01/21 09:50 Monsanto Reports 1998 Fourth-Quarter and Full-Year Results
Monsanto Reports 1998 Fourth-Quarter and Full-Year Results
ST. LOUIS, Jan. 21 /PRNewswire/ -- Monsanto Company (NYSE: MTC) reported
an aftertax loss from continuing operations for the fourth quarter of 1998 of
$603 million, or a loss of $1.00 per share on both a basic and diluted basis.
Sales during the period were $2.1 billion. For the year, the company recorded
an aftertax loss from continuing operations of $250 million, or a loss of 41
cents per share on both a basic and diluted basis. Sales reached $8.6
billion.
Both the fourth quarter and the year were affected by charges for
restructuring, acquired in-process research and development (R&D) and other
unusual items. If these items were excluded for the fourth quarter, aftertax
income from continuing operations would have been $27 million, or 5 cents per
share on a diluted basis. For the full year, if unusual items were excluded,
aftertax income from continuing operations would have been $580 million, or 93
cents per share on a diluted basis.
Based on an EBIT measure (earnings before interest expense and taxes), the
company recorded a fourth-quarter loss of $748 million, which included
restructuring, in-process R&D and other charges of $858 million. If the
unusual items were excluded, fourth-quarter EBIT would have been $110 million.
For the full year, EBIT was $69 million, which included restructuring,
in-process R&D and other charges of $1.1 billion.
EBITDA (earnings before interest expense, taxes, depreciation and
amortization, and excluding unusual items) was $320 million for the last
quarter of 1998 and $1.8 billion for the full year. EBITDA is a cash-based
measure of operating profitability.
"We completed several of the critical steps in our life sciences strategy
in 1998 and put in place the platforms that will accelerate the
commercialization and growth of our new products," said Robert B. Shapiro,
Monsanto chairman and chief executive officer. "Our efforts in 1999 will be
centered on continuing to grow strong base businesses like Roundup herbicide,
integrating our newly acquired seed companies, commercializing new products
like Celebrex arthritis treatment, and accelerating the development of our
product pipeline."
In comparison, aftertax income from continuing operations in 1997 was $5
million, or 1 cent per share on a diluted basis, on sales of $1.8 billion for
the quarter, and $294 million, or 48 cents per share on a diluted basis, on
sales of $7.5 billion for the year. If unusual items in 1997 were excluded,
aftertax income from continuing operations would have been $55 million, or 9
cents per share on a diluted basis, for the fourth quarter, and $749 million,
or $1.23 per share on a diluted basis, for the full year. In 1997, EBIT was
$56 million for the fourth quarter, which included $75 million of in-process
R&D charges, and $536 million for the 12-month period, which included charges
of $684 million for in-process R&D. (EBITDA for 1997 was $269 million for the
fourth quarter and $1.7 billion for the year.)
In the fourth quarter of 1998, Monsanto reported pretax restructuring and
special charges of $625 million. These charges primarily will cover the costs
necessary to eliminate roughly 1,700 jobs in 1999, to write down assets being
sold, and to dispose of nonstrategic assets and product lines. These
initiatives are expected to generate annual pretax savings of approximately
$160 million. The expenses associated with these charges are expected to be
fully offset by cost savings within 20 months. Additional cost-saving actions
are being considered that may require future charges. Fourth-quarter 1998
results also included net pretax charges of $233 million, primarily for in-
process R&D write-offs associated with the purchase of DEKALB Genetics
Corporation, Plant Breeding International Cambridge Limited, and the
international seed operations of Cargill Inc.
In 1998, the company invested $2.1 billion pretax for growth spending,
which included costs associated with research and technology, major product
developments, new product launches and other growth initiatives. This is a 52
percent increase from growth spending in 1997. These growth investments
reduced year-to-year EBIT by approximately $720 million.
Unlike the EBIT measure for the company, the EBIT measure for Monsanto's
specific business segments excludes unusual items, thereby more closely
approximating the cash-generating ability of each business.
Based on EBIT, the agricultural segment had a loss of $79 million for the
quarter and earnings of $737 million for the year, roughly flat with the
returns in the comparable periods in 1997. Technology, selling,
administration and amortization costs negatively affected year-to-year EBIT,
primarily because of the inclusion of recently acquired seed companies in the
segment's results. (EBITDA for the agricultural segment was $35 million for
the quarter and $1.1 billion for 1998. This compares with a loss of $11
million and earnings of $939 million, respectively, in 1997.) For the year,
worldwide volumes for Roundup herbicide increased more than 25 percent
compared with volumes last year. The overall number of acres planted with
crops enhanced by Monsanto's biotechnology traits tripled, and new products
were launched for corn and potatoes in the United States and cotton in China.
Searle, Monsanto's pharmaceutical segment, had EBIT of $179 million for
the fourth quarter and $309 million for the year, increases of 14 percent and
8 percent, respectively, from results for the quarter and year in 1997. (On a
year-to-year comparison, Searle's EBITDA was $451 million in 1998 vs. $422
million in 1997. In the fourth quarter, EBITDA improved to $222 million in
1998, compared with $197 million in the previous year.) Sales reached a
record for the year, fueled by sales of more than $300 million for both Daypro
and Arthrotec arthritis treatments and of more than $400 million for Ambien
short-term treatment for insomnia. Searle became the No. 1 provider of
branded arthritis treatments in 1998 and will add Celebrex to its arthritis
portfolio in 1999. Results for Searle for the fourth quarter included
approximately $200 million from partnering and product-rights agreements. For
the full year, Searle's EBIT and EBITDA also benefited from roughly $250
million higher partnering and product-rights payments when compared with 1997
payments.
Celebrex, the first drug of its kind approved for relief of the signs and
symptoms of osteoarthritis and adult rheumatoid arthritis, was approved in the
United States on Dec. 31, 1998, and in Brazil on Jan. 15, 1999. Shipments of
Celebrex to chain and independent pharmacies in the United States also began
this week.
Searle continues to focus its research efforts on compounds in three key
therapeutic areas: arthritis/pain and inflammation, oncology and
cardiovascular disease. Six of the company's pipeline candidates are
currently in advanced stage (Phase III) clinical trials. These
investigational drugs include: valdecoxib, a second-generation COX-2
inhibitor being evaluated for enhanced inflammation and pain efficacy;
parecoxib, a COX-2 inhibitor for post-surgery pain management; and celecoxib,
a COX-2 inhibitor designed to reduce polyps that may be precursors to certain
malignant tumors. Other investigational drugs being evaluated in Phase III
trials are: eplerenone, a cardiovascular candidate for the treatment of
hypertension and congestive heart failure; leridistim, a blood cell growth
factor designed to help prevent infections in cancer patients after
chemotherapy; and hormone replacement therapy patches for the treatment of
menopausal symptoms and estrogen deficiency.
EBIT for the nutrition and consumer segment was $51 million for the
quarter, down 34 percent from EBIT in last year's fourth quarter, and $278
million for the year, down 14 percent in year-to-year comparisons, primarily
because of the timing of sales of NutraSweet brand sweetener to major
customers, and higher spending on neotame and science-based nutrition
projects. (EBITDA for the nutrition and consumer segment was $88 million in
the fourth-quarter of 1998, and $109 million in the same period during 1997.
For the full year, the segment's EBITDA was $405 million in 1998 vs. $440
million in 1997.) Market share for both tabletop sweeteners and biogums
improved in 1998 as compared with 1997 results. At the end of 1998, a general
use petition for neotame, a new high-intensity sweetener, was filed with the
FDA.
In-process R&D is an accounting treatment that values and immediately
writes off research that is under way at the time of an acquisition but that
has not yet resulted in commercial products. EBIT for the company includes
unusual items, such as restructuring, in-process R&D and other charges; EBIT
for business segments excludes unusual items.
Certain statements made in the news release, including those relating to
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