3. Non-GAAP Financial Information
This presentation may use the non-GAAP financial measures of “free cash flow,” and earnings per share (EPS) on
an ongoing basis. 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
p g gp ,
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 St t
U it d States. Furthermore, these non-GAAP financial measures may not be comparable to similar measures used
F th th GAAP fi il tb bl t i il d
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. Monsanto is unable to provide a reconciliation of the 2009 ROC goal to projected net
income and financial position for 2009 with out unreasonable effort. As shown in the ROC reconciliation for the
previous year, the calculation of ROC is complex and Monsanto does not have sufficient information at this point in
year complex,
the fiscal year to reasonably estimate its operating profit after-tax and average capital for 2009 due to market and
other conditions that our outside of Monsanto’s control.
3
4. PERFORMANCE SUMMARY
FY08 Full-Year and Fourth-Quarter Financial Results
Fourth- Fourth-
Fiscal-Year Fiscal-Year
Quarter Quarter Change Change
2008 2007
2008 2007
Net Sales $2,051M $1,518M 35% $11,365M $8,349M 36%
$960M $643M 49% $6,177M $4,230M 46%
Gross Profit
Diluted EPS on an $(0.03) $(0.18) 83% $3.64 $1.98 84%
Ongoing Basis
As a Percent of Net Sales:
47% 42% 54% 51%
Gross Profit
35% 39% 20% 22%
SG&A
15% 15% FLAT 9% 9% FLAT
R&D
Positive
P iti movement in metric
ti ti
4
5. PERFORMANCE SUMMARY
FY08 Full-Year and Fourth-Quarter Segment Gross Profit
Results
Fourth- Fourth- Fiscal-Year Fiscal-Year
Quarter Quarter Change Change
2008 2007
2008 2007
Gross Profit:
CORN SEED & TRAITS $151M $178M (15)% $2,174M $1,721M 26%
SOYBEAN SEED & TRAITS $76M $7M 986% $725M $588M 23%
COTTON SEED & TRAITS $61M $45M 36% $313M $267M 17%
VEGETABLE SEEDS $124M $57M 118% $394M $267M 48%
ALL OTHER SEEDS & TRAITS $97M $72M 35% $251M $171M 47%
$509M $359M 42% $3,857M $3,014M 28%
Total Seeds & Genomics
$451M $284M 59% $2,320M $1,216M 91%
Total Ag Productivity
As a Percent of Net Sales:
CORN SEED & TRAITS 43% 49% 61% 61% FLAT
SOYBEAN SEED & TRAITS 69% 21% 62% 65%
COTTON SEED & TRAITS 69% 76% 70% 84%
VEGETABLE SEEDS 56% 34% 53% 44%
ALL OTHER SEEDS & TRAITS 60% 61% 55% 53%
54% 48% 61% 61% FLAT
Total Seeds & Genomics
41%
% 37%
% 46%
% 36%
%
Total Ag Productivity
g y
Positive movement in metric
Negative movement in metric
5
6. PERFORMANCE SUMMARY
Over 70% of the $2.8 Billion of Operating Cash Generated
Invested in Acquisitions, Technology and Capital in FY08
USES OF CASH
PERCENT OF $2.8B OPERATING CASH USED BY CATEGORY: FY2008
2%
Cash Generation
13%
$772M
FY2008 Free Cash Flow:
37%
CASH PRIORITIES
Bolster direct returns to
15%
shareowners
Support commercial growth
through capital spending
Invest in future growth through
R&D
Expand the core through
33%
strategic acquisitions
tti i iti
Acquisitions and
Technology Collaborations
Capital Spending
Dividends
Di id d
Share Repurchase
Other
6
7. FINANCIAL OUTLOOK
2009 Again Projects Double-Digit Earnings Growth and
Strong Cash Generation
2008 2009F
EARNINGS
$4.20-$4.40
$3.64
ONGOING EARNINGS PER SHARE ~15-20% GROWTH
>80% GROWTH
FROM 2007 FROM 2008
Seeds & Genomics Gross Profit $3.9B $4.5-$4.6B
Corn Seed & Traits Gross Profit $2.2B ~$2.8B
Soybean Seed & Traits Gross Profit $725M ~$700M
Cotton Seed & Traits Gross Profit $313M ~$300M
Vegetable Seeds Gross Profit $394M ~$500M
All Other Seed & Traits Gross Profit $251M ~$200M
Roundup And All Other Glyphosate-based $2.0B $2.3-2.4B
Herbicides Gross Profit
All Other Ag Productivity Gross Profit $344M ~$400M
CASH MANAGEMENT AND SPENDING
FREE CASH FLOW $772M ~$1.8B
Operating Cash $2.8B >$3B
Capital Expenditures $918M ~$1B
SG&A as a Percent of Sales 20% 19% Range
R&D as a Percent of Sales 9% 9.5%-10% Range
7
8. FINANCIAL OUTLOOK
2009 Earnings Expected to Follow Seasonality of Recent
Fiscal Years
Q4 Q1
• Historical loss reflecting full SG&A and R&D • Earnings: Driven by Latin America – both
spend against smallest sales base in year seed and Roundup sales
• Earnings: Top line generated primarily by • Early orders begin for U.S. seeds, however
Roundup and other glyphosate-based sales are not booked until shipment
SEPT ▼
herbicides and vegetables
• Vegetables and Roundup and
other glyphosate based herbicides
glyphosate-based
S
sales spread relatively evenly
• Cash: One of primary periods of cash
Q4 Q1 throughout year
collections, reflecting U.S. season
• Cash: Reflects pre-pays
associated with early U.S. orders
JUNE ▲
DECEMBER ▼
Annual Earnings
Calendar • Historically largest quarter,
increasing seed-and-trait shift
Q3 Q2
• Second strongest quarter behind Q2 into Q2
• Earnings: Driven by seeds and traits • Earnings: Driven by U S seeds and
U.S.
MARCH ▼
– Continued soybean traits
– Strongest quarter for cotton, reflecting U.S.
– Particularly N. Hemisphere corn and U.S. corn
and India seasons
traits
– Soybean seed and trait split roughly
evenly with Q3
• C h U of cash t f d working capital needs
Cash: Use f h to fund ki it l d
of business begins to build, reaching peak in
Q3 mid Q4
Q2
8
9. FINANCIAL OUTLOOK
Monsanto’s Pricing Model Aimed at Total Value Created;
Shared with Farmer
YieldGard VT Triple Improved Yield
PRICING TO VALUE EXAMPLE: 2009
UPDATE: Yield-advantage value at 3 year
Improved Yield1 average commodity price
g yp
IMPROVED YIELD • One year back, current year and forward year
15-20
(BU/AC):
• Value shared with farmers
UPDATE: 3 YEAR COMMODITY PRICE:
$4.00
Indirect Benefits
$60-$80
Quantified benefits such as convenience and
benefits,
Indirect Benefits2
I di tB fit
peace of mind
INDIRECT BENEFITS:
$5
• Value shared with farmers
Incremental Value Created
$65-$85
Replacement Value
(+)
Factors costs farmers would have incurred for
Ft tf ld h i df
substitute insect and weed control
• 100% of replacement value is captured
PRICING APPROACH
UPDATE: Per-Acre Trait Cost3: $29-$49
UPDATE: Replacement PRICING APPROACH
($11-$19)
Value4
Percentage of incremental value shared
Incremental Farmer Cost: $18-$30 ultimately determined by market research,
pricing simulations and focus groups to assess:
Incremental Value Shared: 65-70%
• Market Share Implications
1. Monsanto estimates, based on better insect and weed control over conventional options
• Trait Penetration Effect
2. Monsanto estimates, based on farmer surveys quantifying benefits such as convenience and
peace of mind • Competitive Reaction
3. Retail price range for YieldGard VT Triple in 2009, at seeding rate of 2.7 acres per unit
4. Subtracts costs farmers would have spent had they not used a trait package
9
10. FINANCIAL OUTLOOK
Yield-Enhancing Technology Creates Value – Returning
$
$1.50-$3 For Every Dollar Spent By Farmers in Corn
$ y p y
U.S. FARMER RETURN ON INVESTMENT: 1983-2008F
170
160
150
32
140
130
Bu/ac
120
FARMER RETURN OF
bu/ac
1.5X – 3X
110
PER DOLLAR SPENT
100
ON YIELD-CREATING TECHNOLOGY
@ COMMODITY PRICE RANGE OF $2-$4/BU
$2 $4/BU
90
80
PRE-BIOTECH: 1983-1996 POST-BIOTECH: 1996-2008F
AVERAGE YIELD DURING AVERAGE YIELD DURING
115.6 bu/ac 138.3 bu/ac
PERIOD: PERIOD:
1.7 bu/ac 2.6 bu/ac
ANNUAL YIELD GAIN: ANNUAL YIELD GAIN:
YIELD-RELATED
ODUCTION
Seed/ Chem/
$27.07/ac $43.24/ac
Equip/ Labor
COSTS
SCARCITY-RELATED
C
$19.33/ac
$ $52.02/ac
$
PRO
Land Rent
$6.23/ac $94.90/ac
Fertilizer
Source: USDA, Land Rent Averaged using Corn & Soybean, Doane Ag, dmrkynetec data, Yield is calculated using a 3 year rolling average, (32 Yield is 2.6 bu/ac/yr *12 years). 2008F Yield is April 08 Doane Ag. Return – Monsanto Estimate
10
11. FINANCIAL OUTLOOK
Increased 2009 and 2012 Targets for Roundup Reflect
Sustainability Even As Supply-Demand Comes Into Balance
Supply Demand
ROUNDUP AND OTHER GLYPHOSATE-BASED HERBICIDES:
Roundup and Other
BRANDED AND NON-BRANDED TRENDS – 2004-2008
Glyphosate-Based
Herbicides
300 Branded
2009 Forecast
Non-Branded
GROSS PROFIT TARGET: $2.3-$2.4B
250
allons)
Above
BRANDED PRICE BAND
(PER GALLON): $16 $18
$16-$18
Glob Volume (in ga 200
2012 Forecast
GROSS PROFIT TARGET: $1.9B
150
BRANDED PRICE BAND
$16-$18
bal
(PER GALLON):
100
50
0
2004 2005 2006 2007 2008
GLOBAL VOLUME
209M 215M 235M 252M 257M
(GALLONS):
Above
BRANDED PRICE BAND
$11-$13
$11 $13 $11-$13
$11 $13 $11-$13
$11 $13 >$11-$13
>$11 $13
(PER GALLON): $16-$18
TOTAL ROUNDUP AND
OTHER GLYPHOSATE-BASED $703M $637M $648M $854M $2.0B
HERBICIDES GROSS PROFIT:
11
12. FINANCIAL OUTLOOK
With Different Core Structure, Credit Access For Farmers
Remains Solid As Purchase-Season Approaches
Purchase Season
U.S. FARM BUSINESS DEBT: U.S. Farm Credit
SHARE BY CATEGORY, 2000-2006
2000 2006 LENDING SYSTEM
45 • One-third of farmers get
financing for the Farm
42.4%
40
Credit System –
government-backed lending
35
entage of Market
t
earmarked for agriculture
k df il
32.6%
30
• Around 40 percent of
farmers tap into regional
25
and community banks
17.2%
20 • Rely on core deposits for
Perce
funding
15
• Continue to hold interest rates
steady and lines of credit open
10
5.3% • 15-20 percent use credit
5 lines provided by
2.6% agricultural suppliers
g pp
0
2000 2001 2002 2003 2004 2005 2006
Commercial Banks Farm Credit System
Individuals & Others Life Insurance Companies
USDA FSA
Source: USDA Economic Research Service
Year-end 2006 preliminary estimates shown
12
13. STRATEGIC OUTLOOK
FY2008 Performance Accelerates 2012 Opportunity;
Monsanto Increases 2012 GP Target
2012 GROSS PROFIT TARGET
GROSS PROFIT COMMITMENT: RELATIVE TO 2007 BASELINE
2007-2012F $
$9.5 -
Total G
T t l Gross Profit
P fit
$9.75B
$10,000
$9.5- BUSINESS DETAIL
$8.6-9.1B $9.75B Roundup and Other
$8,000
~$1.9B
Glyphosate-Based
$8-8.5B
>2X ~2.25X
~2 25X Herbicides
GP (in millions)
)
~2X 2007
2007
BASELINE
~$300M
All Other Ag
$6,000 BASELINE
2007
Productivity
BASELINE
$7.3-
Seeds & Genomics
$4,000
$
$7.5B
$4,230
2.6-2.7x
Corn Seed &
$2,000
Traits
~2x
Soybean Seed &
$0 Traits
ORIGINAL MID-YEAR CURRENT
BASELINE TARGET UPDATE GUIDANCE
~2x
Cotton Seed &
2007 2012F Traits
>2.5x
•INCREASED •BETTER Vegetable Seeds
ROUNDUP GROWTH IN
GP TARGET SEEDS &
TO $1.8B TRAITS
•2008
ACQUISITIONS
•ROUNDUP GP
TARGET OF
$1.9B
13
14. STRATEGIC OUTLOOK
While Metrics and Projections Vary, Fundamentals of
Demand Driven
Demand-Driven Environment for Grain Remain Strong
USDA LONG-TERM PROJECTIONS: Demand Outlook
CORN AND SOYBEAN TOTAL TRADE – 2006-2017
2006 2017 • USDA projections to 2017
anticipate tight continuation
110 70
of demand-driven
Soybea – million metr tons
environment for grain
60
105
• Global corn trade expected
ons
50
ans
to
t grow 15 percent i th t
t in that
Corn – million metric to
100
timeframe
40
• Imports by China and Mexico
95
help spur demand
30
• USDA assumption on U.S.
90
20 planted corn acres: ~90M
ric
• Global soybean trade grows
85 10
40 percent by 2017
• 80 percent of growth is driven
80 0
by China
• USDA assumption on U.S.
planted soybean acres: ~70M
70M
Corn Total Trade Soybean Total Trade
Source: USDA Agricultural Projections to 2017, available at: http://www.ers.usda.gov/Publications/OCE081/
14
15. STRATEGIC OUTLOOK
Monsanto’s Growth Opportunity Lies at the Intersection of
Demand,
Demand Innovation and Execution
Monsanto’s Simple Philosophy on Opportunity:
M t ’ Si l Phil h O t it
YIELD
More demand requires more
q
INNOVATION
More yield requires more
y q
GROWTH
More innovation delivers more
15
16. Reconciliation of Non-GAAP Financial Measures
Reconciliation of Free Cash Flow
Fiscal Year
2009 Fiscal Year Fiscal Year
$ Millions Forecast 2008 2007
Net Cash Provided (Required) by Operations $3,000 $2,799 $1,854
Net Cash Provided (Required) by Investing Activities (1,200)
(1 200) (2,027)
(2 027) (1,911)
(1 911)
Free Cash Flow $1,800 $772 ($57)
Net Cash Provided (Required) by Financing Activities N/A (102) (583)
Effect of Exchange Rate Changes on Cash and Cash Equivalents N/A 77 46
Net Increase (Decrease) in Cash and Cash Equivalents N/A $747 ($594)
Reconciliation of Non-GAAP EPS
Fiscal Year
Fourth Fourth
2009 Fiscal Year Fiscal Year
$ per share Forecast 2008 2007 Quarter 2008 Quarter 2007
Diluted Earnings (Loss) per Share $4.20-$4.40 $3.62 $1.79 ($0.31) ($0.39)
Solutia Claim Settlement -- ($0.23) -- -- --
Loss (Income) on Discontinued Operations -- ($0.04) ($0.15) ($0.01) ($0.13)
In-Process R & D Write-Off Related to the De Ruiter -- $0.29 -- $0.29 --
Acquisition
In-Process R & D Write-Off Related to the Delta & Pine Land -- -- $0.34 -- $0.34
(D&PL) Acquisition
Diluted Earnings (Loss) per Share from Ongoing Business $4.20-$4.40 $3.64 $1.98 ($0.03) ($0.18)
16
17. Reconciliation of Non-GAAP Financial Measures
Reconciliation of Return on Capital
$ Millions Total Monsanto Company and Fiscal Year 2008 Fiscal Year 2007
Subsidiaries:
Operating Profit After-tax (excluding certain $2,157 $1,106
items)
Average Capital $8,967 $7,532
Return on Capital 24.1% 14.7%
Operating Profit After-tax (excluding certain
items):
Net Income $2,024 $993
Adjustment for certain items, after-tax:
2008 In-Process R & D Related to the $161 __
De Rutier Acquisition
2007 In-Process R & D Related to the __ $186
D&PL Acquisition
(Income) on Discontinued Operations $(17) $(80)
Interest (Income) Expense – Net of Taxes $(11) $7
Operating Profit After-tax (excluding $2,157 $1,106
certain items)
As of Aug. 31, As of Aug. 31,
2008 2007
Average Capital:
Short-Term and Long-Term Debt $1,816 $1,420
Shareowners’ Equity 9,374 $7,503
Cash and Cash Equivalents $(1,613) $(866)
Cash for Operations $150 $150
Total Capital $9,727 $8,207
Prior Period Capital $8,207 $6,857
Average Capital $8,967 $7,532
17