St. Louis, Missouri
June 25, 2008 Third Third Nine Nine
($ in millions) Quarter Quarter Months Months
2008 2007 2008 2007
Net Sales by Segment
Corn seed and traits $975 $891 $3,189 $2,443
Soybean seed and traits 447 325 1,064 868
Cotton seed and traits 279 212 361 260
Vegetable and fruit seed 185 170 521 444
All other crops seeds and traits 161 114 293 207
TOTAL Seeds and Genomics $2,047 $1,712 $5,428 $4,222
Roundup and other glyphosate-based
herbicides $1,168 $757 $3,158 $1,936
All other agricultural productivity
products 373 373 880 832
TOTAL Agricultural Productivity $1,541 $1,130 $4,038 $2,768
TOTAL Net Sales $3,588 $2,842 $9,466 $6,990
Gross Profit $1,969 $1,503 $5,253 $3,633
Operating Expenses $875 $684 $2,292 $1,860
Interest (Income) Expense - Net $(3) $1 $(6) $7
Other (Income) Expense - Net $(5) $12 $(189) $32
Net Income $811 $570 $2,196 $1,203
Diluted Earnings per Share (See note 1.) $1.45 $1.03 $3.93 $2.17
Items Affecting Comparability - EPS Impact
(Income) Loss on Discontinued Operations -- $(0.01) -- $0.01
Solutia Claim Settlement (after tax) -- -- $(0.23) --
Diluted Earnings per Share from Ongoing
Business (For the definition of ongoing
EPS, see note 1.) $1.45 $1.02 $3.70 $2.18
Effective Tax Rate 26% 29% 30% 30%
Third Third Nine Nine
Comparison as a Percent of Net Sales: Quarter Quarter Months Months
2008 2007 2008 2007
Gross profit 55% 53% 55% 52%
Selling, general and administrative
expenses (SG&A) 17% 17% 17% 19%
Research and development expenses
(excluding acquired in-process R&D) 7% 7% 7% 8%
Income before income taxes and minority
interest 31% 28% 33% 25%
Net income 23% 20% 23% 17%
Comment from Monsanto Chairman, President and Chief Executive Officer Hugh Grant:
"Backed by continued growing demand for our products, the first nine months of our fiscal year has been remarkable and we're now increasing our full-year guidance. This strong growth sets up a solid foundation for our business and to reach our target of more than doubling gross profit in 2012. Because we're both discovering and delivering innovative tools that can help increase productivity on farm, we offer an attractive solution to the farmer and their mission of meeting our world's growing food, feed and fuel needs. While others are asking should it be food OR feed OR fuel, we believe the answer is AND, and we have the solutions in hand to be a significant part of that answer."
Operations Update
Monsanto reported record net sales of $3.6 billion for the third quarter of fiscal year 2008, which were 26 percent higher than sales in the same period in fiscal year 2007. Results in the quarter reflected increased revenues from the company's Roundup agricultural herbicides globally, increased soybean seed and traits revenues in the United States, increased corn seed and trait revenues in the United States, higher corn seed revenues in Europe-Africa, and higher cotton seed and trait revenue in the United States.
Net sales in the company's first nine months of fiscal year 2008 resulted in year-to-date sales of $9.5 billion, which were 35 percent higher compared with sales in the same period last year. Key contributors to the company's growth included increased sales of Roundup and other glyphosate-based herbicides globally, higher worldwide corn seed and traits revenues as well as increased soybean seed and traits revenues and cotton seed and traits revenues in the United States.
Monsanto's net income for the third quarter of fiscal year 2008 was $811 million or 42 percent higher than net income in the same period last year. For the first nine months of fiscal year 2008, net income was 83 percent higher than net income in the same period last year.
Earnings per share (EPS) for the third quarter of fiscal year 2008 were $1.45 both on an as-reported basis and an ongoing basis. EPS for the first nine months of fiscal year 2008 were $3.93 on an as-reported basis, and $3.70 on an ongoing basis. EPS results for the first three quarters were affected favorably by $0.23 per share after tax from the settlement of Monsanto's claims in conjunction with Solutia's emergence from bankruptcy. (For a reconciliation of ongoing EPS, see page 1.)
Cash Flow
For the first nine months of fiscal year 2008, net cash provided by operating activities was $1.3 billion, compared with $89 million in the same period in 2007. Net cash required by investing activities was $650 million for the first nine months of 2008, compared with net cash required of $410 million for the same period last year. As a result, free cash flow was a source of $675 million for the first nine months of fiscal year 2008, compared with a use of $321 million in the same period in fiscal year 2007. (For a reconciliation of free cash flow, see note 1.) Improved earnings, higher collections from accounts receivable and customer prepayments and the settlement of the Solutia-related claim contributed to the increase in free cash flow in the first nine months of 2008. Net cash provided by financing activities was $93 million for the first nine months of 2008, compared with net cash required of $204 million for the same period last year.
Outlook
Monsanto's fourth quarter is largely influenced by its global cotton business and U.S. Roundup agricultural herbicides business. The company historically records a loss in the fourth quarter.
Monsanto now expects that its full-year 2008 EPS will be approximately $3.63 on a reported basis and approximately $3.40 on an ongoing basis. (For a reconciliation of ongoing EPS, see page 1). Monsanto's full-year 2008 EPS guidance on a reported basis does not include an estimate for the in-process, research and development charge associated with the company's fourth quarter acquisitions.
The company now expects that its free cash flow for fiscal year 2008 will be $550 million. The company expects net cash provided by operating activities to be in the range of $2.6 billion, and net cash required by investing activities to be approximately $2.05 billion for fiscal year 2008. (For a reconciliation of free cash flow, see note 1.) This revised free cash flow guidance reflects the recently-completed acquisition of De Ruiter Seeds as well as the recently-announced acquisition of Marmot, S.A., which operates Semillas Cristiani Burkard (SCB), a privately-held seed company headquartered in Guatemala City, Guatemala.
Preliminary Trait Acreage Report
As part of today's announcement, Monsanto also published a preliminary report on the company's biotech trait acreage for fiscal year 2008. This report is available on Monsanto's web site at http://www.monsanto.com/.
Seeds and Genomics Segment Detail
($ in millions) Net Sales Gross Profit
Third Third Nine Nine Third Third Nine Nine
Seeds and Quarter Quarter Months Months Quarter Quarter Months Months
Genomics 2008 2007 2008 2007 2008 2007 2008 2007
Corn seed and
traits $975 $891 $3,189 $2,443 $565 $530 $2,023 $1,543
Soybean seed
and traits 447 325 1,064 868 269 203 649 581
Cotton seed
and traits 279 212 361 260 195 179 252 222
Vegetable and
fruit seed 185 170 521 444 93 72 270 210
All other
crops seeds
and traits 161 114 293 207 97 62 154 99
TOTAL Seeds
and Genomics $2,047 $1,712 $5,428 $4,222 $1,219 $1,046 $3,348 $2,655
($ in millions) Earnings Before Interest & Taxes (EBIT)
Third Third Nine Nine
Seeds and Genomics Quarter Quarter Months Months
2008 2007 2008 2007
EBIT (For a reconciliation of
EBIT, see note 1.) $586 $557 $1,643 $1,302
Unusual Items Affecting EBIT
Income (Loss) on discontinued
operation None $8 None $(5)
The Seeds and Genomics segment consists of the company's global seeds and related traits business, and genetic technology platforms.
Sales for Monsanto's Seeds and Genomics segment were $2 billion for the third quarter of fiscal year 2008, or 20 percent higher than sales in the same period last year.
During the third quarter of fiscal year 2008, the company realized increased soybean seed and traits revenues in the United States, increased corn seed and trait revenues in the United States, higher corn seed revenues in Europe-Africa and increased U.S. cotton seed and trait revenues. Monsanto expects that strong customer demand for its branded corn seed products contributed to a seventh consecutive year of market share gains in the U.S. corn seed market. In the United States, Monsanto's DEKALB brand could realize 2 to 3 percentage points in share growth and 1 to 2 percentage points in its American Seeds Inc. brands, pending final returns. In Argentina, Monsanto's brand increased 5 percentage points while its brands held share flat in Brazil, as the company had anticipated.
Sales for the segment were also higher for the first nine months of the 2008 fiscal year compared with sales in the same period last year. Sales for the first nine months were $5.4 billion, or 29 percent higher than sales in fiscal year 2007. Key contributors to the company's growth through the first nine months included higher worldwide corn seed and traits revenues, increased soybean seed and traits revenues in the United States as well as higher U.S. cotton seed and traits revenue.
Agricultural Productivity Segment Detail
($ in millions) Net Sales Gross Profit
Third Third Nine Nine Third Third Nine Nine
Agricultural Quarter Quarter Months Months Quarter Quarter Months Months
Productivity 2008 2007 2008 2007 2008 2007 2008 2007
Roundup and
other
glyphosate-
based
herbicides $1,168 $757 $3,158 $1,936 $594 $286 $1,559 $635
All other
agricultural
productivity
products 373 373 880 832 156 171 346 343
TOTAL
Agricultural
Productivity $1,541 $1,130 $4,038 $2,768 $750 $457 $1,905 $978
($ in millions) Earnings Before Interest & Taxes (EBIT)
Third Third Nine Nine
Agricultural Productivity Quarter Quarter Months Months
2008 2007 2008 2007
EBIT (For a reconciliation of
EBIT, see note 1.) $502 $242 $1,488 $423
Unusual Items Affecting EBIT
Solutia Claim Settlement None None $210 None
The Agricultural Productivity segment consists primarily of crop protection products, the lawn-and-garden herbicide business, and the company's animal agricultural business.
Sales for Monsanto's Agricultural Productivity segment were $1.5 billion for the third quarter of fiscal year 2008, or 36 percent higher compared with sales in the same period last year. Results in the quarter benefited from increased average net selling prices for the company's Roundup agricultural herbicides globally.
Sales for the segment were higher for the first three quarters of the 2008 fiscal year compared with sales in the same period last year. Segment sales through the first nine months were $4 billion or 46 percent higher than sales in the same period in fiscal year 2007. Results through the first three quarters benefited from higher average net selling prices of Roundup and other glyphosate-based herbicides globally.
About Monsanto Company
Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality.
DEKALB and Roundup are trademarks of Monsanto Company and its wholly owned subsidiaries.
References to Roundup herbicides in this release mean Roundup branded herbicides, excluding lawn-and-garden herbicide products.
Monsanto Company
Selected Financial Information
(Dollars in millions, except per share amounts)
Unaudited
Statements of
Consolidated
Operations Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
May 31, 2008 May 31, 2007 May 31, 2008 May 31, 2007
Net Sales $3,588 $2,842 $9,466 $6,990
Cost of Goods Sold 1,619 1,339 4,213 3,357
Gross Profit 1,969 1,503 5,253 3,633
Operating Expenses:
Selling, General and
Administrative Expenses 622 487 1,617 1,299
Research and Development
Expenses 251 190 672 554
Acquired In-Process
Research and Development 2 7 3 7
Total Operating Expenses 875 684 2,292 1,860
Income From Operations 1,094 819 2,961 1,773
Interest Expense 31 29 99 96
Interest Income (34) (28) (105) (89)
Solutia-Related Expenses
(Income) - 4 (187) 23
Other (Income) Expense - Net (5) 8 (2) 9
Income Before Income Taxes
and Minority Interest 1,102 806 3,156 1,734
Income Tax Provision 285 231 947 521
Minority Interest Expense 6 10 13 7
Income From Continuing
Operations $811 $565 $2,196 $1,206
Discontinued Operations:
Income (Loss) from Operations
of Discontinued Businesses - 8 - (5)
Income Tax Expense (Benefit) - 3 - (2)
Income (Loss) on Discontinued
Operations - 5 - (3)
Net Income $811 $570 $2,196 $1,203
EBIT (see note 1) $1,088 $799 $3,131 $1,725
Basic Earnings (Loss) per
Share
Income from Continuing
Operations $1.48 $1.04 $4.01 $2.22
Income (Loss) on
Discontinued
Operations - $0.01 - $(0.01)
Net Income $1.48 $1.05 $4.01 $2.21
Diluted Earnings (Loss) per
Share
Income from Continuing
Operations $1.45 $1.02 $3.93 $2.18
Income (Loss) on
Discontinued
Operations - $0.01 - $(0.01)
Net Income $1.45 $1.03 $3.93 $2.17
Weighted Average Shares
Outstanding:
Basic 549.0 544.4 547.6 543.7
Diluted 560.0 555.2 558.9 554.4
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
Condensed Statements of Consolidated Financial
Position As of As of
May 31, 2008 Aug. 31, 2007
Assets
Current Assets:
Cash and Cash Equivalents $1,714 $866
Trade Receivables - Net of Allowances of
$253 and $217, Respectively 3,258 1,499
Miscellaneous Receivables 468 407
Deferred Tax Assets 340 449
Inventories 2,206 1,719
Other Current Assets 141 144
Total Current Assets 8,127 5,084
Property, Plant and Equipment - Net of Accumulated
Depreciation of $3,625 and $3,260, Respectively 2,962 2,656
Goodwill 2,769 2,625
Other Intangible Assets - Net 1,375 1,415
Noncurrent Deferred Tax Assets 816 730
Long-Term Receivables - Net of Allowances of
$172 and $131, Respectively 653 79
Other Assets 590 394
Total Assets $17,292 $12,983
Liabilities and Shareowners' Equity
Current Liabilities:
Short-Term Debt, Including Current Portion
of Long-Term Debt $10 $270
Accounts Payable 788 649
Income Taxes Payable 134 150
Accrued Compensation and Benefits 368 349
Accrued Marketing Programs 720 517
Deferred Revenues 369 260
Grower Production Accruals 120 86
Dividends Payable - 96
Miscellaneous Short-Term Accruals 779 698
Total Current Liabilities 3,288 3,075
Long-Term Debt 1,703 1,150
Postretirement Liabilities 505 542
Long-Term Portion of Environmental and Related
Litigation Reserve 150 135
Long-Term Deferred Revenue 588 -
Other Liabilities 847 578
Shareowners' Equity 10,211 7,503
Total Liabilities and Shareowners' Equity $17,292 $12,983
Debt to Capital Ratio: 14% 16%
Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited
Statements of Consolidated Cash Flows Nine Months Nine Months
Ended Ended
May 31, 2008 May 31, 2007
Operating Activities:
Net Income $2,196 $1,203
Adjustments to Reconcile Cash Provided by
Operations:
Items That Did Not Require (Provide) Cash:
Depreciation and Amortization Expense 423 386
Bad-Debt Expense 52 29
Receipt of Securities from Solutia Settlement (38) -
Stock-Based Compensation Expense 64 54
Excess Tax Benefits from Stock-Based Compensation (161) (49)
Deferred Income Taxes 126 (10)
Equity Affiliate Expense - Net 2 30
Acquired In-Process Research and Development 3 7
Other Items (10) (1)
Changes in Assets and Liabilities That Provided
(Required) Cash, Net of Acquisitions:
Trade Receivables (1,490) (1,969)
Inventories (387) 91
Deferred Revenues (1) (45)
Accounts Payable and Other Accrued Liabilities 746 466
Net Investment Hedge Settlement (97) (4)
Other Items (103) (99)
Net Cash Provided by Operating Activities 1,325 89
Cash Flows Provided (Required) by Investing Activities:
Maturities of Short-Term Investments 59 22
Capital Expenditures (530) (297)
Acquisitions of Businesses, Net of Cash Acquired (113) (125)
Purchases of Long-Term Equity Securities (78) -
Technology and Other Investments (39) (35)
Other Investments and Property Disposal Proceeds 51 25
Net Cash Required by Investing Activities (650) (410)
Cash Flows Provided (Required) by Financing Activities:
Net Change in Financing With Less Than 90-Day
Maturities (28) 265
Short-Term Debt Reductions (9) (8)
Long-Term Debt Proceeds 548 4
Long-Term Debt Reductions (238) (277)
Payments on Other Financing (3) (4)
Debt Issuance Costs (5) -
Treasury Stock Purchases (145) (101)
Stock Option Exercises 100 59
Excess Tax Benefits From Stock-Based Compensation 161 49
Dividend Payments (288) (191)
Net Cash Provided (Required) by Financing Activities 93 (204)
Effect of Exchange Rate Changes on Cash and Cash
Equivalents 80 59
Net Increase (Decrease) in Cash and Cash Equivalents 848 (466)
Cash and Cash Equivalents at Beginning of Period 866 1,460
Cash and Cash Equivalents at End of Period $1,714 $994
Monsanto Company
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 (Loss): EBIT is defined as
earnings (loss) before interest and taxes. Earnings (loss) is intended
to mean net income (loss) as presented in the Statements of
Consolidated Operations under GAAP. The following table reconciles EBIT
to the most directly comparable financial measure, which is net income
(loss).
Three Months Ended Nine Months Ended
May 31, May 31,
2008 2007 2008 2007
EBIT - Seeds and Genomics Segment $586 $557 $1,643 $1,302
EBIT - Agricultural Productivity
Segment 502 242 1,488 423
EBIT- Total 1,088 799 3,131 1,725
Interest (Income) Expense - Net (3) 1 (6) 7
Income Tax Provision(A) 280 228 941 515
Net Income $811 $570 $2,196 $1,203
(A) Includes the income tax provision on minority interest income.
Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated
excluding certain after-tax items which Monsanto does not consider part
of ongoing operations. The reconciliation of EPS to Ongoing EPS for the
third quarter and nine months ended May 31, 2008 and May 31, 2007, is
included on page 1 of this release.
Reconciliation of Free Cash Flow: Free cash flow represents the total
of cash flows from operating activities and investing activities, as
reflected in the Statements of Consolidated Cash Flows presented in
this release. With respect to the fiscal year 2008 free cash flow
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 Nine Months Ended
2008 May 31,
Guidance 2008 2007
Net Cash Provided by Operating Activities $2,600 $1,325 $89
Net Cash Required by Investing Activities (2,050) (650) (410)
Free Cash Flow $550 675 (321)
Net Cash Provided (Required) by Financing
Activities N/A 93 (204)
Effect of Exchange Rate Changes on Cash
and Cash Equivalents N/A 80 59
Net Increase in Cash and Cash Equivalents N/A 848 (466)
Cash and Cash Equivalents at Beginning of Period N/A 866 1,460
Cash and Cash Equivalents at End of Period N/A $1,714 $994
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