Document 85bbEa7ZZQYDw76mrkrKJY4nB

Monsanto 1974 Annual Report Monsanto Company MAR 1100.01 LAM017160 Operational Highlights (Dollars in millions, except per share) Net Sales............................................................................ Net Income........................................................................ Per Common Share: Primary Earnings....................................................... Fully Diluted Earnings...................................-......... Dividends.................................................................... Book Value................................................................... Depreciation, Obsolescence and Depletion.................................................................. Plant Additions and Replacements................... Research and Development.................................... Year End: Shareowners -- Common Shares......................... Employes...................................................................... 1974 $3,497.9 $ 323.2 $ 9.25 8.73 2.30 51.39 $ 171.9 $ 313.4 $ 105.3 98,542 60.926 1973 $2,647.7 $ 238.3 $ 6.90 6.54 1.90 44.26 $ 170.3 $ 205.3 $ 82.0 98,964 58,277 Operating Results by Lines of Business Lines of Business: Agricultural Products.............................................. Commercial Products.............................................. Industrial Chemicals................................................ Polymers & Petrochemicals.................................. Textiles........................................................................ Sales and Operating Income........................ Income Charges (Credits) -- Net............................... Income Before Income Taxes....................................... Provision for Income Taxes........................................... Net Income......................................................................... 1974 Net Sales Income $ 410.7 497.8 947.1 854.6 787.7 $3,497.9 $202.3 4.8 171.5 136.4 35.2 550.2 (24.1) 574.3 251.1 $323.2 1973 Net Sales Income $ 283.4 399.0 666.5 593.5 705.3 $2,647.7 $121.5 (0.6) 103.9 74.4 107.0 406.2 (4.9) 411.1 172.8 $238.3 LAM017161 MAR 1100.02 ! To Our Shareowners The year 1974 was one of economic extremes. Initially, it presented conditions that strained our ability to meet customer demands and later in the year we found conditions that challenged our skills in sustaining a strong, forward thrust in the many worldwide markets we serve. It was a year in which Monsanto's products, technological and human resources provided the base for record sales, net income and earnings per share. For 1974, consolidated net sales reached $3,498 billion, a 32 per cent increase over the $2,648 billion reported in 1 973. Net income for 1974 increased 36 per cent over the $238.3 million reported for 1973, reaching $323.2 million. Primary earnings per common share for 1 974 were $9.25 while fully diluted earnings per common share were $8.73. In 1973, primary earnings were $6.90 per share and fully diluted earnings were $6.54. Effective Jan. 1, 1974, the company changed its method of accounting for inventories to the last-in, first-out (LIFO) method. This was done because the rapid increases in prices during the year would result in an over-statement of profits if the firstin, first-out (FIFO) method were continued, since inventories sold were replaced at substantially higher prices. The effect of this change was to reduce 1 974 net income by $77.5 million or $2.26 per common share. 1974 Earnings Factors As we entered 1974, most Monsanto plants were operating near peak capacities. Shortages of some petroleum-based feedstocks impacted some manufacturing operations however, and, in certain instances, we were forced to allocate products to our customers. Virtually all areas of the LAM017163 company were reporting large increases in sales and all lines of business were recording significant improvements in operating income. As rigorous price control restraints that spanned nearly two years were removed early in 1974, Monsanto was able to offset the raw material costs it had been absorbing by selective increases in its selling prices. Undoubtedly we will see some softening of selling prices in the current economic climate. However, as the economy improves, we anticipate that capacity limitations, together with historical growth rates within the chemical industry, will result in price stability, which, in turn, will provide future earnings strength. During 1974, each of Monsanto's operating companies recorded sales increases over those of 1 973, and four of the five operating units recorded substantial increases in operating income. Agricultural Chemical Sales Up A number of product areas exhibited particular market strength throughout 1974. Agricultural chemicals increased sales by 44.9 per cent over those of 1 973 as the world demand for greater food production continued unabated. Another strong showing was reported by the rubber and specialty chemicals products in which Monsanto is a world leader; demand remained high for these products for virtually all of 1974. Similarly, the phosphates and detergents product groups turned in fine performances in 1974. These, and the vast majority of Monsanto's other business groups, showed rapid growth in 1 974; however, the year was not without its problems or its challenges. Energy Shortages The petroleum-based raw material shortages which caused some disruptions in production early in the year, were held to a minimum through innovative approaches to securing feedstocks and primary raw materials needed for production. As the year progressed and demand normalized, we were able to secure ample feed stocks for our manufacturing operations. However, the prices of feedstocks and a number of raw materials vital for production doubled, tripled and even quadrupled, primarily reflecting higher petroleum costs. The first harbinger that all was not right with the world's economies appeared in the spring as sales of our electronic group slowed. Shortly after midyear, demand for man-made fibers slackened in Europe and this phenomenon reached U. S. markets within weeks. Sales for other Monsanto products also slowed in the fourth quarter, reflecting a deepening recession in all world markets. Demand for plastics used in automotive and home building industries declined, as did sales of plasticizers and process chemicals. The current economic climate does not diminish our strong belief that in the next decade Monsanto will be in a strong growth mode. Monsanto is continuing to position itself to be a world leader in sciencebased products. To insure our participation in a growing economy, we have initiated an ambitious capital spending program that will see major new capacity coming on-stream late in 1975, in 1976, in 1977 and beyond in areas of defined strength. Capital Spending Increases Last year our capital spending was the highest in the company's history. reaching $313.4 million. This year we anticipate capital spending to increase more than 60 per cent and, depending on the availability and delivery of materials, to reach between $500 and $550 million. A similar level of expenditures is already planned for 1976. These major capital commitments are part of Monsanto's long-term program to plan and manage its capital investments on a consistent, year-to-year basis. We intend to minimize the broad fluctuations in capital spending, thereby helping to maximize long-term profit growth. This long-term planning also accrues to the company's benefit by implementing engineering and construction efficiencies that are the keys to future expansion programs. High rates of inflation, particularly in construction costs, render the benefits we receive from depreciation inadequate to fill our capital require ments. As an example, construction of a new acrylonitrile plant today is two to three times more expensive than one built 10 years ago. Even though our planned capital expenditures will be financed primarily through depreciation and retained earnings, we will be required to raise additional funds in the public capital markets. While the timing is uncertain, we plan to raise such funds in the debt market and see no present need to seek additional equity. Executive Changes Significant changes were effected during the year. On Dec. 6, 1974, Mr. Buck Mickel, chairman of the board of Daniel International Corporation, Greenville, S. C., a leading engineering LAM017164 4 MAR 1100.05 and construction firm, was elected, effective Jan. 1, 1 975, to the Monsanto Board of Directors. Within the company's operating groups a number of organizational changes were implemented. Monsanto's fifth operating company, Monsanto Agricultural Products Company, became operational on Jan. 1, 1975. Mr. Edmond S. Bauer was elected a Monsanto group vice president and named head of the new operating company. Reflecting Monsanto's planned, aggressive level of capital expenditures. Facilities and Planning, a new corporate staff function, was created to closely coordinate the planning, engineering and manufacturing functions throughout Monsanto. Mr. Francis E. Reese was elected a group vice president and appointed to manage this new function. Mr. James E. Crawford Jr., vice president, assumed responsibility for the International Division on Jan. 1, 1975, succeeding Mr. Reese. On June 14, 1974, Mr. Robert L. Berra was elected vice presidentpersonnel, in charge of the combined personnel-management development programs of the company. potential considerably higher than its historical norm. Our primary objective in managing the many businesses that comprise Monsanto is to provide steadily increasing earnings over the long term. While the possibility of a year-to-year earnings decline exists, we are confident, based on our strategic approach to both existing as well as new business opportunities, that Monsanto's earnings will, over the long term, have a positive upward direction. Once again we must underscore for you Monsanto's greatest resource, its family of employes. Their efforts during 1974 culminated in Monsanto's most successful year. Monsanto's family has more than 60,000 employes worldwide and it would be impossible to present all of them to you. We would, however, like to present some of the members of our key management organization who are helping to guide and direct Monsanto to new and greater destinies. Those members of key management appearing in this publication are representative of the strength that is Monsanto. Sincerely, 1975 Outlook Projecting Monsanto's sales and earnings potential for 1975 would be difficult in ordinary times and is virtually impossible in these times of economic uncertainty. Ffowever, underlying strengths in such major areas as agricultural chemicals and phosphates and detergents, combined with continuing growth potential in areas such as specialty chemicals, provide a strong base on which 1 975's results will be built. Monsanto, with this strong base, has established a level of earnings Chairman of the Board X/' President March 7, 1975 MAR 1100.06 \1 , LAM017165 5 P*VS D R' w^.v jrv* . " ;s: > ky, 'v*>.~! VKA S'-:A>y*x>t'R.i-c:hard Jjl 'M-ah>one^y13*^ ras i>-'i ,'i.T! sg mu *l3g??$S"'StS*** v*.- 1.'-. ' *!/'>- `-I $8 iMMip' .. 1 . ' \v&s)L -3, ' . , , ^ * * *..*. V TjnC ',^.. ;J|-V . ,*-.'*V V V</p is* X|f ..b .'/!.. . , *&* 7/#-j * ^fL s ; mWl V*-,.W-'< CV^V? .i ` >Vi - '! "i-f * '*' Afy * fj '.#J>gl -1^ ^Clll s'Sam S-j8te iS fc ass I tfiK StfBWja HiHi m. *>: tyit <t:L ,, :i >. IT- -. ^-:n':!yM^ 565s?^ m, !&&&$ MM Ednnond;S.|Bauer :-vj? ,i,t'! WM JxW% rf(8 sP SEWS lf?5 ,,;{^Vsf$ .*y<r*i v-~-a>*t _sv* ..*`ct*.-*^.'>?'/tv'.+.*i-* /* '-Nicholas L.' Reeling' /',' H " "* MAR 1100.07 'Mil- LAM017166 Monsanto Agricultural Products Company (Dollars in millions) Edmond S. Bauer Group Vice President D. R. Fischer Director, Animal & Plant Products Richard J. Mahoney Director -- International Nicholas L. Reding Director. Herbicides LAM017167 1974.......... .. 1973.......... 1972......... 1971.......... Sales $410.7 233.4 222.3 199.7 Operating Income $202.3 121.5 80.9 68.0 Monsanto's newest operating company, the Monsanto Agricultural Products Company, established record sales and operating income levels in 1974. It also initiated an ambitious expansion program as it continues its vital role in helping to increase the world's food supplv. The major factors influencing 1974's successful performance included heavy plantings of wheat, corn and soybean crops resulting in greater use of the company's herbicides and fertilizer products. De mand exceeded supply m many areas. Herbicides produced by this operating company help to control weed growth, making nutrients and moisture more available to crops, thereby increasing yields. Lasso Herbicide Sales Up In 1974, sales of Lasso herbicide were up sharply among com, soybean, and peanut groweis. Used primarily to control annual, grassy-type weeds, Lasso is finding additional market penetration as it is used in combination with other agricultural chemicals to control broader spectrums of weeds. Too. additional market penetration is being achieved as Lasso is broadcast (spread over the entire field) rather than in band use, where it is applied only to rows of corn or soybeans. During 1974, additional production capacity for Lasso canto on-stream. Another expansion is r. way and will increase production -<r '.ms versa- t ie heipicide by 50 nr to meet MAR 1100.08 / continuing heavy demand. This expansion is expected to be on-stream during 1976. Sales of Avadex herbicides registered further gains in 1974, with substantial increases in Canada and Europe. The family of Avadex herbi cides has broad use worldwide for the control of wild oats in crops such as sugar beets, wheat, barley, green peas, lentils and flax. With worldwide demand for this product increasing, capacity expansions are under way. A new manufacturing unit is expected to be operational in the United States in 1976 and an expansion of capacity for European Avadex markets is under way in Belgium. Machete Expansion In the Far East rice-growing areas, sales of Machete herbicide reached all-time highs. The herbicide controls grassy weeds in rice, the world's largest food crop. To shorten supply lines and improve service to this fast-growing market, construction of a plant for the manufacture of Machete began in late 1974 in the Republic of Korea, in partnership with local interests. Sales of insecticides rose in 1974, as cotton farmers increased the number of acres planted. Late in 1974, however, world demand for cotton began to soften, affecting parathion insecticide sales in Latin America. Roundup In Commercial Use Newer products, for a variety of weed problems that escape existing herbicide technology, are the key to the future in the agricultural area. Monsanto's new Roundup herbicide -- the first to demonstrate real and reliable control of perennial weeds -- will be a major product for the future. Roundup appears to control more than 100 species of weeds including such difficult perennials as Johnson Grass and Quackgrass. During the year, Roundup moved into U.S. commercial use for industrial applications such as the control of difficult-to-kill weeds along highway, railroad, fuel and power transmission rights-of-way. In addition to industrial and other nonagricultural uses. Roundup is expected to have extensive worldwide application in crop and plantation agriculture. For such appli cations, test-marketing of Roundup began in Malaysia on rubber plan tations, and in the United Kingdom, for small grain crops. In the United States, extensive experimental field work required for Environmental Protection Agency registration of cropland uses is continuing according to schedule. Approval for such com modities as wheat, corn and soybeans is expected, but not before 1976. In late 1974, a new plant for the production of Roundup was under construction in Luling, La., with completion scheduled for mid-1976. Polaris Increases Yields Polaris, another new product, is the company's first plant growth regulator and is continuing to find wide acceptance in major sugar pro ducing areas of the world. Polaris gives sugarcane growers a longer harvest period and increases the yield per acre of raw sucrose which is refined into sugar. Use of Polaris improves yields by 10 to 15 per cent. In 1974, demand for ammonia exceeded supplies. Plans to construct a new 400,000-ton-a-year ammonia plant in Luling, La., were announced late in the year. Start-up is scheduled for the last quarter of 1 976. The new facility will support increased ammonia needs for use in production of other Monsanto products, for fertilizer and for blasting agents. Animal Products Sales Gain Animal products posted a modest year-to-year sales gain on the strength of a good performance in the first half of the year. In the last half of 1 974, sales of feed supplements and antioxidants were affected by cutbacks in feed additive inventories, as cus tomers reduced their production levels. At Farmers Hybrid, Inc., sales of the wholly-owned subsidiary's swine business fell off in the latter part of 1974, as growers, reacting to higher corn and lower hog prices, began to reduce their breeding herds. At yearend, the subsidiary had four "boar power" sales centers in operation in key market areas. Demand for farm products con tinues to grow and, following a subnormal harvest in 1974, an increase in planted acreage appears certain for 1975. High crop prices should encourage farmers to push for higher yields through greater use of herbicides. 3 MAR 1100.09 LAM017168 1974 Highlights (Dollars in millions) Per Cent Sales of Total Herbicides. Insecticides and Other Products S410.7 Agricultural Products Heavy demand for agricultural herbicides led to strong 1974 increases in sales and operating income. Increased plantings of major crops of wheat, soybeans and corn, created increased use of herbicides and fertilizer products. Sales of Lasso herbicide were up sharply as use in concert with other agricultural chemicals broadened market penetration. Additional Lasso capacity came on stream and a further expansion will increase production by 50 per cent in 1 976. Avadex herbicides for control of wild oats in wheat, barley and other crops, registered additional gains in Canada and Europe. Machete sales growing for rice-producing areas. Roundup herbicide moved into U.S. commercial use for industrial applications. MAR 1100.10 LAM017169 9 ' 'I''-'*-' >*,*'' ' :w. , ', -^.F. Eugene Troy' ij^rV LAM017170 Monsanto Commercial Products Company (Dollars in millions) Tom K. Smith Jr. Group Vice President Edward H. Finsilver Director, Extruded Products Business Group F. P. LaBelle Director, Enviro-Chem Business Group George M. MacLeod General Manager, Electronics Division Thomas M. Shive President & Chairman of the Board, Fisher Controls Company, Inc. F. Eugene Troy Director, Consumer Products & Recreational Surfaces Business Group Robert L. Walter Director, Container Business Group 1974......... . . 1973......... 1972.......... 1971......... Sales $497.8 399.0 341.1 328.8 Operating Income $ 4.8 (0.6) (11.0) (6.3) The most diversified of all Monsanto operating companies, Monsanto Commercial Products Company encompasses a number of distinct, established businesses as well as several young, emerging businesses -- some of which carry heavy development costs. Fisher Controls Posts Strong Year The 1 974 surge in capital spending, particularly in energy related industries, contributed to Fisher Controls Com pany's best year. This wholly-owned Monsanto subsidiary's sales of auto matic control valves and digital and analog process controls increased 30 per cent over the previous year as a result of increased volume and improved selling prices. A new industrial electronics instrumentation plant, scheduled for completion in late 1975, will triple production capacity for ac2 and de control systems. Demand for these controls continues to grow due to industrial modernizations, greater use of automation and preference for electronic versus pneumatic controls. Projected strength for the energy as well as the chemical process industries, both major markets for Fisher products, together with sub stantial order backlogs, indicate a continued strong sales performance for Fisher in 1 975. Increase In Pollution Control Sales Monsanto Enviro-Chem Systems, Inc., another wholly-owned subsidiary, posted record sales of Brink mist MAR 1100.12 LAM017171 eliminators for air-pollution control, sulfuric acid plant design and con struction, and vanadium catalyst for contracted suifuric acid plants. Sales of Brink units were bolstered by increased environmental concern in the textiles, food processing and paper industries, which resulted in new markets for the product. Catalyst sales were also at record levels. Sales backlogs for Brink units, catalysts and sulfuric acid plants are at record highs for 1975. To meet catalyst demand, a plant expansion at Avon, Calif., nearly doubled pro duction when completed early in 1975. Construction of a 1,000-ton-a-day Landgard solid -waste disposal and resource recovery system in Baltimore was completed in 1974. Full start-up of the system is scheduled by mid1975. Landgard is a forerunner in new approaches to solve municipal waste disposal problems while recovering useful by-products. Fome-Cor Sales Off The container and extruded oroducts business groups showed strong profit increases during 1974. However, there was a fourth-quarter decline in demand for blownware products, film and packaging materials, as well as a steep drop in sales of Fome-Cor sheathing board, a product used in the mobile home market, increased sales performances were achieved in coated fabrics and foam cushioning products in Canada, and in polystyrene meat trays, film and sheet in Belgium. In the United States, polystyrene shortages prompted closing of one Polyflex film anti sheet operation, resulting in a significant decline in sales of clear meat trays. There was strong demand for polyethylene film for both construction and agricultural uses, with prices firm. Performance of the Fome-Cor group was weakened by several factors: shortages existed for coated paper for graphic arts boards; tight mortgage money restricted financing of mobile homes made with sheathing board; and consumers lacked interest in buying automobiles, many of which use Fome-Cor automotive board and other products. A new application for Fome-Cor as underlayment in refinish ing home exteriors was developed. Cycle-Safe Production Starts In 1974, Monsanto changed the trademark for its Lopac polymeric container to Cycle-Safe to emphasize the product's recyclability. The com pany will conduct active recycling programs as an integral part of the marketing and manufacturing process. The first Cycle-Safe container production is under way at South Windsor, Conn., building toward support of initial market introduction by The Coca-Cola Company during the first half of 1975 in an eastern city. Plans are also moving ahead for production at units near Chicago and Baltimore. The long-term potential is high for Monsanto's leadership po sition with a recyclable and safer soft drink container. However, start-up costs and continued development resulted in heavy expense in 1974 and will require even greater expenditures for the company in 1975. Electronics Sales Drop After posting gains very early in 1974, electronics industry sales dropped dramatically, reflecting high customer inventories and reduced end-product demand. As a result, the Electronics Division's sales for 1974 were below 1973's record level. The division encompasses Monsanto's silicon, lll-V materials and optoelectronic components busi nesses, with manufacturing operations in the United States, Malaysia, Indonesia and Belgium. The latter part of 1974 showed a continuing downward trend in sales of silicon, while shipments of lll-V materials remained flat. Sales of optoelectronic devices, such as the numerics on hand-held calculators, also dropped precipitously. The depressed state of the electronics business is expected to continue well into 1975 as large industrial customers work off inventory. AstroTurf Sales Expand The consumer and recreational surfaces product group had record sales during 1974 in the United States and Western Europe. However, in the fourth quarter, reduced consumer spending caused both the doormat and consumer nylon product groups to fall behind sales levels for the same period a year earlier. Raw material price increases in these areas were a major factor in limiting second-half profit performance. New products in this area are planned for market testing and introduction in 1975. AstroTurf stadium surface, either contracted for or installed in 1974, ranged from Moscow and Tokyo to Brooklyn and El Paso. Record sales were recorded for the polyurethane poured-in-place fieldhouse and track surfaces. The total market for recre ational surfaces is expected to continue expanding in 1975, particularly in soccer fields abroad and in the replacement and new sales markets in the United States. MAR 1100.13 LAM017172 1974 Highlights (Dollars in millions) Per Cent Sales of Total Process Controls and Electronics................$21 2.4 Plastic Products..............160.7 Chemical and Environ mental Systems. . . . 85.2 Other Products................ 39.5 17 i 8 Process Controls & Electronics Capital spending surge by energy-related industries benefits sales of process control valves by wholly-owned subsidiary, Fisher Controls. Sales backlog at record level entering 1975. Demand for electronic products, including silicon, lll-V materials and optoelectronic devices, slowed early in 1974 and is not expected to rebound until later in 1975. Plastic Products Modest gains in plastic products areas including blownware and packaging materials. Cycle-Safe containers being produced for initial market introduction by The Coca-Cola Company. Chemical and Environmental Systems Strong performance in established product lines for Brink mist eliminators and vanadium catalysts. Landgard system in start up mode in Baltimore. Other Products AstroTurf stadium surface installations set record sales levels. MAR 1100.14 13 LAM017174 i Monsanto Industrial Chemicals Company (Dollars in millions) H. Harold Bible Group Vice President Francis J. Fitzgerald General Manager, Specialty & Process Chemicals Dr. S. Allen Heininger General Manager, Plasticizers John Mason Director -- Europe Arne Obel General Manager, Rubber Chemicals James E. Springgate General Manager, Detergents & Phosphates 1974.......... 1973.......... 1972.......... 1971......... Sales $947.1 666.5 572.3 544.3 Operating Income $171.5 103.9 57.7 49.5 The year 1974 saw Monsanto Industrial Chemicals Company set new records in sales and operating income. A worldwide supply/demand imbalance existed during most of the year, with many products in sold-out positions, and a number of products were placed on allocation. This diversified operating company serves a broad range of markets and a large number of its products are somewhat insulated from the cyclical eccentricities of the economy. These include functional fluids, detergent and phosphate products, food ingredi ents and fine chemicals. Despite the economic turndown in the fourth quarter, demand for these products remained high. Late in the year, demand for products serving housing, textiles, automotive and durable goods indus tries, such as plasticizers and rubber chemicals, softened significantly. This condition is expected to continue for the first half of 1 975. Raw material costs accelerated rapidly through most of the year. However, capacity limitations and strong demand made possible increased selling prices to recover higher costs. Rubber Chemicals Sales Grow Rubber chemicals, produced in eight countries, recorded worldwide sales exceeding 1973 levels. Sales of. rubber testing equipment also sur passed 1973 resuits. Product shortages occurred in the early months, because of lack of raw materials, with the operating unit unable to satisfy cus- LAM017175 MAR 1100.16 tomer demand. In the last quarter supply and demand were restored to balance, influenced by the general downturn in automotive production both in the United States and Europe. The downturn in auto production was offset somewhat by continued demand for replacement tires and tires for heavy construction equipment. The company announced plans for construction of a major rubber chemi cals manufacturing unit at a plant site in the United Kingdom. Construction began on a major plant in Brazil, expected on-stream in 1976. Specialty Chemicals Demand Strong In the specialty chemicals area, outstanding growth was recorded for both the food chemicals and fine chemicals product lines. Plans were announced for construction of Monsanto's first sorbic acid plant in the United States, with completion set for late 1976, Sales of L-dopa, used in the treatment of Parkinson's disease, reached a record as a new facility completed its first full year of production. A new United Kingdom plant expansion was planned to serve the European market with Dequest water treating chemicals. In Luling, La., an expansion was completed for pro duction of ACL swimming pool chemicals. Santotrac tractive lubricant, a development product, found new uses in industrial drives in the United States and Europe. It is also being evaluated in industry and government studies, as automotive design engineers look to traction transmissions to improve fuel economy. year. Future plans call for substantial capacity increases in major plasticizer products to meet anticipated demand in the late 1970's. Monsanto Flavor/Essence showed sales growth, stimulated by two product breakthroughs; commercial-, ization of the first successful synthetic chocolate flavor and development of an entire line of spray-dried fragrances and flavors. Phosphate Sales Increase Phosphates and detergents reached record sales levels and demand continued high throughout the year. All plants operated at high levels during the year, producing dental, food and detergent grade phosphates Process Chemicals Show Gain Demand for process chemicals, which are used by manufacturers as basic building blocks, was strong for most of 1974. A number of incremental increases partially offset the supply/ demand imbalance, but feedstock shortages limited over-all plant production rates. Monsanto is a leader in both the technology and production of plasti cizers which are used to provide flexibility and other properties to certain plastic products. Plasticizer plant operations were at near maximum output until the fourth quarter of the year. Plasticizers include phthalates, phosphates and specialty additives for a number of consumer products such as vinyl upholstery, wire and cable, wall coverings, flooring and food wraps. The company participates in all world markets for these chemicals. A major consumer of plasticizers is the vinyl industry, which will be as well as phosphorous intermediates. Research efforts to develop new detergent builders and surfactants accelerated. A new nonphosphate detergent builder is being evaluated by customers and will go into research pilot plant production in 1975. Efforts to expand the company's phosphates and detergents businesses into other world markets progressed with announcement of a phosphate production complex in Brazil. In the United Kingdom, a plant to produce TCC bacteriostat, used in bar soaps, began operations early in 1975. In Augusta, Ga,, a new dental phosphates plant was started up early in 1975, and additional phosphoric acid capacity is being installed. Demand, sales levels and profit ability patterns set in 1974 for the detergents and phosphates businesses are expected to continue throughout 1975, thus assuring continued high utilization of the division's phosphate plants. confronted with restrictions on worker exposure to vinyl chloride monomer in the near future. Although the regu lations may temporarily affect the production of PVC, it is expected to remain a major product meeting industry needs. A new plant to produce Santicizer 71 ! plasticizer for the Australian vinyl market became operational during the maR^0017 LAM017176 1974 Highlights (Dollars in millions) Per Cent Sales of Total Rubber and Specialty Chemicals................. $407.6 ___ 43] Process Chemicals and Plasticizers. . . . 292.7 5D Phosphates and Detergents................ 246.8 26 Rubber & Specialty Chemicals Rubber chemicals and testing equipment produced strong 1974 sales despite slowdown in automotive production. Replacement, truck and off-the-road tire markets continued strong until year end. Expansions underway at United Kingdom plant site and major new plant being constructed in Brazil. Specialty chemicals sales remained strong throughout 1974. Expansion completed for ACL swimming pool chemicals in U.S. Dequest water treating chemical plant expansion planned in Europe. Process Chemicals and Plasticizers Demand strong for most of 1974 but decline noticeable in last quarter. Sales of plasticizers lower in fourth quarter as end market sales slow. Phosphates and Detergents Sales remained strong throughout the year as demand exceeded supply for non-detergent uses in food additives, dentifrices and phosphorous ntermediates. 1100.18 7 LAM017177 17 * v i?**'2vL""v *?'*1 * ' v' l i;r,,v-V, ?-V'`'~ rw\4;,. *y* *; V, *^t /fti f^|V-sT*^ -*^*dSfiir"Xt ^ V*V 4" *'.:t*:, C < "^ i V1 Ar, , ^V;t W4 W" ' . i?-y' ' ' * ' - t. .,,-}'5, ' *'* *. ytfiVlVS'V* y>* '*" "` ***f5'\" >'$k "'*''-> -^Vi*n?-> s-Jfa \v-J. ?*`. -Vy/\?^-,v;'. William H;^r.?!?,e.vr^^ .*?. .' YrV,-. / a - kv.Svs: b ,,, - -./* y-Jj^v s-- - -'% , V: ~'M; '?fL,. r*Hi ''(.' i, sU, rri\ * -., iV`* ,r;ff, .ft : H. Norbert Dahlstrom yyv ',**> * rtreiHiy /V /-*<*? *?r,y ;t. F/Sptfsi F .$4^2? ,- * i*Vl!V*?' yr.; v'/.'Y,? h<~*' "J-( nrRf<$&?' ** >!%%.-- - 'YI ' i 'i ;*^<?.-;;. II ` ^s. "'3=%%k 5B :.v. Li /Jiff f*!- Jk^i3f" ' l\ ., / \ - ikfcj, . V A< ' i ,:v*? ,;S)* - i f Vjjpv*^ .- ; v \ 1 , yli \t*t -i' > , v - ' - ?; j - ' L . -?T\ :/ '\ tu\ * v, ' ,^Kpv ,.v Sl?4 i$j$ | 4k't 'M f <% `t 4 y-4, }jj:v "'ft V . v l f. .. - >-t<yvc' ^ -'s'v * LV .fcAv:^ '' Fr \ V; - . > \u :4^w- ^ -itW'?.'; ;to? sSmS\^:'^V ~-;'i - / ;v -fp- r.Lr;lr|r: Alfred W:Andrews 18 '"'A f 9 /...^V ' ' ' ag; ") ? ^%*$4 v^<#^5'veR''< i'/> f * J. Virgil Waggoner 1100.19 :'S-iv&Y:,: LAM017178 Monsanto Polymers & Petrochemicals Company (Dollar.; in millions) John R. Eck Group Vice President Alfred W. Andrews General Manager, Plastics William H. Bromley General Manager, Resin Products H. Norbert Dahlstrom Director -- Europe J. Virgil Waggoner General Manager, Petrochemical; MAR 1100.20 1974.......... . . 1973.......... 1972......... 1971.......... Sales $854.6 593.5 556.8 531.4 Operating Income $136.4 74.4 46.5 30.3 Monsanto Polymers & Petro chemicals Company set new records in 1974, with sales increases in all major businesses. Strong demand for petrochemicals, plastics and resin products was spurred by constricted raw material supplies through the third quarter. The worldwide energy demand provided ready markets for all of the company's oil and gas production. The cost-price squeeze eased after the first quarter, permitting prices to rise to more realistic levels and benefitting all product areas. In the last quarter, there was an abrupt dropoff in worldwide sales of plastics and resin products. However, the impact was cushioned by the earlier record performance. Late-1974 Inventory Adjustment The suddenness of the late-1974 decline, a worldwide phenomenon, signaled a reduction in inventories in downstream industries. This inventory adjustment is continuing into 1975 in most Polymers & Petrochemicals' product areas. As inventories in the pipeline downstream are corrected, which is expected during the first half, demand for petrochemicals, plastics and resin products should rise. Demand for oil and gas production, which is mostly in the United States and Canada, continues unabated. Petrochemicals Sales Increase The petrochemicals business reached record sales levels in all LAM017179 19 product groups. An overheated economy, the dominant factor through most of the year, brought unprecedented demand for styrene monomer, acrylonitrile, acetic acid, phenol, methanol and ethylene and ethylene coproducts. The exceptional operating records turned in by the two big Texas petrochemicals complexes, at Texas City and Alvin, highlighted the year's manufacturing performance. Downtime was at a minimum, opening the way for high-volume production of monomers, the critical building block raw materials for many other Monsanto product groups. The Alvin, Tex.,plant supplies a considerable portion of the company's primary petrochemical needs including ethylene, propylene and benzene. The combination of economic factors associated with rapid inflation and weakening demand affected the petrochemical business as the recession deepened in late 1974. Product demand slowed as petrochemical derivatives reflected depressed condi tions in the automotive, housing, piastics and synthetic fiber markets. Plastics Demands Grow Polymers & Petrochemicals' plastics business also was up in all sales categories, as demand outpaced supply during most of 1974. The sharp decline in the last quarter, brought on principally by depressed automotive and housing markets, was more than offset by excellent sales performance in the first three quarters. Styrene polymers led sales increases in the plastics business. To meet long-term objectives and to capitalize on the expected upturn late in 1975, new facilities for the production of Lustrex polystyrene were brought on stream in 1974 in Addyston, Ohio, and Decatur, Ala. Polystyrene and expandable polystyrene capacity additions are being constructed in France, and a similar expanded facility in Australia completed its first full year of operation in 1974. ABS Expansion Under Way Monsanto is also committed to long-term growth in its other styrenics, Lustran ABS (acrylonitrilebutadiene-styrene) and Lustran SAN (styrene-acrylonitrile). ABS expansions, under way in the United States and Canada, will be completed in 1975. Vydyne nylon resins gained wider acceptance, establishing a base for greater potential sales for these versatile engineering thermoplastics in the automotive and industrial fields. The resin products business had record sales, with worldwide operations sold out through the first three quarters. Ge/vatol polyvinyl alcohol and Gelva multipolymer solutions were in strongest demand in the vinyl-acetate based product line. Resimene aminoplast coating resins and phenolic thermal insulation binder volume grew impressively. Resin Products Sales Soften Resin products sales slackened in the fourth quarter. Return to normal growth rate will largely follow the recovery of the durable goods and construction industries, though specialty segments of the business are less sensitive to general economic trends. New resin plants were completed in Trenton, Mich., and Antwerp, Belgium, to supply the specialty, adhesives and coatings markets. Plans for construction of a plant to manufacture Butvar polyvinyl butyral (PVB) resin at Springfield, Mass., were announced for start-up in 1976. Markets for PVB, in addition to laminated safety glass, include adhesives and coatings. Sales of Saflex polyvinyl butyral sheet, the interlayer for laminated safety glass used in automotive windshields and other applications, were lower than in 1973 because of the depressed condition in the worldwide automotive market. However, increased sales for archi tectural purposes softened the impact of the dropoff in automotive demand on total Saflex PVB sheet performance for 1974. Oil and gas sales, another Polymers & Petrochemicals' business, were up, and exploration continued m the Java Sea, U. K. North Sea, Canada and onshore and offshore United States. In 1975, exploration activities will be continued worldwide. In offshore Indonesia, a drilling and production platform will be installed to develop a 1974 oil discovery under a production sharing contract in which Monsanto has a one-sixth interest. The discovery well flowed at a rate in excess of 3,300 barrels a day. MAR 1100.21 LAM017180 1974 Highlights (Dollars in millions) Per Cent Sales of Total Plastic Materials............. S578.9 Petrochemicals................ 224.9 Oil & Gas Production and Exploration... . 50.8 1681 gjjgf 6 Plastic Materials Sales growth for ABS plastic. Expansions underway in the United States and Canada. Continued wider acceptance of nylon resins. New applications in automotive and industrial field. Sales increased in polystyrene. Expansions completed during 1974 in the United States and underway in France. Resin products business had record sales. New plants completed in the United States and Belgium, a further expansion announced in the United States. Sales of Saflex polyvinyl butyral glass interlayer were lower, reflecting depressed automotive market. Petrochemicals Volume of petrochemical sales at record levels in all product groups. Exceptional operating records by petrochemical plants in Texas. Construction underway on acrylonitrile plant in United States; similar expansion announced for England. Most of the year saw unprecedented demand for all products. Petroleum Exploration continued in various oarts of the world. MAR 1100.22 LAM017181 21 2s LAM017182 Monsanto Textiles Company (Dollars in millions) Dr. Louis Fernandez Group Vice President Robert E. Burke General Manager. Commercial John M. Chamberlin General Manager, Technology Leonard A. Cohn General Manager. Commercial Cole Downing Director -- Europe. Managing Director, Monsanto Ltd. H. James Lawler General Manager, Planning & International Development PaulW. Rungs General Vi,mug ;-r ' 5emifuctuimg Operu'iens Eric Sharp Chair:" i,: Mon .un.ro Ltd 1974......... . . 1973......... 1972......... 1971......... Seles $737.~ 705.3 53.9 432.9 Operating Income $ 35.2 107.0 42.3 36.4 Record soles were registered bv Monsanto Textiles Company in 1974, but a dramatic downturn in demand in the second 'naif saw total operating income drop significantly below the 1 973 level. The year began with demand exceeding supply and with production below capacity. Tin; oil embargo had reduced raw materials availability, creating siioituges and causing costs to soar. Recession Impacts Fiber Demand The market situation changed dramatically eariv in the third quarter. A worldwide slowdown in consumer spending triggered a change of policy by fabric manufacturers and retailers, from inventory accumulation to inven tory reduction. This reversal was felt throughout the textiles industry, result ing in a sharp reduction in fabric, yarn and fiber demand. Weak con sumer demand is expected ;o continue at least through the first hair of 1975 before resuming an upward climb. As raw materials and energy puces soared in 1974, ;ne Textiles Company took measures to pass through cost increases and restored reasonable profit levels. However, soft market demand in the last half of the year prevented some cost increases from being passed on, thus affecting income. Another factor iffecting 197synthetic fiber performance was the nearly simultaneous downturn of the European and U.3. economies. Each of the major market groups w'bin Monsanto 7; (tiles Company LAM017183 MAR 1100.24 was affected by these external con ditions. Nevertheless, noteworthy sales gains were registered by the industrial fibers, home furnishings, hosiery and Textiles - Europe business groups. While increased selling prices aided Textiles - Europe in lifting dollar sales volume over that of 1973, raw materials and energy costs rose even more. A slow second half was experienced in Europe, as consumer resistance curbed production in the entire apparel market and reduced carpet shipments. Carpet Shipments Lower The falloff in housing starts, which plunged from the 1973 high, coupled with consumer unwillingness to buy, reduced U.S. industry carpet shipments 9 per cent from the year earlier. This affected the carpet business group's sales and, at year's end, inventory reductions were still occurring at all levels from mill to retail. The apparel group felt the impact of inventory shrinkage late in the year as consumer resistance to higher prices stiffened and purchases of products, other than necessities, were deferred. The industrial fibers end-use market was also influenced by economic conditions late in 1974, as many nylon tire yarn customers closed their plants over the year-end holiday period to adjust to lower demand. Home Furnishings Show Gain Home furnishings and hosiery business groups showed year-to-year sales gains, although the market served by the hosiery group did not share in early 1974 boom conditions enjoyed by other segments of the textiles industry. The hosiery gains were made in what was essentially a buyer's market all year long. Home furnishings sales gains were achieved in the first three quarters of 1 974. This business group also experienced difficulties in the fourth quarter, as consumer resistance, inventories and mill shutdowns mounted. Late-1975 Gain Anticipated Monsanto Textiles Company's sales are closely linked to consumer demand and the economy in general. These are expected to begin recovery in the latter half of 1975, and the operating company's performance is expected to parallel this trend. With the restoration of consumer confidence, momentum is expected to pick up. The textiles industry should go into 1976 with demand reaching, if not exceeding, levels realized at the start of 1974. Longer-range, the future for synthetic fibers is even brighter with consumption expected to double in the next decade. Nylon intermediates facilities are planned for Teesside, England, to improve the company's raw materials position. Use of the Monsantodeveloped electrohydrodimerization (EHD) process will reduce production costs for adiponitrile, a key intermediate chemical to be made at Teesside. The EHD process also reduces dependency on cyclohexane, a raw material in short supply during the petrochemical shortage and expected to be so again in the future. A similar program is under way in the United States to improve production at existing EHD facilities at Decatur, Ala. Other capital expenditure decisions in 1974 are designed to improve Monsanto's European textiles position and the U.S. markets for filament polyester and acrylic. Acrilan acrylic capacity will be increased at Coleraine, Northern Ireland, from 105 to 130 million pounds per year, and nylon carpet yarn capacity will be increased in Europe. Plant Expansions Scheduled Acri/an acrylic and SEF modacrylic fiber capacity will be increased by 70 million pounds at the Decatur plant. Demand for modacrylics, because of the U.S. government's adoption of a number of flame retardance standards, is expected to grow significantly. Plans to double filament textile polyester yarn capacity at Sand Mountain, Ala., are well under way. Existing filament polyester production was a strong contributor to 1 974 performance; with its "partially oriented yarns," Monsanto is building a sound position in this product area. Several acquisitions were made in 1974 to broaden services and product range in the textiles field. The acquisition of Olympia Industries makes it possible for Monsanto, for the first time, to supply dyed, textured polyester to fabric manufacturers. Acquisitions were also made in England and Germany of texturizers to improve Monsanto's apparel nylon market position while moving closer to the consumer. The future for its Cerex nylon spunbonded products and for other products under development, is considered bright. Monsanto now has excellent positions in acrylics and nylon and is rapidly building a firm position in filament polyester in the United States. A stronger position has been established in Europe, giving the company a good base in the largest market in the world outside of the U.S. 94 MAR 1100.25 LAM017184 1974 Highlights (Dollars in millions) Per Cent Sales of Total Man-Made Fibers...........$787.7 TOOH Man-Made Fibers Record sales registered. Operating income off significantly as costs soar, demand drops dramatically. Note worthy sales gains made by four business groups: industrial fibers, home furnishings, hosiery and Textiles -- Europe. Textiles gearing up for expected upturn in economy later in 1975. Nylon intermediates facilities announced for Teesside, England, to improve raw materials position, reduce production costs, lessen dependency on cyclohexane. Similar program in U.S. will improve production at existing facilities at Decatur. Other capital expenditures will improve position in Europe and U.S. for filament polyester and acrylic markets. Acrilan capacity at Coleraine, Northern Ireland, to be raised from 105 to 130 million pounds while Acrilan acrylic and SEF modacrylic capacity to be upped 70 million pounds at Decatur. Plans to double Sand Mountain filament polyester yarn capacity well under way with existing production a strong contributor to 1 974 performance. MAR 1100.26 LAM017185 LAM017186 international Division James E. Crawford Jr. Vice President Dr. John R. Durland Area Director -- Japan Allen G. Erdman President & Chief Executive Officer, Monsanto Canada, Ltd. Paul A. Klingsporn Area Director -- Latin America Athol D. Lapthorne Area Director--Australia & Southeast Asia Onnik S. Tuygil Chairman of the Board, Monsanto Europe S.A. International operations for 1974 reached new levels, as Monsanto's sales outside the United States approached one billion dollars, including U.S. exports. Monsanto brings to these oper ations a commitment to excel --in its business and in its relationship to host countries -- and a conviction that worldwide benefits accrue from world trade. For the year, Monsanto's inter national sales, made up of exports of U.S.-produced products and sales of products manufactured outside of the United States, reached a record $999.7 million -- a 30.9 per cent gain over the $763.8 million sales recorded in 1973. The International Division is re sponsible for coordinating Monsanto's business interests outside the United States in conjunction with the oper ating companies. The division also represents the corporation in its relationships with certain subsidiaries and affiliates not currently within the province of the operating units. Monsanto's operating companies generally have worldwide responsibility for product lines, and worldwide sales and the attendant operating income have been included in the operating company sections. Export sales from the United States increased to $296.2 million, compared with $230.6 million in 1973. Sales increases were led by growth in phosphate and other industrial chemicals, as well as by petrochemicals and products for agriculture. These U.S. export sales are not included in other area sales reported below. In Europe, sales reached $430.0 million in 1974, an increase of 31.9 per cent over 1 973 sales of $363.3. Growth was led by strong first-half sales increases in rubber chemicals, MAR 1100.28 LAM017787  Headquarters for Areas Major Subsidiaries'Plants Sales Offices Major Affiliated Plants \ f'r-j l1' n }\ plasticizers, acrylonitrile, styrene plastics, man-made fibers and agricultural chemicals. In Canada and Latin America, sales were $144.9 million, an increase of 37.6 per cent over 1 973 sales of $105.3 million. Sales were led by plastics and plasticizers, phosphates, agricultural chemicals, coated fabrics and textiles. In Latin America, sales continued strong well into the fourth quarter and then, volume dropped. Limited availability of feedstocks hampered earlier growth. In Asia-Pacific and other world areas, soles reached $78.6 million in 1974. compared with $64.1 million in 1973. In Australia, higher raw materials cost and increased wages adversely affected performance, although sales increased somewhat. Resin products, styrene polymers and phenol were major contributors to the increase. Start-up of a new plasticizer plant was completed at the company's West Footscray site near Melbourne. The company's Spanish affiliate, Aiscondel S.A., a major plastics producer and fabricator, reported increased sales. The company's per formance was impaired by higher costs and wages and by restricted availability of raw materials. In Mexico, Industrias Resistol S.A. recorded higher soles. The Monsanto affiliate entered a joint venture during the year to produce phenol in Mexico. Mitsubishi Monsanto Chemical Company, a Monsanto affiliate in Japan, experienced strong sales growth in the Asia-Pacific area, led by rubber chemicals sales. Expansions were planned in plastics and plastic film, and a new site was purchased at Hazaki. In the Republic of Korea, Monsanto Overseas S.A. entered into a joint venture with Korea Agricultural Chemicals Company for the pro duction of Machete herbicide. The plant is expected to begin operation in 1 975. Sales to Eastern Europe countries and the U.S.S.R. were expanded. mar 1100.29 LAM017188 i* . ; Vifi i^r Worldwide Interests Included among Monsanto's member companies around the world are those appearing in the following list. Per cent ownerships are noted parenthetically. In addition, there are a number of other member companies not listed, many of which have been established for marketing or investment purposes. NORTH AMERICA United States Farmers Hybrid Companies. Inc. (100%) produces hybrid breeding swine. Fisher Controls Company, Inc. (100%) manufactures and markets process measurement and control equipment. Monsanto Enviro-Chem Systems, Inc. (100%) develops and markets engineered chemical facilities and pollutionabatement systems. Monsanto Flavor/Essence, Inc. (100%) manufactures essential oils, aroma chemicals, flavors and fragrances. Monsanto International Finance Company (100%) obtains funds abroad to help finance overseas expansion. Monsanto Research Corporation (100%) conducts research for government agencies and for Monsanto; produces nuclear sources: operates a governmentowned laboratory for the Atomic Energy Commission. United Systems Corporation (100%) manufactures electronic test and measurement instruments. Canada Monsanto Canada Ltd. (100%) manufactures chemicals and plastics. EUROPE AND MIDDLE EAST Belgium Monsanto Europe S.A. (100%) manufactures plastics and chemicals in Belgium and conducts marketing activities throughout Europe. France Societe Monsanto (100%) manu factures plastics. Israel Israel Chemical Fibres Ltd. (60%) manufactures acrylic fiber. Luxembourg Monsanto Cie S.A. (100%) manu factures nylon 6,6 yarns. Spain Aiscondel S.A. (50%) makes consumer plastic products. A subsidiary produces chemicals and plastics. Switzerland Monsanto Research S.A. (100%) performs basic research. United Kingdom Monsanto Limited (100%) manu factures and markets chemicals, plastics, acrylic fiber and nylon 6,6 yarns. West Germany Monsanto (Deutschland) GmbH (100%) manufactures acrylic fiber and markets Monsanto products. LATIN AMERICA Argentina Monsanto Argentina S.A.I.C. (100%) manufactures plastics and chemicals. Brazil Goyana S.A. Industrias Brasileiras de Materias Plasticas (44%) manu factures and markets plastic products. Colombia Fabrica de Hilazas Vanylon S.A. (49%) produces nylon 6 yarns. Mexico Industrias Resistol S.A. (39%) produces chemicals and plastics. Compania Industrial de Plasticos S.A. (100%) fabricates plastic consumer products. Netherlands Antilles Monsanto International N.V. (100%) obtains funds abroad to assist in financing the operations of Monsanto Company and its subsidiaries. Panama Chemstrand Overseas S.A. (100%) and Monsanto Overseas S.A. (100%) hold investments outside the United States. ASIA AND AUSTRALIA Australia Monsanto Australia Ltd. (100%) manufactures chemicals and plastics. Affiliate companies produce fluorocarbons and synthetic latex products. Hong Kong Monsanto Far East Ltd. (100%) supervises marketing of Monsanto products in the Asia-Pacific area outside Japan and Australia. Japan Mitsubishi Monsanto Chemical Company (49%) manufactures and markets chemicals and plastics. LAM017189 MAR 1100.30 ' ' 29 Mi f -'M; m fm mi Mm Hi m '%?k \ ei%% V* ip` - 'w r** mm" fttv# ,fa: A m P/: \ "j' Ms , . -p v -. m m^x- 'yi'.p'-jfrfil hVi. -.yYS-Wt''f.W.'lS.?f **'wS& f "sfs.- \ --:4v:-?! y-'-rf-`*1 \V - -34 <*-/; sl`?"^S **??,, *\~t ^V-V*-' --->. - ' -4V-Ajt'i-iW t,*'- v-A-Y -Georgl Roush Jr., M.D. ' ;'VT1J, \ " ` - " ............. ' ,'i,*\3P\'l;A'' Ora** Sfil ii jy V ih ig>r 'X'"A'-t-4rii\TVy-./"'-*-ii4 -.-A 'iV3 , f>J ,, ' v? V <3 < / j/ .... ! (,/_. I J ,'Y~ ' "i >:- h / .* fl Ah'- /.. '" '...`yVJ '*''" '"ii r*' ^ 'ST.1 . . A'. 3A'Sr, KD-33^.K: /// AAnm m ' ** 4 ^ C.E. Anagnostopoulos V-Ss' 30 MAR 1100.31 Monte C. Throdahl LAIV>Ol7iao i eujiiiujuyy Monte C. Throdahl Group Vice President C. E. Anagnostopoulos General Manager, New Enterprise Division John B. Clark Director, Corporate Patent Department Howard K. Nason President, Monsanto Research Corporation George Roush Jr., M.D. Director, Corporate Medical Department Byron L. Williams Director, Corporate Research Department Under its commitment to technology, Monsanto continuously works to upgrade its existing products and processes while exploring new areas of possible growth. During 1974, the company substantially increased expenditures for research and development as an investment toward the future. Out of its technology have grown business areas now in various stages of development. A decade ago, for example, the company's agricultural products business struggled through the heavy development costs involved in bringing it to its present potential. As the agricultural business began to take its place as a profit contributor, plastics technology that was to lead to the Cycle-Safe container program was emerging from the laboratories. That program, described in the Monsanto Commercial Products Company segment of this report, is presently in its own expensive start-up phase of development. It is another indication of the belief that long-term potential justifies the sacrifice of near-term profit. As these businesses grow, other potential opportunities are explored by basic research conducted and supported by Monsanto. Recently Monsanto entered into an accord with Harvard University, under which the company will equip a research laboratory at Harvard Medical School and finance its basic research in molecular biology, the behavior of large natural or man-made molecules which trigger biological activity. The programs will be selected and directed by Harvard authorities, and Monsanto is to cooperate where it can contribute expertise from its own chemical, process engineering and other strengths. Monsanto has agreed to spend up to $23 million between now and 1 936 and will work to commercialize discoveries made in the course of the research. The Harvard arrangement was welcomed by Monsanto, which possesses no medical research capability of its own. Personnel of the Monsanto Medical Department are well qualified in occupational health and environmental medicine but confine their efforts to those areas. Monsanto last year was awarded 294 U.S. patents, one index to the success of its innovative explorations. Monsanto Research Corporation, the subsidiary which performs contract research, primarily for branches of the U.S. government, had a record year. A new agricultural product. Roundup herbicide, requires higher expenditures in 1975, as the massive data necessary to qualify it for use on croplands in the United States is gathered and filed with regulatory authorities. The promise of opening an entire new area of weed control has been |udged worth the expense. Monsanto customers in many industries are testing new develop ments in their plants. Reinforcement of rubber for use in conveyor and transmission belts through incorporation of oriented short cellulosic fibers is one innovation. Use of an Acrilan acrylic carpet fiber which can be dyed three different colors in a single dye bath is another. Monsanto's intermediate- and long-term future is based on the employment of technology resources to satisfy societal needs. These technology assets of the company will be carefully managed, efficiently nurtured and precisely developed in coming years for the benefit of customers, shareholders, employes and the general public. MAR 1100.32 LAM017191 31 Operations C. Preston Cunningham Group Vice President Robert L. Berra Vice President -- Personnel H. A. Ericson Director, Corporate Advertising & Promotion Department James E. McKee Jr. Director, Corporate Public Relations Department Ernest S. Robson Jr. Vice President, Energy & Materials Management Energy and Feedstocks Changes in the world's energy supply and economics affected virtually every element of Monsanto. The company's benzene-related manufacturing plants operated below capacity early in 1974. The Chocolate Bayou, Tex., petrochemicals plant was kept at capacity during the Mideast oil embargo with alternate sources of feedstock. Natural gas feedstocks for other U.S. plants were supplied under long-term contracts. Purchased petrochemicals, which augment Monsanto's own manufacturing, were in short supply during the first half of 1974. The cost of feedstocks and pur chased petrochemicals escalated to $400 million, compared to $180 million in 1973, as materials were obtained from new sources to keep Monsanto's plants operating. At year-end, prices began to soften slightly from the peak reached in the first half. Fuel oil used in plant boilers experienced similar fluctuations. In the United States, plants burning natural gas obtained fuel oil supplies as a back-up. Although the U.S. coal strike threatened electricity suppliers, Monsanto plants which use coal had sufficient stockpiles. The cost of fuels and purchased energy and other utilities rose to $195 million, versus $130 million in 1973. Energy costs will continue to rise in the future, particularly in the U.S. as the value of coal and gas, on a BTU basis, catches up with oil prices. Partially offsetting higher fuel costs was the company's expanded energy conservation program. The effort, first given major emphasis in 1 973 in the U.S., was extended to Canadian and European locations. By improving day-to-day operations and making incremental investments in existing units, the company's 1974 energy consumption rate was cut eight per cent -- saving $18.7 million in purchased energy. The impact on Monsanto from additional U.S. energy taxes, proposed early in 1975, will depend upon final legislation. We are actively stressing that taxes on the use of oil or gas as feedstocks would be inflationary and an undue hardship on the chemical industry which has no alternative to petroleum. Personnel Monsanto management is con vinced that its people are primarily interested in an opportunity to achieve. Its personnel programs are. therefore, directed toward providing managers and supervisors with the skills neces sary to develop a climate of achieve ment. These include orientation toward results and the tieing of rewards to accomplishment. The company believes that such programs can be effective only if they are an integral part of the operation and not peripheral to it. Therefore, responsibility for implementation rests with the respective operating companies and staff departments. Monsanto's human resources represent a significant reservoir of talent. Encouraging employes to reach for their full potential and optimizing their utilization is a prime objective of the personnel policies. This includes all employes -- management, minority, female, technical, field sales and plant personnel. This approach reflects Monsanto's management style which stresses standards of excellence. The emphasis is on accomplishment and its accom panying pride and productivity. MAR 1100.34 LAM017193 33 Facilities & Planning Francis E. Reese Group Vice President John M. Depp Diiector, Corporate Engineering Department James H. Senger Director. Corporate Plans ?j Z ./oiopir.ent High levels of capital expenditures projected for the rest of this decade and the growth of our worldwide manufacturing capability have led to the creation of a new corporate staff function. Facilities and Planning. The new group is charged with responsibility for long-range corporate planning, engineering design and facility construction, and coordination of manufacturing activities throughout Monsanto. The corporate planning process establishes strategic business directions with the various operating companies and business units consistent with corporate ob|ectives. Management decisions on deployment of our resources of people, capital, and technology are made in accord with these strategic plans. This effort will permit better planning of cash management, allow new product capacity to be moved into the market more systematically, and optimize use of our engineering capabilities. Beginning in 1973, Monsanto embarked on the largest capital investment program in its history, with expenditures for new plants and equipment reaching $313 million in 1974. Plans for major expenditures in 1975 and 1976 totaling over $1 billion are being implemented. At the current time, the monthly rate of capital spending exceeds that of 1974 and is expected to accelerate as 1975 progresses. Agricultural chemical operations for both present high volume products and emerging new products are being expanded. By the end of 1 975, the company will have doubled its polystyrene capacity to 300 million pounds and, concurrently, large expenditures are being made for new acrylonitrile production used in the manufacture of Cycle-Safe containers and in nylon and acrylic fibers. In other areas of continuing strength for Monsanto, a number of expansion programs are under way. These programs will provide products to end use markets -- further augmenting our position in areas such as rubber chemicals, detergent materials, and specialty resins for adhesives and coatings. . The breadth of the company's capital projects during 1974 were the largest in terms of dollar volume in Monsanto history. Design and engineering of new facilities during the year ranged from the world's largest acrylonitrile plant on the Gulf Coast of the United States to a new herbicide plant in Korea. Significant international effort included engineering and construction programs in Europe, India, Brazil, Malaysia and other parts of the world. In total, 55 active project sites were involved, including 32 U.S. sites. With this record activity came new challenges. The rapid escalation of plant costs associated with chemical processing in 1974 ranged from 22 per cent a year in the United States to more than 40 per cent in Brazil. In addition, there was a worldwide scarcity of many critical construction materials. Rising energy costs necessitated new concepts in design for energy conservation. Concurrently, new safety regulations and governmental constraints on plant emissions grew tighter. Beyond plant start-up, the new corporate staff group has begun coordination among manufacturing resources of the various operating companies of Monsanto. mar ^00 36 LAM017195 MAR 1100.37 fHfiii&!?s*; t LAW1017196 Financial Review James .J. Kerley , l-v *- 4W,i. **-*- Group Vice President >/,< *<>*} < ` ,> ` -^s ,,* -1} ', , n f*-. Kenneth N. Kermes Treasurer &fr i s* s ' Richard C. O'Sullivan " ControlleiTr . , 'jV- rr"'?-. >.#-ys .. - > -'if ;,J4'.*lt':3sVi.V'? *%*' -Vsrt.'i `'^V^Va' - ** V- - -1 'J-T4>v --v" Edwin J. Putzell Jr . .; ,,-K ' *; ",^v ` *'i"`F^ W^S'*" Vice President, Secretary* & General Counsel ' y^Z-.; ,. vfi-v Thomas M. Rasmussen - * ; ^ r;; '- Director, Corporate Tax Department V-/1 'v- i* y 1'' - C'^ t?t.` *+ t' ,* V j `3 r * 1 ' *'' Francis A. Stroble Director, Management Information & Systems Department ^ MAR 1100.38 LAM017197 37 Financi ^Review -,r ^.Operating Results;_________ ___ ____ _ ______ . . earnmgf We^^ji6{^Sj^l^p74!^|lB3S^8^ #W?e blllic^^^* i.32 per^erit?'.Net income rose $84.9,.millioin,Qr.36 Der cent ft f; of $238J3.'mj(([oriTo; HEMM earnings per common share reached $9.25 as compared with $6.90.m; * . . , .." . V,'-. ../.it;-.J>-.'. - . .- -v -, ?j<.-.y^...a..... \. .i-'-; '* r*'\ , c ^i tv'1'* '' Hv 1' - ' i ' s' '-*- ' . . . , ., soften in the'second quafter,\closely followed bvifextile fibers in;the^third-quarter.; In the last sixty days of the year, this.softness spread to plastic materials and . * '___-- -. L .^ ri VlAiirLk'iil'o~ K Jl *.*** - js,v-`UMAa/tMj&AM *Kn< 4ixm 4nl#l. ^ftnntn - a* iMtlntiA i^ ..itsfiveo-p--e-r,a. t.in..g--c.o_mp. a...n..ie..s..s.e..t..new.sales records and four,).._______ _____________ , .^st.a""b'|s|isft*h. ed jecord-v..oVpt.erating .'I'inor^er'ndt to overstate reported brofitsVsa "result 'of.'inflationduring the'";W~'r`'yl year, the Companyjchanged its method of^accounting forvsubstantially all ,>r>5? ; ^United Statesinvehtories from first-in,'firs^out;tFIFO) tqllast-in, first{out'(LIFO): This was necessaiy because of the rapid increase .in. prices";in{l 974 which; . ; ,,; caused inventories sold to.be replaced.^y^simijar goods at'substantially higher Quarterly earnings for 1974, as stated below, nave been restated for the Net Sales $4000 3500 3000 2500 2000 1500 1000 500 0 1970 1971 1972 1973 1974 Sales and Earnings ^{ byQuarter -- 1974 vs.'1973 A* /V;';" t' i-';* ' .1974: v - -; ;First Quarter. . . . v ' Second Quarter'.'. C Third Quarter.. . .. Fourth Quarter... Year................ "*Net ' . Sales '-Warnings per Share <' Incoo1 mmee- >/ '*f'$s; Primmaarryy'' "-Jit- * Diilluutteedd: $ `838.2 A ^-94.5 V *&$2.74{-:: ^i'922.2 y/r r6-: '108.0 'hr ;Wj3.12 .-S 956.7 ' 74.8 { {2710 .;`t 780.8 45.9 r ' 1.29 S3.497.9 S323.2 $9.25 '$2!58 2.92 ''.*VI'.98 ; 1.25 $8.73 1973: -First Quarter. . Ss; 695.i; sfcie 73.8 Second Quarter, i `^''665.0 " ' ` 65.2 . ..Third Quarter. .. . . ..628.3 Jij,.'.64.9. - ' Fourth Quarter: Year. ...... UJ. -^659.3'. $2,647.7. <: .-1 ...... 44.4 ` $238.3 Vv?t$2.16'.' ;:f 1.90 " ,;'$2.04' 1.79 J..68.;.,.%r;.->4.49. 4<Y4.26 ; *.1.22 - k I -- M 1. *C- f.&t-': l~m--P---- $6.90 ^ -S6.54 Improvement $ -850.2 $: 84.9. $2.35 $2.19 A review of quarterly sales and operating income, by lines of business, sets - forth the varying impact of the early-in-the-year seasonal demand for agricultural products, the impact of the elimination of U.S. price controls in the second ` quarter arid the worldwide softening of demand forteirtije/plastic and rubber { chemical products in the latter part of the year.;;Operating income is defined , as income before other income, other income charges* interest charges and the provision for income taxes. . 38 Net Income $400 J350 300 250 200 150 100 50 0 1970 1971 1972 1973 1974 MAR 1100.39 LAM017198 t ^^ J* T * ` `k ,i *' l !^ - r ^V'*" iL * *% * ' * `J > *- l .. b'iJZ.d&XJ' '?*>*** ....^MjmNSfera*1 ******' 974 Sales byLines of Business ,,V \m. TuSrtk il .16.41 60.6J 132.8] y 25.21 g236.5'I 26M 254: 2508f 263:6] 1854:6 WEI256.0i?i ______ S7sfr,7`S;fv mm Company.^^^^838.2 ^$922.2 ^956.7^780.8^3,497^^ Net Income (as a per cent of net sales) 10% '\ ' FFiirrsstt V-SSeeecaonndd ' --TThhiirrdd --F oFuorutrhthT^ . after; [barter /: .QuarterSf^Quarter UlUlral Produd:sV^SC*i^zJk^C:^^ igO.8 4<?.$/24.6A 2,2 9 6 Jt&SBia5.7 ,/ '., T?-! .. ' &<*> ' > Jfssm-fi ^aMk: ^S^^-^^iin^lin'comeubYjfnes ofbusiness for.the Jast four,years arel .-. , sections on the five operating companiesAmerCb1riplriy^dls''not !-.V < nroeonf 01 m (|4I> infArmetiAn tr T O/fl hflr'^i irQ g DOllCV C11300 " * III I II I I1 III 1970 1971 1972 1973 1974 *>''-.'&&~ ^ r.V i*v?: \V':i $y?< ,vr<.*,-. l^Woridwide Operations^4^;.^;>^^ *; 42*?;. S^^lSs1.?74' business in(La.lljworia areasjncre^sed.significantly^"over^tjfi^73^^; r^per,cent over'the.$763.8 million levei 6f^973m4^:;i^^^^-.' .'^'SCaadlawa hbwy WnrlH Afdi : ^^^^Ril74 Over 1973 ;|iiSds|eM Exports froni U.S .'; * i': *.^<*[?.EvEuUrroOppee--" V* , .r. '- >^F*Twyiw t iCan&W&9?J:XWt&09b ' "" Latiri'Amenca''' 8' . Other WbrtdAreas ': ' Tofai fcornpan^lfl^W^ :-:^v ^ ^ > <;; Reflecting'the incr * i': jiWc om"T-e at'ti-ainearecord Jeve -v-.n.atioc rparhed ^l Net Income (as a per cent of average shareowners' equity) 22.5% 20 17.5 15 12.5 10 I I I7.5 3 I III IIII 1970 1971 1972 1973 1974 LAM017199 39 Earnings 8i Dividends (per share) .............P..r..o..d..u...c..t.t.V..rr::. 60.7 ('Al'46.344.434.8 ''511124.7 '.' *'. '.. a;:.,.'- ;*.i mental Systems...,':, .>. ;.i85.2 Other Products -` * vIndustrial Chemicals:' >v i .Rubber arid Spec .^^w^feg^Cltainical?,T %-m|TlprbcMS Chemicals and jrsSV&i ic.w . . Plasticizers; .V?.\.`.-' V292.7 *',-,'193.1`^160.0 .-;t*Y42.8 ;:,':;136.7 Plastic Materials.:............. '- ,678.9 C .435.6 ' , '346.5 310.4 % :;280.6 . Petrochemicals; . ____ 1J. ^224.9 `/X -128.4 ,;f. ',\112.7 ^.106.3 >,,V \ 97.1 ,;f, fti^oil 8i Gas Production . . 'M- &.%:& Kxfo?*: - v*i.v.'^ rt,**, : :W-'-4 and Exploration.. 'i'.. ,* ;'{|60.8'J%\29.5 -5(^i27.8 '%-?4'.27,526.1 ; /"tl Textiles: -s. , ' . 'V^fvX'Atr: -tl: %' .?"/> . Man-Made Fibers. ..;.. ! ,787.7 705.3 \S.532.9 . 482.9 ` 445.6 Dividends Earnings Shareowners' Equity 8t Long-Term Debt S2000 . -;; .Operations v -ix>.v Total C- ompany. - :69.8 ,-,v>;?<r87.2 _77.0 $3,497.9jW!:t$2,647.7.'' $2,225.4 J$2,087.1. 61,971.6 WMl Analysis of Earnings Improvement -V -cr:-4v7v - ..*, ' Y'lt,#**Ufcy'U -.v ' ' ' -- 'C.H -i<^A. - ' < '"'C >-',! Mn\The improvement in ,1974 earnings over those for 1973 primarily reflected ; the Company s^abijity to price its products on an historical margmbasis as.gpc, . the cost of materiajs^ labor' and servicesescalated'.sharply.'-Additionally, the change to the LIFO method of accounting for substantially all tJnited States ^ inventories'increased 1974 raw material and other manufacturing costs by i : - *.' ' IX . ''y-s,. - f -" ,t'* ` o';..'7 S'" y ' 7 '-'V ! ' A* $2.26 per share. As measured on a primaiy earnings per share basis; these f-; ; actions, partially offset by unfavorable changes in volume and mix late in the year, resulted .in an increase in operating income of $2.48.per inarej4figher : short-term interest rates, coupled with larger average^cash balances available for short-term investment, resulted-si'*n-. i'vm- p` .roved inter^est'*i'n! corf*i'e\ ^A's'h2'?*increase in interest expense, a higher effective tax rate and an increase in shares outstanding 40 MAR 1100.41 LAM017200 i combined, however, to more than offset this improvement. In total, primary earnings per common share increased $2.35. > ,,, The year-to-year improvement in earnings for 1973 over 1972 was attributable to higher sales volume and improved product mix. Increases in selling prices, which for United States operations were limited under the Price Control Regulations, were offset by increased costs of raw materials and other operating costs. A summary of operating results for the years 1965 through 1974 is included on pages 56 and 57. Analysis of Primary Earnings per Share Improvement 1974 vs. 1973 Operating Income: Sales Volume and Product Mix........... Higher Selling Prices................................. Higher Raw Material Prices................... Higher Other Manufacturing Costs. . Higher Start-up Costs............................. Higher Non-manufacturing Expenses Increase in Operating Income... $(0.44) 13.97 (8.91) (0.99) (0.08) (1.07) $ 2.48 1973 VS. 1972 $ 3.46 2.10 (0.85) (0.55) (0.03) (0.61) $ 3.52 Other Causes: Higher Income Credits -- Net.... Higher Interest Expense..................... Higher Tax Rate..................................... Increased Shares Outstanding____ Discontinued Operations................... Decrease from Other Causes Net Improvement.............................................. $ 0.40 (0.07) (0.29) (0.17) -- $(0.13) $ 2.35 $ 0.37 (0.03) (0.29) (0.06) (0.10) $(0.11) $ 3.41 Financial Position Monsanto's 1974 year-end financial position reflected additional improvement as net working capital increased by $113.3 million over 1973 to a level of $967.8 million. The December 31, 1974 current ratio was 2.9:1. Working capital additions provided by operations totaled $504.3 million in 1974 compared with $403.3 million in 1973. Cash reserves, short-term securities and time deposits at December 31, 1974 amounted to $324.1 million, representing a $66.2 million reduction from 1973. This reduction was primarily the result of increased investment in inventories and capital assets. Accounts receivable at December 31, 1974 increased $35.5 million or 7 per cent over the previous year reflecting the higher sales level. Inventories at the end of 1974 amounted to $636.8 million --an increase of $242.7 million over 1973 resulting from both higher inventory costs and increased quantities. Financing As a result of Monsanto's strong financial position and cash flow, its working capital requirements and capital expenditures were chiefly financed by internally generated funds in 1974. To provide flexibility in financing its future growth, new United States credit facilities of $230.0 million were arranged with nineteen banks on January Cost/Price Index (Domestic and Export) (Year 1967 = 100%) 250 200 150 100 50 0 1970 1971 1972 1973 1974 Selling price Raw material cost Working Capital S2000 1750 1500 1250 1000 750 500 250 0 1970 1971 1972 1973 1974 Current Liabilities Current Assets MAR 1100.42 LAM017201 41 Financial ^Review,,. , agreement, which replace the preyious ^1.QQ;0 million short-term line of creait.^y H Short-term credit arrangements are also.maintained in most foreign countries ' As of December 31,1974,^Monsanto slong-term.debt was $587.0 million,. representing 25 per cent of its'total capitalization compared with 28 per cent'at VX/'the end of 1973. Monsanto has reduced itsliiebt bs a percentage of total -; Monsanto's $313.4 million'investment in. neivv'.pfahts^ahd^equipment was the highest iri 'its history and compares with $205;3'million in 1973. Major' V expenditures during the year were channeled . toward increased or new production capacity for textile fibers, plastic materials, Cyc/e-Sa/e containers for carbonated beverages, acrylonitrile -- a key raw material for many of the Company's products -- and a number of other product lines where additional capacity was required, i; 7. r.i ' ; :'By World Area ^ United States,....................... Europe. -r.-;.5V.............7 Canada and Latin America Other World Areas.'.. Total Company." 1974 ` '1973 1972 "1971 ' 1970 $253.3 $165.6 v - $114,2 $144.5 $232.3 ' 44.5 Y- kK-25.8'fe;;J:47.1 ^ -56.3 .1 69.2 3.1vl 1.5- f . '404 5.5 - A r>.3.3 *:: f 5.0 : -' 4.i ' 5.9 .1.5 - . i.i ^ 1-4.3' $313.4 . $205.3 ,v$168.3 : $205.2 . $300.8 i ' ;,i, v 1.77'^' As a part of its long-range plan for sustaining the continued growth of its product lines, the Company anticipates that 1975 capital expenditures will be in the $500.0 to $550.0 million range.y;, Major Operating Expenditures Major operating expenditures increased significantly as a result of increasing rates of inflation in both the United States and abroad. ; i -'iV . 1974 Purchased Raw Materials............. $1,194.4 Energy and Utilities....................... .......................... '...7.'.'"'.''..' 195.0 ' Wages, Salaries and Employe Benefits... 7.............Y.. t,* i>, 803.3 7 1973 $648.4 `130.1 693.3 , During 1974, the prices of Domestic raw materials and energy and utilities increased at rates of 80.0 per cent and 49.4 per cent, respectively. Wages, salaries and employe benefits for the average United States employe rose approximately 11.5 per cent during the year. Dividend Payments Common stock dividends in 1974 amounted to $77.6 million, equal to $2.30 per share. Effective in the second quarter of 1974, the Board of Directors Capital Expenditures & Depreciation Expense $400 350 300 250 200 150 100 50 0 Wages, Salaries and Employe Benefits $900 800 700 600 500 400 300 200 100 0 1970 1971 1972 1973 1974 42 LAM017202 **** 1100.43 , /! V'*' - j S; ^4 x" _> *V*': ,!v V; > i*v ^ KV -(OgO increased the quarterly dividend from $0.50 to $0.60 per share. A regular cash dividend has been paid quarterly without interruption or reduction since ,1928. Common Stock .Dividends Dividend Payments: : First Quarter......................... Second Quarter. ............... Third Quarter...................... Fourth Quarter.................... 1974 $0.50 0.60 0.60 0.60 $2.30 . '1973 ; M972 , ' $0.45 0.45 0.50 . 0.50, $0.45 0.45 0.45 0.45 $1.90 $1.80 Primary Earnings'...................... Dividends as a Per cent of Earnings' 'Before extraordinary items^ $9.25 $6.90 $3.49 25% . 28% . , 52% ' .-yv 1971 ; $0.45 0.45 0.45 . 0.45 $1.80 $2.65 68% .. $0.45 0.45 0.45 0.45 $1.80 - $2.17 83% V;'~-v -v Preferred stock dividends amounted to $6.3 million in 1974 or $2.75 per share. Quarterly dividends of $0.6875 per share have been paid regularly since issuance of the preferred shares in 1969. Shareowners' Equity Shareowners' equity was $1,755.0 million at December 31, 1974 -- up 18 per cent from $1,483.7 million as of the end of 1973. Book value increased from $44.26 per common share at the end of 1973 to $51.39 as of December 31,1974. For 1974, net income was 9.2 per cent of sales, compared with 9.0 per cent for 1973. Net income as a percentage return on average shareowners' equity was 20.0 per cent in 1974, as compared with 17.2 per cent for 1973. Capital Stock Monsanto common stock is traded on the New York Stock Exchange and certain other major exchanges throughout the world, including the London, Paris, Amsterdam and certain Swiss and Belgian Exchanges. The Company's preferred stock is traded on the New York Stock Exchange. The high and low sales prices on the New York Stock Exchange, by quarter, for 1974 and 1973 are indicated below: First Quarter................. Second Quarter........... Third Quarter............... Fourth Quarter............. First Quarter................. Second Quarter........... Third Quarter............... Fourth Quarter............. Common Stock Prices 1974 High Low 63-1/2 69-1/2 64-7/8 53-1/4 48-7/8 57-1/8 44-1/8 39-3/8 Preferred Stock Prices 1974 High Low 70-3/4 77-3/8 71-1/8 58-3/4 58 64 55 45-1/2 High 55-1/4 57-1/4 67-3/8 75-3/4 1973 Low 47-3/4 49-1/8 50-1/8 43-1/8 High 66 68 75 84 1973 Low 59-1/2 61-3/4 62 58-1/2 MAR 1100.44 Book Value (per share) $55 50 45 40 35 30 1970 1971 1972 1973 1974 Common Stock Price Range $80 ~7Q "6CT "so" ou 20 10 0 1970 1971 1972 1973 1974 *- At December 31 LAM017203 43 bummaryoT Significant Epliciesr>gsij exchange rates prevailing at the'dates'acquired/ijpcpme.apd;expense^!tems^/e.ri^^ VanslatediTt'approximate average rates in effect!^ngrtTO^ ...**"* depreciation which is translated at'the approximate rates prevailing whlei n fixed asset's^were'acquired.^S5f^i^<fe'?Sg|;^p4r";''i"'` -- Monsanto Envirq-Chem,Systems, Jnqyia subsidiary,: reports income on its long-term contracts on the percentage-of? use the straight line method of computing depreciation on assets; howeyer7theTr*s| sum of the years digits method is used on most domestic assets placed .iaservice , prior tcTJanuary 1,^1972. Depreciation rates are based onJtl;estimab3;.usefui.t^iiv lives of the individual assets. Depreciation and depletion.of mineral.rigntsana s&i$..v> oil and gas properties are computed by the unit of production method, based upon estimated, recoverable reserves. Income jaxes^Jhe Company follows the practjce.ptreducing its provision;); 1 for current income taxes By the full amount of its investment tax credits/?f^^j^ Income on long-term contracts of Monsanto EnvirofChem SysternsJ^c.-ris,'^^ recognized orfthe Completed contract basis for incpme''tax"'pV^^6se8.^'^':i^:'s^,'fi''; " .Deferred income taxes are provided for amounts which affect financial arid i; , j taxable income in different periods. ! * Inventory Valuation,-- Inventories are stated at the lower of,post or market.; .* > ' -- ' I. <-' * *- .'* -. 1 .1 '#<" '*.<' - * - #***'* 5 .r **y -A/' * -sSJ* i'.,f i Effective January .1; 1974,'the method of determining c(^f9^su^aotta^||^^|'i domestic inventories was changed from the /cicn\ -^ete trfSji?.- the last in;first-out (LIFO) basis. The cost determined generally on the first-in, first-out (FIFO) Pension Plans -- Pension cost's include charges applicable to current service ! "4;* .; and amortization of unfunded prior service costs, wherever applicablergeriefally " f over periods ranging from 15 to 30 years, it is the policy to fund pension ~; V costs accrued. . . ^ A:4 -1^ , ' ' ' Technological Expenses -- Research, development, engineering and patent expenditures are charged to incorne as incurred. . . ; "\ 44 LAM017204 MAR 1100.45 ' Monsanto'Company and' Subsidiaries Statement 'of .y^W-v ... '- i-1 * - ,. .-/ ,`i'" -* 1 *-*.i .' ` ' . '' , ,' 4^ `4 3.W; ` - (.(.iUiA.uV./, -.V,,, <; % ! * i* `J-a "Aff.j;-->v *!'/* A - ' '' ' Net.Sales'. ....'.,.:...."....."... v '.V.'.V.. :....`. c > .VI;.'.'...". / Cost of Goods Sold.'. ........'..?. 'v\'<........... . ../; . ".-...1. .:.*......' vv Marketing and Administrative ^Expenses V... Technological Expenses ;:' i . *-' V' - 1 V*`- ' '''" '-'J, - Operating Income......................................... .;..' '`Vi';rV-.> . **;,' s Income Charges (Credits) . , Interest expense. '?.? Other -- net..;....;%.'.. /'. v>*V Income Before Income Taxes ' `. Provision for Income Taxes: Current.............................. ... Deferred............................. Net Income............ ....... ...................;....... .v... .. .v.-f Earnings per Common Share: _ Primary. ................................... .>y....,.. Fully diluted.... . ;. . h ...yri'n-'.'Tt'i'.'.'T.'ht Year 1974 $3,497.9 2,548.2 273.4 126.1 2,947.7 550.2 Year 1973 $2,647.7 1,904.0 236.4 101,1 2,241.5 406.2 43.0 (67.1) (24.1) 574.3 38.9 (43.8) (4.9) 411.1 227.4 23.7 251.1 $ 323.2 170.0 ________ Z8 172.8 $ 238.3 $9.25 8.73 $6.90 6.54 ') The above statement should be read in conjunction with page 44 and pages 50 through 65 of this report. MAF* 1100.46 LAM017205 45 . ^uuipaiiy.anu OUU5IUI Dec. 31, 1974 Dec. 31, 1973 $ 32.3 291.8 520.8 636.8 1,481.7 $ 42.4 347.9 485.3 394,1 1,269.7 64.6 38.8 103.4 46.4 41.7 88.1 % .,. *.<* \> r 4 ^ 2 * ** \ '* - , j ( i . Less accumulated depreciation and depletion, etc.. . . "/.r.W.-.-t.. :S $#Net property.. ..7.?..;V\* \ ......... ; >7. ......... ??C - * * , -7 | f* ' < ' < >*",> * **, * fV'jwS* V-.-. %* ,,->>*. ,, . * f >/**" . ,, , <7. . '/ = '>> o-- *. . --*,.,>-J -X T Deferred Charges. .r.` .V,':,........... ."..; .<$.l;\aA. :'*"> > . >' _'k. ' > * , M?:. ,* --".jf . - >* ,. ,* * \' *.-,>; 'v - * ; ,' * 35.9 452.0 2,510.6 158.0 3.156.5 1,844.9 1.311.6 41.3 $2,938.0 29.4 424.4 2.250.1 147,7 2,851.6 1.699.2 1,152.4 35.1 $2,545.3 -,-V** . .... -- -..iv -:..'V i,. . ., ^\v>v'v."a,< ^.v' ' The above statement should be read in conjunction with page 44 and pages 60 through 65 of this report. 46 MAR 1100.47 LAM017206 Dec. 31, 1974 Dec. 31 1973 $ 408.6 91.0 14.3 513.9 587.0 $ 307.1 93.4 14.7 415.2 579.3 53.7 28.4 82.1 30.0 37.1 67.1 r.*0- *-> ''Vj'V.l-'-, -v,/ ,:S" ."*.*`V' ;;A ' - p^>tj *{'* -,n-> <f '- * - .... j * *. . ............................. - *, ***!*;.- * ^ >++* *.**> i*?4,0r*>j%,*i*X ~ * *-v> *vu 4 - ?H. y > {f < VT --> , * v '. !--.,- - v| *t - *h '* /Hr ii* ;<3>x< v ** sv*"* " - * ^.`.."'d-kr'^,^ssYSVT'f4* r^v^^`** * {'*v^-w^n'y'V V**>/`; r'*,,<'v',,>\* > >*, :< \vM"i>nfevV4>'.i.`*v ^ *v * -4 ^ ,, % \ t( *4 * - * t * * i'-TM r,-*> > - > ' '.--` ,,*,A*V. ' /, ># - - - * <-*.* * 1 ;' V "v.- ?hVv.* .>,-> r -*- ^-.''v.n4*** -` '-ypx- ~zJ" r' ,*> ..' , / -v.' . i 5.0 68.7 631.4 1,062.5 1,767.6 12.6 1,755.0 $2,938.0 5.2 67.4 613.1 810.5 1,496.2 12.5 1,483.7 $2,545.3 ; .rxc ^RAAOO^8 LAM017207 47 Year 1974 $323.2 171.9 23.7 (14.5) 504.3 8.0 18.6 16.9 547.8 Year 1973 $238.3 170.3 2.8 (8.1) 403.3 6.6 15.9 19.2 445.0 313.4 83.9 18.7 18.5 434.5 $113.3 205.3 69.3 20.1 (26.3) 267.8 $177.2 * m'v ^ ^iTvy-'-''- > **ii* >,-.v"^ -X '>'-' >; .^increase (decirease) 'in current assets: * - *Cash and"marketable'se^u^iw^y^V^^`^^^^.^^':l^^i.:!^^?|^^^0 Net receivables.;.... ..;. y!.....; Inventories. . '. .-. . .. (Increase) decrease in current liabilities: Accounts payable and accruals. ... " ,,lncome.taxes,.;j;. . .... . Current portion of long-term debt. : - -*r. Net increase in Working Capital......;....yy,. -`^'s v<4-*;` ' YV; Y\"V'>*s' J~ f $(66.2) 35.5 242.7 212.0 (101.5) 2.4 0.4 (98.7) $113.3 $195.6 85.1 (0.2) 280.5 (44.0) (57.2) (2.1) (103.3) $177.2 The above statement should be read in conjunction with page 44 and pages 50 through 65 of this report. 48 LAM017208 MAR 1100.49 'ommon-^1:90 per;snare1 ...... toption plans: ^jitf.>,^^Preferred^,500.Shares':|s^H^;;^r4i " Common--337,557 shares . . ;?S**CAr6iinoiv^AeSrXsrito. h`.va1ue:of^'omm~dn*n~ %SUto'ck'issued -fcfs ._ .joldeivofjConvertible loan stock<ofj MonsantojUpted447;573shares S *' ^'TCdi,wfeerrresdidn, sotfo1c3,k`8^3f:S^I 5r49^^wrp^of^ '1 ". Income^tax bel'_n2e-fi^ts resuiltin21*g*?jfr'-o't?*r**n&$<^&` *'" *' ^Balance, December^31 ^ 1973: ***&$-' '`';C"iAs pi^ousj^^ppt|CKi^^*:^|^|^,^l:. ^ , . Adjustments ana issuance *of 226,770 5 shares of common stock for the 1 : "* .*>-* for as a pooling' o' *,f,rti5n*"te**r'e><-=s-t-s' .' -.`hi.1 ?*' - '" ; ii * '' rpctatpn ** ^ -.- v*r- ` >.' * &* >*y lltfj-** ".'.Net inco#ym*ue ........^.....-....^.........\.. .. .. .. i$i.l. 2 .'*">4 <! .Dividends:^^vVv^^/'r'''^t^&^t P^gpVSfeWia^l75 pST'share, r':. i - Common-i$2i30 per share l.......... ' Amounts received for shares of capital V.:.stock issued 'under stock^option^ plans:' ` Sl'Preferred--400 ahares^^^-' a'i- Common--240,382 shares........... Conversion value of .common stock issued ,~vj4o'holders of convehibie ioan^Socjtof U IMpnsanto UmitedT7-92,989 shares .i;. . Conversion of 82,600 shares of $2.75 ; ' . preferred stock to 92,503 shares . . of common stock;,.y,....... Income tax benefits f&iiilQng'frdrifSi^l^-- ; exercises and disposition's of option ; ' I .. -stock by employes JT:Tr:i`: X; J Cancellation value of common stock}'; 'r' ' j purchased for employes under stock : purchase plan....................... .............. : Balance, December 31, 1974..................... The above statement should be read in conjunction with page 44 and pages 50 through 65 of this report. Capital Stock Preferred Common $5.2 $66.6 Paid-in Surplus $593.0 Retained Earnings $ 641.5 238.3 Treasury Stock $(12.5) Total $1,293.8 238.3 (6.4) (62.9) (6.4) (62.9) 0.4 0.7 15.5 0.4 16.2 0.1 2.5 2.6 1.7 1.7 5.2 67.4 613.1 810.5 (12.5) 1,483.7 0.4 1.3 12.7 14.4 5.2 67.8 614.4 823.2 (12.5) 1,498.1 323.2 323.2 (6.3) (77.6) (6.3) (77.6) -- 0.5 11.3 0.2 4.9 11.8 5.1 (0.2) 0.2 -- -- 0.8 0.8 (0.1) (0.1) $5.0 $68.7 $631.4 $1,062.5 $(12.6) $1,755.0 MAR 1100.50 LAM017209 49 Notesltd . _Fdin'a(m! vf1ast-iir?Jnrsi-BUt(L FO)jjasisfor,substantially all.domestic jnventonesMhisjiyasja^ v' d-*jo--yn--ye-typ^RL-e--j-- -- SIie rapid increase in prices .during the_vear wouldpavifresultedjf M* *;vfr-?*^^i>73wlrstaterni^r|t2&f^^ofits'if^iis'd^f^th&^FlgO. basi^of been continued, since inventones sbld were replaced at subrtaritialJ^\higH%A^*V'^ *prices^f1He,'FIFb'laasis^f inventoryvaluationhad been^used^venwnes^at December 31, 1974 would have been $155.0 higherthan reporte3Tt%^-??' . ,: The eiffectof the change was``to decrease 1974 net Income by"^?^ or v '<4 3|llfdn"^ufy292.f'974;Uh'^^^ 'Producer ofjBiluyMl'dJ/.t*eAxut*Vtiri4izAeMd/cdntinmuoi u ^tlilamiieAnnt*.,npAolulyAei^stnteWr i.>Vnai>rnh`annHddnom'uibl lekhit'4<'J V polyester fabric; in exchange for 226,770 common shares. The transaction has (; 5 ~ \f .>-v- ...' ', <.--* . ; `' ` ' ^ /ffi <- >v , 7,.^ *,</ *< vr.. V . * been.^accounted for as a pooling of interests. 4 ;^ : : '--iroiyrnpia's^salesarid'net lossffor its fiscal period beginning' October 1,1973 ? through December 31 f 1974, vyhich have been included in the. Company's 1974 consolidate^'b^ratihg result^'amounted tcr$69.7 arid $3.7, respectively^The1 *s' 1973 financial statements were not restated for this acquisition since the effect o_n consolida_t_e_d___re__s.u.ltsjof o--p.e..rations was.d77o*t'7d*i,a.*7te7.r7ilaLAA'?- 77V.V'77 v - ;- -V? ", v-v v'.*s.V`. r r- Bank Credit Agreeimmaennttes y > 4&-i i*fOn MarcVll'i 973,>the:Cdmpany arranged with ,16"banks for domestic short-term bank credit facilities of,$100.0. Interest on loans under these new domestic credit facilities aggregating $230.0 with ,19 bahksV-fhese.' arrangements provide $115.0 under a revolving credit-term loan agreement plus an additibnal $115.0 of short-term`line^bf credit;^ Loans under;the`revolving ;`^ credit-term loan agreement will bear interest related to the prime commercial -i it ;' rate Of the agent bank. First National City Bank, New York; loans under the^ j short-term lines of credit will bear interest related to the prime commercial rate ,' of the yaripus banks. No borrowings were made under either of,fh^e loan arrangements through*'Februaiy 14, 1975. " p pp. ; A' .' : r-'..-4.x-- ? v, : Depreciation, Obsolescence and Depletion "- - c ; Charges against income were:;.r..*iln^,rA^.vV-:>-^>^.', 'it-:?; ^*.1974 ' " 1973 Depreciation and amortization. '$156.7 $1 53.1 Obsolescence.............................. Depletion. . 7 . . .`.V.. 7. V. ... . 11.6 ... 13.5 3.6 3.7 -.$171.9 v $170.3 Earnings per Common Share Income and the number of shares used in the computation of earnings per common share were determined as follows: 50 MAR 1100.51 LAM017210 ./^y;`,*Stlpcreinental.shares*for,outst ;:'Tr f^l^stSTk opWons[^l^}^H|? ' Shares issuable upon conversioL , . A"V,^^toan stock of Monsanto Limited^ - !';?';v^`-.$,r08bontu.M of Monsahto^^x^s^ "'X-^^^^ntemational Fjnance Company. %*:$&*' 52.75 Preferred Stock fr . 1 Employe Stock Options -vv.,vw,,r - , 'T-'^4:A^ew^6cicloption:planNivas^0ppfbvM^s"part\Sf;tM-MonMnfo;l^nMem?nt. Incentive Plan of 1974. The ------------ ------- - status,.o.f.*a*,*u<thaorize>d-.co.mmon-sharest!,for th/ r >"'','<' he changes occurring during Ihe.year'we -V. V'-*$> ....................... m...... "* Aft' lan: v 'Outstanding i/i774;Si';'S.47..-:.. 521,749^ 11.140 - , ^`.'`'},j,Unoptjoned 1/1^7j4._J;g;rif,.('iA;y!'t 9,918 ` : y,^-' "`.^i'sOOpptitoiohneed ^dduurriing yeyaer,a.*r/..Cvr^<;v-^* ii.; . 46,200 5 7.00C >jj;:Exercisl durlng'yea?|.`.J:^V:C-V-VCXf.', . /--Expired during year .-!?/.%'.. .'.-." ,,'-.'*'."5 -- . Terminated during year. ."............................ ... -i 9,242,>.^,1,1, 2,555F :w4->T `' ... /' uc,m `ii Y, `f+S? /r|:-;:5||0utaaVdingT2;3imy/t';3,V.f^f.'|ma4'5V,9455,095;#0;|^^0066,2,27.7V,iWl^'j6l^4a**RS--; - y Under the\bve':piahs, options for..452,221,shrar^^ivere oU^tandlng^n^^v:. prices ranging from $32.50 to.$68.31.per share, or a weighted^average of $49.96 per share. ^ ti-'A1, ;' ,i t, ... , .. .- vXf' The 400 authorized shares of $2.75 Preferred Stock outstanding!at`;D.ecember - ; 31, 1973 under the stock option plan for employes of the former Fisher Governor Company were exercised in 1974. . ...... if.\ , * . ..-. . . <V-'n;;fiiv.^ Equity in Affiliates and Foreign SubsWarrasi||ipi| ;/ /The* Company's equity jrfthe unaudited^et^incbme^Taffijia'^Itotaleq.^rr $12.6 in 1974 and is included mother income.'Equity'iri net iricbme!of affiliates ' :::? The Company s equity in the net income,of foreign ^subsidiaries was $62.3 in 1974 and $43.4 in 1973. The Company's equity in'the net'assets' of these' ' ' companies at December 31/1974 and 1973.was $412.8 and $345.7, respectively. Consolidated retained earnings at December 13iyi ^47 jnciudeci $250.1 of the undistributed earnings of these affiliates and foreign subsidiaries/The :t remittance of a substantial portion of these eamings has beeri fndefinitely MAR 110 52 LAIVI017211 51 .................... ....... .. ........................... ... - ~ *____ ________________,, - - December 31,1973) and $5.2 was charged to income. Net exchange and translation losses of $5.6 were charged to the reserve in 1973. f : Income Taxes a >^^^0^OmPOnentS C , - icc . forwai^^'tK^^^s^i^Mfte^o'rfulVr^v^rs' 'awards/'A^^f^^-^'.'^,^^: "' ' The Company and its^subsidianes .were contingentjY^iabie as guarantors of,ii|<;:,j Commitments m connection with uncompleted additions to property: i remaining .The Company and its subsidiaries are parties tQ^a.fUjmberJpfjawsuits arising in the normal course of business. While the results of litigation cannot be 52 MAR 1100.53 'Long-Term Debt S#n-%The' long-term debt of tne Company and "1974 and 1973, exclusive of current'-- DecemberSI ; ^t?arfniCpmpany||^^^.'<^^^^fe:'V5 . ^kE&J6J4%-8,/4%barikloaii;due.1975/1985 JWest'German M Q/'`n>Hm!i>AnnrM'Ainii ti.**<? yu "w**k `T.`V''^it-:MPns*ntpJnternatiorial Finance Company:- /:\- ^'1`ry'- 4\4% niinrantftp.H smlcinn funrl HpKortttiroc riil 1 QRR f\ 5i ':;,5V4% guaranteed bonds due 1987-;{Swissfranc) ?";'. W-.Monsanto Limited'(United Kingdom subsidiaiy).;(Britisbpbund): ' > ; . 6% debentures' due 1977/1982 Ly .v.^l 4$'*'' ; .h ,vr&^ii:6%.<tebantuM^due 1982 ->;sc.v'i 5% guaranteed loan stock due .1982/1986 (b 5% guaranteed loan stock due 1992/1997. - 6%% guaranteed loan stock due11992/1997 gr.-i'&i . i?, - Monsanto.:(Suisse) S.A.; (Swiss subsidiary).(SwissTra " 6%%'guaranteed sinking fund debentures'due-1985 - ,6V4% guaranteed sinking fund debentures due .1986 . ""I/O . Monsanto Europe S.A;(Belgian subsidiary) .'(Belgian.fi 4,9% guaranteed bank loan due'1975/1986';V:t;f?v1 >} - *- -Notes. ., y.*.t . .. ... >*.. . ' (a) These debentures are guaranteed by the Company and are currently convertible into?.-/*-:'-"'''; "cvriMonsanto common stock at $88 per share, subject to adjustment under,certain.:'- ; conditions. . .... ,... .; : ,i , ^ "(b) This loan stock is guaranteed by tthe Company and is convertible mtp'.MpnsantojJl^;,, ;. common stock at the approximate rate of one share per 22 pounds 92 new pence S' ($54 at December 31, 1974 exchange rate), subject to adjustment under certain .. conditions.. ... . 'v; (c) Interest on thisbank loan was reduced by a government subsidy of 2%which expired -WV> ......... 'S, ; in 1974. '> *4N, --/'v ; -s'- ' - - ' ' "n;\rv; ?; .-\ingDecember 31,1979, are as follows: ' ' ; - .* k's 6'/4%-854% bank loan............... .. 1.... 4%% promissory notes..........................' 9'/% sinking fund debentures...................... >' 4'A% guaranteed sinking fund debentures. 'Bank loans (Monsanto Europe S.A.). . . . . Other................... ................................................ 1975 1976 $ 1.0.V ..$,2.1 4.7 4.7 " ---. . . 6.0 -- 2.5 3.6 .3.6 5.0 6.3 $14.3 $25.2 1977 41978 ,! 1979 4.4 $ 2.1 S'=7$ 2.1;&.* 2.1*3;: 4.7 4.7 ' - 4.7 . 6.0 6.0 6.0 2.5 . 2.5 ' -, 2.5 : 3.6 3.6 3.6 -. 3.4 3.3 4.3 $22.3 $22.2 $23.2 MAR 1100.54 LAM017213 53 Notes to Financial Statements (Dollars in millions, except per share) Pension Plans $.%&S'- **v'/ ''H v>, * '-5$J-`" ' **>V V*'<T3*/' reflecting the general decline in the market value of common stock investments. /! As a result; the market value of the assets is below the value; used for actuarial ,;;!rgufposes.:.Ari additional contribution of,$10.5 was' made in 1974'td-ceftain^A---.' >/.*- Vll^hs'S0l(4P#^oJ?9i.n amorfe'ang this difference. . .,*;' provision for pension costs increased from*$35.9'fn1973'to * ,.3-,., J|s>.The actuarially computed,value of the.vested benefits;; ;5 Company and certain domestic subsidiaries exceeded the market value of the/;; /^'assets in the related pension funds by $68.1 as ot Decernf&jt311j9Z4,-^V- -iPM^U9h ^PP^pany, arjd ||$ actuary^cannpt^as ye^erm^e^the; exact. - Mfl&W j]?M|^Thdputstanding preferred stock is stated at ^^umulauve'dividend 'of $2.76 per sfiare;! It is'convertibleafjan,,,.,.,,_i_n_t_o_'_C_d__m._p_a_,hyi common stock at the initial rate of 1.12 shares.of commondonsach share ofUf&KB W;v-r- A~ispreferred, subject to adjustment jn certain events.under antidiluf--- ------------- ~ ~ .//The'stock may.be redeemed'at the Company s option an\|tM / Project Cbst Overruns U/.f.- Monsanto.Enviro-Chem Systems, Ind, a subsidiaiy, lias projected significant " ^cost.overruns on several long-term construction projects^fJ^sjons for coster-# ' LAW1017214 MAR 1100.55 V" ~ ' \ ' CERTIFIEDiPUBLIClACCOUOTANTs^^:^?"' -mwm Monsanto .CornpanvfftkM&f We have examined the accompanying consolidated financial .statements 'jMSii- ; > (page's 44 throug'K:55)t o^j^prs^tcp&bjn^^^anl'^ubsl^i^esjfo^^years'^ll/vi ended December 31, 1974 ah^;1973^dur>^raminati6n'was made in accordance ' .4w > *.'fc-i.'. 34^ .r *t. ,yi . financial position of Mohsahtd'Co'mpany^and Subsidiaries at DecemberJ31,19.74. - and 1973 and the results of theitoperations and changes in their financial position for the years then ended, in conformity with generally accepted "ft-'* accounting principles applied; except for the'change in the method of inventory valuation, with which we concur, explained on page 50 in^the notes x to financial statements,`ton a consistent basls.%<rV4<5'^ 's?v : 1- \:VJ % 1TV ' " '--Ti <'&-**; -s^r,." ; * v?.`..'t? y bt ~ *-* - <y** v * J / ** V* r.?* v - = --. <-%; ^V-? . : \ i * '* v, -.< * -> - < - v .,. *x February 14, 1975 MAR 1100.56 LAM017215 55 Per cent of average shareowners' equity. Vir-'is w; fyhf 1974 1973 1972 $3,498 550 43 251 323(1) $2,648 406 39 173 238 $2,225 216 37 81 122 323(1) 238 9.2% 9.0% dfel 20.0% 17.2% 122 5.5% 9.7% $9.25 9.25 8.73 8.73 $6.90 6.90 6.54 6.54 $3.49 3.49 3.40 3.40 Property, plant ana equipment -- net. 7`. .fwffi............... .LongVterm tdebTi#';^'V>./. "Shai6Wnere'Tc&^^^ '. ;, -Pefcoirimbnblfafe^^^ Dividends . .............;..................... ............... ...TlvT..'. .1.V.V\: . , " Book value ...-..;-...:.______ .;.. ...;..'...... ';( .Capital expenditures... ............___ __,............/&%*; Depreciation; obsolescence and depletion.f.1....... Year.End;^v;-';ijj%v^;,;<';:;-;|;' * Shareowners:1 t,? '.:; i&f-Q ! v* Common.k...'..'...........k'.-."H-i-V-iI7`.V;-` Preferred.;...;.v: v..;................................ .w\;;k Common shares outstanding_________ k..... I .Th /. ' Employes.....'..................:............ k::: kv .. v' 1` 1 ': =~". ` ; . ' ' * v-* ^ \^ . ' ` y. -.. -V * /' .' ' ' V'' A-'::', -r .y* ^ ' ' "' ' ** . ' fc'' (1) As of January 1,1974, the Company and certain of its domestic subsidiaries changed their method of inventory valuation for substantially all United States ., inventories from the FIFO basis to the LIFO basis. The effect of this change was . to decrease 1974 income by S77.5 or S2.26 per primary share. ` (2) Excludes $16.0 applicable to extraordinary charges. '' J 56 MAR 1100.57 $2,938 968 3,157 1.312 587 1,755 $2,545 855 2,852 1,152 579 1,484 $2,237 677 2,765 1,133 576 1,294 $ 2.30 51.39 $ 313 172 98.542 3.709 34.1 60.926 $ 1.90 44.26 $ 205 170 $ 1.80 39.05 $ 168 194 98.964 3.855 33.4 58,277 104,369 3,939 33.0 57,891 LAM017216 1971 $2,087. 178 39 66 94 -- 94 4.5% 7.8% $2.65 2.65 2.63 2.63 1970 $1,972 128 33 35 78 11 67 3.4% 5.6% 1969 $1,939 191 22 .. 73 109' (7) 116 6.0% 9.8% $2.17 1.83 2.17 1.83 $3.08 3.28 3.03 3.21 1968 1967 $1,865 214 21 88 116 -- 116 6.2% 10.3% ' $1,705 186 23 \ 71 105 (6) 111 6.6% 10.3% $3.26 3.26 3.20 3.20 $2.96 3.15 2.92 3.10 1966 $1,679 211 24 82 120 -- 120 7.2% 11.9% $3.48 3.48 3.40 3.40 1965 $1,527 219 19 85 130 -- 130 8.5% 14.0% $3.86 3.86 3.73 3.73 $2,154 547 2,735 1,170 558 1,226 $2,145 538 2,637 1,170 589 1,194 $2,012 510 2,471 1,071 454 1,205 $1,957 520 2,345 1,047 473 1,154 $1,908 434 2,293 1,098 492 1,103 $1,906 396 2,167 1,105 520 1,044 $1,815 364 1,982 1,047 501 975 $ 1.80 37.16 $ 205 187 110.490 3.897 32.8 59.271 $ 1.80 36.27 $ 301 170(2) $ 1.80 36.25 $ 220 164 121,399 3.941 32.8 62.940 118.156 3.621 33.1 64,604 $ 1.65 34.74 $ 135 174 111,538 -- 33.1 62.815 $ 1.60 33.31 $ 166 165 111,363 -- 33.0 62.073 $ 1.60 32.17 $ 220 154 95.938 -- 32.3 60.697 $ 1.45 30.67 $ 299 135 93.538 -- 31.6 58.817 MAR 1100.58 LAM017217 Directors Charles H. Sommer, St. Louis Chairman John W. Hanley, St. Louis President H. Harold Bible, St. Louis Group Vice President C. Preston Cunningham, St. Louis Group Vice President Fredrick M. Eaton, New York Senior Partner, New York law firm of Shearman & Sterling John R. Eck, St. Louis Group Vice President Louis Fernandez, St. Louis Group Vice President J. W. Fisher, Marshalltown, Iowa Former Chairman, Fisher Controls Company, Inc. John L. Gillis, St. Louis Former Monsanto Senior Vice President James J. Kerley, St. Louis Group Vice President Jean Mayer, Boston Professor of Nutrition, Harvard University Buck Mickel, Greenville, S. C. Chairman, Daniel International Corporation, engineering and construction firm Edward A. O'Neal, St. Louis Former Monsanto Chairman Edward L. Palmer, New York Chairman of the Executive Committee, First National City Corporation Francis E. Reese, St. Louis Group Vice President Tom K. Smith Jr,, St. Louis Group Vice President Monte C. Throdahl, St. Louis Group Vice President Earle G. Wheeler, Martinsburg, W. Va. U.S. Army, Retired. Former Chairman, Joint Chiefs of Staff Transfer Agents Morgan Guaranty Trust Company of New York The Boatmen's National Bank of St. Louis Registrars MAR 1100.59 The Chase Manhattan Bank, N. A. St. Louis Union Trust Company 58 LAM017218 Officers John W. Hanley President and Chief Executive Officer Charles H. Sommer Chairman Group Vice Presidents Edmond S. Bauer Monsanto Agricultural Products Company H. Harold Bible Monsanto Industrial Chemicals Company C. Preston Cunningham Operations Staff John R. Eck Monsanto Polymers & Petrochemicals Company Louis Fernandez Monsanto Textiles Company James J. Kerley Administrative Staff Francis E. Reese Facilities and Planning Staff Tom K. Smith Jr. Monsanto Commercial Products Company Monte C. Throdahl Technical Staff Vice Presidents Robert L. Berra Personnel James E. Crawford Jr. International Division Edwin J. Putzell Jr. Secretary and General Counsel Ernest S. Robson Energy and Materials Management Other Officers Kenneth N. Kermes Treasurer Richard C. O'Sullivan Controller March 7, 1975 Printed in U.S.A. Regional Vice Presidents Western Region Roy L. Brandenburger Eastern Region Richard T. Clark Governmental Affairs Sam Pickard MAR 1100.60 LAM017219