The Rising Influence of Rising Affluence

[DewDiligence]

MON’s 8-K filing on layoff, exit from sugarcane business, and related write-offs:

http://www.sec.gov/Archives/edgar/data/1110783/000111078315000197/form8k.htm

On October 6, 2015, Monsanto committed to take actions to realign resources to increase productivity, enhance competitiveness by delivering cost improvements and support long-term growth. Planned actions include streamlining and reprioritizing some commercial, enabling and research and development efforts, including the exit of the sugarcane business.

Together, these actions are expected to include separation of approximately 2,600 employees over the next 18 to 24 months across the entire company. The scope of the separations will vary from country to country and is expected to be approximately 12% percent of the company’s global workforce.

These actions are expected to require a restructuring charge estimated at approximately $850 million to $900 million [of which $450M (after taxes) will be in cash—see below]. Approximately $493 million of the charge occurred in the fourth quarter of fiscal year 2015 with a majority of the remainder expected to occur in fiscal year 2016. The charge is expected to be comprised of approximately $330 to $350 million in severance and related benefits, $145 to $160 million in site closures and contract termination costs, and $375 to $390 million in asset impairments and write-offs related to property, plant and equipment, inventory and intangible assets. The restructuring actions are expected to require future cash expenditures of approximately $450 million, which includes cash expenditures related asset impairments. The Restructuring Plan is expected to be completed in fiscal year 2018.