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monsanto 02-21-06 monsanto 02-21-06 Presentation Transcript

  • HUGH GRANT CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER MORGAN STANLEY BASIC MATERIALS CONFERENCE Feb. 21, 2006 1
  • Forward-Looking Statements Certain statements contained in this release are quot;forward-looking statements,quot; 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. 2
  • Non-GAAP Financial Information This presentation may use the non-GAAP financial measures of “free cash flow,” earnings per share (EPS) on an ongoing basis, and Return on Capital (ROC). We define free cash flow as the total of cash flows from operating activities and investing activities. A non-GAAP EPS financial measure, which we refer to as on-going EPS, excludes certain after-tax items that we do not consider part of ongoing operations, which are identified in the reconciliation. ROC means net income (without the effect of certain items) exclusive of after-tax interest expenses, divided by the average of the beginning year and ending year net capital employed, as defined in the reconciliation. Our presentation of non-GAAP financial measures is intended to supplement investors’ understanding of our operating performance. These non-GAAP financial measures are not intended to replace net income (loss), cash flows, financial position, or comprehensive income (loss), as determined in accordance with accounting principles generally accepted in the United States. Furthermore, these non-GAAP financial measures may not be comparable to similar measures used by other companies. The non-GAAP financial measures used in this presentation are reconciled to the most directly comparable financial measures calculated and presented in accordance with GAAP, which can be found at the end of this presentation. Fiscal Year In this presentation, unless otherwise specified, references to Monsanto’s fiscal years refer to the 12-month period ending August 31. Trademarks Roundup, Roundup Ready, Roundup Ready2Yield, Bollgard, Bollgard II, YieldGard, Monsanto, Imagine, Vine Design, Asgrow, DEKALB, Monsanto Choice Genetics, Posilac, Processor Preferred, Vistive, and French Kiss are trademarks owned by Monsanto Company and its wholly-owned subsidiaries and are italicized the first time they appear in this presentation. Mavera™ is a trademark of Renessen. 3
  • OVERVIEW Monsanto Is On Track Or Exceeding Expectations, Setting Stage for Strong Growth FY2006 AND FY2007 TARGETS 2006 2007 2006 COMMITMENT UPDATE COMMITMENT $2.35-$2.50 $2.82-$3.00 $2.35-$2.50 EARNINGS PER UP TO 20% 20% GROWTH TOWARD UPPER SHARE GROWTH FROM FROM 2006 END OF RANGE 2005 PROJECTION FREE CASH $825M - $900M $825M - $900M $875-$950M FLOW KEY COMMERCIAL COMMITMENTS US CORN SHARE 1 – 2 pts 1 – 2pts US RR CORN 30M ACRES 34M ACRES US YGRW 8M ACRES 10M ACRES US COTTON 1 – 2 POINTS 1 – 2 POINTS SHARE US RR FLEX 2 – 3M ACRES 2 – 3M ACRES AUSTRALIA 80% - 85% 90% penetration COTTON TRAITS penetration BRAZIL RR 5 – 10 cents per 5 – 10 cents per EARNINGS share share CONTRIBUTION 4
  • COMMERCIAL LEADERSHIP Corn Germplasm Improvements Are Tightly Linked to Market Share Gains U.S. KEY MARKET ACRES BRAND LICENSED ASI AVAILABLE MARKET 80M 16% 32% 3% PERCENT PENETRATED 2005 CORN YIELD (BU/A) MONSANTO BRANDS 200 COMPETITORS 190 Average yield differential 180 RESULTS is better by 33% in 2005 compared with 2004 170 testing 160 Strong yield advantages 150 are consistent across 95 100 105 110 115 maturity zones and RELATIVE MATURITIES (DAYS) outperform best U.S. CORN MARKET SHARE competitive commercial 60% material sold in 2005 50% Branded share on pace for 40% SUSTAINABLE RESULTS 1 – 2 points for the fifth 1-2 POINT 30% SHARE GAINS straight year 20% 10% 0% 2001 2002 2003 2004 2005 2006 2007 HOLDENS/CORN STATES LICENSEES AMERICAN SEEDS, INC. BRANDS DEKALB AND ASGROW BRANDS 5
  • COMMERCIAL LEADERSHIP Drought Pressure in 2005 in Central Corn Belt Demonstrated Performance Value of YieldGard Rootworm KEY MARKET ACRES U.S. BRAZIL ARGENTINA YieldGard 5M 1M AVAILABLE MARKET 25-30M Rootworm Corn 2006 STATUS 16% 0% 0% PERCENT PENETRATED YIELDGARD MIDWEST DROUGHT OBSERVATIONS ROOTWORM • In 2005, YieldGard approximately one- Rootworm’s quarter of growers protection allows in U.S. drought for heartier roots areas have that can tap what experienced >30 bu/acre advantage moisture exists over soil-applied insecticides • Yieldgard Rootworm corn is The difference expected to be in between the range of 8 – 10 YieldGard million acres in INSECTICIDE TREATED-CORN 2006 Rootworm plants and conventional YIELDGARD ROOTWORM ones is visible 6
  • COMMERCIAL LEADERSHIP Market Opportunity for Roundup Ready Corn on Track for 60M Acres Longer Term OPPORTUNITY INFLECTION POINT: Variable Based Roundup Ready corn Pricing INFLECTION 40 is on pace for 50M POINT: EU IMPORT acres by 2008 in the INFLECTION APPROVALS 35 POINT: U.S. DOMESTIC CHANNELING Supply now available 30 U.S. ACRES PROGRAM to sell 15% more acres 25 of Roundup Ready corn than forecast in 20 November SUSTAINABLE ACREAGE 15 GROWTH 10 5 0 1998 1999 2000 2001 2002 2003 2004 2005 2006F 2007F 7
  • COMMERCIAL LEADERSHIP Variable-Based Pricing Leverages Roundup Ready Corn Base and Expands Market for Stacked Traits Single Trait Stacked - Double Trait 2 1 Stacked - Triple Trait TRAIT BAGS OF SEED Indexed 2005 = 1 1 .5 24% 5% 1 44% 41% 0 .5 54% 32% 0 2005 2006F STATES WITH WEED CONTROL NEEDS, SPORADIC CORN BORER AND Significant Incremental ROOTWORM Demand For Stacked STATES WITH CONSISTENT NEED FOR Combinations of WEED CONTROL, CORN-BORER CONTROL AND ROOTWORM CONTROL Roundup Ready and STATES WITH CONSISTENT NEED YieldGard in DeKalb / FOR WEED CONTROL, ROOTWORM Asgrow Brands in CONTROL AND SPORADIC CORN- BORER CONTROL Illinois and Indiana 1.Seed includes one or more traits 8
  • COMMERCIAL LEADERSHIP Stacking Shifts Value Opportunity to the More Profitable Acre U.S. CORN TRAIT ACRES AVERAGE U.S. RETAIL VALUE ADDED WITH STACKED TRAITS SINGLE TRAITS TRAIT RETAIL VALUE 3.42 STACKED – DOUBLE TRAITS 3 .5 50 TRAIT RETAIL VALUE PER ACRE ADDED PER ACRE STACKED – TRIPLE TRAITS 3 40 (INDEXED) ACRES IN MILLIONS 2 .5 30 2 20 1.59 1 .5 10 1 DOUBLE TRIPLE STACK STACK 0 2001 2002 2003 2004 2005 1 = INDEXED VALUE OF SINGLE TRAIT 9
  • COMMERCIAL LEADERSHIP Success in Variable-Based Pricing in Cotton Is Bellwether for Zone-Based Royalties in Corn STEP 1 Driving Trait Penetration in Marginal to Modest COTTON EXAMPLE Insect-Infestation Zones Differential pricing allowed 51% U.S. BOLLGARD TRAIT ACRES Monsanto to earn an acre that 3 .5 penetrated MARGINAL – TO – MODEST INFESTATION ZONES ACRES (MILLIONS) otherwise would not have used 3 Bollgard technology, driving 2 .5 trait penetration on marginally- 2 to modestly-infested acres 11% 1 .5 STEP 2 penetrated 1 Experience shows the farmer 0 .5 recognizes the value and 0 convenience of the trait 1998 2005 package and embraces more value-added technology, largely Increasing Monsanto’s Value per Acre in Marginal COTTON EXAMPLE through stacked traits to Modest Insect-Infestation Zones STEP 3 5.6 X GP RETAIL PRICE (INDEXED 1998 = 1) WEIGHTED AVERAGE PER ACRE FROM 1998 6 2 .0 0 1 .7 5 Because of the increased 5 (INDEXED 1998 = 1) 1 .5 0 penetration and movement GROSS PROFIT 4 1 .2 5 toward stacked-traits, the total 3 1 .0 0 value per acre captured by 0 .7 5 Monsanto increases 2 0 .5 0 With more trait acres and more 1 0 .2 5 value generated per acre, 0 0 .0 0 overall gross profit increases 1998 2005 AVERAGE PER ACRE RETAIL PRICE 10
  • COMMERCIAL LEADERSHIP New Branded Business and Expanding Licensee Base Showcases Strong Cotton Germplasm U.S. COTTON STONEVILLE KEY MARKET ACRES STATES 14M AVAILABLE MARKET 14% 0% PERCENT PENETRATED 2005 COTTON GERMPLASM PERFORMANCE (19 LOCATIONS) 1600 1400 Monsanto varieties competitive with 1200 current market leaders and heavily LBS LINT/ACRE 1000 RESULTS penetrated with Roundup Ready Flex stacked with Bollgard II 800 600 400 Stoneville will offer 9 varieties either with 200 the Roundup Ready Flex trait or with Roundup Ready Flex stacked with 0 2005 MONSANTO Bollgard II COMPETITIVE VARIETIES LEADERS Cotton States will have 5 licensees in 2006 MONSANTO COTTON SHARE GROWTH 30% 25% 20% SUSTAINABLE 1-2 POINT SHARE GAIN 15% WITH EMERGENT 10% 5% 0% 2004 2005 2006F 2007F EMERGENT 11
  • COMMERCIAL LEADERSHIP Roundup Ready Flex Launch To Be Most Significant in 10-Year History of Biotech Traits KEY MARKET ACRES U.S. INDIA AUSTRALIA Roundup Ready 10-15M AVAILABLE MARKET 10-15M 0.5-0.8M Flex Cotton 2006 STATUS 0% 0% 0% PERCENT PENETRATED ROUNDUP READY Anticipated largest trait launch of 2-3 million acres in U.S. in 2006 FLEX COTTON through 10 cotton seed companies • Pricing at a Roundup Ready Flex will only be stacked with Bollgard II at premium of $6-$11 approximately 70 – 80% of mix an acre over the first-generation of Introductory acres planted in Australia; full launch set for 2007 Roundup Ready cotton Trait in initial breeding phase with licensees in India in preparation for filing for regulatory field trials The Roundup Ready Flex cotton trait will be coupled with our Stoneville brand and our Cotton States licensing as a showcase of Monsanto’s cotton business DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 12
  • COMMERCIAL LEADERSHIP Multiple Margin Opportunities Accelerate with Second- Generation Launches Australia Second-Generation Traits COTTON RETAIL VALUE IN AUSTRALIAN MARKET • 90% of all cotton acres 150 have at least one trait 125 • 65% of all acres with at least one trait are a 100 stack vs. 44% last year US $/ACRE • Success of Bollgard II / 75 Roundup Ready sets stage for full launch of 50 Bollgard II/ Roundup Ready Flex starting in 25 2007 0 ROUNDUP ROUNDUP STACK WITH CONVENTIONAL BOLLGARD II READY READY BOLLGARD II & COTTON SEED FLEX COTTON ROUNDUP READY FLEX 13
  • COMMERCIAL LEADERSHIP Brazil Is the Most Significant New Market Potential for Roundup Ready Soybeans MARKET UPDATE: ROUNDUP READY SOYBEANS IN BRAZIL CURRENT MARKET CONDITIONS Planted soybean acres down roughly 5 percent for 2006 season VALUE CAPTURE New seed sales at mid to upper NORTH: PRIMARILY end of 4 – 5M acre range NEW SEED 40 NEW SEED MILLION SALES Value: ~$9/acre retail value PLANTED shared significantly with SOYBEAN partners ACRES Saved seed estimated at ~15M acres SAVED SEED Value: ~$4.50/acre retail value SOUTH: PRIMARILY shared significantly with SAVED SEED partners EARNINGS 10 MILLION Expected 5-10 cents per share contribution for PLANTED FY2006 SOYBEAN ACRES Revenue recognized primarily in Q3 and Q4 14
  • OVERVIEW Capitalizing on Our First Mover Advantage Lays Foundation for Long-Term Leadership 2008 2009 2010 LEAD Accelerate the Current Commercial Platform Expanded long–term opportunity for corn traits, reflecting opportunity in licensing, stacking and price-to-value strategies Expand in New Markets Penetration of new markets in Asia, Europe and South America with existing traits New opportunity in the high-margin Seminis business Discover New Opportunities Through Research Refreshing of first-generation trait portfolio Breeding programs expand our genetic footprint Translate Growth to Value Gross profit mix reflects higher-margin seeds and traits 15
  • COMMERCIAL OPPORTUNITY Market Potential for Biotech Traits Highlights Continued Growth Opportunity SOYBEANS COTTON CORN MARKET OPPORTUNITY: ROUNDUP KEY MARKETS BOLLGARD I ROUNDUP YIELDGARD YIELDGARD READY ROUNDUP READY AND II READY CORN BORER ROOTWORM FLEX UNITED 70M 10-15M 6-8M 60M 50-60M 25-30M STATES BRAZIL 50M 3M 2M 20M 15M 5M ARGENTINA 35M - - 5M 4M 1M INDIA - 10-15M 10-15M 3 – 5M 3 – 5M - EUROPE 1M - - 24M 8M 5M AFRICA 0.2M 11M 10M 6M 4M - AUSTRALIA - 0.5M-0.8M 0.5M-0.8M - - - TOTAL KEY 34.5- 156.2M 28.5-35.8M 118-125M 84-96M 36-41M MARKETS 44.8M 76% 0% 35% 19% 40% 10% BIOTECH ACRES PLANTED 2005 REMAINING AVAILABLE MARKET 16
  • COMMERCIAL OPPORTUNITY Europe Is Next Opportunity for a Multiple Channel Approach Because of Strong Germplasm Foundation European Corn Channel Strategy 2005 COMPETITIVE CORN YIELD COMPARISON 1 Channel: Owned 160 Outlet: Retail Target reach: National 150 BUSHELS/ACRE 140 130 120 2 110 Channel: Licensed, non-exclusive 100 Outlet: Retail, Regional 85 90 95 100 105 110 115 Target reach: Europe-Africa RELATIVE MATURITIES (DAYS) COMPETITORS MONSANTO BRANDS 17
  • COMMERCIAL OPPORTUNITY In India, Markets Emerge As Technology Provides Value to Farmers, the Economy and the Environment CORN COTTON KEY MARKET ACRES 5-7M 10-15M AVAILABLE MARKET 0% 20% PERCENT PENETRATED Bollgard Penetration Biotech cotton adoption reflects economic and environmental benefits Acres in Millions 7 Yield Increase 58% Pesticide Reduction (50%) 5 Farmer Net Return 163% SUSTAINABLE Bollgard II will launch on small acres in ACREAGE 3 2006 and Roundup Ready Flex longer GAINS term. 1 2004 2005 2006F 2007 Corn Share Conversion of open pollinated to Monsanto Branded Seed hybridization expands market potential Gained 10 Share Points In 40% Last Two Years Breeding program introducing new Market Share 35% higher yielding hybrids with superior fit fueling market expansion SUSTAINABLE 1-2 30% POINT SHARE GAINS Roundup Ready and YieldGard corn- 25% borer corn submitted for regulatory approval 20% 2003 2004 2005 2006 2007 18
  • COMMERCIAL OPPORTUNITY Corn Market Share Growth in Brazil Sets Foundation for Ultimate Value in Traits KEY MARKET ACRES CORN 20M AVAILABLE MARKET 0% PERCENT PENETRATED CORN YIELD Strong yield advantages are consistent High Performance Hybrids 26 across maturity zones and outperform best 24 competitive commercial material sold in 22 MONSANTO BRANDS Tons/acre 20 2005 COMPETITORS RESULTS 18 16 New incremental investments in molecular 14 breeding specific for tropical germplasm 12 10 8 S o u th E a r ly E a r ly S o u th E a r ly E a r ly E a r ly SAFRINHA CENTER SOUTH CORN SHARE Branded share on pace for 1 – 2 points Total Market 40% Solid share growth despite successive price 38% increases SUSTAINABLE RESULTS 36% 1-2 POINT Portfolio restructured, 50% of sales are from 34% SHARE GAINS high performance hybrids 32% Licensee agreements signed with regional 30% 2001 2003 2005 2006 2007 Brazilian companies DEKALB AND ASGROW BRANDS 19
  • COMMERCIAL OPPORTUNITY Seminis Addition to Monsanto Quickly Contributes to Growth And Opens New Business and Research Opportunities EUROPE-AFRICA 2005 Market Share 19% Market Position 1 ASIA-PACIFIC NORTH AMERICA 2005 2005 Market Share 7% Market Share 34% Market Position 3 Market Position 1 OPPORTUNITY Fruit & vegetable seeds only represent approx. 3.6% of farmgate value (corn: 13.2%; soybeans: 11.4%) Significant growth opportunities in hybrid creation Seminis has the largest SOUTH AMERICA global vegetable germplasm 2005 library; Molecular breeding Market Share 37% tools honed in row crops Market Position 1 will be applied to vegetables 20
  • PIPELINE OVERVIEW Efficient Discovery Program Is in Full Gear, Fueling Pipeline Expansion and Performance PHASE II PHASE III DISCOVERY PHASE I PHASE IV Early Development Advanced Proof Of Concept Pre-launch Gene/Trait Development Identification AVERAGE 24 to 48 MONTHS 12 to 24 MONTHS 12 to 24 MONTHS 12 to 24 MONTHS 12 to 36 MONTHS DURATION1 AVERAGE 5 PERCENT 25 PERCENT 50 PERCENT 75 PERCENT 90 PERCENT PROBABILITY OF SUCCESS2 ION AT GR E INT IT RA T G STIN D TE FIEL MONSANTO DISCOVERY + REGULATORY DATA GENERATION COLLABORATIVE REG U LATO PARTNERS RY S UBM IS SION KEY INFLECTON POINT: SE ED BU AFTER PHASE II COMMERCIAL LK UP SUCCESS GOES TO >50% WITH LEADS ON COMMERCIAL TRACK TENS OF THOUSANDS THOUSANDS 10s <5 1 GENES IN TESTING •HIGH-THROUGHPUT •GENE OPTIMIZATION •TRAIT •TRAIT INTEGRATION •REGULATORY KEY ACTIVITY SCREENING DEVELOPMENT SUBMISSION •CROP •FIELD TESTING •MODEL CROP TRANSFORMATION •PRE-REGULATORY •SEED BULK-UP •REGULATORY DATA TESTING DATA GENERATION •PRE-MARKETING •LARGE-SCALE TRANSFORMATION 1. Time estimates are based on our experience; they can overlap. Total development time for any particular product may be shorter or longer than the time estimated here. 2. This is the estimated average probability that the traits will ultimately become commercial products, based on our experience. These probabilities may change over time. 21
  • DISCOVERY PHASE I PHASE II PHASE III PHASE IV PIPELINE UPDATE Proof Of Concept Early Advanced Pre-launch Gene/Trait 2006 Pipeline Development Development Identification AS OF JANUARY 1, 2006 Roundup Ready Flex cotton Roundup RReady2Yield soybeans Roundup RReady2Yield canola Dicamba-tolerant soybeans Dicamba-tolerant cotton 2nd-Gen YieldGard Rootworm 2nd-Gen YieldGard Corn Borer Insect-protected soybeans YieldGard Rootworm II FARMER Soybean nematode-resistance Bollgard III Drought-tolerant corn 2nd-Gen Drought-tolerant corn Higher-yielding canola Drought-tolerant soybeans Drought-tolerant cotton Higher-yielding corn Nitrogen utilization corn Higher-yielding soybeans Mavera™ High-value corn with lysine PROCESSOR Mavera™ I High-value soybeans Mavera™ II High-value soybeans 2nd-Gen High-value corn with lysine Feed Corn with balanced proteins High oil soybeans for processing CONSUMER Improved-protein soybeans Vistive II Low Lin – Mid Oleic soybeans Vistive III Low Lin – Mid Oleic – Low Sat soybeans Omega-3 soybeans 22
  • LEADERSHIP Monsanto Is Upgrading the Entire Commercial Trait Portfolio to Second- and Third-Generation Traits TECHNOLOGY UPGRADES IN THE PIPELINE CORE FIRST- COMMERCIALIZED DISCOVERY PHASE I PHASE II PHASE III PHASE IV GENERATION SECOND- Proof Of Concept Early Development Advanced Development Pre-launch Gene/Trait TECHNOLOGY GENERATION Identification YIELDGARD CORN 2ND GEN YIELDGARD BORER CORN BORER (1997) UPGRADE: BROADER BENEFIT: FULL-SEASON INSECT CONTROL; CONTROL OF EUROPEAN BETTER IRM PROPERTIES CORN BORER ROUNDUP READY ROUNDUP READY CORN CORN 2 (1998) (2001) BENEFIT: NEW WEED UPGRADE: SIMPLIFIED CONTROL SYSTEM WEED CONTROL, GREATER FLEXIBILITY YIELDGARD YIELDGARD 2ND GEN YIELDGARD ROOTWORM ROOTWORM II ROOTWORM (2003) UPGRADE: NEW MODE OF UPGRADE: IMPROVED BENEFIT: CONTROL OF ACTION FOR INSECT EFFICIENCY OF STACKING CORN ROOTWORM CONTROL IN ELITE GERMPLASM ROUNDUP READY ROUNDUP DICAMBA-TOLERANT SOYBEANS RREADY2YIELD SOYBEANS (1996) SOYBEANS UPGRADE: ADDITIONAL BENEFIT: NEW WEED UPGRADE: GREATER MODE OF ACTION CONTROL SYSTEM FLEXIBILITY; YIELD BENEFIT BOLLGARD BOLLGARD II BOLLGARD III COTTON COTTON COTTON (1996) (2003) BENEFIT: BROADER BENEFIT: IN-PLANT BENEFIT: BROADER INSECT CONTROL; CONTROL OF THE INSECT CONTROL; BETTER IRM PROPERTIES BOLLWORM BETTER IRM PROPERTIES ROUNDUP READY ROUNDUP READY DICAMBA-TOLERANT COTTON FLEX COTTON COTTON (1997) (2006) BENEFIT: ADDITIONAL BENEFIT: NEW WEED BENEFIT: GREATER MODE OF ACTION CONTROL SYSTEM FLEXIBILITY; HERBICIDE REPLACEMENT 23
  • PIPELINE OVERVIEW Drought-Tolerant Corn Advances to Phase II Based on Second-Year Field Test Results KEY MARKET ACRES U.S. BRAZIL ARGENTINA 80M 30M 6M AVAILABLE MARKET 0% 0% 0% PERCENT PENETRATED SEGMENTED VALUE OPPORTUNITY WITH TRAIT WITHOUT TRAIT WITH TRAIT WITHOUT TRAIT RESULTS o C 32 34 40 BROAD ACRE STATES WITH STATES WITH Drought tolerance established through plant WATER USE INCONSISTENT CONSISTENT physiology (performance) over three years EFFICIENCY DROUGHT DROUGHT STRESS STRESS AND IRRIGATION REQUIREMENTS DISCOVERY PHASE I PHASE II PHASE IV LAUNCH PHASE III Proof of Concept Early Development Pre-Launch Adv. Development 24
  • OVERVIEW Drivers of Growth in Mid-Term and Long-Term Horizons Are On Track FY2006 AND FY2007 TARGETS FY2008 - FY2010 2006 2006 2007 LEADERSHIP TARGET UPDATE TARGET $2.35-$2.50 $2.82-$3.00 Accelerate the Current $2.35-$2.50 EARNINGS PER Up to 20% 20% growth Commercial Platform Toward upper SHARE growth from from 2006 end of range Expanded long–term opportunity 2005 projection for corn traits, reflecting opportunity in licensing, FREE CASH $825M - $900M $825M - $900M $875-$950M stacking and price-to-value FLOW strategies KEY COMMERCIAL COMMITMENTS Expand in New Markets US CORN 1 – 2 pts 1 – 2pts Penetration of new markets in SHARE Asia, Europe and South America with existing traits US RR CORN 30M ACRES 34M ACRES New opportunity in the high- margin Seminis business US YGRW 8M ACRES 10M ACRES Discover New Opportunities US COTTON Through Research 1 – 2 POINTS 1 – 2 POINTS SHARE Refreshing of first-generation US RR FLEX 2 – 3M ACRES 2 – 3M ACRES trait portfolio Breeding programs expand our AUSTRALIA 80-85% 90% genetic footprint COTTON TRAITS penetration penetration Translate Growth to Value BRAZIL RR 5 – 10 cents per 5 – 10 cents Gross profit mix reflects higher- EARNINGS share per share margin seeds and traits CONTRIBUTION 25
  • Reconciliation of Non-GAAP Financial Measures Reconciliation of Free Cash Flow Fiscal Year Fiscal Year 2006 2007 $ Millions Target Target Net Cash Provided by Operations $1,300 - $1,375 $1,375 - $1,450 Net Cash Provided (Required) by Investing Activities $(475) $(500) Free Cash Flow $825 - $900 $875-$950 Net Cash Provided (Required) by Financing Activities N/A N/A Net Increase in Cash and Cash Equivalents N/A N/A 26