monsanto 06-02-06
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  • 1. HUGH GRANT CHAIRMAN, PRESIDENT AND CEO MONSANTO COMPANY SANFORD C. BERNSTEIN STRATEGIC DECISIONS CONFERENCE June 2, 2006 1
  • 2. Forward-Looking Statements Certain statements contained in this presentation 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
  • 3. 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. Trademarks Roundup, Roundup Ready, Roundup RReady2Yield, Bollgard, Bollgard II, YieldGard, Monsanto, Imagine, Vine Design, Asgrow, DEKALB, Monsanto Choice Genetics, Posilac, Processor Preferred, Vistive, Stoneville and Seminis are trademarks owned by Monsanto Company and its wholly-owned subsidiaries and are italicized the first time they appear in this presentation. All other trademarks are the property of their respective owners. © 2006 Monsanto Company 3
  • 4. OVERVIEW Increased Grain Production Will Be Required to Meet the World’s Changing Food Demands EUROPE UNITED STATES 2005 2010 ASIA 2005 2010 CORN 52M MT 55M MT 2005 2010 CORN 278M MT 297M MT SOY 1M MT 3M MT CORN 122M MT 132M MT SOY 86M MT 81M MT SOY 22M MT 23M MT WORLD AREA GRAIN PRODUCTION THE THREE LEADING SOYBEAN EXPORTERS – U.S., BRAZIL, AND ARGENTINA ACCOUNT FOR > 90% OF WORLD CHINA: NET IMPORTS TRADE E.U. REMAINS 40 ARGENTINA WORLD’S PRINCIPAL METRIC TONS (M) DESTINATION FOR 30 2005 2010 SOYBEAN MEAL 20 IN BRAZIL, DESPITE CORN 23M MT 27M MT 10 INCREASING SOY 38M MT 40M MT DOMESTIC FEED USE, 0 INCREASING AREA 2005 2010 -10 ALLOWS SHARE GROWTH IN CORN AND CORN SOY SOY BRAZIL 2005 2010 CORN 44M MT 53M MT SOY 60M MT 81M MT PRODUCTION = CONSUMPTION NET EXPORTER NET IMPORTER Source: U.S.D.A. Foreign Agricultural Service, ABIOVE, Independent Economists & Monsanto Estimates 4
  • 5. OVERVIEW Monsanto’s Seeds And Traits Strategy Is Played Out Across Four Core Crop Franchises CORN COTTON • DEKALB/ASGROW • STONEVILLE SEED • ASI, INC. SEED CHANNELS • COTTON STATES CHANNELS • HOLDEN’S/CORN STATES • BOLLGARD FAMILY KEY • YIELDGARD FAMILY • ROUNDUP READY KEY TRAITS • ROUNDUP READY FAMILY TRAITS FAMILY BIOTECH AND BREEDING R&D PLATFORM SOYBEANS VEGETABLES • DEKALB/ASGROW • SEMINIS AND SEED SEED • ASI, INC. RELATED BRANDS CHANNELS CHANNELS • HOLDEN’S/CORN STATES • TOMATOES, KEY MELONS, PEPPERS • ROUNDUP READY CROPS KEY FAMILY TRAITS • VISTIVE FAMILY 5
  • 6. OVERVIEW Farmers ‘Buy Yield,’ Creating Opportunity for Seeds and Traits Growth FARMERS’ DECISION EQUATION MONSANTO’S POSITION: CORN SEED Retail brands (GENETIC GAIN) The starting point of all agriculture; farmers Regional brands need to maximize ‘genetics’ in seed for yield + TECHNOLOGY Licensing + ‘Above ground’ protection (% OF GENETIC GAIN PRESERVED) ‘Below ground’ protection Technology is used to protect and maximize the yield potential of the seed == Weed control system MAXIMUM YIELD The elegance of a seed and trait POTENTIAL approach is that the seed is the package and traits can be ‘stacked’ for The basic equation represents the maximum effect maximum yield potential multiplied by the In 2005, Monsanto introduced the first percent of that yield preserved by technology triple-stack of biotech traits 6
  • 7. OVERVIEW Breeding and Biotech Provide Parallel R&D Paths to Commercial Products That Enhance Yield BREEDING and BIOTECHNOLOGY form two R&D pathways Separate, but parallel, the BREEDING and BIOTECHNOLOGY pathways are linked by shared tools. DISCOVERY PHASE I PHASE II R&D PHASE: PHASE III PHASE IV LAUNCH BREEDING COMMERCIAL IT PLATFORM GERMPLASM G ANALYTICS MARKERS GENOMICS SEED ELITE Germplasm SOLD TO FARMERS R BIOTECHNOLOGY 7
  • 8. OVERVIEW Opportunity for Breeding and Biotechnology Is to Continue to Deliver Yield for Farmers FOCUS: YIELD WHAT MATTERS TO FARMERS IS THE YIELD HE SEES AT HARVEST, WHICH IS A FUNCTION OF HOW MUCH POTENTIAL A SEED HAS AND HOW GENETIC POTENTIAL (FUTURE) IT’S PROTECTED: GENETIC POTENTIAL NET REALIZED YIELD WITH PERCENT OF GENETIC GAIN FUTURE PROTECTION X PRESERVED OPPORTUNITIES PROTECTION AND ENHANCEMENT IMPROVED NITROGEN ADVANCES BREEDING UTILIZATION NET REALIZED YIELD DROUGHT TOLERANCE SECOND-GENERATION INSECT CONTROL GENETIC POTENTIAL (CURRENT) INSECT PRESSURE NET REALIZED YIELD WITH CURRENT WEED PRESSURE PROTECTION NATURAL YIELD NUTRIENT DEFICIENCY SUPPRESSION BELOW-GROUND CURRENT YIELD WATER DEFICIENCY INSECT CONTROL PROTECTION GENETIC POTENTIAL ABOVE-GROUND IS PRESERVED INSECT CONTROL THROUGH BIOTECH TRAITS AND PRODUCTION WEED-CONTROL ADVANCES TRAITS SEED NET REALIZED YIELD MANUFACTURING WITH NO PROTECTION 8
  • 9. COMMERCIAL Breeding and Biotechnology Create Enough High- Performing Products to Supply Three Channels U.S. CORN MARKET SHARE 60% 2006 50% FRONTLINE UPDATE: ASGROW AND 40% DEKALB AND ASI BRANDS 30% ARE EXPECTED TO GROW MARKET 20% SHARE IN 2006 10% 0% 2001 2002 2003 2004 2005 2006F TRAIT PENETRATION STACKED PENETRATION CHANNEL TO MARKET 2005 2006F 2005 2006F DEKALB AND ASGROW 87% 90% 60% 69% BRANDS 66% 76% 36% 54% AMERICAN SEEDS, INC. (ASI) HOLDEN’S/CORN STATES 44% 60% 27% 43% LICENSEES 9
  • 10. COMMERCIAL Corn Market Share Gains Still To Fully Reflect Power of Molecular Breeding Application MOLECULAR-BREEDING HYBRIDS 20% 6% AS A PERCENT OF BRANDED UNITS SOLD IN COMMERCIAL CORN PORTFOLIO 2005 BRANDED U.S. 5% MARKET SHARE: 16% IN COMMERCIAL CORN PORTFOLIO PERCENT OF BRANDED UNITS SOLD 15% DEKALB AND ASGROW 4% U.S. MARKET SHARE U.S. BRAND MARKET SHARE 3% 10% 2% 5% 1% 0% 0% 2001 2002 2003 2004 2005 2006F 2007F 2008F CYCLE 1: CYCLE 2: CYCLE 3: PROGRESSION INTEGRATION OF APPLICATION OF MOLECULAR SELECTION POWER OF OF BREEDING GLOBAL GERMPLASM BREEDING TO SELECTION MOLECULAR BREEDING TECHNOLOGY IN THE • MOLECULAR BREEDING • ASSEMBLED 36 MAJOR CORN • PREDICTIVE COMBINATIONS COMMERCIAL IMPROVES GENETIC POTENTIAL BREEDING PROGRAMS IN 12 ALLOW MORE EFFICIENT PORTFOLIO BY 2X VERSUS CONVENTIONAL COUNTRIES BREEDING BREEDING • FIRST INTRA-COMPANY • MOLECULAR BREEDING • BY 2006, FIRST MOLECULAR CROSSES; BY CYCLE 3, >50% ACCELERATES TRAIT BREEDING HYBRIDS ENTER OF HYBRIDS IN THE U.S. INTEGRATION BY COMMERCIAL PORTFOLIO PORTFOLIO MADE THROUGH SHORTENING ‘BACKCROSSING’ INTRA-COMPANY CROSSES CYCLES 10
  • 11. COMMERCIAL Successful Application of Technology in Corn Opens Opportunities to Replicate Strategy in Other Crops EUROPE-AFRICA 2005 Market Share 19% Market Position 1 ASIA-PACIFIC NORTH AMERICA 2005 SEMINIS 2005 Market Share 7% OPPORTUNITY Market Share 34% Market Position 3 Market Position 1 Seminis addition to Monsanto opens new business and research opportunities Seminis has the largest global vegetable germplasm library Molecular breeding tools honed in row crops will be applied to vegetables SOUTH AMERICA 2005 Market Share 37% Market Position 1 11
  • 12. COMMERCIAL Existing Biotech Traits Set Up Three Pathways for Mid-Term Growth EXAMPLE: ROUNDUP READY SOYBEANS IN BRAZIL There are 50M acres of OPPORTUNITY: PENETRATION AND soybeans in Brazil EXPANSION In 2006, approximately 20- CURRENT 25M acres will be planted to STATUS: Roundup Ready soybeans EXAMPLE: CORN TRAITS IN THE UNITED STATES Of the 80M acres of U.S. OPPORTUNITY: corn, in 2005, approximately STACKING 14M included stacked traits Stacked traits will soon CURRENT overtake the number of STATUS: single-trait acres EXAMPLE: SECOND-GENERATION U.S. COTTON TRAITS In 2005, approximately 11M U.S. acres were planted with OPPORTUNITY: MULTI- cotton traits, most in first- generation traits GENERATION In 2006, Roundup Ready Flex cotton was introduced, CURRENT allowing for the first STATUS: second-generation stack with Bollgard II. 12
  • 13. COMMERCIAL Penetration: Market Potential for Biotech Traits by 2010 Highlights Continued Growth Opportunity SOYBEANS COTTON CORN ROUNDUP BOLLGARD ROUNDUP KEY MARKETS YIELDGARD YIELDGARD READY ROUNDUP READY AND READY CORN BORER ROOTWORM BOLLGARD II CORN 2 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 - - - 34.5- TOTAL ACRES IN 156.2M 28.5-35.8M 118-120M 84-96M 36-41M 44.8M KEY MARKETS 76% 0% 35% 19% 40% 10% BIOTECH ACRES PLANTED 2005 REMAINING AVAILABLE ACRES 13
  • 14. COMMERCIAL Stacking: Increasing Demand for Stacked Traits Leads Overall Acreage Gains for Each Individual Corn Trait 60 1.80 1.70 50 2006 FRONTLINE 1.60 TRAIT INTENISTY PER ACRE ACRES IN MILLIONS UPDATE: “TRAIT 40 INTENSITY” – A 1.50 MEASURE OF MARGIN 30 1.40 OPPORTUNITY PER ACRE – WILL 1.30 STEP UP 20 CONSIDERABLY AS THE MARKET 1.20 MOVES INCREASINGLY 10 1.10 TOWARD TRIPLE- STACKED TRAITS 0 1.00 2001 2002 2003 2004 2005 2006F U.S. CORN ACRES1 (IN MILLIONS) 17.7 23.8 27.3 33.6 30.6 ~24 U.S. SINGLE TRAIT ACRES 1.2 2.2 5.1 8.7 13.0 ~20 U.S. DOUBLE TRAIT ACRES 0 0 0 0 1.3 ~5 U.S. TRIPLE TRAIT ACRES 1.06 1.08 1.16 1.21 1.35 1.61 TRAIT INTENSITY2 1 U.S. Corn Acres represent the total number of acres with at least one Monsanto brand trait – representing “absolute” acres 2 “Trait Intensity” represents the average number of traits per acre, calculated by comparing the “trait” acres with the number of absolute acres 14
  • 15. COMMERCIAL Multi-Generation: Roundup Ready Flex Launch Brings First Double-Stacked Second-Generation Traits to Market KEY MARKET ACRES U.S. INDIA AUSTRALIA Roundup Ready 10-15M AVAILABLE MARKET 10-15M 0.5-0.8M Flex Cotton CREATING VALUE 0% 0% 0% PERCENT PENETRATED ROUNDUP READY Launch of 2+ million acres in U.S. this season through 10 cotton FLEX COTTON seed companies • U.S. 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 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 licensee brands as a showcase of Monsanto’s cotton technologies DISCOVERY PHASE I PHASE III PHASE II PHASE IV LAUNCH Proof of Concept Adv. Development Early Development Pre-Launch 15
  • 16. PIPELINE 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 INFLECTION 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. 16
  • 17. DISCOVERY PHASE I PHASE II PHASE III PHASE IV PIPELINE 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 lysine1 Mavera™ I High-value soybeans1 PROCESSOR Mavera™ II High-value soybeans1 2nd-Gen High-value corn with lysine1 Feed Corn with balanced proteins1 High oil soybeans for processing1 CONSUMER Improved-protein soybeans Vistive II Low Lin – Mid Oleic soybeans Vistive III Low Lin – Mid Oleic – Low Sat soybeans Omega-3 soybeans 17 1. These product candidates are in the Renessen pipeline. Renessen is a Monsanto/Cargill joint venture
  • 18. PIPELINE Farmer Benefits: Multi-Generational Drought-Tolerant Corn Is Advancing Closer to Commercial Reality 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 of EFFICIENCY DROUGHT DROUGHT testing STRESS STRESS AND IRRIGATION REQUIREMENTS DISCOVERY PHASE I PHASE II PHASE IV LAUNCH PHASE III Proof of Concept Early Development Pre-Launch Adv. Development 18
  • 19. PIPELINE Farmer Benefits: Roundup RReady2Yield Soybeans Advances 10 Years of Yield Gains With One Trait KEY MARKET ACRES U.S. BRAZIL ARGENTINA Roundup RReady2Yield 70M 50M 35M AVAILABLE MARKET Soybeans 0% 0% 0% PERCENT PENETRATED HISTORICAL SOY YIELD GAINS OF HALF BUSHEL PER YEAR •With roughly 5 bushel per acre yield improvement, BUSHELS/ACRE 45 Roundup RReady2Yield y = 0.4246x - 811.11 40 advances 10 years of conventional breeding 35 gains 30 •Research under way on 25 potential for additional 20 insurance for Asian 1970 1980 1990 2000 soybean rust •Provides platform for future soy technologies, including third-generation of weed control in soybeans •Product currently in RESULTS Phase III of pipeline Indications are Roundup RReady2Yield soybeans demonstrate roughly a 10 percent yield gain both in the U.S. and Brazil. 19
  • 20. PIPELINE Consumer Benefits: Vistive Family of Improved Oils Meets Multiple Needs in Food Industry TARGET: LOW LINOLENIC TARGET: LOW LINOLENIC TARGET: LOW SAT VISTIVE SOYBEANS VISTIVE RAPESEED +INCREASED OLEIC + LOW LINOLENIC 2005 LAUNCH 2005 LAUNCH 500K ACRES IN US 40K ACRES IN EUROPE VISTIVE III LOW LIN – MID OLEIC – LOW SAT TARGET: INCREASED OLEIC SOYBEANS + LOW LINOLENIC VISTIVE PHASE II FAMILY VISTIVE II LOW LIN – MID OLEIC SOYBEANS CONSUMER PHASE III MARKET OIL FOR FRYING AND IMPROVED SOYBEAN SPRAYING QUALITY FOR LIQUID OILS Crackers Snack chips OIL PROFILES ALONG THE THREE-STEP CHANGE IMPROVEMENT LINOLENIC LINOLEIC OLEIC SATS 18:3 18:2 18:1 18:0 / 16:0 STANDARD SOYBEAN LOW LIN MID OLEIC + LOW LIN ZERO SAT + MID OLEIC + LOW LIN 20
  • 21. PIPELINE Processor Benefits: High-Lysine Is First Biotechnology Quality Trait for Animal Feed Industry KEY MARKET ACRES U.S. BRAZIL ARGENTINA MaveraTM High-Value Corn 5M 2M 1M AVAILABLE MARKET with Lysine CREATING VALUE 0% 0% 0% PERCENT PENETRATED PROJECT OVERVIEW Monsanto’s joint MaveraTM High-Value Corn with Lysine venture with Cargill, Renessen, is CONCEPT researching new products with • High-Value Corn with Lysine enhances level of limiting enhanced components essential amino acids and corn oil content in feed and for animal feed and lowers cost of animal feed ration processing grain. Today, Renessen MILESTONES is using both biotechnology and • Final U.S. regulatory clearance received in February breeding to produce • Initially, high-lysine trait will be offered in stacked corn and soybeans combination with YieldGard Corn Borer, with the with higher levels of oil, protein, and amino opportunity to move to additional combinations with acids. YieldGard Rootworm and Roundup Ready Corn 2 • Final commercial evaluation under an experimental field program in 2006, with limited commercial acreage in 2007 21
  • 22. PIPELINE Most Significant Cost Leverage in Production of Ethanol Is Corn OPPORTUNITY: OPPORTUNITY: COST COMPOSITION: ONE GALLON OF ETHANOL INCREASE THE REDUCE THE VALUE OF THE INPUT COST OF AVERAGE COST: $1.09/GALLON AT 40M GALLON FACILITY CO-PRODUCT CORN Increasing the A 5% increase in 0.70 nutrient value of yield reduces the co-product – ethanol production 0.50 or ‘waste stream’ costs by ~4 cents – of ethanol $ / GALLON per gallon 0.30 production KEY TOOLS: opens new revenue streams 0.10 Molecular breeding that defray cost increases the rate of production of yield gain 2X -0.10 annually and KEY TOOLS: OTHER* DEPRECIATION & UTILITIES LABOR SUPPLIES OVERHEAD CORN DENATURANT biotech traits -0.30 Renessen corn protect that yield PRODUCT processing potential VALUE technology CO- builds on high- lysine product to create new feed *OTHER INCLUDES ENZYMES - AMYLASE opportunity from co-product 22
  • 23. SUMMARY Seeds and Traits Strategy Comes Together to Drive Ongoing EPS Performance $3.00 $2.50 - $2.55 $2.50 ONGOING EPS ($/SHARE) $2.08 $2.00 $1.59 $1.42 $1.50 $1.00 $0.50 $0.00 2003 2004 2005 2006F 2005-2006: CORE SEEDS- 2003-2004: 2004-2005: 20%+ ONGOING EPS GROWTH AND-TRAITS 12% ONGOING EPS GROWTH 31% ONGOING EPS GROWTH MILESTONES • EU APPROVALS UNLOCK • IN 2003, GROSS PROFIT • EXPECTED ONGOING EPS IN 3Q: AND U.S. CORN GROWTH FROM SEEDS AND TRAITS $1.15-$1.20 STRATEGIC SURPASSES ROUNDUP AND DRIVERS • VALUE-CAPTURE • U.S. CORN MARKET SHARE OTHER GLYPHOSATE-BASED SYSTEM ESTABLISHED GAINS FOR 5TH STRAIGHT YEAR HERBICIDES IN BRAZIL FOR • INCREASED PENETRATION OF ROUNDUP READY • BEGINNING OF THE STACKED CORN TRAITS SOYBEANS TRANSITION FROM SINGLE TRAITS TO STACKED TRAITS • LAUNCH OF ROUNDUP READY • LAUNCH OF VISTIVE – FLEX COTTON THE FIRST CONSUMER- ORIENTED TRAIT 23
  • 24. Reconciliation of Non-GAAP Financial Measures Reconciliation of Non-GAAP EPS 12 Months Third Quarter Ended Aug. 31, 12 Months 12 Months 12 Months Fiscal Year 2006 Ended Aug. 31, Ended Aug. 31, Ended Aug. 31, $ per share 2006 Forecast Forecast 2005 2004 2003 Net Income per Share $1.15-$1.20 $2.50-$2.55 $0.94 $0.99 $0.26 Cumulative Effect of Change in Accounting Principle -- -- -- -- $0.05 Diluted Earnings (Loss) per Share Before Effect of $1.15-$1.20 $2.50-$2.55 $0.94 $0.99 $0.31 Accounting Change In-Process R&D Write-off Related to the Seminis and -- -- $0.91 -- -- Stoneville Acquisitions Solutia-Related Charge and Tax Benefit -- -- $0.64 -- -- Tax Benefit on Loss from European Wheat and -- -- $(0.39) -- -- Barley Business Restructuring Charges -- Net -- -- $0.02 $0.36 $0.09 Income on Discontinued Operations and -- -- $(0.04) -- $0.06 Related Restructuring Impairment of Goodwill -- -- -- $0.24 -- PCB Litigation Settlement Expense – Net -- -- -- -- $0.96 Diluted Earnings per Share from Ongoing Business $1.15-$1.20 $2. 50-$2.55 $2.08 $1.59 $1.42 24