EXHIBIT 99.1
[MONSANTO LOGO]
MONSANTO COMPANY
800 NORTH LINDBERGH BLVD
ST. LOUIS, MISSOURI 63167
RELEASE Immediately
CONTACT Media: Lee Quarles (314-694-4452)
Investors: Scarlett Lee Foster (314-694-8148)
MONSANTO COMPANY REPORTS FOURTH-QUARTER AND FISCAL-YEAR 2005 RESULTS
St. Louis - Oct. 12, 2005
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FINANCIAL SUMMARY FOURTH FOURTH FISCAL FISCAL
($ in millions, except per share) QUARTER QUARTER % YEAR YEAR
2005 2004 CHANGE 2005 2004 % CHANGE
- ----------------------------------------------------------------------------------------------------------------
NET SALES $1,274 $1,233 3% $6,294 $5,423 16%
- ----------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $(125) $(42) NM $255 $267 (4)%
- ----------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS (LOSS) PER SHARE $(0.47) $(0.16) NM $0.94 $0.99 (5)%
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NM = Not Meaningful
- - Quarterly sales increased slightly as a result of growth across the seeds
and traits businesses, including revenues from the acquired Seminis
business which were nearly offset by decreased revenues of Roundup
agricultural herbicides and selective herbicides in the United States. For
fiscal year 2005, sales increased 16 percent to $6.3 billion.
- - Reported net loss for the fourth quarter was $(125) million. For fiscal
year 2005, reported net income was $255 million, which included several
items affecting comparability. The largest of these included the in-process
R&D write-off of $248 million related to the Seminis and Emergent
acquisitions, an aftertax charge of $175 million ($284 million pre-tax)
primarily to establish a reserve associated with the Solutia Inc.
bankruptcy proceedings, and a tax benefit of $106 million ($86 million in
discontinued operations and $20 million in continuing operations) as a
result of the loss incurred on the European wheat and barley business. A
complete list of items affecting comparability is included in the
performance summary section.
- - Monsanto increased growth projections for fiscal year 2006, as the company
now expects earnings per share (EPS) to be in the range of $2.35 to $2.50,
which would reflect a growth rate of up to 20 percent from fiscal year 2005
EPS ongoing base of $2.08 per share. (For a reconciliation of ongoing EPS,
see note 1.)
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COMMENT FROM MONSANTO CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER HUGH
GRANT:
"Our strong financial results were delivered by a combination of growth in our
core businesses and through our newly acquired Seminis vegetable and Emergent
cotton seed businesses. For the fourth quarter, our results continue to reflect
the growth of our seeds and traits businesses, as well as the proactive steps
we've taken to reduce working capital across our herbicide business."
FOURTH-QUARTER AND FISCAL-YEAR 2005 PERFORMANCE SUMMARY:
NET SALES increased 3 percent to $1.3 billion in the fourth quarter of fiscal
year 2005. Sales in the Seeds and Genomics segment increased by 53 percent for
the quarter driven by growth across the seeds and traits businesses, including
the addition of revenues from the Seminis vegetable and fruit seed business.
However, higher revenues for this segment were largely offset by lower sales of
Roundup agricultural herbicides and selective herbicides in the United States.
For fiscal year 2005, net sales were $6.3 billion, a 16 percent improvement
compared with net sales for fiscal year 2004. The sales increase for the 2005
fiscal year was driven primarily by higher U.S. trait revenue, increased corn
seed sales, higher cotton trait revenues in Australia and India, and stronger
sales of Roundup agricultural herbicides in Europe and Brazil. Revenues from the
company's 2005 acquisitions also contributed to growth in the fiscal year. These
gains were slightly offset by lower sales of Roundup agricultural herbicides and
selective herbicides in the United States.
NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE: Monsanto recorded a
fourth-quarter fiscal year 2005 net loss of $(125) million, or $(0.47) per
share, compared with net loss of $(42) million, or $(0.16) per share, for the
fourth quarter of fiscal year 2004.
Items affecting comparability for fourth quarter fiscal year 2005 included:
- $0.01 per share income on discontinued operations.
- A $0.02 per share tax benefit associated with certain liabilities
in connection with the Solutia bankruptcy ("Solutia-related
charge").
Items affecting comparability for fourth quarter fiscal year 2004 included:
- After-tax charges of $(0.15) per share in continuing operations
related to Monsanto's 2004 restructuring plan, net of reversals.
- An after-tax loss of $(0.02) per share for discontinued
operations and related restructuring.
- A $0.02 per share tax benefit associated with the goodwill
write-off of the global wheat business.
For fiscal year 2005, Monsanto reported net income of $255 million, or $0.94 per
share, compared with net income of $267 million, or $0.99 per share, for fiscal
year 2004.
Items affecting comparability for fiscal year 2005 included:
- A charge of $(0.91) per share associated with the in-process R&D
write-off related to the Seminis and Emergent acquisitions.
- $(0.64) per share for the Solutia-related charge.
- A $0.39 per share tax benefit as a result of the loss incurred on
the European wheat and barley business.
- Net restructuring charges of $(0.02) per share.
- $0.04 per share income on discontinued operations.
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Items affecting comparability for fiscal year 2004 included:
- After-tax charges of $(0.36) per share in continuing operations
related to Monsanto's 2004 restructuring plan, net of reversals.
- Write-off of goodwill, net of tax, associated with the global
wheat business of $(0.24) per share.
For fourth quarter and fiscal year 2005, Monsanto's results also included two
offsetting items. The first item was a $(0.05) per share charge for an asset
impairment related to an acrylonitrile (AN) facility closure at Sterling
Chemical. (A by-product of AN is used to produce a raw material for Roundup
agricultural herbicides.) Although Monsanto has not recently activated the
contract for raw materials supplied from Sterling, Monsanto did have assets at
the Sterling facility that now will no longer be in-service and were required to
be impaired. This expense was roughly offset by a tax benefit from the
completion of an audit related to a Monsanto subsidiary.
OPERATING COSTS: Research-and-development (R&D) expenses increased by 34 percent
to $187 million for the fourth quarter of fiscal year 2005, an increase of $47
million compared with last year's fourth quarter, primarily driven by R&D
related to the Seminis and Emergent businesses. For fiscal year 2005, R&D
expenses were $588 million compared with R&D expenses of $509 million for fiscal
year 2004. For both fiscal years, R&D expenses as a percent of sales were 9
percent. Additionally, Monsanto recorded in-process R&D expenses of $266 million
in fiscal year 2005 related to all acquisitions.
Selling, general and administrative (SG&A) expenses for fourth quarter 2005 were
$423 million, or 41 percent higher, compared with SG&A expenses for fourth
quarter 2004. The fourth quarter increase was driven by expenses related to the
businesses Monsanto acquired and higher accruals for potential incentive
payments to employees. For fiscal year 2005, SG&A expenses increased to $1.3
billion, or 18 percent higher, compared with the prior-year SG&A expenses of
$1.1 billion. The SG&A expense increase in the fiscal year 2005 was driven by
the businesses Monsanto acquired in fiscal year 2005 and higher accruals for
potential incentive payments to employees. For fiscal year 2005, SG&A as a
percent of net sales including bad-debt expense was 22 percent compared with 23
percent for this metric in fiscal year 2004.
Bad-debt expense for fourth quarter 2005 was relatively flat at $31 million
compared with bad-debt expense of $30 million for fourth quarter 2004. Bad-debt
expense for fiscal year 2005 was $67 million, or $39 million lower, compared
with bad-debt expense of $106 million for fiscal year 2004. Fiscal year 2004
included a higher level of bad-debt expense in Argentina.
OTHER EXPENSES: In the fourth quarter of 2005, Monsanto reported other expense
of $33 million compared with other expense of $39 million for the same period in
2004. For fiscal year 2005, Monsanto reported other expenses of $406 million, or
$254 million higher than fiscal year 2004 results, driven by the $284 million
Solutia-related charge.
CASH FLOW: For fiscal year 2005, net cash provided by operations was $1.7
billion, compared with $1.3 billion for fiscal year 2004. Net cash required by
investing activities was $1.7 billion for fiscal year 2005, and $262 million for
the same period in 2004. As a result, free cash flow decreased from $999 million
in fiscal year 2004 to $70 million in fiscal year 2005. The decrease in free
cash flow was driven by cash used for acquisitions totaling $1.5 billion. In
fiscal year 2004, the company's free cash flow also reflected payments related
to the Solutia PCB litigation settlement. Net cash required by financing
activities was
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$582 million for fiscal year 2005, and $243 million for the same period in 2004.
(For reconciliation of free cash flow, see note 1.)
SEEDS AND GENOMICS SEGMENT DETAIL
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NET SALES FOURTH FOURTH FISCAL FISCAL
($ in millions) QUARTER QUARTER % YEAR YEAR
2005 2004 CHANGE 2005 2004 % CHANGE
- ----------------------------------------------------------------------------------------------------------------
CORN SEED AND TRAITS $190 $171 11% $1,494 $1,145 30%
- ----------------------------------------------------------------------------------------------------------------
SOYBEAN SEED AND TRAITS $62 $44 41% $889 $699 27%
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VEGETABLE AND FRUIT SEED $139 - NM $226 - NM
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ALL OTHER CROPS SEEDS AND TRAITS $154 $142 8% $643 $476 35%
- ----------------------------------------------------------------------------------------------------------------
TOTAL SEEDS AND GENOMICS $545 $357 53% $3,252 $2,320 40%
- ----------------------------------------------------------------------------------------------------------------
NM= Not Meaningful
The Seeds and Genomics segment consists of the global seeds and related trait
business, and genetic technology platforms.
Fourth quarter 2005 net sales of $545 million for the Seeds and Genomics segment
improved 53 percent compared with sales of $357 million recorded in the fourth
quarter of fiscal year 2004. The strong results for the quarter reflected
strength across the seeds and traits portfolio, including increased revenues
from corn and soybean trait sales in the United States and cotton trait sales in
India. Revenues from the company's 2005 acquisitions also contributed to the
growth.
For fiscal year 2005, sales for the Seeds and Genomics segment increased by 40
percent to approximately $3.3 billion, compared with sales of $2.3 billion
recorded in fiscal year 2004. This increase was largely driven by growth across
the seeds and traits businesses, and partially by the addition of revenue from
acquisitions.
EBIT (net income (loss) before interest and taxes) for the Seeds and Genomics
segment was $(136) million for the fourth quarter of fiscal year 2005, compared
with $(135) million for the same period last year. For fiscal year 2005, EBIT
for the segment was $374 million compared with $196 million for the same period
in fiscal year 2004. A major factor for improvement in EBIT for fiscal year 2005
was increased revenues from corn, cotton and soybean traits. Gains in global
corn seed market share also contributed to the EBIT improvement for the year.
(For a reconciliation of EBIT, see note 1.)
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AGRICULTURAL PRODUCTIVITY SEGMENT DETAIL
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NET SALES FOURTH FOURTH FISCAL FISCAL
($ in millions) QUARTER QUARTER % YEAR YEAR
2005 2004 CHANGE 2005 2004 % CHANGE
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ROUNDUP AND OTHER GLYPHOSATE-BASED $508 $602 (16)% $2,049 $2,005 2%
HERBICIDES
- ----------------------------------------------------------------------------------------------------------------
ALL OTHER AGRICULTURAL PRODUCTIVITY $221 $274 (19)% $993 $1,098 (10)%
PRODUCTS
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TOTAL AGRICULTURAL PRODUCTIVITY $729 $876 (17)% $3,042 $3,103 (2)%
- ----------------------------------------------------------------------------------------------------------------
The Agricultural Productivity segment consists of crop protection products,
lawn-and-garden herbicide products, and the company's animal agricultural
businesses.
Net sales in the Agricultural Productivity segment for fourth quarter 2005
decreased 17 percent to $729 million, compared with $876 million for fourth
quarter 2004. Lower sales of Roundup and other glyphosate-based herbicides and
selective herbicides in the United States were the primary reason for the
decrease.
For fiscal year 2005, Agricultural Productivity sales decreased 2 percent to $3
billion, primarily driven by decreased sales of Roundup agricultural herbicides
and selective herbicides in the United States. Lower sales for the fiscal year
2005 were partially offset by increased sales of Roundup and other
glyphosate-based herbicides in Europe and Brazil.
EBIT for the Agricultural Productivity segment was $(39) million for the fourth
quarter of fiscal year 2005, compared with $79 million for fourth quarter 2004
primarily because of working capital reductions for Roundup agricultural
herbicides and selective herbicides in the United States. For fiscal year 2005,
EBIT for the segment was $(27) million, compared with $249 million for fiscal
year 2004. The major factor for the decrease in EBIT for fiscal year 2005 was
the Solutia-related charge of $284 million, which was somewhat offset by lower
operating expenses. (For a reconciliation of EBIT, see note 1.)
OUTLOOK COMMENT FROM MONSANTO CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
HUGH GRANT:
"In the last two years, we have led the transformation of the agricultural
industry with our seeds and traits strategy. We believe we're on a path not just
to maintain that leadership, but accelerate it. That's why today, we raised our
growth prospects for fiscal year 2006."
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2006 GUIDANCE:
Monsanto management announced today it had raised its growth projections for
fiscal year 2006. Monsanto now expects earnings per share (EPS) to be in the
range of $2.35 to $2.50, which would reflect a growth rate of up to 20 percent
from fiscal year 2005 EPS ongoing base of $2.08 per share. (For a reconciliation
of ongoing EPS, see note 1.)
Monsanto outlined its target for SG&A expense as a percent of sales for fiscal
year 2006 of 22 percent. The company also indicated R&D expenses as a percent of
sales are expected to be in the range of 10 percent.
Free cash flow generation for fiscal year 2006 is expected to be in the range of
$825 million to $900 million. The company expects net cash provided by
operations to be approximately $1.175 billion to $1.25 billion, and net cash
required by investing activities to be approximately $350 million. (For a
reconciliation of free cash flow, see note 1.)
OTHER ITEMS OF NOTE:
On October 12, Monsanto Company submitted in a Form 8-K with the Securities and
Exchange Commission unaudited pro forma financial information for the company
which reflects the pro forma impact of its acquisitions of the Seminis and
Emergent seed businesses on fiscal years 2005 and 2004.
On September 20, Monsanto Company announced that it had signed separate
licensing agreements with Arcadia Biosciences and Targeted Growth, Inc. for the
development and commercialization of technologies developed by these companies
in applicable Monsanto crops.
On September 2, Monsanto's American Seeds, Inc. subsidiary announced it made
five key strategic additions to its family of regional seed companies.
Collectively, the acquired companies represent approximately 1 percent of the
U.S. corn seed market.
On August 8, Monsanto Company announced that it had completed the sale of
Monsanto Enviro-Chem Systems Inc. to a new company formed by the Enviro-Chem
management team and an outside investor.
On July 21, Monsanto Company announced that it had completed its $500 million
share repurchase program a year ahead of the authorized expiration period.
Announced in July 2003, the repurchase program authorized the purchase of $500
million of the company's common stock over a three-year period.
Other supplemental data to this news release, including slides that accompany
the company's financial results conference call, can be found on the investor
information page of the company's web site at: www.monsanto.com.
Monsanto Company is a leading global provider of technology-based solutions and
agricultural products that improve farm productivity and food quality.
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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION:
Certain statements contained in this release are "forward-looking statements,"
such as statements concerning the company's anticipated financial results,
current and future product performance, regulatory approvals, business and
financial plans and other non-historical facts. These statements are based on
current expectations and currently available information. However, since these
statements are based on factors that involve risks and uncertainties, the
company's actual performance and results may differ materially from those
described or implied by such forward-looking statements. Factors that could
cause or contribute to such differences include, among others: continued
competition in seeds, traits and agricultural chemicals; the company's exposure
to various contingencies, including those related to intellectual property
protection, regulatory compliance and the speed with which approvals are
received, and public acceptance of biotechnology products; the success of the
company's research and development activities; the outcomes of major lawsuits,
including proceedings related to Solutia Inc.; developments related to foreign
currencies and economies; successful completion and operation of recent and
proposed acquisitions; fluctuations in commodity prices; compliance with
regulations affecting our manufacturing; the accuracy of the company's estimates
related to distribution inventory levels; the company's ability to fund its
short-term financing needs and to obtain payment for the products that it sells;
the effect of weather conditions, natural disasters and accidents on the
agriculture business or the company's facilities; and other risks and factors
detailed in the company's filings with the SEC. Undue reliance should not be
placed on these forward-looking statements, which are current only as of the
date of this release. The company disclaims any current intention or obligation
to update any forward-looking statements or any of the factors that may affect
actual results.
Notes to editors: Roundup is a registered trademark owned by Monsanto Company
and its wholly owned subsidiaries.
Unless otherwise indicated, references to "Roundup and other glyphosate-based
herbicides" exclude all lawn and garden herbicide products.
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MONSANTO COMPANY AND SUBSIDIARIES
Selected Financial Information
(Dollars in millions, except per share amounts)
Unaudited
CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS THREE MONTHS THREE MONTHS 12 MONTHS 12 MONTHS
ENDED ENDED ENDED ENDED
AUG. 31, 2005 AUG. 31, 2004 AUG. 31, 2005 AUG. 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
NET SALES $1,274 $1,233 $6,294 $5,423
Cost of Goods Sold 781 731 3,290 2,896
------------------------------------------------------------------------
GROSS PROFIT 493 502 3,004 2,527
OPERATING EXPENSES:
Selling, General and Administrative Expenses 423 299 1,334 1,128
Bad-Debt Expense 31 30 67 106
Research and Development Expenses 187 140 588 509
Acquired In-Process Research and Development -- -- 266 --
Impairment of Goodwill -- -- -- 69
Restructuring Charges - Net (1) 46 7 112
------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 640 515 2,262 1,924
INCOME (LOSS) FROM OPERATIONS (147) (13) 742 603
Interest Expense - Net 23 12 75 57
Solutia-Related Expenses 9 15 309 58
Other Expense - Net 24 24 97 94
------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES (203) (64) 261 394
Income Tax Provision (Benefit) (74) (27) 104 128
------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (129) (37) 157 266
DISCONTINUED OPERATIONS:
Income (Loss) From Operations of Discontinued
Businesses 5 (4) 11 (6)
Income Tax Provision (Benefit) 1 1 (87) (7)
------------------------------------------------------------------------
INCOME (LOSS) ON DISCONTINUED OPERATIONS 4 (5) 98 1
------------------------------------------------------------------------
NET INCOME (LOSS) $(125) $ (42) $ 255 $ 267
========================================================================
EBIT (1) $(175) $ (56) $ 347 $ 445
========================================================================
BASIC EARNINGS PER SHARE:
Income (Loss) From Continuing Operations $(0.48) $(0.14) $0.59 $ 1.01
Income (Loss) on Discontinued Operations 0.01 (0.02) 0.37 --
------------------------------------------------------------------------
NET INCOME (LOSS) $(0.47) $(0.16) $0.96 $ 1.01
========================================================================
DILUTED EARNINGS PER SHARE:
Income (Loss) From Continuing Operations $(0.48) $(0.14) $0.58 $ 0.99
Income (Loss) on Discontinued Operations 0.01 (0.02) 0.36 --
------------------------------------------------------------------------
NET INCOME (LOSS) $(0.47) $(0.16) $0.94 $ 0.99
========================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic Shares 268.3 265.6 266.8 264.4
Diluted Shares 268.3 265.6 272.7 269.2
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MONSANTO COMPANY AND SUBSIDIARIES
Selected Financial Information
(Dollars in millions)
Unaudited
CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION AS OF AS OF
AUG. 31, 2005 AUG. 31, 2004
- ----------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 525 $1,037
Short-Term Investments 150 300
Trade Receivables - Net of Allowances of $275 and $250,
respectively 1,473 1,663
Miscellaneous Receivables 370 316
Deferred Tax Assets 374 397
Inventories 1,664 1,154
Assets of Discontinued Operations 15 --
Other Current Assets 73 64
-----------------------------------
TOTAL CURRENT ASSETS 4,644 4,931
-----------------------------------
Property, Plant and Equipment - Net 2,378 2,087
Goodwill - Net 1,248 720
Other Intangible Assets - Net 1,153 454
Noncurrent Deferred Tax Assets 699 475
Other Assets 476 497
-----------------------------------
TOTAL ASSETS $10,598 $9,164
===================================
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES:
Short-Term Debt $ 254 $ 433
Accounts Payable 369 326
Income Taxes Payable 227 122
Accrued Compensation and Benefits 273 158
Accrued Marketing Programs 457 419
Liabilities of Discontinued Operations 11 --
Miscellaneous Short-Term Accruals 559 436
-----------------------------------
TOTAL CURRENT LIABILITIES 2,150 1,894
-----------------------------------
Long-Term Debt 1,486 1,075
Postretirement Liabilities 732 687
Solutia-Related Reserve 184 --
Other Liabilities 433 250
Shareowners' Equity 5,613 5,258
-----------------------------------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $10,598 $9,164
===================================
Debt to Capital Ratio: 24% 22%
===================================
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MONSANTO COMPANY AND SUBSIDIARIES
Selected Financial Information
(Dollars in millions)
Unaudited
STATEMENT OF CONSOLIDATED CASH FLOWS 12 MONTHS ENDED 12 MONTHS ENDED
AUG. 31, 2005 AUG. 31, 2004
- --------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net Income $ 255 $ 267
Adjustments to reconcile cash provided (required) by operations:
Items that did not require (provide) cash:
Depreciation and amortization expense 488 452
Impairment of goodwill -- 69
Bad-debt expense 67 109
Noncash restructuring 7 51
Deferred income taxes (104) 88
Gain on disposal of investments and property - net (21) (10)
Equity affiliate expense - net 31 36
Acquired in-process research and development 266 --
Solutia-related charge 284 --
Net loss on retirements and impairments of property 36 8
Other items that did not require (provide) cash 48 (4)
Changes in assets and liabilities that provided (required) cash, net of
acquisitions:
Trade receivables 394 486
Inventories 6 70
Accounts payable and accrued liabilities (26) 110
PCB litigation settlement insurance proceeds (payments) 14 (328)
Solutia-related reserve (49) --
Pension contributions (60) (215)
Tax benefit on employee stock options 94 37
Net investment hedge proceeds (loss) (48) (17)
Other Items 55 52
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NET CASH PROVIDED BY OPERATIONS 1,737 1,261
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS PROVIDED (REQUIRED) BY INVESTING ACTIVITIES:
Purchases of short-term investments (150) (550)
Maturities of short-term investments 300 480
Acquisitions of businesses, net of cash acquired (1,541) --
Technology and other investments (65) (58)
Capital expenditures (281) (210)
Other investment and property disposal proceeds 70 76
- --------------------------------------------------------------------------------------------------------------
NET CASH REQUIRED BY INVESTING ACTIVITIES (1,667) (262)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS PROVIDED (REQUIRED) BY FINANCING ACTIVITIES:
Net change in financing with less than 90-day maturities 28 23
Short-term debt proceeds 40 24
Short-term debt reductions (52) (20)
Long-term debt proceeds 503 117
Long-term debt reductions (299) (168)
Payment of premium to exchange notes payable (53) --
Payments on debt assumed in acquisitions (495) --
Debt issuance costs (4) --
Payments on other financing (15) (12)
Treasury stock purchases (234) (266)
Stock option exercises 173 200
Dividend payments (174) (141)
- --------------------------------------------------------------------------------------------------------------
NET CASH REQUIRED BY FINANCING ACTIVITIES (582) (243)
- --------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (512) 756
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,037 281
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 525 $ 1,037
- --------------------------------------------------------------------------================== =================
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MONSANTO COMPANY AND SUBSIDIARIES
Selected Financial Information
(Dollars in millions)
Unaudited
1. EBIT, ONGOING EPS, AND FREE CASH FLOW: The presentations of EBIT,
ongoing EPS and free cash flow are not intended to replace net income
(loss), cash flows, financial position or comprehensive income (loss),
and they are not measures of financial performance as determined in
accordance with generally accepted accounting principles (GAAP) in the
United States. The following tables reconcile EBIT, ongoing EPS and
free cash flow to the respective most directly comparable financial
measure calculated in accordance with GAAP.
RECONCILIATION OF EBIT TO NET INCOME: EBIT is defined as net income
(loss) before interest and taxes. The following table reconciles EBIT
to the most directly comparable financial measure, which is net
income.
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THREE MONTHS THREE MONTHS 12 MONTHS 12 MONTHS
TOTAL MONSANTO COMPANY AND SUBSIDIARIES: ENDED ENDED ENDED ENDED
AUG. 31, 2005 AUG. 31, 2004 AUG. 31, 2005 AUG. 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
EBIT - Seeds and Genomics Segment $ (136) $(135) $374 $196
EBIT - Agricultural Productivity Segment (39) 79 (27) 249
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EBIT - TOTAL MONSANTO COMPANY AND SUBSIDIARIES (175) (56) 347 445
Interest Expense - Net 23 12 75 57
Income Tax Provision (Benefit)(1) (73) (26) 17 121
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NET INCOME (LOSS) $ (125) $ (42) $255 $267
=============================================================================
</Table>
(1) Includes the income tax provision (benefit) from continuing operations
and the income tax provision (benefit) from discontinued operations.
RECONCILIATION OF EPS TO ONGOING EPS: Ongoing EPS is calculated
excluding certain after-tax items which Monsanto does not
consider part of ongoing operations.
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THREE MONTHS THREE MONTHS 12 MONTHS 12 MONTHS
TOTAL MONSANTO COMPANY AND SUBSIDIARIES: ENDED ENDED ENDED ENDED
AUG. 31, 2005 AUG. 31, 2004 AUG. 31, 2005 AUG. 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS (LOSS) PER SHARE $(0.47) $(0.16) $0.94 $0.99
In-Process R&D Write-Off Related to the Seminis -- -- 0.91 --
and Emergent Acquisitions
Solutia-Related Charge and Tax Benefit (0.02) -- 0.64 --
Tax Benefit on Loss from European Wheat and -- -- (0.39) --
Barley Business
Restructuring Charges - Net -- 0.15 0.02 0.36
(Income) Loss on Discontinued Operations and (0.01) 0.02 (0.04) --
Related Restructuring
Impairment of Goodwill -- (0.02) -- 0.24
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DILUTED EARNINGS (LOSS) PER SHARE FROM
ONGOING BUSINESS $(0.50) $(0.01) $2.08 $1.59
===============================================================================
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RECONCILIATION OF FREE CASH FLOW: Free cash flow represents the total
of cash flows from operations and investing activities, as reflected in
Monsanto's Statement of Consolidated Cash Flows presented in this
release. With respect to the projected free cash flow guidance provided
under the caption "2006 Guidance," Monsanto does not include any
estimates or projections of Net Cash Provided (Required) by Financing
Activities because in order to prepare any such estimate or projection,
Monsanto would need to rely on market factors and conditions that are
outside of its control.
- ----------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR 12 MONTHS 12 MONTHS
TOTAL MONSANTO COMPANY AND SUBSIDIARIES: 2006 ENDED ENDED
TARGET AUG. 31, 2005 AUG. 31, 2004
- ----------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operations $1,175 - $1,250 $ 1,737 $1,261
Net Cash Provided (Required) by Investing Activities (350) (1,667) (262)
-------------------------------------------------------
FREE CASH FLOW $825 - $900 $ 70 $999
Net Cash Provided (Required) by Financing Activities N/A (582) (243)
-------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS N/A (512) 756
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD N/A 1,037 281
-------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD N/A $ 525 $1,037
=======================================================
2. RESTRUCTURING: In October 2003, Monsanto announced plans to continue
to reduce costs primarily associated with its agricultural chemistry
business as that segment matures globally. These plans included: (1)
reducing costs associated with the company's Roundup herbicide
business; (2) exiting the European breeding and seed business for
wheat and barley; and (3) discontinuing the plant-made pharmaceuticals
program. In fiscal year 2004, total restructuring charges related to
these actions were $105 million aftertax. Additionally, the approved
plan included the impairment of goodwill in the global wheat business
of $69 million pretax ($64 million aftertax). In fiscal year 2005, the
company incurred charges of $6 million aftertax in continuing
operations to complete the restructuring actions under this plan. No
further actions are anticipated related to this plan.
Activities related to the restructuring plan items were recorded in
the Condensed Statement of Consolidated Operations in the following
categories:
- -------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS THREE MONTHS 12 MONTHS 12 MONTHS
TOTAL MONSANTO COMPANY AND SUBSIDIARIES: ENDED ENDED ENDED ENDED
AUG. 31, 2005 AUG. 31, 2004 AUG. 31, 2005 AUG. 31, 2004
- -------------------------------------------------------------------------------------------------------------------------------
Cost of Goods Sold(1,2) $ 1 $ (16) $ 1 $ (35)
Impairment of Goodwill -- -- -- (69)
Restructuring Charges - Net(1,2) 1 (46) (7) (112)
----------------------------------------------------------------------
Income (Loss) From Continuing Operations Before Income
Taxes 2 (62) (6) (216)
Income Tax Benefit (Provision)(3) (1) 26 20 54
----------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 1 (36) 14 (162)
Loss From Operations of Discontinued Businesses(4) -- (2) -- (11)
Income Tax Benefit (Provision) -- (1) -- 9
----------------------------------------------------------------------
LOSS ON DISCONTINUED OPERATIONS -- (3) -- (2)
----------------------------------------------------------------------
NET INCOME (LOSS) $ 1 $ (39) $ 14 $ (164)
======================================================================
(1) The restructuring charges for the three months and 12 months ended
Aug. 31, 2005, included reversals related to the 2004 restructuring
plan of $2 million (recorded in the Agricultural Productivity
segment). The restructuring charges for the three months and 12 months
ended Aug. 31, 2004, included prior plan restructuring reversals of $1
million (recorded in the Agricultural Productivity segment) and $7
million ($6 million in Agricultural Productivity and $1 million in
Seeds and Genomics), respectively.
(2) The $6 million of restructuring charges for the 12 months ended Aug.
31, 2005, was split by segment as follows: $7 million in the Seeds and
Genomics segment offset by reversals of $1 million in the Agricultural
Productivity segment.
(3) The $20 million of income tax benefit for the 12 months ended Aug. 31,
2005, is related to tax losses incurred on the sale of the European
wheat and barley business. See below for further discussion.
(4) The three months and 12 months ended Aug. 31, 2004, contain
restructuring charges related to discontinued businesses. These
restructuring charges were recorded in discontinued operations.
- more -
-13-
In first quarter 2005, Monsanto recorded a deferred tax benefit of
$106 million, of which $20 million was recorded in continuing
operations, and the remaining $86 million was recorded in discontinued
operations. The $20 million tax benefit recorded in continuing
operations is related to the impairment of goodwill in the global
wheat business as part of the fiscal year 2004 restructuring plan and
thus is included in the table above. The tax benefit of $86 million
recorded in discontinued operations was primarily related to the
goodwill impairment loss at the date of adoption of SFAS 142, Goodwill
and Other Intangible Assets (SFAS 142), on Jan. 1, 2002, and thus is
not reflected in the table above. Upon adoption of SFAS 142, the
goodwill impairment was recorded as a cumulative effect of a change in
accounting principle, and the impairment for the wheat reporting unit
was primarily related to the discontinued European wheat and barley
business.
3. DEPRECIATION AND AMORTIZATION: The following table displays the
depreciation and amortization expense by segment for the three months
and 12 months ended Aug. 31, 2005, and 2004:
- --------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS THREE MONTHS 12 MONTHS 12 MONTHS
DEPRECIATION AND AMORTIZATION EXPENSE ENDED ENDED ENDED ENDED
AUG. 31, 2005 AUG. 31, 2004 AUG. 31, 2005 AUG. 31, 2004
- --------------------------------------------------------------------------------------------------------------------------------
Seeds and Genomics(1) $ 93 $ 66 $302 $264
Agricultural Productivity 47 46 186 188
-----------------------------------------------------------------------------
Total Monsanto $ 140 $ 112 $488 $452
=============================================================================
(1) Does not include the $69 million impairment of goodwill in fiscal year
2004.