiber, new solution-dyed Acrilan and an improved fiber-fill material. To accommodate increasing demand for solutiondyed fiber, facilities for its production were ex panded at the Decatur, Ala., plant. Solution-dyed material is used principally in making deep-pile fabrics and fabrics for outdoor awnings. A "Wear Dated" program, under which Chem strand guarantees men's and boys' shirts made of 100 per cent Acrilan and slacks made of Acrilanrayon blends, was begun in the fall of the year. It was helpful in increasing sales of the fiber. A third expansion of the Decatur plant was begun in the fourth quarter to further boost Acrilan capacity. HYDROCARBONS DIVISION In its first full year of operation, this division materially strengthened its role as a supplier of raw materials to other manufacturing divisions. It also broadened its external sales. Chemical Raw Materials The Chocolate Bayou Plant was on stream by November. Using a feedstock of light crude oils, the unique facility converts petroleum into a variety of chemicals which Monsanto uses and sells. Chocolate Bayou gives the company a stronger base in raw materials for its present needs and for its future development. The plant's 500-millionpound-a-year ethylene unit and a smaller one at MAR 000704 LAM016763 7 Texas City, Tex., supply Monsanto's current re quirements for this vital raw material. Chocolate Bayou also produces significant quantities of naph thalene, benzene, propylene and ethylbenzene. All are "building blocks" for Monsanto's broad prod uct line. Chocolate Bayou also makes butylenes, xylenes, aromatic solvents, resin oil and resinous pitch, which are sold as industrial raw materials. New manufacturing efficiency was achieved by switching a modern ethylene unit at Texas City to crude oil feedstock and by making mixed product streams for upgrading at Chocolate Bayou. An older, less efficient ethylene facility at Texas City has become obsolete and been shut down. Also at Texas City, process improvements increased the capacity of the acetylene unit. Monomers Production of acrylonitrile, styrene and vinyl chloride monomers exceeded previous records. Over seas demand for acrylonitrile was particularly strong. Technological improvements of the styrene unit added to its efficiency. In July, shipment of styrene began from a new terminal on the Des Plaines River at Lemont, 111., Monsanto's fifth such outlet in the United States. Completion of a vinyl acetate unit at Texas City early in 1963 will add a new chemical monomer to the company's product list. Annual production of 45 million pounds is to be used at other Monsanto plants to make vinyl resins, emulsions and copoly mers. Also new to the company is butadiene. Made at Chocolate Bayou, it is used for production of Lustran styrene-based plastics by Monsanto and for manufacture of synthetic rubber by customers. tributors of Lion products were established in three new marketing areas of Mississippi, Tennessee and Texas. Initial steps were taken to bring the com pany's five grades of octane-blended gasoline to motorists throughout the nine-state marketing area. Production and Exploration Net production of crude oil was down from 8,017,000 barrels in 1961 to 6,992,000 barrels in 1962. The 12.8 per cent decrease was due to new restrictions on the amount of crude to be taken from domestic wells and to a productivity decline in older wells. This decline was not fully offset by production from newer wells. Although several new gas wells could not produce for lack of pipeline connections, natural gas sales were 23.1 billion cubic feet, compared to 22.6 billion cubic feet in 1961. As the year ended, pipe lines were being extended to many of the 39 shut-in gas wells. Thus, gas production in 1963 should rise considerably. Monsanto participated in the completion of 59 producing wells representing a net interest to the company of 42.8 wells. This included 14 wildcat discoveries in the United States and Canada, of which eight were oil wells and six were gas wells. Monsanto's ratio of successful wildcats to dry holes was better than the industry average. Exploration expenditures in 1962 were $13.3 millions, up from the $11.5 millions so spent in 1961. There was an intensification of exploration effort on the Gulf Coast, where Monsanto hopes to add to the reserves available for its use at the two Texas plants. Petroleum Products Branded product sales of gasolines, automotive lubricants and diesel fuels rose to new high levels, exceeding the average industry increase for these products. Prices, however, were severely depressed. Gross refinery sales permitted capacity opera tions throughout the year, while inventories were maintained at minimum levels. Jobbers and dis In 1962, this division made progress on a number of marketing fronts. Several new and significant production and sales records were set. Phosphorus and Phosphates Markets continued strong, with virtually every product in the group showing record sales. Profits mar 000705 LAM016764 were hit by price declines, however. Both phosphorus plants -- at Columbia, Tenn., and Soda Springs, Idaho -- produced at unprece dented rates. Additional ore-washing facilities were installed at Columbia. Both phosphorus plants are now integrated to operate entirely on Monsantoproduced phosphate raw materials. The new plant at Augusta, Ga., was completed on schedule and has begun shipping sodium tri polyphosphate and phosphoric acid. Phosphoric acid capacity was increased at Kearny, N. J. Additional capacity for the calcium phosphates used in dentifrices was installed at St. Louis. Aerial applications of Phos-Chek fire retardant proved the chemical's effectiveness in controlling brush and forest fires. Phos-Ckek was developed by Monsanto in association with U.S. and Cali fornia forestry officials. Detergents As a group, surface-active agents showed excellent sales growth. Demand for alkylbenzene was more vigorous than ever. New facilities are under construction at El Dorado, Ark., for the manufacture of cyanuric acid, and at Monsanto, 111., for ACL 59, the po tassium salt of dichlorocyanuric acid. Start-up is scheduled at both locations in 1963's first quarter. These units will use an efficient new Monsantodeveloped process. Cost-saving innovations have been incorporated into existing facilities for ACL manufacture at Everett, Mass. ACL has been well accepted as a chlorine donor for domestic and commercial bleaching, sanitizing, and swimming pool chlorination products. Heavy Chemicals Total sales of heavy chemicals were off slightly for the year. At Everett, expanded facilities are under con struction for Monsanto's new silica aerogels, Santocel Z and Santocel 62. Completion is scheduled for the first quarter of 1963. Santocel Z aids in the production of certain blueprint papers. Santocel 62 is an improved flatting agent for paints, varnishes and lacquers. Facilities being installed at Avon, Calif., will recover sulfur from the hydrogen sulfide by-product of Tidewater Oil Company's nearby refinery. Com pletion is planned for the first half of 1963. Electronics Chemicals The market for ultra-pure silicon grew. Mon santo's product line was expanded to include pulled single-crystal silicon in addition to silicon produced by float-zone methods. Technological improvements and innovations helped lower production costs. In pilot-scale facilities, the company now pro duces limited quantities of epitaxial silicon wafers of controlled electrical resistivity. Using such wafers, makers of electronic devices have been able to manufacture more integrated, higher quality prod ucts at lower cost. At year end, a major expansion of the silicon plant was under way at St. Charles, Mo. Capacities for polycrystal and pulled single-crystal silicon are being enlarged; capacity for epitaxial wafers is being installed. Market demand for other semiconductor ma terials, especially gallium arsenide, exceeded ex pectation. Monsanto is now a chief supplier of such products, particularly those used in laser technology. ORGANIC CHEMICALS DIVISION Sales and earnings of organic chemicals exceeded 1961 levels although the division was hard hit by lower prices on a number of major products. Production topped the two-billion-pound mark for the first time. Eleven new products entered com mercial production and capacity expansions in 11 others came on line. In their first year of operation, all manufacturing emits at the new plant near Bridgeport, N. -J., including the unique plasticizer process, exceeded design capacities. In October, Monsanto's newest phenol unit achieved successful start-up at the Chocolate Bayou Plant. MAR 000706 LAM016765 PARENT COMPANY 210 210 INDEX OF HOURLY WAGE RATES, PRICES OF RAW MATERIALS AND SELLING PRICES 1947-1949=100 HOURLY WAGE RATES PRICES OF RAW MATERIALS SELLING PRICES 130 130 120 120 110 110 100 *100 90 90 1953 1954 1955 195$ 1957 1953 1959 1960 1961 1962 Functional Fluids and Petroleum Additives Additives for motor oils, gear oils and automatic transmission fluids led this product group to higher sales. A new Santolube 800 series of detergentinhibitor systems for engine oils reached commercial status. So did Santowax OMP, a coolant and mod erator for nuclear reactors. And Santolene K, a non-metallic additive for fuel oil, was successfully introduced. An intensive marketing program was launched on a newly designated family of Therminol fireresistant heat-transfer fluids. Intermediates Despite two price decreases on phenol, sales volume in this product enabled the group to top its performance of the previous year. All dyestuff intermediates moved well. Toluene- sulfonic acid sales were of record proportions. Modernization of the large sulfonation phenol plant at Monsanto, 111., resulted in cost savings and greater production volume. The new phenol unit at the Chocolate Bayou Plant is integrated to feedstocks produced there and has proved the low production costs for which it was designed. Paper Chemicals and Wood Preservatives Sales were well above 1961 levels, with practically all products participating in the gain. Mersize fortified rosin size moved strongly. Heavy chemicals for paper making exceeded their 1961 sales, as did pentachlorophenol wood preservative. MAR 000707 LAM016766 Production of Scriptite 400, a resin to give paper a high degree of wet strength, was begun at Baxley, Ga.,by Filtered Rosin Products Company, a Mon santo subsidiary. Mersize RM 80, a new concentrat ed fortified rosin size, was commercially introduced. Pharmaceuticals, Flavors and Condiments Increased sales of bulk aspirin, acetophenetidin, vanillin, ethavan and saccharin helped this group better its 1961 performance. The price of saccharin increased and work was begun on a new and 50 per cent larger saccharin plant at St. Louis. At Texas City, Tex., Monsanto is building the first domestic facility for making lactic acid syn thetically. New to Monsanto, the acid is an im portant additive in food products. Plasticizers Greatly increased pound sales of these products more than offset two rounds of price reductions and lifted dollar sales well above those of 1961. Sales of polymeric plasticizers introduced in 1961 figured importantly in the gain. Four new proprietary plasticizers reached com mercial status: Santicizer 261 and Santieizer 262 are high molecular weight monomeric plasticizers for the new acrylic lacquer automobile finishes; Santicizer 264 offers greatly improved stain resist ance in solid vinyl flooring; Santicizer 406 is a polymeric plasticizer with outstanding resistance to styrene migration, important in the gasketing for refrigerator doors. A national network of plasticizer distributors was established to speed the handling of small-quantity orders. Bulk blending facilities for plasticizers were installed at the plant near Bridgeport, N.J., and expanded at the Long Beach, Calif., plant. Resin Materials Dollar sales of these products were down sharply despite pound sales equivalent to those of 1961. Industry-wide excess capacities have resulted in fierce price competition in phthalic anhydride and maleic anhydride. Consequently, their respective prices have dropped 28 per cent and 27 per cent below the highest 1961 levels. Three new resin materials -- diethyl fumarate, dioctyl fumarate and dioctyl maleate -- were introduced as ingredients for polymer and copoly mer systems. Hydrogenated bisphenol A was offered as an effective means of imparting chemical resist ance to surface coating formulations. Phosgard flame retardant compounds achieved commercial acceptance in rigid urethane foams and in acrylic panels. Modification of phthalic anhydride manufac turing units at Everett, Mass., and St. Louis lowered production costs. Substantial quality ad vances and cost savings were obtained in production of adipic acid and bisphenol A. Rubber Chemicals Sales of the group rose. The gain was spear headed by the Monsanto-invented Santocure family of delayed action accelerators to speed the curing of rubber. Two new additions, Santocure MOR and Santocure MOR 90, gave Monsanto the broadest line of such accelerators. Santoflex 36, an antiozonant (antiweathering agent) for truck and automobile tires, was success fully introduced. So were two non-discoloring anti oxidants (also antiweathering agents), Santowhite 54 and Santowhite 54-S. Production facilities for Santoflex 36 started up at Monsanto, 111. New and expanded multi-product facilities for making Santocure accelerators and Flectol H, a general-purpose antioxidant, came on stream at Nitro, W. Va. PLASTICS DIVISION Plastics sales increased over those of 1961. While profits improved, they continued to be depressed by more of the price erosion which has typified the plastics industry in recent years. Increased sales were achieved by Lustrex poly styrene and high-pressure polyethylene. The auto mobile industry's good year contributed to sizable increases in sales of Saflex polyvinyl butyral film OOO?"8 hak LAM016767 for laminated safety glass and Resimene melamine resins for automotive finishes. Additional gains came in such applications as wire and cable, packaging, flooring and thermal insulation. New Lustran styrene-based copolymers and terpolymers, which made excellent headway in some substantial end uses, further justified the confidence with which they were introduced. Successful com mercial applications now include school seating, business machine and appliance housings, refriger ator and automobile components, luggage and other products requiring the abuse resistance and bal anced price-performance properties these materials offer. With the April start-up of full-scale production of Lustran at Addyston, Ohio, Monsanto became the only company to market a full spectrum of styrenebased molding and extrusion materials -- a com petitive advantage that is being exploited. Many of the new or improved products intro duced in 1962 are tailored to specific process and performance requirements of consuming industries. Noteworthy are: new polyethylene resins for ex trusion coating of milk-carton board and cellophane; two tough, high-clarity polyethylene resins for production of packaging films; latex and styrenemaleic anhydride products for improving detergents, floor waxes and foam rubber; better phenolic resins for glass-wool insulation bonding, decorative-panel laminating, and foundry molding; styrene-acry lonitrile molding materials for refrigerator parts, housewares and fighting fixtures; an improved highimpact polystyrene with superior processing prop erties; a special polyvinyl butyral film for use as a transparent protective cover plate for TV picture tubes; a series of rigid vinyl polymers for building panels and profile extrusions; and improved poly ethylene resins for wire coating. Production facilities for polyvinyl chloride paste resin and copolymer were expanded at Springfield, Mass., to meet increased market demand. Efforts to provide customers not only with better products but with better service continued. Ex panded order service centers were set up in major U.S. market areas. Monsanto's leadership in bulk shipping of plastics was strengthened when its fleet of specially designed railroad cars was enlarged. And expansion of electronic computer facilities helped establish industry leadership in production scheduling, inventory control and product dis tribution. Building Products Department This department was formed early in the year to develop and market finished building products and building systems. Its principal efforts are directed toward upgrading raw materials already made by Monsanto, most important of which are plastics. The department's first commercial offering -- a corrugated building panel of rigid polyvinyl chloride -- was introduced at mid-year. Such panels are being produced on a continuous basis at Kenil worth, N.J. Early in 1963, capacity will be tripled. To handle the marketing function, a small sales group was set up and nation-wide distributorships were established. As new products broaden the fine, they will be distributed through these same channels. A prototype house with components made pri marily of plastics was built and successfully tested. A number of potential markets for such a house are currently being explored. Bering Plastics Company In every area of its operations, Gering made good sales gains. Sales of molding materials -- these include poly styrene, polyvinyl chloride, polyethylene, poly propylene, cellulosics and nylon -- were especially strong. In 1962, Gering improved its competitive position in the Midwest when it began warehousing such materials at Chicago. And at its plant in Kenilworth, N. J., the company succeeded in boosting the productivity of its compounding facilities. Garden hose had a good year. Advance bookings indicate that 1963 sales will go still higher. Gering's sales promotion efforts were aided when the burst MAR 000709 LAM016768 12 170 GROSS ADDITIONS TO PROPERTY AND DEPRECIATION * (in $ millions) Depreciation includes: depreciation, obsolescence, amortization and depletion. Chtmstrond and subsidiaries not included in years prior to i960. PROPERTY ADDITIONS " DEPRECIATION* ................. .. 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 strength of its hose was given a superior rating by an independent testing laboratory. Use of the company's polyethylene film in con struction, agriculture and industry continued to grow, with sales often exceeding the capacity of present tooling. Production facilities will be ex panded as a consequence of this booming demand. Plax Company A public preference for plastic packages was again evident. Plax sales of both plastic bottles and Polyflex polystyrene sheeting increased. Like liquid detergents before them, liquid bleaches became available nationally in Plax bottles. Other products which began appearing in the company's bottles were fabric softeners, waxes and polishes, oils for outboard motors, insect killers, photographic chemicals, industrial chemicals, beauty parlor preparations and vinegar. Polyflex extended its popularity for the packaging of fresh produce, baked goods and candies. Develop ment of a scratch-resistant coating for the material helped open a new market in the field of transparent envelopes. The new bottle-making plant at Yardville, N.J., was in full operation by the second quarter. Ad ditional capacity to produce bottles was installed at Anaheim, Calif. Polyflex capacity was increased to meet strong demand. RESEARCH Determined research effort was again rewarded by discoveries that helped Monsanto move forward. In 1962, following a 10-year period in which 438 products were introduced by Monsanto's five chemical divisions, 293 of these products contrib uted 35 per cent of those divisions' total sales and 37 per cent of their gross profit. During the year, 78 new Monsanto products survived screening tests and were sold commercially. Also in 1962, the company was granted 345 U.S. patents and 338 foreign patents. Expenditures for research, development, patent work and basic engineering amounted to $51.6 millions in 1962, compared to $46.7 millions in 1961. Monsanto's St. Louis Research Center in its first full year of operation fulfilled expectations of efficiencies to be gained from centralized services to and close communication among research personnel. Monsanto operates a wholly owned subsidiary, Monsanto Research S.A., at Zurich, Switzerland. Its laboratory, established for the purpose of carry ing out fundamental physical and organic chemical research, is now in its sixth year. The European company, in addition to making significant con tributions to Monsanto technology, makes avail able for consultation on Monsanto programs the varying scientific trainings and viewpoints of the MAR 000710 LAM016769 European chemists who compose its staff. It also provides useful contacts with others in the Euro pean scientific community. Monsanto's manufacturing divisions strengthened their research activities in 1962. The Agricultural Chemicals Division, for example, expanded its laboratories at the Research Center by one-third to provide additional facilities for the study of pesti cides in different types of soils and under varying climatic conditions. The number of new products transferred from the division's research department to development in 1962 was considerably greater than the number transferred in 1961. At the Research Center, also, the Organic Chemi cals Division enlarged and consolidated its research program on the development of new products for the paper industry. Research &. Engineering Division The Research & Engineering Division in 1962 continued to emphasize programs that forward Monsanto's total technical development. They include fundamental research leading the company into new fields as well as research directly oriented to existing Monsanto areas of production. In one area of scientific exploration, for example, the con cepts involving combinations between inorganic and organic materials are being vigorously pursued in programs directed to a variety of industrial uses. During the year, work continued on organic phosphorus compounds. Certain new compositions have been found which, when incorporated in polymers, are of special interest. Although these compositions impart flame-proof characteristics, the physical properties of the compounded polymers are essentially those of the base polymers. Monsanto has long been the leader in providing fire-resistant functional fluids so important to the development of certain hydraulic mechanisms in missiles and in industry, and to the safe operation of military and civilian aircraft. Successful research on these functional fluids continued during 1962. Modem methods of information retrieval were developed during the year to store and retrieve accumulated Monsanto research and engineering information. This system makes such information immediately available to all segments of the com pany in support of many fast-moving programs. It not only affords a saving of many manhours on each project where a review of related past work within the company is advantageous but also avoids duplication of previous work. Monsanto Research Corporation Wholly owned Monsanto Research Corporation continued to operate in four areas. It handled re search for 18 government agencies under 30 separate contracts. It made and sold nuclear sources. It operated Mound Laboratory at Miamisburg, Ohio, for the Atomic Energy Commission. And it did research for the parent company. The research subsidiary's 1962 highlights in cluded development of: a laminating resin for pro longed use at temperatures higher than 550 degrees Fahrenheit; antioxidants and antiwear additives that may permit military aircraft to use polyphenyl ether fluids and lubricants at 600 degrees Fahren heit, rather than the 400 to 450 degrees now realized with other fluids; a plastic composition that can be applied to ship hulls to reduce vibration and thus help navy vessels escape detection (and which, it is believed, will be useful in reducing vibration in industrial and architectural applications); and a model thermoelectric generator to convert heat to electricity -- in orbiting satellites, for example. Also in 1962, MRC's contract to operate Mound Laboratory was renewed through September, 1966. Monsanto built the AEC laboratory in 1948 and has since been responsible for its operation. INTERNATIONAL OPERATION'S Overseas Division Export sales of chemicals and plastics in 1962 were considerably higher than those of 1961 and exceeded those of 1960, the prior record year. Re flecting the trend of U.S. exports generally, such sales included an increased percentage of specialtyproducts. At the same time, there was a reduction in exports of heavy chemicals. Products from the Inorganic, Organic and Agricultural Chemicals Divisions contributed to the year's gain. Europe Europe's future economic growth, stimulated MAR 000711 LAM016770 particularly by the European Economic Com munity (Common Market), is expected to be at least as vigorous as in the 15 years following World War II. In the past, Monsanto has participated in this growth through export sales and through in vestments in France, Belgium, the United Kingdom and Italy. Consolidation of the company's European interests into a new organization -- Monsanto Europe -- should help maximize future partici pation. In France, Monsanto acquired majority owner ship of Societe Monsanto Boussois in 1962. The name of this formerly 50 per cent owned associate was changed to Societe Monsanto. The company, which manufactures a complete line of polystyrene molding and extrusion products, entered the paper chemicals market with local manufacture of Mersize, a synthetic size for paper. In 1962, it also became the first overseas manufacturer of Lustran I, Mon santo's new styrene-acrylonitrile-butadiene terpolymer plastic. Wholly owned Monsanto Belgium, which pro duces So/lex polyvinyl butyral interlayer for lami nated safety glass, profitably completed its first full year of operation. Monsanto Chemicals Limited, one of Monsanto's three subsidiaries in the United Kingdom, main tained its sales level. But profits were hurt by price reductions in heavy chemicals and plastics. MCL acquired a plastics manufacturer producing foamed plastics and panels for the construction industry. It integrates well with MCL's own polystyrene operations. Plant expansions and improvements were made in rubber chemicals and aspirin. A new fumaric acid plant was completed. The second U.K. subsidiary is wholly owned Chemstrand Limited, which produces Acrilan acrylic fibers in Northern Ireland. In 1962, this company operated profitably. Also in the United Kingdom, all the common stock of Lansil Limited was purchased in 1962. Lansil is principally a producer of cellulose acetate flake and filament yarns. Monsanto's position in Spain was strengthened when ownership was increased from 25 per cent to 50 per cent in Etino-Quimica S.A. This company is directly related to Monsanto's other 50 per cent owned Spanish associate, Monsanto Iberica S.A. The two are integrated from basic raw materials such as limestone, salt and coal to polyvinyl chloride compounds. The product line includes calcium car bide, acetylene, alcohols, plasticizers and highimpact polystyrene. Many of the facilities are currently in start-up phase and all should become operative in 1963. In Italy, Monsanto's 40 per cent owned affiliate, ACSA (Applicazioni Chimiche Societa Per Azioni), which makes and markets acrylic fibers, substanti ally increased sales and production in 1962 in the process of further developing its markets. Western Hemisphere Operations in this hemisphere consist of wholly owned subsidiaries in Canada, Mexico and Argen tina; an affiliate in Colombia; and export sales to virtually every country. Canada, with its high standard of living, accounts for the largest share of Monsanto exports. Latin American nations account for a smaller but in creasing share. Monsanto Canada Limited had a year of record sales. Sales of polystyrene and vinyls were especially strong. So were sales of plastic foam to the clothing and automotive industries. Although some tapering in the level of Canada's economy is expected in 1963, the outlook remains favorable. Sales of Monsanto Mexicans S.A. recovered from a 1961 slump. The company was aided by improved sales of polyvinyl chloride resins and compounds, plus export gains within the Latin American Free Trade Area. Acquisition of an interest in a Mexican plastics fabricating company moved Mon santo Mexicana closer to the consumer in a country with one of the world's fastest-growing populations. Monsanto Argentina S.A.I.C. was badly hurt by lower sales, lower profits and currency devaluation. Political unrest has seriously affected the Argentine economy. Nevertheless, Monsanto Argentina is making the necessary adjustments to prepare for more efficient operations when the economy is revitalized. In Colombia, Monsanto has a 49 per cent equity in Fabrica de Hilazas Vanylon S.A. Formed in MAR 000712 LAM016771 1959, this company now produces about two million pounds of nylon yam annually. In 1962, it had a good year in terms of both sales and profits. Asia-Pacific Area Monsanto exports to most of the non-communist countries in this vast area. Its principal invest ments, however, are currently in Australia and Japan. Monsanto Chemicals (Australia) Limited -- in which Monsanto's direct and indirect interests total 81 per cent -- recovered more rapidly than expected from 1961's business recession. Sales and profits increased in step with the recovery. MC(A)L is building a new phenol plant to utilize a newly developed process. By 1964, this plant should pro vide major economies over the company's aging sulfonation plant. Australian Fluorine Chemicals Pty. Limited, an MC(A)L associate, has its fluorocarbon plant oper ating. During 1962, however, due to excessive im ports, output was insufficient to prevent an oper ating loss. Australian Petrochemicals Pty. Limited, a Mon santo subsidiary, showed a profit in its first full year of operation. The company manufactures styrene monomer. Mitsubishi Monsanto Chemical Company, Mon santo's 50 per cent owned Japanese associate, reflected a slowdown in Japan's economy. Its sales and profits were below those of 1961's record year. Overcapacity in both the polyvinyl chloride and polystyrene fields caused price reduction. Also in Japan, Monsanto has a 38 per cent equity in Mitsubishi Vonnel Company Limited. This Monsanto affiliate operated its acrylic fiber plant close to capacity in 1962. Here again, low selling prices, caused by intense competition from other Japanese producers, prevented profitable oper ations. Near East Israel Chemical Fibres Limited was formed in 1962, as a 60 per cent owned subsidiary to produce Acrilan at Ashdod, Israel. Its plant will soon be under construction. Completion is scheduled for 1964. 50 PER CENT OWNED DOMESTIC ASSOCIATED COMPANIES Operations of domestic associates are not con solidated with those of Monsanto and its subsidi aries. Yet, some discussion of them is appropriate. Mobay Chemical Company, owned with Farbenfabriken Bayer A.G. of West Germany, had its best year to date. Gains in both sales and income were substantial. A number of expansions were completed or under way at Mobay's plant in New Martinsville, W. Va. New units to make diphenyl-methane diisocyanate and dinitrotoluene were on stream by mid-year. Under construction were facilities to raise capacity for tolylene diisocyanate (TDI) from 50 to 70 million pounds annually. It is the sixth TDI ex pansion since Mobay's formation in 1954. Isocyanate-based materials have gained sub stantial footholds in a wide cross section of basic U.S. industries. Price erosion, common to fastgrowth chemical commodities, has been largely offset by the development of large-volume markets, notably in the automotive, construction, refriger ated transport and appliance insulation fields. An event of significance was the opening of Mobay's new 52,000-square-foot research center at Pittsburgh. Mobay continues to place heavy em phasis on researching new products and new appli cations. In 1962, a number of products were com mercially introduced and 79 patent applications on processing technology were filed. Typical of the new developments is an isocyanate introduced in April. Essentially hazard-free, it makes possible low-cost manufacture of rigid, highstrength urethane foams. The chemical is useful in new techniques.for sealing interiors of mine tunnels and for erecting emergency firewalls to localize and control underground fires. Additional use is ex pected as a sprayed-on or foamed-in-place insulant in building construction. New formulations of Mobay's urethane elastomer resins were commercially introduced for such appli cations as caulks and sealants for the construction industry. Advances also were made in adapting the resins to molding, casting, sheet extrusion and production of spandex fibers. MAR 000713 LAW1016772 Expansion of facilities to make polycarbonate thermoplastic resins is in progress. Tough poly carbonate is the only transparent plastic listed by Underwriters Laboratories, Inc., as both self extinguishing and adaptable to current-carrying electrical components. In 1962, the plastic made good penetration into prime industrial component markets. Recent development of improved process ing technology should lead to new advances. In 1962's final quarter, Mobay declared and paid its first cash dividend to the parent companies. It had paid a stock dividend in 1961. Shawinigan Resins Corporation, owned with Shawinigan Chemicals Limited of Canada, made significant gains in its twenty-fifth year. Sales ad vanced and profits recovered well from a 1961 downturn. The improvement resulted from a more favorable product mix and increased demand for "Butvar" polyvinyl butyral in various markets, including that market for which Monsanto converts "Butvar" into Saflex, the interlayer for automotive and architec tural laminated safety glass. Exports grew in im portance, amounting to more than one-tenth of total sales. Specialized resins for electrical insulation and adhesives accounted for the bulk of overseas shipments. The third expansion of "Gelvatol" polyvinyl alcohol capacity was completed. A new unit pro vides facilities for making two new types of the alcohol for use in paper and textile manufacture. Fome-Cor Corporation, owned with St. Regis Paper Company, manufactures, as its only product, a lightweight laminated board -- a sandwich of polystyrene foam between layers of kraft paper. Its sales are to the construction industry and to the graphic arts industry. The young company again showed a loss. Polythane Corporation, owned with Peteco, Inc., was formed in January, 1962, to produce spandex fibers (elastic fibers now used mainly in women's foundation garments and hosiery). Its products are to be marketed by the Chemstrand Company Division. Polythane's plant at Rumford, R. I., was built during the year. Its spandex is expected to be added to Chemstrand's product line in 1963's first quarter. Also in 1962, Polythane formed a wholly owned subsidiary in the United Kingdom. The new com pany, Polythane Fibres Limited, will also produce spandex. - E F S O !\! \' E _ Strong emphasis on personnel development con tinued. A sales technique program was conducted for all marketing people. A program of instruction to improve maintenance skills was begun. An in strument school to help supervisory personnel adapt to the new requirements of automated production was established. And operations analysis was intro duced as a production training tool. A technical training program to further the de velopment of scientists was carried on at company research facilities. Academic and advanced manage ment leaves also were continued in an effort to build the best trained scientific and managerial staff possible. Relationships with universities and colleges were strengthened by a new program which centralizes the administration of recruiting, scholarships and scholarship aid. Combining these functions im proves the means of evaluating both schools and students and assures that Monsanto will continue to secure its share of top-caliber college graduates. Also effected in 1962 was a new company-wide system of requisitioning manpower. It permits more accurate specification of the types of technical per sonnel needed to meet current and expected re quirements in given areas of endeavor. Monsanto's safety performance was again out standing. Its accident frequency rate was far below the industry average. Thus, the company's record as one of the safest in the chemical industry was continued. New three-year work contracts were negotiated successfully at three plants. Two-year contracts were agreed to at four. As a result, the company finished the year without a work stoppage. The favorable pattern of labor agreements reflects a constant effort to better employe understanding of Monsanto's business goals and the competitive en- MAR 000714 LAM016773 vironment in which they must be achieved. Alert to new developments which minimize and expedite handling of paperwork, Monsanto in 1962 became the first company to install an electronic mail sorter to speed mail distribution. Also during the year, an industrial preparedness policy was formulated for use in the event of a worsened international situation. The policy pro vides procedures for continuing business operations in time of national emergency and includes disaster plans for all facilities. The company's pattern of expansion created the need for certain organizational changes. A new Distribution Department, having compre hensive traffic responsibilities, was established. John R. Sayers, formerly assistant director for purchas ing and traffic, was named its director. In October, Franklin J. Cornwell became a regional vice president with headquarters in New York. Mr. Cornwell, who had been in corporate development, now is concerned with Monsanto's marketing interests as they affect major eastern customers. Because of the rapid expansion of overseas in terests, Director and Vice President Robert K. Mueller was assigned the principal sphere of interest for international chemical and plastics activities. Other important changes occurred in January, 1963. David R. Calhoun, president of St. Louis Union Trust Company and director of a number of other corporations, was elected to Monsanto's Board of Directors. Edwin J. Putzell Jr., corporate secretary and director of Monsanto's Law Depart ment, was elected a vice president and appointed general counsel. Marlette C. Covert, formerly an assistant controller and the associate director of the Accounting Department, was elected con troller and appointed director of the department. In both capacities, Mr. Covert succeeded Edwin J. Cunningham, who retired Jan. 31, 1963. SALES BY PRODUCT GROUPS PARENT COMPANY AND ALL SUBSIDIARIES Chemical Fibers........................................................ Plastics, Synthetic Resins and Surface Coatings Phosphate Products and Detergents................... Intermediates and Plasticizers.............................. Rubber and Oil Chemicals...................................... Agricultural Chemicals............................................. Petroleum Products--Net of purchases............... Pharmaceuticals, Flavors and Condiments......... Textile and Paper Chemicals................................. Heavy Chemicals...................................................... Other.......................................................................... 1962 % 26.3 23.5 11.3 9.8 7.4 6.9 5.6 3.3 3.1 2.3 .5 100.0 1961 % 25.2 21.0 12.2 10.7 7.7 7.2 6.7 3.6 2.8 2.6 .3 100.0 1957 % 19.9 22.3 12.9 11.1 9.0 6.6 7.9 4.3 2.8 3.1 .1 100.0 mar 000715 LAM016774 M nKIQAMT O CHPMir Al OOMPAtt STATEMENT OF CONSOLIDATED FINANCIAL POSITION ASSETS Current Assets: Cash............................................................................................................... Marketable securities, at cost which approximates market................ Net receivables............................................................................................ Inventories.................................................................................................... 1962 On Thousands) 1961 $ 34,435 $ 28,914 67,037 18,600 173,924 152,704 170,595 445,991 154,438 354,656 Investments and Miscellaneous Assets, at Cost or Less: Investment in and advances to associates.......................................... Miscellaneous investments and receivables........................................ Property, Plant and Equipment, at Cost.................................................. Less accumulated depreciation and depletion.................................... Net property..................................................................................... 25,552 58,808 84,360 33,545 56,942 90,487 1,402,062 632,190 769,872 1,224,923 544,119 680,804 Deferred Charges......................................................................................... 24,639 16,326 The above statement should be read in conjunction with pages 22 and 23 of this report. $1,324,862 $1,142,273. "--------^ MAR 000716 LAM016775 SUBSIDIARIES 19 AT DECEMBER 31, 1962 AND 1961 LIABILITIES Current Liabilities: Accounts payable and accruals.................................................................... Income taxes................................................................................................... Current portion of long term debt (less $1,000,000 debentures in treasury) 1962 1961 (In Thousands) $ 126,964 42,855 9,346 179,165 $ 109,274 48,794 9,223 167,291 Notes, Debentures, etc.--Less Current Portion Above............................. 219,864 128,225 Income Debentures........................................................................................... Other Liabilities: Deferred income taxes................................................................................... Miscellaneous................................................................................................. 141,000 33,520 3,459 36,979 141,000 28,069 3,394 31,463 Minority Interests in Subsidiary Companies............................................... 30,268 23,065 Shareowners' Equity: Common shares--authorized, 35,000,000 shares, par value $2 each; outstanding, 29,010,147 shares in 1962 and 28,023,440 shares in 1961...................................................................................................... Paid-in surplus................................................................................................ Retained earnings.......................................................................................... 58,020 360,856 298,710 717,586 $1,324,862 56,047 323,055 272,127 651,229 $1,142,273 MAR 000717 LAM016776 20 MONSANTO CHEMICAL COMPAN STATEMENT OF CONSOLIDATED INCOME Income: Net sales............................................................................... Other.................................................................................... Deductions: Cost of goods sold............................................................... Selling, administrative and research expenses............ Interest................................................................................ Minority interests............................................................... Other.................................................................................... Income Before Income Taxes............................................ 1962 1961 (In Thousands) $1,063,195 $932,916 11,731 11,755 1,074,926 944,671 762,218 151,724 15,422 1,600 2,679 933,643 141,283 672,924 131,407 11,579 382 1,339 817,631 127,040 Increase Decrease $130,279 24 130,255 89,294 20,317 3,843 1,218 1,340 116,012 14,243 Provision for Income Taxes: Current................................. Deferred............................... Net income 51,464 11,451 62,915 $ 78,368 58,384 58,384 $ 68,656 6.920 11,451 4,531 $ 9,712 The above statement should be read in conjunction with pages 22 and 23 of this report. MAR 000718 LAM016777 A SUBSIDIARIES STATEMENT OF CONSOLIDATED PAID-IN SURPLUS AND RETAINED EARNINGS PAID-IN SURPLUS Balance at Beginning of Year.............................................................................. Additions: Excess of approximate market value of common capital stock distributed as a stock dividend over the par value thereof....................................... Excess of approximate market value over the par value of common capital stock issued for the remaining 50 per cent interests in Plax Corpora tion and Societe Monsanto Boussois....................................................... Excess of equity in the net assets of Societe Monsanto Boussois over the carrying value of the investment therein.......................................... Excess of amounts received over the par value of common capital stock issued under stock option plans............................................................... Balance at End of Year......................................................................................... 1962 1961 (In Thousands) $323,055 $286,666 21,191 27,022 13,806 303 2,501 $360,856 9,367 $323,055 RETAINED EARNINGS Balance at Beginning of Year.............................................................................. Addition--Net Income for the Year.................................................................... Deduction: Dividends on capital stock of parent company: Cash--at the rate of $1.05 a share in 1962 and $1.00 a share in 1961........................................................................................................ Stock--2%..................................................................................................... Balance at End of Year......................................................................................... The above statement should be read in conjunction with pages 22 and 23 of this report. $272,127 78,368 350,495 29,470 22,315 51,785 $298,710 $258,907 68,656 327,563 27,316 28,120 55,436 $272,127 LAM016778 mar 000719 FINANCIAL REVIEW The accompanying financial statements (pages 18 through 21) consolidate all active domestic and foreign subsidiaries in which Monsanto Chemical Company directly or indirectly owns more than 50 per cent of the voting capital stock. The accounts of Societe Monsanto Boussois and Plax Corpora tion have been included in consolidation from the dates of acquisition in 1962 of the remaining 50 per cent interests in these companies. The equity in the unaudited 1962 net income of 50 per cent owned companies, including the net income of Boussois and Plax to the dates they became subsidiaries, was $2,250,000, compared with $3,652,000 in 1961. Dividends of $1,822,000 were received from 50 per cent owned companies in 1962 and $573,000 in 1961. The equity in the unaudited net assets of such companies at the end of the year was $30,941,000, which exceeded the carrying value of $25,552,000 by $5,389,000. The Revenue Act of 1962 provides for a credit against federal income taxes equal to approximately seven per cent of expenditures for machinery and equipment purchased and placed in service during the year, with a corresponding reduction of the depreciable base of such property. As a result of this investment credit, the company's income tax liabil ity for 1962 has been reduced by $6,709,000, of which $3,220,000 or 48 per cent, has been included in 1962 net income. The remainder, $3,489,000, has been credited to a reserve for deferred taxes and will be amortized over the life of the properties to which attributable, to compensate for the reduction of the depreciable tax basis. The use of the sum of the years digits method for computing depreciation on the majority of new assets acquired since 1954 was continued in 1962. The excess of depreciation provided by this method over straight line depreciation increased from $12,263,000 in 1961 to $13,755,000. For income tax purposes only, the company, in 1962, adopted the shorter lives established for machinery and equipment by the United States Treasury Depart ment. The additional depreciation for tax purposes reduces the company's current income tax. Net income for the year, however, was not affected, since an amount equivalent to the reduction in taxes has been charged to income to provide for deferred taxes payable in future years. Charges against income for depreciation, obso lescence and depletion amounted to $97,639,000, of which $94,161,000 was depreciation and obso lescence, and $3,478,000 depletion of mines and wells. In 1961, such charges were $84,201,000 and $2,675,000. Repair and maintenance charges included in operating expenses were $68,143,000 in 1962 and $57,883,000 in 1961. In certain prior years, provisions were made for income taxes payable in future years resulting from the excess of depreciation and amortization of facilities constructed under Certificates of Neces sity for income tax purposes over depreciation for accounting purposes. For the years 1962 and 1961, $3,684,000 and $4,049,000 of such taxes became payable and were charged against the reserve pro vided in prior years. Inventories are generally stated at the lower of cost or market. Annual rates of turnover were 4.7 in 1962 and 4.4 in 1961. Reserves for doubtful accounts were $5,014,000 in 1962 and $4,110,000 in 1961. The long term debt of the company and its sub sidiaries is shown in the table on Page 23. The parent company sold at par in January and May, 1962, a total of $75 millions principal amount of 4% per cent promissory notes, due January 1, 1993. In June, 1962, the company sold an additional $25 millions of such notes, on a basis to yield 4% per cent interest over their average life. The notes require that 93 per cent of the principal amount be prepaid in equal annual installments commencing January 1, 1973, with the balance due at maturity. Upon merger of The Chemstrand Corporation into the company in April, 1962, the holders of Chemstrand's then outstanding 3H per cent First Mortgage Bonds, Series A, due April 1, 1976, aggre gating $66,212,000 principal amount, exchanged such bonds for an equal principal amount of 3M per cent Promissory Notes of the company, due August 1, 1972. In 1962, cash dividends of 25 cents in each of the first three quarters and 30 cents in the fourth quarter were paid on the common shares. Also, a stock divi dend of two per cent was paid in December. The parent company has three stock option plans in effect: the plans authorized by shareowners in 1951 and 1960 for key employes, and the Second MAR 000720 LAM016779 LONG TERM DEBT (Exclusive of Current Maturities) 1962 1961 Notes, debentures, etc.: (In Thousands) Parent company: 3lA% sinking fund debentures, due 1968................. $ 10,000 2.65% debentures, due 1971 (less $1,000,000 in $ 11,250 treasury in 1961)..................................................... 3%% sinking fund debentures, due 1972................. 3V2% promissory notes, due 1972.............................. 4%% promissory notes, due 1993.............................. The Chemstrand Corporation: 23,000 10,500 55,412 100,000 23.000 11.000 3y2% first mortgage bonds, due 1976........................ Monsanto Chemicals Limited (British subsidiary): 62,257 6% debentures, due 1977/82...................................... 5% debentures, due 1982............................................ Other subsidiaries (less $289,500 in treasury in 1961) 8,400 9,800 2,752 8,400 9,800 2,518 Total........................................................................ $219,864 $128,225 Income debentures -- Parent company: 33/4%, due 2002.............................................................. $ 91,000 4%%, due 2008.............................................................. 50,000 $ 91,000 50,000 Total........................................................................ $141,000 $141,000 Total long term debt............................................................. $360,864 $269,225 Employes' Stock Plan, authorized by shareowners in 1960 for hourly and salaried employes except participants in the key employe plans. The status of the authorized shares of each and the changes occurring during the year were: 1951 Stock Option Plan 1960 Stock Option Plan Second Employes' Stock Plan Outstanding 1/1/62___ 177,808 Unoptioned 1/1/62....... Optioned during year... Exercised during year... 20,164 Terminated during year. Outstanding 12/31/62. 160,961* Unoptioned 12/31/62.. 513,370 33,696 32,250 8,621 3,080 544,524* 4,768* 352,234 48,306 2,153 40,196 43,082 271,109 89,235 Adjusted for 1962 two per cent stock dividend. Under the Stock Option Plans, 394 options are outstanding, at prices ranging from $25.53 to $55.03 a share. Where applicable, the prices have been ad justed for stock dividends and for the 1955 threefor-one split. The three-year Second Employes' Stock Plan, which became effective on June 3, 1960, provided for the grant to hourly paid and salaried employes of options to purchase a maximum of 450,000 Monsanto shares. On subsequent anniversary dates of the plan, options were offered to those employes who had not previously been eligible to participate. At the end of 1962, the options outstanding were: Date of Offering Number of Employes June 3,1960.............. .........7,415 December 5, 1960............. 259 June 5, 1961.............. ......... 166 December 4, 1961___ ......... 354 June 5, 1962.............. ......... 116 December 3, 1962___ ......... 189 8,499 Number of Shares 254,852 6,541 3,027 4,723 1,017 949 271,109 Price a Share $39.25 40.75 50.25 50.50 50.50 50.50 The prices are the higher of approximately 95 per cent of the New York Stock Exchange average price on the date the options were granted or the highest option price on any earlier date on which options were granted. Payments by the employe over the option period are made by payroll deduc tions on which the company has been crediting interest at a minimum rate of four per cent. jy^LR 000721 LAM016780 ACCOUNTANTS' OPINION HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS BOATMEN'S B.ANK BUILDING SAINT LOUIS 2 Monsanto Chemical Company: We have examined the statement of consolidated financial position of Monsanto Chemical Company and its subsidiary companies as of December 31, 1962 and the related statements of consolidated income and paid-in surplus and retained earnings for the year then ended. Our examination was made in accord ance 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 circum stances . In our opinion, the accompanying statement of consolidated financial position and statements of consolidated income and paid-in surplus and retained earnings present fairly the financial position of Monsanto Chemical Company and its subsidi aries at December 31, 1962 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. .. February 11. 1963 Y/ &0 J? </ MAR 000722 LAM016781 25 m MONSANTO CHEMICAL COMPANY AND SUBSIDIARIES SOURCE AND DISPOSITION OF FUNDS On Thousands) Source of Funds: TOTAL 1962 Net income..........................................................., Provisions for: Depreciation, etc............................................. , Deferred income taxes................................... Sale of securities: 43A% promissory notes................................. 4V4% income debentures............................. 6% debenture stock of British subsidiary.., Common shares issued under options......... Other--net............................................................ $305,186 372,531 13,290 99,593 50,000 3,780 28,323 153 $ 78,368 97,639 11,451 99,593 2,639 2,366 872,550 292,056 1961 I960 19590) 19580) $ 68,656 $ 67,807 $ 53,473 $ 36,882 86,876 79,038 56,055 52,923 1,839 9,926 7,918 157,540 1,040 2,273 145,612 25,000 13,846 4,723 153,097 25,000 3,780 872 2,949 124,245 Disposition of Funds: Dividends on common shares: Monsanto.......................................................... Chemstrand.................................................... . Plant additions and replacements................... Investment in affiliated companies................. Retirement of debt............................................. Increase--decrease in working capital....... Increase--decrease in cash and securities... 124,577 2,500 127,077 570,618 54,866 57,589 51,491 10,909 29,470 29,470 168,833 9,597 17,877 14,614 51.665 $872,550 $292,056 27,316 27,316 153,818 9,810 2i,928 5,021 60,353 23,159 2,500 25,659 121,253 9,723 9,915 27,479 48,417 22,414 22,414 68,657 5,504 3,999 3,485 56,008 22,218 22,218 58,057 20,232 3,870 7,862 12,006 $157,540 $145,612 $153,097 $124,245 (1) The accounts of The Chemstrand Corporation and subsidiaries are not included in the years 1959 and 1958. (2) Exclusive of cash and securities. Italics indicate decrease. MAR 000723 LAM016782 26 MONSANTO CHEMICAL COMPANY HISTORICAL STATEMENT OF CONSOLIDATEC (In millions) ASSETS Current Assets: Cash.......................................... ......... Marketable securities....................... Net receivables......................... ......... Inventories................................ ......... 1962 1961 1960 $ 34.4 $ 28.9 $ 32.8 67.1 18.6 75.1 173.9 152.7 124.4 170.6 154.5 153.5 446.0 354.7 385.8 1959(D $ 25.7 93.3 101.6 105.5 326.1 \95S(l> 10 YEARS AGO 1952 25 YEARS AGO 1937 $ 24.6 38.5 93.5 100.4 257.0 $ 38.0 17.5 41.9 62.6 160.0 $ 3.1 4.0 2.9 7.6 17.6 Investments, etc.......................... ......... 84.4 90.5 75.4 79.6 76.4 20.4 .8 Property: Land...................................................... Buildings............................................... Machinery and equipment................ Phosphate deposits............................ Producing oil and gas properties-- Undeveloped oil and gas leaseholds. Accumulated depreciation, etc......... Accumulated depletion...................... Net property.............................. 25.2 219.3 1,054.5 8.6 84.8 9.6 600.9 37.2 769.9 23.4 195.0 907.0, 8.5 82.1 8.9 574.8 29.3 680.8 19.2 181.0 795.5 8.1 79.5 9.0 449.4 27.2 615.7 14.2 110.4 524.1 6.9 76.6 10.0 307.7 25.6 408.9 11.8 107.3 484.4 6.2 74.9 12.8 274.3 24.4 398.7 5.9 55.4 236.8 4.4 90.1 .6 211.8 1.7 7.7 24.4 .4 10.4 23.8 Deferred Charges.................................. 24.6 16.3 12.7 $1,324.9 $1,142.3 $1,089.6 10.2 $824.8 8.5 $740.6 2.2 $394.4 .2 $42.4 (1) The accounts of The Chemstrand Corporation and subsidiaries are not included in the years 1959 and 1958. Italics indicate deduction. MAR 000724 lawio16783 27 and subsidiaries FINANCIAL POSITION (In millions) LIABILITIES Current Liabilities: Accounts payable and accruals........ Income taxes less tax notes.............. Current portion long term debt......... 1962 $ 127.0 42.9 9.3 179.2 1961 $ 109.3 48.8 9.2 167.3 1960 $ 86.4 46.8 9.9 143.1 Notes, Debentures, etc.......................... 219.8 128.2 148.2 Income Debentures............................... 141.0 141.0 141.0 1959(0 $ 65.5 36.1 1.8 103.4 68.8 141.0 1958(0 10 YEARS AGO 1952 25 YEARS AGO 1937 $ 63.0 22.0 1.8 86.8 $ 36.8 3.9 40.7 72.5 35.3 116.0 66.0 $ 3.3 1.0 4.3 Other Liabilities: Deferred income taxes....................... Miscellaneous...................................... Minority Interests in Subsidiaries___ 33.5 3.5 37.0 30.3 28.1 3.4 31.5 23.1 31.1 3.1 34.2 23.1 19.0 1.7 20.7 21.6 19.3 2.5 21.8 20.4 3.6 7.7 11.3 19.1 .5 .5 2.3 Shareowners' Equity: Preference shares............................... Common shares.................................. Paid-in surplus..................................... Retained earnings............................... 58.0 360.9 298.7 717.6 $1,324.9 56.0 323.1 272.1 651.2 $1,142.3 54.4 286.7 258.9 600.0 $1,089.6 w MAR 000725 46.3 222.6 200.4 469.3 $824.8 44.5 187.2 191.4 423.1 $740.6 15.0 26.3 100.9 79.8 222.0 $394.4 5.0 11.1 8.3 10.9 35.3 $42.4 LAM016784 28 MONSANTO CHEMICAL COMFAN HISTORICAL STATEMENT OF CONSOLIDATED INCOME (In millions except per share earnings) Income: Net sales............................................... Other...................................................... 1962 1961 $1,063.2 $932.9 11.7 11.8 1,074.9 944.7 I960 $890.1 10.4 900.5 1959<>! $688.0 12.3 700.3 195811' $611.3 8.9 620.2 1952 $299.1 3.4 302.5 1937 $33.2 .5 33.7 Deductions: Cost of goods sold.............................. Selling, administrative, research----Interest................................................. Minority interests................................ Other...................................................... 762.2 151.7 15.4 1.6 2.7 672.9 131.4 11.6 .4 1.3 933.6 817.6 632.7 126.3 12.4 1.6 .9 773.9 512.5 83.4 7.5 1.6 1.8 606.8 469.1 75.4 7.3 .5 5.1 557.4 213.6 38.9 3.5 .5 3.7 260.2 23.0 4.1 .2 .4 27.7 Income Before Income Taxes.............. Provision for Income Taxes................. Net Income.............................................. Per Common Share: Adjusted for splits............................... Adjusted for splits and stock divi dends................................................. 141.3 127.1 62.9 58.4 $ 78.4 $ 68.7 $ 2.70 $ 2.45 $ 2.70 $ 2.40 126.6 58.8 $ 67.8 $ 2.49 $ 2.40 93.5 40.0 $ 53.5 $ 2.31 $ 2.18 62.8 25.9 $ 36.9 $ 1.66 $ 1.53 42.3 19.4 $ 22.9 $ 1.41 $ 1.23 6.0 1.0 $ 5.0 $ .49 $ .43 (1) The accounts of The Chemstrand Corporation and subsidiaries are not included in the years 1959 and 1958. MAR 000726 LAM016785 29 * OTHER DATA (In millions except where italicized) Depreciation, depletion, etc.................. 1962 1961 $ 97.6 $ 86.9 I960 $ 79.0 1959'D $ 56.1 lgssf1 > $ 52.9 10 YEARS AGO 1952 25 YEARS AGO 1937 $ 15.2 $ 2.0 Book value a share'21............................. $24.74 $23.24 $22.06 $20.27 $79.07 $13.70 $3.02 Gross additions to property.................. $ 169.2 $153.8 $121.3 $ 68.7 $ 58.1 $ 74.8 $ 7.2 Employes'31.............................................. 44,407 37,576 35,427 25,748 24,524 78,384 5,268 Net working capital....... ......................... $ 266.8 $187.4 $242.7 $222.7 $170.2 $119.3 $13.3 Employed capital'41................................. $1,108.7 $943.5 $912.3 $700.7 $632.0 $342.4 $37.6 Employed capital per employe............. $24,967 $25,7 70 $25,752 $27,863 $25,771 $18,625 $7,137 Parent company: Cash dividends on common shares. $ 29.5 $ 27.3 $ 23.2 $ 22.4 $ 22.2 $ 12.9 $ 3.3 Per common share'21...................... $7.05 $7.00 $7.00 $7.00 $7.00 $.83 $.33 Preference shares outstanding......... Common shares outstanding'21........ Number of shareowners.................... 29.0 28.0 82,452 82,203 27.2 83,809 23.2 78,675 150,000 50,000 22.3 15.8 10.0 66,427 24,404 7,074 Data for The Chemstrand Corporation and subsidiaries are not included in the years 1959 and 1958. (2) Adjusted for splits. MAR 000727 (3) Excluding employes of government plants. (4) Net worth and long term debt. LAM016786 1962 BOARD OF DIRECTORS Seated (from left): O'Neal, Queeny, Sommer, Thomas, Schneider, Williams. Standing: Mueller, Eaton, Temple, Anderson, Gillis, Hochwalt, Christian, Hoover; and Secretary Edwin J. Putzell Jr. CHARLES ALLEN THOMAS, Board Chairman. Graduate, Transylvania and M.I.T., AB, DSc, LLD. Research chem ist, General Motors Research Corporation and Ethyl Gasoline Corporation; president of Thomas & Hochwalt Laboratories, Dayton, Ohio. Joined Monsanto, 1936, as director of Central Research Department when Monsanto acquired Thomas & Hoch walt Laboratories; later vice president and technical director, executive vice president, chairman of Executive Committee. Director since 1942. Elected president, 1951. Elected chairman of the board, March, 1960. Chair man, Bonus and Stock Option Committees and member of Executive, Finance and Chemstrand Committees. Director of Met ropolitan Life Insurance Company, South western Bell Telephone Company, St. Louis Union Trust Company, First National Bank in St. Louis, RAND Corporation and Washington University, St. Louis. Member: National Academy of Sciences; Board of Trustees, Carnegie Corporation of New York. CHARLES H. SOMMER, President. BS, chemistry, University of Arizona. Joined Monsanto, 1934, as a salesman; later prod uct sales manager, Organic Chemicals Divi sion; then assistant general manager of sales. In 1949, became assistant coordinator of sales for Monsanto; then Organic divi sion's assistant general manager. Appointed general manager, former Merrimac Division, 1951. Elected a vice president and appointed general manager of Organic Chemicals Divi sion, 1954. Elected executive vice president and elected to board and to Executive Com mittee, 1959. Elected president, elected chair man of Executive Committee and elected to Finance Committee, 1960. Became chairman of Budget Committee, 1961. Member, Chem strand Committee. Director and chairman of executive committee. Manufacturing Chemists' Association; director, St. Louis Union Trust Co., Liberty Mutual Insurance Company and Monsanto Research Cor poration. EDGAR M. QUEENY, Chairman ofFinance Committee. Cornell, class of 1919. Lieuten ant (jg), U.S. Navy, World War I. Joined Monsanto, which was founded by his father, in 1919. Served in export department, sales department; later sales manager and vice president. Director since 1919. President from 1928 to 1943. Chairman of the board, 1943 to 1960. Elected to Executive Commit tee, 1939; elected chairman of Finance Committee, 1960. Member of Bonus, Stock Option and Chemstrand Committees. Chair man, Board of Trustees of Barnes Hospital, St. Louis. Trustee: American Museum of Natural History, National Industrial Con ference Board. Director: American Airlines; Federal Reserve Bank of St. Louis. DILLON ANDERSON, Board Member. BS, University of Oklahoma; LLB, Yale. With law firm of Baker, Botts, Shepherd & Coates since 1929; partner since 1940. Chairman of the board of Texas National Bank of Hous ton. Colonel, U.S. Army, World War II. Consultant to the National Security Council, 1953 to 1960; U.S. delegate to 1955 Summit Conference at Geneva; special assistant for national security affairs to the President, 1955 and 1956. Elected to Monsanto's board, 1960; member of Finance, Bonus and Stock Option Committees. Director: Westinghouse Electric Corporation; Federated Department Stores, Inc.; Foreign Policy Association. Trustee: Carnegie Endowment for International Peace, Brookings Institu tion, Foley Store Foundation, Schlumberger Foundation. Member of American Bar As sociation, Texas Institute of Letters; coun cil member, American Law Institute; fellow, American Academy of Arts and Sciences. JOHN L. CHRISTIAN, Vice President. Re sponsible for coordinating: manufacturing, division engineering, purchasing, distribu tion, personnel relations and medical. BS, chemical engineering, Alabama Polytechnic Institute; post-graduate work at Columbia. Joined research department of The Swann Corporation, 1933 (which was acquired by Monsanto in 1935), later in pilot plant and production departments; superintendent of furnaces at Columbia, Tenn., elemental phosphorus plant; then plant manager. Ap pointed general manager of Phosphate Divi sion (now Inorganic Chemicals Division I, 1948. Elected vice president, 1951. Elected to the board and to the Executive Commit tee, 1960. Member, Budget Committee. Director: Louisville & Nashville Railroad Company. Past chairman of St. Louis BiState Chapter, American National Red Cross. Member, American Chemical Soci ety, Newcomen Society, American Institute of Chemical Engineers. MAR 000728 LAM016787 31 FREDRICK M. EATON, Board Member. AB, LLB, Harvard. Partner in law firm of Shearman & Sterling since 1945. General counsel. War Production Board, 1945. Elected to Monsanto's board, 1947; re signed in 1959 to serve as chairman of the American delegation to 10-nation disarma ment committee at Geneva. Re-elected to the board and Finance Committee, 1961. Member of Auditing Committee, 1961. Di rector of Consolidated Edison Company; First National City Trust Company ; New York Life Insurance Company; Great American Insurance Company. Trustee of American Museum of Natural History ; Carnegie Corporation; Commonwealth Fund, Presbyterian Hospital, New York City. JOHN L. GILLIS, Vice President. Respon sible for coordinating: marketing and trade relations. BS, Washington University. Joined Monsanto, 1933. Export manager, assistant director and director, former Foreign De partment; later general manager of former Merrimac Division. Elected vice president, 1950; appointed general manager. Organic Chemicals Division, 1951; appointed vice president of marketing, 1953; elected to board, 1955; elected to Executive Commit tee, 1958. Member of Budget, Salary and Chemstrand Committees. Director of Mobay Chemical Company; St. Louis County National Bank ; St. Louis County Chamber of Commerce; General Contract Finance Corp. and Securities Investment Co. Vice president and director, National Safety Council. Chairman, Board of Trustees of the Governmental Research Institute of Missouri. Member of President's Council of St. Louis University. CARROLL A. HOCHWALT, Vice Presi dent. Responsible for coordinating: research, development, patents and basic engineering. BChE, DSc, University of Dayton. Research chemist. General Motors Research Corpo ration; research chemist, production man ager, Ethyl Gasoline Corporation. Vice president, Thomas & Hochwalt Labora tories, Dayton, Ohio, in 1926. When Monsanto acquired Thomas & Hochwalt Laboratories in 1936, became associate director of former Central Research De partment ; later director. Elected vice presi dent, 1947; became coordinator of research, development and patent activities, 1948. Elected to board, 1949; president of The Chemstrand Corporation during research and development stage; elected to Executive Committee, 1950. Member, Budget, Salary and Chemstrand Committees. Director of Monsanto Research Corporation; Kettering Foundation; Boatmen's National Bank of St. Louis. Member, President's Council of St. Louis University. Trustee, University of Dayton. HERBERT HOOVER JR., Board Member. AB, Stanford University; MBA, Harvard University. President, later board chairman, United Geophysical Corporation, 1935 to 1953; consultant to Secretary of State, 1953; Under Secretary of State, 1954 to 1957. Consulting engineer since 1957. Elected to Monsanto's board, 1958. Elected to Finance Committee, 1959. Director: Southern Cali fornia Edison Company, Hanna Mining Company, American Mutual Fund, Invest ment Company of America, Pacific Mutual Life Insurance Company. Trustee: Univer sity of Southern California, Claremont Men's College, Freedoms Foundation at Valley Forge. A national director of Boys' Clubs of America. Member, Business Ad visory Council, U.S. Department of Com merce. President, American Radio Relay League, Inc., and International Amateur Radio Union. ROBERT K. MUELLER, Vice President. Responsible for coordinating international operations. BS, chemical engineering, Washington University; MS, chemistry, University of Michigan. Joined Monsanto, 1935, as a control chemist; operating super intendent, Plastics Division; operating superintendent, general production superin tendent, plant manager. Longhorn Ordnance Works, World War 11; plant manager, as sistant production manager, production manager, assistant general manager, Plastics Division, before appointment as general manager, 1952. Elected vice president, 1954. Elected to board, Executive Committee, 1961. Member, Salary and Retirement Plan Committees. Board chairman of Shawinigan Resins Corporation (an associate company). Director: Fome-Cor Corporation, Mon santo Belgium, Valley Bank & Trust Company of Springfield, Mass. EDWARD A. O'NEAL JR., Vice President. BA, Davidson College. In 1926, joined The Swann Corporation at Anniston, Ala. (acquired by Monsanto in 1935); became plant manager there in 1937. Later plant manager, former Phosphate Division plant at Trenton, Mich.; moving up to division production manager, 1944. Two years later, named managing director of British sub sidiary, Monsanto Chemicals Limited; served as its board chairman from 1948 to 1955. Elected a Monsanto vice president and appointed general manager, Overseas Division, 1953. Later named vice president of international operations. In 1955, elected to Monsanto's board and to board of The Chemstrand Corporation (which became Chemstrand Company, a division of Mon santo in 1962.) Has served as Chemstrand's president since 1956. Re-elected Monsanto vice president, 1962. WILLIAM W. SCHNEIDER, Vice Presi dent. As general counsel, responsible for coordinating: finance, law and legislative matters. LLB, St. Louis University. Joined Monsanto, 1921, as assistant in Legal Department; later director, Legal Depart ment; corporation secretary, 1925 to 1951. Elected vice president, 1947; board mem ber, 1951. Corporation treasurer, 1953 to 1956. Elected to Finance Committee, 1954; appointed vice president of finance and law, and general counsel, 1954; elected to Executive Committee, 1956. Member, Budget and Retirement Plan Committees. Director of Mobay Chemical Company. Retired from Monsanto, Dec. 31, 1962. ALAN H. TEMPLE, Board Member. B. Litt., journalism, Columbia University. Former managing editor and editor, Com merce and Finance; financial editor, North American Review; president of Theo. H. Price Publishing Company. Entered banking in 1931. Retired 1961 from First National City Bank of New York, which he had served as a director since 1956 and vice chairman since 1958. Elected to Monsanto's board, 1959 ; elected to Finance and Auditing Committees, 1960. Director of Mead Corporation; Moore Corporation, Limited; Prudential Insurance Company of Great Britain (in N. Y.); Hudson Insurance Company; Seaboard Surety Company; Centennial Insurance Company; Lazard Fund, Inc. Trustee: Atlantic Mutual Insurance Company, Columbia University, Whitney Museum of American Art, National Industrial Conference Board, Academy of Political Science, Committee for Economic Development. FELIX N. WILLIAMS, Vice President. Responsible for coordinating: new com mercial ventures, labor relations. University of Virginia, 1923. Joined The Swann Corpo ration (acquired by Monsanto in 1935) in production department, later in research department; purchasing agent, assistant plant manager, plant manager. Supervised construction of Columbia, Tenn., elemental phosphorus plant, later plant manager there. Production manager, former Phos phate Division; general manager, Plastics Division. Elected vice president, 1944; elected to board, 1947; member, Executive Committee, 1950. Appointed vice president of manufacturing, 1954; vice president of personnel, 1960; present position, 1961. Member, Budget Committee. Director: Fome-Cor Corporation; Mercantile Trust Company of St. Louis; Managed Funds, Inc.; Illinois State Chamber of Commerce; United Fund of Greater St. Louis. Director, finance committee member of Wabash Railroad Company. Director, executive committee member. Chamber of Commerce of Metropolitan St. Louis. MAR 000729 LAM016788 3-2 DIRECTORS AND OFFICERS BOARD OF DIRECTORS officers Charles Allen Thomas, Chairman...........St. Louis Charles Allen Thomas . . Chairman of the Board of Dillon Anderson................................................ Houston Directors Charles H. Sommer............................................President David R. Calhoun............................................................St.LouisJohn L. Christian........................................Vice President John L. Christian............................................................St.LouisJohn L. Gillis................................................Vice President Fredrick M. Eaton.......................................................NewYorkCarroll A. Hochwalt...................................................VicePresident Robert K. Mueller.......................................................VicePresident John L. Gillis...................................................................St.LouisEdward A. O'Neal Jr.................................Vice President Carroll A. Hochwalt....................................................St.LouisFelix N. Williams......................................Vice President Herbert Hoover Jr.................................Los Angeles H. Harold Bible.............................................................VicePresident Robert K. Mueller........................................................St.LouisEdward J. Bock...............................................................VicePresident Edward A. O'Neal Jr....................................................NewYorkJohn R. Eck.......................................................................VicePresident Edgar M. Queeny.............................................................St.LouisArthur W. Lucas............................................................VicePresident Robert M. Morris..........................................................VicePresident Charles H. Sommer.........................................................St.LouisEdwin J. Putzell Jr.......................................................VicePresident Alan H. Temple..............................................................NewYorkTom K. Smith Jr...............................................................VicePresident Felix N. Williams............................................................St.LouisErwin G. Somogyi...........................................................VicePresident J. Russell Wilson..........................................................VicePresident Marshall E. Young.......................................................VicePresident EXECUTIVE COMMITTEE Charles H. Sommer, Chairman John L. Christian Robert K. Mueller John L. Gillis Charles Allen Thomas Carroll A. Hochwalt Felix N. Williams FINANCE COMMITTEE Edgar M. Queeny, Chairman Dillon Anderson Fredrick M. Eaton Charles H. Sommer Alan H. Temple Herbert Hoover Jr. Charles Allen Thomas Transfer Agent Morgan Guaranty Trust Company of New York Marlette C. Covert...........................................Controller Edwin J. Putzell Jr.............................................Secretary Patrick J. DOwd....................................................Treasurer Lloyd R. Cole.............. Earl B. Mills............... Jack W. Mueller........ Walter C. Thilking .. Earl J. Wipfler........... Charles E. Caspari Jr. John N. Eulers............. Rodney Harris Jr......... C. Brent Holleran . . . Franklin C. Rehfeld .. Norvell G. Jones .... J. Robert Matlock. .. Thomas M. Rasmussen. Rolla H. Stocke.......... George F. Wingard___ Assistant Controller Assistant Controller Assistant Controller Assistant Controller Assistant Controller .Assistant Secretary .Assistant Secretary . Assistant Secretary . Assistant Secretary . Assistant Secretary Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Assistant Treasurer Registrar The Chase Manhattan Bank MAR 000730 Regional Vice Presidents Roy L. Brandenburger Franklin J. Cornwell Edward W. Gamble Jr. February 25, 1963 LAM016789 MONSANTO CHEMICAL. COMPANY 800 N. LINDBERGH BLVO ST. LOUIS 86. M MAR 000731 LAM016790