EXHIBIT 99
MONSANTO COMPANY
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Monsanto Company ("Monsanto" or the "company") completed the acquisition of
Seminis, Inc. on March 23, 2005, from which time the operating results of
Seminis were included in the company's consolidated financial statements.
Monsanto completed the acquisition of Emergent Genetics, Inc. and Emergent
Genetics India Ltd. (collectively, "Emergent" or the "Emergent acquisition") on
April 5, 2005, from which time the operating results of Emergent were included
in the company's consolidated financial statements.
The following unaudited pro forma condensed combined financial information is
presented to illustrate the pro forma effects of the acquisitions of Seminis and
Emergent on Monsanto's historical statements of consolidated operations. The pro
forma condensed combined statements of operations were prepared as follows:
o 12 months ended Aug. 31, 2005: Pro forma amounts for the 12
months ended Aug. 31, 2005, were derived from Monsanto's
unaudited 2005 statement of consolidated operations, which
includes Seminis and Emergent operating results beginning on
March 23, 2005, and April 6, 2005, respectively, and from the
statements of consolidated operations for Seminis and Emergent
from Sept. 1, 2004, to the dates of the acquisitions. The pro
forma adjustments are for the 12 months ended Aug. 31, 2005,
and are presented as if the Seminis and Emergent acquisitions
occurred at the beginning of Monsanto's 2005 fiscal year.
o 12 months ended Aug. 31, 2004: Pro forma historical amounts
for the 12 months ended Aug. 31, 2004, were derived from
Monsanto's 2004 statement of consolidated operations as
reported in Monsanto's Current Report on Form 8-K filed on May
24, 2005, and from the statements of consolidated operations
for Seminis and Emergent for their 2004 fiscal years, which
both ended Sept. 30, 2004. The pro forma adjustments are for
the 12 months ended Aug. 31, 2004, and are presented as if the
Seminis and Emergent acquisitions occurred at the beginning of
Monsanto's 2004 fiscal year.
The acquisitions of Seminis and Emergent have been accounted for using the
purchase method of accounting under Statement on Financial Accounting Standards
(SFAS) No. 141, Business Combinations (SFAS 141). Accordingly, the assets and
liabilities of the acquired entities were recorded at their estimated fair
values at the dates of the acquisitions.
The unaudited pro forma condensed combined statement of operations combines the
historical statements of consolidated operations of Monsanto, Seminis and
Emergent, giving effect to the acquisitions as if they had occurred on Sept. 1,
2003, the beginning of Monsanto's 2004 fiscal year. The pro forma results are
not necessarily indicative of what actually would have occurred had the
acquisitions been in effect for the periods presented and should not be taken as
representative of Monsanto's future consolidated results of operations.
The company has adjusted the historical consolidated financial information to
give effect to pro forma events that are (1) directly attributable to the
acquisition, (2) factually supportable, and (3) expected to have a continuing
impact on the combined results.
The unaudited pro forma condensed combined statements of operations should be
read in conjunction with Monsanto's Report on Form 10-K for the fiscal year
ended Aug. 31, 2004 (portions have been recast in Monsanto's Current Report on
Form 8-K filed on May 24, 2005).
A pro forma combined balance sheet has not been provided in this Form 8-K,
because the company has included a balance sheet as of May 31, 2005, prepared in
accordance with SFAS 141 as it relates to the Seminis and Emergent acquisitions,
in the company's Report on Form 10-Q for the quarterly period ended May 31,
2005.
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MONSANTO COMPANY
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
12 MONTHS ENDED AUG. 31, 2005
<Table>
<Caption>
Pro Forma Monsanto
(Dollars in millions, except per share amounts) Monsanto Seminis(1) Emergent(2) Adjustments(3) Pro Forma
------------ ------------ ------------ -------------- ------------
NET SALES $ 6,294 $ 339 $ 39 $ -- $ 6,672
Cost of goods sold 3,290 134 16 (2)(a,b,c) 3,438
------------ ------------ ------------ ------------ ------------
GROSS PROFIT 3,004 205 23 2 3,234
OPERATING EXPENSES:
Selling, general and administrative expenses 1,334 132 9 (14)(d) 1,461
Bad-debt expense 67 -- -- -- 67
Research and development expenses 588 32 (4) 26(e) 642
Acquired in-process research and development 266 -- -- (248)(f) 18
Restructuring charges-- net 7 -- -- -- 7
------------ ------------ ------------ ------------ ------------
Total Operating Expenses 2,262 164 5 (236) 2,195
INCOME FROM OPERATIONS 742 41 18 238 1,039
Interest expense-- net 75 27 1 (4)(g) 99
Solutia-related expenses 309 -- -- -- 309
Other (income) expense-- net 97 (6) -- 1(h) 92
------------ ------------ ------------ ------------ ------------
Income from Continuing Operations
Before Income Taxes 261 20 17 241 539
Income tax provision 104 4 3 2(i) 113
------------ ------------ ------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS $ 157 $ 16 $ 14 $ 239 $ 426
============ ============ ============ ============ ============
BASIC EARNINGS PER SHARE:
Income from continuing operations $ 0.59 $ 1.60
DILUTED EARNINGS PER SHARE:
Income from continuing operations $ 0.58 $ 1.56
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 266.8
Diluted 272.7
</Table>
- ----------
(1) For the period Sept. 1, 2004, to March 22, 2005
(2) For the period Sept. 1, 2004, to April 5, 2005
(3) See Note 3 -- Pro Forma Adjustments -- for an explanation of these
items.
The accompanying notes are an integral part of these unaudited pro forma
condensed combined financial statements.
2
MONSANTO COMPANY
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
12 MONTHS ENDED AUG. 31, 2004
<Table>
<Caption>
Pro Forma Monsanto
(Dollars in millions, except per share amounts) Monsanto Seminis(1) Emergent(1) Adjustments(2) Pro Forma
---------- ---------- ---------- ------------ -----------
Net Sales $ 5,423 $ 526 $ 69 $ -- $ 6,018
Cost of goods sold 2,896 236 37 34(a),(b) 3,203
---------- ---------- ---------- ---------- ----------
Gross Profit 2,527 290 32 (34) 2,815
Operating Expenses:
Selling, general and administrative expenses 1,128 188 18 (20)(d) 1,314
Bad-debt expense 106 2 -- -- 108
Research and development expenses 509 59 12 47(e) 627
Impairment of goodwill 69 -- -- -- 69
Restructuring charges -- net 112 -- -- -- 112
---------- ---------- ---------- ---------- ----------
Total Operating Expenses 1,924 249 30 27 2,230
Income from Operations 603 41 2 (61) 585
Interest expense -- net 57 46 2 (6)(g) 99
Solutia-related expenses 58 -- -- -- 58
Other (income) expense -- net 94 (1) -- -- 93
---------- ---------- ---------- ---------- ----------
Income (Loss) from Continuing Operations Before Income Taxes 394 (4) -- (55) 335
Income tax provision (benefit) 128 12 1 (35)(i) 106
---------- ---------- ---------- ---------- ----------
Income (Loss) from Continuing Operations $ 266 $ (16) $ (1) $ (20) $ 229
========== ========== ========== ========== ==========
Basic Earnings per Share:
Income from continuing operations $1.01 $ 0.87
Diluted Earnings per Share:
Income from continuing operations $0.99 $ 0.85
Weighted Average Shares Outstanding:
Basic 264.4
Diluted 269.2
</Table>
- ----------
(1) For the 12 months ended Sept. 30, 2004
(2) See Note 3 -- Pro Forma Adjustments -- for an explanation of these
items.
The accompanying notes are an integral part of these unaudited pro forma
condensed combined financial statements.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF TRANSACTION
In third quarter fiscal year 2005, Monsanto acquired Seminis, Inc. for $1.0
billion in cash (net of cash acquired), inclusive of transaction costs of $23
million, and paid $495 million for the repayment of outstanding debt. The
transaction was completed on March 23, 2005, from which time the operating
results of this acquisition were included in the company's consolidated
financial statements. Marinet Investments, LLC, which prior to the closing was a
holder of co-investment rights in Seminis, elected to reduce the cash payment to
which it was entitled upon completion of the transaction by $50 million in
exchange for a contingent payment of up to $125 million based on the achievement
of certain cumulative net sales targets over the 36-month period ending Sept.
30, 2007. The cash portion of the acquisition was funded with cash on hand plus
commercial paper borrowings of $600 million issued in March 2005. Prior to the
closing of the transaction, Seminis initiated a tender offer to redeem all of
its outstanding 10 1/4% Senior Subordinated Notes. In April 2005, payments
totaling $390 million were made to settle tender offers and were funded with
commercial paper borrowings.
Seminis is the global leader in the vegetable and fruit seed industry, and its
brands are among the most recognized in the vegetable and fruit segment of the
agricultural industry. Seminis supplies more than 3,500 seed varieties to
commercial fruit and vegetable growers, dealers, distributors and wholesalers in
more than 150 countries around the world. In order to enhance connections among
Monsanto and Seminis employees, including the application of back-shop
technology advancements across certain support functions, Monsanto plans to
integrate certain support services of Seminis with its other businesses.
Monsanto is in the process of assessing the plan of integration and is not yet
able to calculate the potential costs or benefits. In connection with this
integration, Monsanto and the chief executive officer of Seminis have agreed
that he will assist in the integration and will resign by Dec. 31, 2005.
Monsanto is assessing whether the termination of his employment could
potentially accelerate the timing of the contingent payment discussed above. Any
such payment would be reflected as an increase in the purchase price of Seminis,
which increase would be allocated to goodwill, and would require a use of cash
by Monsanto.
In third quarter fiscal year 2005, Monsanto acquired Emergent Genetics, Inc. and
Emergent Genetics India Ltd. (collectively, "Emergent" or "the Emergent
acquisition") for $306 million (net of cash acquired), inclusive of transaction
costs of $8 million. With its STONEVILLE and NEXGEN brands in the United States
and MAHALAXMI and PARAS brands in India, Emergent is the third largest cotton
seed business in the United States, has two strong cotton seed brands in India
and has a solid presence in several other smaller cotton-growing markets around
the world. The addition of the Emergent brands completes a strategic cotton
germplasm and traits platform modeled on the company's leading corn and soybean
strategy. The transaction was completed on April 5, 2005, from which time the
operating results of this acquisition were included in the company's
consolidated financial statements. The cash portion of the acquisition was
funded with $284 million of commercial paper borrowings issued in April 2005.
Debt of $16 million was also assumed in the transaction.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. PURCHASE PRICE
The Seminis and Emergent acquisitions were accounted for as purchase
transactions, and accordingly, the assets and liabilities of the acquired
entities were recorded at their estimated fair values at the dates of the
acquisitions. The purchase price allocations for the Seminis and Emergent
acquisitions as of Aug. 31, 2005, are preliminary and are summarized in the
following table.
<Table>
<Caption>
(Dollars in millions) Seminis Emergent
------------ ------------
Current Assets $ 707 $ 74
Property, Plant and Equipment 305 17
Goodwill 194 160
Other Intangible Assets 664 92
Acquired In-process Research and Development 200 48
Other Assets 100 2
------------ ------------
Total Assets Acquired 2,170 393
------------ ------------
Current Liabilities 759 48
Other Liabilities 335 20
------------ ------------
Total Liabilities Assumed 1,094 68
------------ ------------
Net Assets Acquired $ 1,076 $ 325
============ ============
Supplemental Information:
Net assets acquired $ 1,076 $ 325
Cash acquired (56) (19)
------------ ------------
Cash paid, net of cash acquired $ 1,020 $ 306
============ ============
</Table>
The primary items that generated the goodwill were the premium paid by the
company for the right to control the businesses acquired, and the value of the
acquired assembled workforces. None of the goodwill is deductible for tax
purposes.
The following table presents details of the acquired identifiable intangible
assets:
<Table>
<Caption>
Weighted
Average Life Useful Life
(Dollars in millions) (Years) (Years) Seminis Emergent
------------ ----------- ---------- ----------
Germplasm 30 20 - 30 $ 295 $ 16
Acquired Biotechnology Intellectual Property 6 4 - 10 116 56
Trademarks 29 4 - 30 91 12
Customer Relationships 14 8 - 15 162 8
------------ ----------- ---------- ----------
Other Intangible Assets $ 664 $ 92
============ =========== ========== ==========
</Table>
Charges of $248 million were recorded in research and development (R&D) expenses
in the 12 months ended Aug. 31, 2005, for the write-off of acquired in-process
R&D (IPR&D) related to Seminis and Emergent. Management believed that the
technological feasibility of the IPR&D was not established and that the research
had no alternative future uses. Accordingly, the amounts allocated to IPR&D were
required to be expensed immediately under generally accepted accounting
principles.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. PRO FORMA ADJUSTMENTS
Adjustments included in the column under the heading "Pro Forma Adjustments"
primarily relate to the following:
(a) To conform inventory costing methodology for quality assurance and
warehousing expense related to Seminis. The adjustment for the 12
months ended Aug. 31, 2005, and Aug. 31, 2004, was $18 million and $30
million, respectively.
(b) To reflect an accounting policy alignment for freight expense for
Seminis. Freight expense was reclassified from selling, general, and
administrative (SG&A) expenses to cost of goods sold, to align with
Monsanto's reporting. The adjustment for the freight expense
reclassification for the 12 months ended Aug. 31, 2005, and Aug. 31,
2004, was $2 million and $4 million, respectively.
(c) To reverse the effect of purchase accounting adjustments related to
inventory. The adjustment for the 12 months ended Aug. 31, 2005, was a
reversal of expense of $22 million.
(d) To record:
- the reversal of purchase accounting adjustments for Seminis
intangible asset amortization expense related to a prior
acquisition transaction. The adjustments for the 12 months
ended Aug. 31, 2005, and Aug. 31, 2004, were $3 million and $6
million, respectively.
- the reversal of purchase accounting adjustments for Seminis
fixed assets related to a prior acquisition transaction. The
adjustments for the 12 months ended Aug. 31, 2005, and Aug.
31, 2004, were $3 million and $5 million, respectively.
- purchase accounting adjustments for the amortization and
depreciation expenses recorded in SG&A. The combined
adjustments for Seminis and Emergent were $3 million and $7
million for the 12 months ended Aug. 31, 2005, and Aug. 31,
2004, respectively.
- conformity of inventory costing methodology for quality
assurance and warehousing expense related to Seminis (see (a)
above). The adjustment for the 12 months ended Aug. 31, 2005,
and Aug. 31, 2004, was $21 million and $34 million,
respectively.
- an accounting policy alignment for freight expense (see (b)
above). The adjustment for the Seminis freight expense
reclassification for the 12 months ended Aug. 31, 2005, and
Aug. 31, 2004, was $2 million and $4 million, respectively.
(e) To record purchase accounting adjustments for the amortization and
depreciation of intangible and fixed assets for Seminis and Emergent.
Adjustments of $26 million and $47 million were made for the 12 months
ended Aug. 31, 2005, and Aug. 31, 2004, respectively.
(f) To record the reversal of $248 million for IPR&D for the 12 months
ended Aug. 31, 2005.
(g) To reflect purchase accounting adjustments of $4 million and $6 million
for the 12 months ended Aug. 31, 2005, and Aug. 31, 2004, respectively,
for interest expense on Seminis' paid-in-kind mandatory redeemable
preferred stock.
(h) To reflect the reversal of purchase accounting adjustments related to a
prior acquisition transaction for Seminis of $1 million for the 12
months ended Aug. 31, 2005.
(i) To reflect the tax effect of each of the pro forma adjustments, at the
approximate tax rate for the type of adjustment as well as the entity
for which the adjustment is required. There is no tax effect on IPR&D
adjustments.
NOTE 4. MATERIAL NONRECURRING CHARGES
The pro forma results include adjustments to exclude the write-off of IPR&D and
the increase in cost of goods sold due to the revaluation of inventory related
to the Seminis and Emergent acquisitions. See (c) and (f) in Note 3 -- Pro Forma
Adjustments.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (CONTINUED)
The historical financial information for Seminis includes nonrecurring costs
under the previous ownership structure of $8 million in each of the 12 months
ended Aug. 31, 2005, and Sept. 30, 2004. The historical financial information
for Seminis also includes charges of approximately $1 million in the 12 months
ended Sept. 30, 2004, related to one-time legal and professional fees and other
costs directly attributable to a prior acquisition transaction. In addition,
interest expense related to Seminis debt has not been removed from the
historical Seminis results; however, as discussed above, Seminis debt of $495
million, with a weighted-average interest rate of approximately 10%, was repaid
subsequent to the acquisition date, while interest expense on commercial paper
issued to fund repayments of the debt was at an interest rate of approximately
3%. In July 2005, Monsanto issued $400 million of 30-year notes that bear
interest at 5 1/2% annually, which allowed the company to pay down the
commercial paper borrowings.
7