Monsanto Increases 2006 Fiscal Year Earnings Per Share Guidance

ST. LOUIS, May 30 /PRNewswire-FirstCall/ -- Monsanto Company announced today that it is increasing its fiscal year 2006 earnings per share (EPS) guidance. The company also outlined its EPS expectations for the third-quarter of the 2006 fiscal year.

Monsanto now expects that its full-year 2006 EPS guidance will be in the range of $2.50 to $2.55 per share, on a reported and ongoing basis, based on the strength of the company's U.S. corn seed and traits business. (For a reconciliation of EPS on an ongoing basis, see note 1.) The company also expects that $1.15 to $1.20 per share of its full-year EPS, both on a reported and ongoing basis, will occur in the third quarter.

U.S. Corn Business Drives Improvement for Third Quarter, Fiscal Year

Continued strong results from the company's U.S. corn seed and traits business are contributing to the improvement in the company's performance in the third quarter and fiscal year 2006. The company continues to see robust adoption of its trait technologies and expects that its corn seed and traits business will gain market share in the U.S. corn seed market for a fifth consecutive year.

"We continue to see strong interest and adoption of our company's seeds and trait technologies, led by the breeding and technology advancements in our U.S. corn business and by the increasing momentum being created by our international corn seed business," said Terry Crews, chief financial officer and executive vice president for Monsanto.

"Our farmer customers demand high-quality, premium-seed offerings that can offer them higher yield potential and a way to preserve that potential through the end of the crop season," Crews noted. "These are characteristics that define an industry leader and something that our business takes pride in delivering to farmers season after season."

Free Cash Flow Guidance

The company also confirmed that its guidance for free cash flow in fiscal year 2006 remains in the range of $825 million to $900 million. The company confirmed that in fiscal year 2006, it expects net cash provided by operating activities to be in the range of $1.375 billion to $1.450 billion, and net cash required by investing activities to be approximately $550 million. Free cash flow guidance excludes cash that may be used for a rights offering in connection with the bankruptcy proceedings of Solutia, Inc. Monsanto's current guidance also does not reflect any equity in Solutia, Inc., that the company may receive as a result of the bankruptcy process. (For a reconciliation of free cash flow, see note 2.)

"The company continues to closely monitor its receivables during the peak collection period in Brazil," said Crews. "We are pleased with the progress made to date in the face of the tough market dynamics that have occurred in that region this year. We are poised to meet our free cash flow guidance for the fiscal year."

Crews will discuss the earnings guidance as part of his presentation tomorrow morning, May 31, at the UBS Best of Americas Conference in London. Crews' presentation slides and a simultaneous audio webcast of this presentation will be available through the UBS Best of Americas conference web site at the time of the event. To access the webcast of this presentation, go to: http://events.webeventservices.com/ubs/2006/05/ .

Following the live broadcast, scheduled for May 31, at 3:30 a.m. CDT (9:30 BST), a replay of the webcast will be available for two weeks through this same link. Crews' presentation slides will also be archived at the Investor Relations section of Monsanto's website at http://www.monsanto.com/ .

Monsanto will report its complete financial results for the third quarter on Thursday, June 29.

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. For more information on Monsanto, see: http://www.monsanto.com/ .

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.

Monsanto Company Reconciliations of Non-GAAP Financial Measures Unaudited Ongoing EPS and Free Cash Flow: The presentations of 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 ongoing EPS and free cash flow to the respective most directly comparable financial measures calculated in accordance with GAAP. 1. Reconciliation of EPS to Ongoing EPS: Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations. Third Quarter Fiscal Year 2006 2006 Fiscal Year Target Target 2005 Diluted Earnings per Share $1.15-$1.20 $2.50 - $2.55 $0.94 In-Process R&D Write-Off Related to the Seminis and Emergent Acquisitions - - 0.91 Solutia-Related Charge - - 0.64 Tax Benefit on Loss from European Wheat and Barley Business - - (0.39) Restructuring Charges - Net - - 0.02 Income on Discontinued Operations - - (0.04) Diluted Earnings per Share from Ongoing Business $1.15-$1.20 $2.50 - $2.55 $2.08 2. Reconciliation of Free Cash Flow: Free cash flow represents the total of cash flows from operating and investing activities. 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. (Dollars in millions) Fiscal Year 2006 Fiscal Year Target 2005 Net Cash Provided by Operating Activities $1,375 - $1,450 $1,737 Net Cash Required by Investing Activities $(550) (1,667) Free Cash Flow $825 - $900 $ 70 Net Cash Provided (Required) by Financing Activities N/A (582) Net Increase (Decrease) in Cash and Cash Equivalents N/A (512) Cash and Cash Equivalents at Beginning of Period N/A 1,037 Cash and Cash Equivalents at End of Period N/A $ 525