UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the period from January 1, 2002 to July 1, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
------------ --------------
Commission file number 1-2516
A. Full title of the plan and the address of the plan, if
different from that of issuer named below:
PHARMACIA CORPORATION SAVINGS AND INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
PHARMACIA CORPORATION
100 Route 206 North
Peapack, New Jersey 07977
PHARMACIA CORPORATION SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2002 TO JULY 1, 2002
PHARMACIA CORPORATION SAVINGS AND INVESTMENT PLAN
Financial Statements
Table of Contents
Page
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits as of July 1, 2002 and
December 31, 2001 2
Statement of Changes in Net Assets Available for Benefits for the
Period From January 1, 2002 to July 1, 2002 3
Notes to Financial Statements 4
NOTE: Supplemental schedules required by the Employee Retirement Income
Security Act of 1974 that have not been included herein are not
applicable to the Pharmacia Corporation Savings and Investment
Plan.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
Pharmacia Corporation Savings and Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Pharmacia Corporation Savings and Investment Plan (the "Plan") at July 1,
2002 and December 31, 2001 and the changes in net assets available for benefits
for the period from January 1 to July 1, 2002 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Plan's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Effective July 1, 2002, the Plan merged with the Pharmacia and Upjohn Employee
Savings Plan to form a new plan named the Pharmacia Savings Plan. Refer to the
notes to the financial statements for additional information.
PricewaterhouseCoopers LLP
December 20, 2002
PHARMACIA CORPORATION SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
JULY 1, 2002 AND DECEMBER 31, 2001
(Dollars in thousands)
JULY 1, DECEMBER 31,
2002 2001
---- ----
ASSETS:
Investment in the Pharmacia Corporation and Monsanto Company
Defined Contribution and Employee Stock Ownership Master Trust $ -- $1,440,081*
---------- ----------
Total investments -- 1,440,081
---------- ----------
RECEIVABLES:
Company contributions -- 286
Participant contributions -- 743
---------- ----------
Total receivables -- 1,029
---------- ----------
Total assets -- 1,441,110
---------- ----------
LIABILITIES:
ESOP debt -- 31,617
---------- ----------
Total liabilities -- 31,617
---------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ -- $1,409,493
========== ==========
*Individual investment securities which represent 5% or more of net assets
available for plan benefits.
The above statements should be read in conjunction with the accompanying Notes
to Financial Statements.
2
PHARMACIA CORPORATION SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE PERIOD FROM JANUARY 1, 2002 TO JULY 1, 2002
(Dollars in thousands)
PERIOD FROM
JANUARY 1 TO
JULY 1, 2002
------------
ADDITIONS:
Additions to net assets attributed to:
Investment income (loss):
Plan Interest in the Pharmacia Corporation and Monsanto Company Defined
Contribution and Employee Stock Ownership Master Trust Net Investment Loss $ (92,254)
Interest on participants' loans 394
-----------
Total investment loss (91,860)
-----------
Contributions:
Participant 20,545
Rollovers 6,784
Company 2,372
-----------
Total additions (reductions) (62,159)
-----------
DEDUCTIONS:
Deductions from net assets attributed to:
Benefits paid to participants 90,692
Plan expenses 2,384
Interest expense on ESOP debt 1,013
Transfer to New Pharmacia Plan 1,253,245
-----------
Total deductions 1,347,334
-----------
Net decrease (1,409,493)
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of period 1,409,493
-----------
End of period $ --
===========
The above statement should be read in conjunction with the accompanying Notes to
Financial Statements.
3
PHARMACIA CORPORATION SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 2002 TO JULY 1, 2002
1. Summary of Significant Accounting Policies
The accompanying financial statements of the Pharmacia Corporation Savings
and Investment Plan (the "Plan") have been prepared on the accrual basis
of accounting.
Fixed income fund investments in guaranteed investment contracts, issued
by insurance companies, are valued at contract value plus accrued interest
because these investments have fully benefit-responsive features.
Investments other than guaranteed investment contracts are stated at fair
values, which are generally determined by quoted market prices. The value
of outstanding participant loans is determined based on the outstanding
principal balance as of the last day of the period, which approximates
fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Dividend income is recorded on the ex-dividend date. Realized gains and
losses from security transactions are reported on the average cost method.
The Plan presents in the statement of changes in net assets available for
benefits, the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains and losses and the
unrealized appreciation (depreciation) on these investments.
Benefit payments are recorded when paid.
The Plan pays certain outside service provider expenses (e.g.
recordkeeping and trustee fees) incurred in the operation of the Plan.
Investment manager fees are paid by the Plan and are included in
Administrative Expenses. Certain other expenses are paid by the Company.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent liabilities at
the date of the financial statements and reported amounts of increases and
decreases during the reporting period. Actual results could differ from
those estimates.
The Plan provides for various investment options in any combination of
stocks, mutual funds, common/collective trusts, and other investment
securities. Investment securities are exposed to various risks, such as
interest rate, market and credit risk. Due to the level of risk associated
with certain investment securities and the level of uncertainty related to
changes in the value of investment securities, it is possible that changes
in risks in the near term would materially affect participants' account
balances and the amounts reported in the statement of net assets available
for benefits and the statement of changes in net assets available for
benefits.
2. Information Regarding the Plan
GENERAL
The following description of the Plan provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
ADMINISTRATION
Pharmacia Corporation ("Pharmacia" or the "Company") is the sponsor of the
Plan. The Global Employee Benefits Oversight Committee and the
Administrative Committee -- U.S. Plans are responsible for administering
plan operations in accordance with the Employee Retirement Income Security
Act of 1974 ("ERISA") plan documents. The Global Benefits Investment
Committee is responsible for monitoring plan investments.
4
The Plan is a contributory defined contribution profit sharing plan with
individual accounts for each participant. Employees are generally eligible
to participate in the Plan as soon as administratively possible. The cost
of Plan administration is borne partially by Plan participants and
partially by Pharmacia (the Plan sponsor). The trustee of the Plan is The
Northern Trust Company.
Effective as of July 1, 2001, the account balances of the Plan that were
allocated to the accounts of certain employees and former employees of
Monsanto Company were transferred to the Monsanto Company Savings and
Investment Plan (the "Monsanto SIP"). The allocation of these assets was
based on the actual participant account balances, by investment fund, as
of July 1, 2001. All investment income and gains/(losses) through December
31, 2001, were subsequently allocated based on the actual participant
account balances, by investment fund, as of December 31, 2001. The assets
underlying these accounts continued to be held in a master trust serving
both the Plan and the Monsanto SIP.
On June 28, 2001, the Global Employee Benefits Oversight Committee
approved the amendment and restatement of the Pharmacia & Upjohn Employee
Savings Plan, to be effective July 1, 2002. The Committee also approved
the merger of the Plan, with and into this new plan, to be named the
Pharmacia Savings Plan (the "New Pharmacia Plan"), effective July 1, 2002.
In order to effect this merger, assets and liabilities from the Plan's
Master Trust representing the Plan's interest and obligations in and under
the Master Trust were transferred to The New Pharmacia Plan's Master Trust
and The New Pharmacia Plan's ESOP Trust for Pharmacia Common Stock. The
New Pharmacia Plan includes the Retirement Choice Program and New
Investment Options. Under the Retirement Choice program, participants have
a choice of two retirement benefit options. Option 1 offers additional
Pension Plan benefits and Option 2 offers additional Savings Plan
benefits. Participants receive a pension and savings benefit under either
option and can choose between Options 1 and 2 on an annual basis. In
addition, the New Pharmacia Plan offers New Investment Options in the form
of eight core investment funds and four pre-mixed investment funds. The
eight core investment funds are the Income Fund, the Core Bond Fund, the
Value Stock Fund, the Large Company Stock Fund, the Growth Stock Fund, the
Mid-Small Company Stock Fund, the International Stock Fund, and Pharmacia
Common Stock Fund. The pre-mixed funds are the Conservative Pre-Mixed
Fund, the Moderate Pre-Mixed Fund, the Moderately Aggressive Pre-Mixed
Fund and the Aggressive Pre-mixed Fund. These funds offer varying degrees
of risk and return. They are invested in the Core Bond Fund, the Large
Company Stock Fund, the Mid-Small Company Stock Fund, and the
International Stock Fund in predetermined percentages to form the funds.
All Plan assets were invested in the New Investment Options as of July 1,
2002.
As of the date of the Plan's merger with the New Pharmacia Plan,
participants became 100% vested in their Plan balances.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions, Company contributions, and Plan earnings/(losses).
Participants' accounts are valued on a daily basis. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account balance.
CONTRIBUTIONS AND VESTING
The Plan provides for voluntary employee contributions generally ranging
from 1% to 16% of an employee's eligible pay. Employees have an option to
make before-tax contributions or after-tax contributions. Subject to
Internal Revenue Service discrimination tests, contributions may be all
before-tax, all after-tax, or a combination of both. Generally, employee
contributions to the Plan may be invested in 1% increments and allocated
in any combination to the following investment fund types: a fixed income
fund, a balanced fund consisting of both fixed income and equity
securities, a growth and income equity fund, an international equity fund,
a growth equity fund, a U.S. equity index fund or the employer stock fund,
which invests in Pharmacia common stock. In addition, the Plan includes
four asset allocation funds which allow participants varying degrees of
risk and return, including (in order of risk tolerance -- least to
greatest), the Conservative Portfolio Fund, the Moderate Portfolio Fund,
the Moderately Aggressive Portfolio Fund, and the Aggressive Portfolio
Fund. Investments in the U.S Equity Index Fund, the Balanced Fund, the
Growth and Income Equity Fund, the Growth Equity Fund, the Fixed Income
Fund and the International Equity Fund are used in predetermined mixes to
form the asset allocation funds. As a result of the spin-off of Solutia,
Inc., a former subsidiary of the former Monsanto Company, prior to 1998,
certain participants' accounts received common stock of Solutia. This
stock is maintained in the
5
Non-Employer Stock fund and no contributions either employee or employer,
subsequent to the spinoff can be made to this fund.
The before-tax option allows participants to elect to make before-tax
contributions from gross pay before most income taxes are deducted. The
participants generally cannot withdraw before-tax contributions until age
59 1/2, retirement, disability, death or termination of employment.
After-tax contributions are made from participants' pay after income taxes
are deducted. Withdrawal of after-tax employee contributions can be made
with no penalty. Participants may change the amounts of their
contributions and transfer their contributions among the investment
options. Active participants who are at least age 50 and are fully vested
may elect to have all or a part of the employer portion of their Pharmacia
Common Stock Fund accounts sold and the proceeds invested in other
investment funds (excluding the Non-employer Stock Fund).
Employee contributions to the Plan, up to a maximum of 7% of eligible pay,
generally are matched 60% by Pharmacia. In December 2001, Pharmacia made
discretionary performance contributions of an additional 20% of the first
10% of eligible pay. Employer contributions and related earnings are
invested solely in Pharmacia common stock. In part, this is accomplished
through an Employee Stock Ownership Plan (ESOP) feature added to the Plan
in October 1991. Dividends paid on Pharmacia common stock are reinvested.
Prior to the merger of the Plan into the New Pharmacia Plan, Employer
contributions vested and became non-forfeitable at the rate of 20% per
year of service, such that employer contributions are 100% vested after
five years of service. Upon completing five years of participation in the
Plan, all Employer matched amounts could also be withdrawn. A participant
who had less than five years of participation in the Plan could not
withdraw Employer matching contributions received during the last 24
months and Employer matching contributions that had not vested.
LEVERAGED ESOP
In 1991, in connection with the ESOP component, the Plan issued $100
million in amortizing notes and $100 million in amortizing debentures,
both guaranteed by Pharmacia (the "Public Debt"), and borrowed $50 million
from Pharmacia (the "Internal Debt"). In January 1992, the proceeds from
the borrowings were used to purchase approximately 18.5 million shares of
common stock from Pharmacia at the average price of $13.40 per share. This
stock is released for allocation to participant accounts in accordance
with the terms of the Plan as interest and principal on the borrowings are
paid. In 1996 and 1997, the Plan borrowed an additional $3.7 million and
$4.3 million, respectively, from Pharmacia to make payments on existing
ESOP borrowings.
Pursuant to an Employee Benefits and Compensation Allocation Agreement,
effective June 13, 2001, the Plan trust entered into separate Plan
Separation, Loan, Assignment and Assumption Agreements with Pharmacia and
Monsanto (the "Separation Agreements"). The Separation Agreements required
the provision of two separate new loans by Pharmacia and Monsanto to the
ESOP in order to permit the ESOP to redeem a portion of the remaining
Public Debt and restructure the remaining Internal Debt. The terms of the
new and restructured loans and the redemption of the Public Debt were
negotiated and approved by U.S. Trust Company, N.A., acting as an
independent fiduciary to the Plan for this purpose.
Effective July 1, 2001, 54.6% of the unallocated assets held by the ESOP
were transferred to a new trust established under a new qualified
retirement plan, the Monsanto Company Savings and Investment Plan (the
"New Monsanto SIP"). In connection with this transfer, the trust under the
New Monsanto SIP assumed the Plan's obligations under the new loan held by
Monsanto. The trust under the New Monsanto SIP also assumed the larger of
the separate obligations that was created by restructuring the Internal
Debt, which represents 54.6% of the outstanding June 29, 2001 principal
balance of the Internal Debt.
Following are the net assets and significant components of the changes in
net assets related to the ESOP:
6
(DOLLARS IN THOUSANDS)
JULY 1, 2002 DECEMBER 31, 2001
------------------------------------- -------------------------------------
ALLOCATED UNALLOCATED TOTAL ALLOCATED UNALLOCATED TOTAL
--------- ----------- ----- --------- ----------- -----
INVESTMENTS:
Short-term investment funds $ -- $ -- $ -- $ 913 $ -- $ 913
Pharmacia Common Stock -- -- -- 243,270 93,427 336,697
--------- --------- --------- --------- --------- ---------
Total investments -- -- -- 244,183 93,427 337,610
--------- --------- --------- --------- --------- ---------
RECEIVABLES:
Dividends and interest receivable -- -- -- 2 3 5
--------- --------- --------- --------- --------- ---------
Total receivables -- -- -- 2 3 5
--------- --------- --------- --------- --------- ---------
LIABILITIES:
Accrued Expenses -- -- -- 48 -- 48
Notes payable -- -- -- -- 31,617 31,617
--------- --------- --------- --------- --------- ---------
Total liabilities -- -- -- 48 31,617 31,665
--------- --------- --------- --------- --------- ---------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ -- $ -- $ -- $ 244,137 $ 61,813 $ 305,950
========= ========= ========= ========= ========= =========
7
(DOLLARS IN THOUSANDS)
PERIOD FROM JANUARY 1, 2002 TO JULY 1, 2002
-------------------------------------------
ALLOCATED UNALLOCATED TOTAL
--------- ----------- -----
ADDITIONS:
Additions to net assets attributed to:
Investment income (loss):
Net depreciation $ (28,843) $ (10,436) $ (39,279)
Interest 28 7 35
Dividends 1,501 573 2,074
--------- --------- ---------
Total investment loss (27,314) (9,856) (37,170)
Company contributions -- 2,372 2,372
Allocation of 195,143 shares of Common Stock for
Company matching contributions 8,193 -- 8,193
--------- --------- ---------
Total additions (reductions) (19,121) (7,484) (26,605)
--------- --------- ---------
DEDUCTIONS:
Deductions from net assets attributed to:
Benefits paid to participants (14,117) -- (14,117)
Plan expenses (103) -- (103)
Interest on notes payable -- (1,013) (1,013)
Transfers to other investment funds (4,962) -- (4,962)
Allocation of 195,143 shares of Common stock for
Company matching contributions -- (8,193) (8,193)
Asset transfers, net (205,834) (45,123) (250,957)
--------- --------- ---------
Total deductions (225,016) (54,329) (279,345)
--------- --------- ---------
Net decrease (244,137) (61,813) (305,950)
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of period 244,137 61,813 305,950
--------- --------- ---------
End of period $ -- $ -- $ --
========= ========= =========
As of July 1, 2002 (the plan merger date), all unallocated shares and the
three outstanding loans were transferred to the New Pharmacia Plan. As of
July 1, 2002 the outstanding principal balance on the Plan's Public Debt
was $8,179,080 (carrying an interest rate of 8.13% and maturing on
December 15, 2006). In addition, the Plan carried two separate internal
notes payable to Pharmacia. The outstanding principal balance of the first
note as of July 1, 2002 was $20,071,153 (carrying an interest rate of
5.71% and maturing on December 15, 2006). The outstanding principal
balance of the second note as of July 1, 2002 was $353,773 (carrying an
interest rate of 7.00% and maturing on December 15, 2021). The Plan held
1,968,630 shares of unallocated Pharmacia Common Stock as of the date of
plan merger.
PARTICIPANT LOANS
Most Plan participants can obtain loans from their accounts. A participant
can borrow up to the legal limit of 50% of the total vested account
balance (including the employer-contributed portion of the Pharmacia
Common Stock Fund account), but not more than $50,000 minus the excess of
the participant's highest outstanding loan balance during the last 12
months over the participant's outstanding loan balance on the date the
loan is made. The minimum loan is $1,000. The interest rates are set
quarterly and are based on the prime interest rates. Participants can
establish a loan repayment schedule from 12 to 60 months.
8
3. Information Regarding the Pharmacia Corporation and Monsanto Company
Defined Contribution and Employee Stock Ownership Master Trust ("Master
Trust")
Effective July 1, 2001, the Master Trust was formed and the assets of the
Plan were collectively invested with the assets of the Monsanto SIP in the
Master Trust. Within the Master Trust, each participating plan is entitled
to a specific interest in the Master Trust's net assets and net
earnings/(losses). At December 31, 2001 the Plan's specific interests in
the total net assets of the Master Trust was approximately 49%. Effective
July 1, 2002, all assets of the Master Trust were transferred out to the
New Pharmacia Plan and the Monsanto SIP.
The following table presents the fair values of investments for the Master
Trust at July 1, 2002 and December 31, 2001:
(DOLLARS IN THOUSANDS)
JULY 1, DECEMBER 31,
2002 2001
---- ----
INVESTMENTS
Cash and temporary investments $ -- $ 54,636
Mellon Daily Liquidity Stock Index Fund -- 211,308
Capital Guardian International Equity Fund -- 83,897
Debt Securities including U.S. Government securities -- 96,285
Common stock -- Pharmacia Corporation -- 934,258
Common stock -- Solutia Inc. -- 22,143
Common and preferred stock -- other -- 691,730
Guaranteed investment contracts -- 798,794
Loans to participants -- 25,641
----------- -----------
TOTAL INVESTMENTS -- 2,918,692
Investment receivables 2,257
Accrued expenses -- (1,812)
----------- -----------
TOTAL $ -- $ 2,919,137
=========== ===========
9
INVESTMENT INCOME (LOSS) (DOLLARS IN
THOUSANDS)
PERIOD FROM
JANUARY 1,
2002 TO
JULY 1, 2002
------------
Interest $ 29,019
Dividends -- Pharmacia Corporation 6,535
Dividends -- other 5,765
Net appreciation (depreciation) in fair value of investments:
Common stock -- Pharmacia Corporation (106,568)
Common stock -- other (98,589)
Mutual funds (30,835)
Debt securities 1,818
---------
TOTAL NET INVESTMENT LOSS $(192,855)
=========
Guaranteed Investment Contracts
Within the Master Trust, the fixed income fund purchases
benefit-responsive guaranteed investment contracts with various insurance
companies to provide participants the issuers' commitment to repay
principal plus resultant earnings. Effective June 1, 2002, the four
existing separate synthetic guaranteed investment contracts were
terminated and replaced with a single contract that uses three issuers:
AEGON, State Street, and JPMorganChase. Effective July 1, 2002, the
combined synthetic contract was transferred to the Pharmacia Savings Plan.
The following summarizes the guaranteed investment contracts held within
the Master Trust as of July 1, 2002 and December 31, 2001:
(DOLLARS IN THOUSANDS)
CONTRACT VALUE
GUARANTEED INVESTMENT CONTRACTS JULY 1, DECEMBER 31,
2002 2001
---- ----
AIG FINANCIAL PRODUCTS GROUP
Synthetic Guaranteed Investment Contract $ -- $ 199,946
PACIFIC MUTUAL GROUP ANNUITY
Synthetic Guaranteed Investment Contract -- 200,233
JPMORGANCHASE
Synthetic Guaranteed Investment Contract -- 199,130
AEGON #ADA00233TR
Synthetic Guaranteed Investment Contract -- 199,485
AEGON #CDA00003TR
Synthetic Guaranteed Investment Contracts Combined -- --
(AEGON, State Street, and JPMorganChase)
--------- ---------
TOTAL $ -- $ 798,794
========= =========
No gain or loss was realized as a result of the termination of the
original four contracts on May 31, 2002. The contract value of the new,
combined contract effective June 1, 2002 was the sum of the contract
values of the terminated issuers.
10
The rate of return for the synthetic guaranteed investment contracts generally
fluctuates with the return on the underlying assets. The average yields for the
first five months of 2002 and the full year of 2001 were:
PERIOD FROM
JANUARY 1, 2002 FOR THE YEAR ENDED
TO JULY 1, 2002 DECEMBER 31, 2001
--------------- -----------------
AIG Financial Products Group 6.09% 6.10%
Pacific Mutual Group Annuity 6.76% 6.54%
JPMorganChase 7.32% 6.96%
AEGON #ADA00233TR 6.03% 6.41%
---- ----
The interest rates as of July 1, 2002 and December 31, 2001 were:
JULY 1, 2002 DECEMBER 31, 2001
------------ -----------------
AIG Financial Products Group -- 6.01%
Pacific Mutual Group Annuity -- 6.93%
JPMorganChase -- 7.50%
AEGON #ADA00233TR -- 6.98%
AEGON #CDA00003TR 6.46% --
---- -----
Upon appropriate notification to the insurance company, the synthetic and
separate account guaranteed investment contracts may be terminated.
The Plan values these guaranteed investment contracts at contract value
plus accrued interest. The total estimated fair value of guaranteed
investment contracts was $824 million as of December 31, 2001. Fair values
were estimated using appropriate valuation techniques based on information
available as of December 31, 2001. The fair value estimates are not
necessarily indicative of values the Plan could realize in the current
market.
The above-mentioned guaranteed investment contracts, Pharmacia Corporation
common stock, and shares of the Mellon Daily Liquidity Stock Index Fund,
represent the only investments of the Plan which were individually greater
than 5% of the Plan's net assets.
Nonparticipant-Directed Investments
Except for a portion of the employer stock fund, all other funds in the
Master Trust are participant directed. Information about the net assets
and the significant components of the changes in net assets relating to
the nonparticipant-directed investment amounts as of July 1, 2002 and
December 31, 2001are presented below:
(DOLLARS IN THOUSANDS)
JULY 1, DECEMBER 31,
2002 2001
---- ----
NET ASSETS
Cash and temporary investments $ -- $ 14
Common stock -- Pharmacia Corporation -- 830,595
--------- ---------
TOTAL ASSETS -- 830,609
Accrued expenses -- 113
ESOP debt -- 69,316
--------- ---------
TOTAL LIABILITIES -- 69,429
--------- ---------
NET ASSETS $ -- $ 761,180
========= =========
11
(DOLLARS IN
THOUSANDS)
PERIOD FROM
JANUARY 1,
2002 TO
JULY 1, 2002
------------
CHANGES IN NET ASSETS:
Contributions $ 4,792
Loan payments 14
Interest 149
Dividends 5,127
Net depreciation (94,597)
Benefit payments (27,951)
Interest on ESOP debt (2,089)
Interfund transfers (15,100)
Asset transfers, net to New Pharmacia Plan (250,957)
Asset transfers, net to Monsanto SIP Plan (380,568)
----------
TOTAL $ (761,180)
==========
4. Information Regarding Tax Status
Pharmacia has received a determination letter dated May 21, 2001 from the
Internal Revenue Service (IRS) indicating that the Plan was in compliance
with the applicable requirements of the Internal Revenue Code.
5. Transfer to New Pharmacia Plan
Effective July 1, 2002, the Plan's net assets were transferred to the New
Pharmacia Plan. Forfeited non-vested accounts totaling $1.4 million were
included within the $1.3 billion transferred out to the New Pharmacia
Plan.
6. Related-Party Transactions
For the period from January 1, 2002 to July 1, 2002, the Master Trust
purchased 1,320,484 shares of Pharmacia Common Stock with a fair market
value of $54,406,128 and sold 2,006,864 shares for proceeds of
$84,001,820, resulting in a gain of $8,180,378. At December 31, 2001 the
Plan owned 21,905,232 shares of Pharmacia common stock at a cost of
$539,515,734. In addition, funds are invested in a short-term investment
fund managed by The Northern Trust Company, the trustee for the Master
Trust and the Plan. At December 31, 2001 the fair value of the Northern
Trust Company short-term investment account was $33,466,247. For the
period January 1, 2002 to July 1, 2002, the Master Trust purchased
short-term investment funds with a fair market value of $318,269,961 and
sold short-term investment funds for proceeds of $327,272,556.
7. Subsequent Event
Effective July 15, 2002, Pharmacia Corporation and Pfizer Inc. announced
that they had signed a definitive agreement for Pfizer Inc. to acquire
Pharmacia Corporation in a stock-for-stock transaction, which is expected
to close once the appropriate shareholder and regulatory approval have
been received.
* * * * * *
12
Pharmacia Corporation
Exhibit Index
NUMBER DESCRIPTION
------- ------------
23.1 Consent of Independent Accountants, PricewaterhouseCoopers LLP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
PHARMACIA CORPORATION SAVINGS AND INVESTMENT PLAN
By: /s/
---------------------------------------
Robert G. Thompson
Pharmacia Corporation
Senior Vice President and Controller
December 20, 2002