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Form 8-K MONSANTO CO /NEW/ For: Oct 07

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October 7, 2015 8:06 AM EDT


As Filed with the Securities and Exchange Commission on October 7, 2015



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  October 7, 2015

MONSANTO COMPANY
(Exact Name of Registrant as Specified in its Charter)

Delaware
001-16167
43-1878297
State of Incorporation
(Commission File Number)
(IRS Employer Identification No.)

800 North Lindbergh Boulevard
St. Louis, Missouri    63167
(Address of Principal Executive Offices)  (Zip Code)

Registrant's telephone number, including area code:  (314) 694-1000

Not Applicable
(Former Name or Former Address, If Changed Since Last Report)
_________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations under any of the following provisions (see General Instruction A.2. below):

[   ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


1


ITEM 2.02.  Results of Operations and Financial Condition.

On October 7, 2015, Monsanto Company issued a press release announcing its fourth quarter and full fiscal year 2015 financial and operating results for the period ended August 31, 2015.  This press release is furnished as Exhibit 99 hereto and incorporated herein by reference.

The press release furnished herewith uses the non-GAAP financial measures of earnings per share (“EPS”), EPS growth, gross profit, operating expenses, and net income, each on an ongoing basis (collectively, “Ongoing Financial Measures”).  Our Ongoing Financial Measures exclude certain after-tax items that we do not consider part of ongoing operations.  We believe that our Ongoing Financial Measures presented with these adjustments best reflect our ongoing performance and business operations during the periods presented and are useful to investors for comparative purposes.  In addition, management uses the Ongoing Financial Measures as a guide in its budgeting and long-range planning processes, and uses the ongoing EPS financial measure as a guide in determining incentive compensation.

The press release also uses the non-GAAP financial measure of EPS growth on an ongoing currency neutral basis. Ongoing currency neutral EPS growth is used to determine what the current period U.S. dollar operating results would have been if the foreign currency exchange rates had not changed from the comparable prior year period. This is done by translating the ongoing current year period results using the comparable prior period currency exchange rates used to translate the Company's financial statements in the comparable prior year period.  Ongoing currency neutral EPS growth is estimated using the effective tax rate for the local jurisdictions and the related currency changes. We believe that ongoing currency neutral EPS growth is useful to investors to evaluate our performance on a currency neutral basis and for comparative purposes. In addition, management evaluates the operating performance of our company and our international subsidiaries on an ongoing currency neutral basis and uses it as a guide in its budgeting and long-range planning processes.

The presentation of these non-GAAP financial measures is intended to supplement investors’ understanding of our operating performance and should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP.  These non-GAAP financial measures may not be comparable to similar measures used by other companies.  Information concerning Monsanto’s use of the non-GAAP financial measures free cash flow and EBIT appears in Monsanto’s most recent Report on Form 10-Q.

We are furnishing the information contained in this report, including the Exhibit, pursuant to “Item 2.02 Results of Operations and Financial Condition” of Form 8-K promulgated by the SEC.  This information shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, unless we specifically incorporate it by reference in a document filed under the Securities Act or the Exchange Act.  By filing this report on Form 8-K and furnishing this information, we make no admission as to the materiality of any information in this report, including the Exhibit.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS.

(d)        Exhibits

The following exhibit is filed herewith:

Exhibit 99    Press Release, dated October 7, 2015, issued by Monsanto Company

_________________________________

2



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  October 7, 2015

 
MONSANTO COMPANY
 
 
 
 
 
By:     /s/ Christopher A. Martin
 
Name:  Christopher A. Martin
 
Title:    Assistant Secretary



3


EXHIBIT INDEX



Exhibit No.
 
Description of Exhibit
 
 
 
99
 
Press Release, dated October 7, 2015, issued by Monsanto Company





Monsanto Company
800 North Lindbergh Blvd
St. Louis, Missouri 63167
Release
Immediately
 
 
Contact
Media:      Sara Miller  (314-694-5824)
 
Analysts:  Laura Meyer (314-694-8148)

GLOBAL PORTFOLIO, LEADING INNOVATION AND FINANCIAL DISCIPLINE ENABLED YEAR OF SOLID PERFORMANCE FOR MONSANTO, BACKING CONFIDENCE IN LONG-TERM GROWTH OPPORTUNITY
•
FY15 EPS of $5.73 on an ongoing basis and $4.81 on an as-reported basis
•
With continuing industry headwinds, FY16 ongoing EPS guidance at $5.10 to $5.60; $4.44 to $5.01 on an as-reported basis as a result of forecasted charges related to announced restructuring actions
•
Announces new $3 billion accelerated share repurchase program under its current share repurchase authorization, as it progresses toward its targeted capital structure
•
Confirms five year plan to deliver more than double 2014 ongoing EPS by 2019, with more than 20 percent annual growth in ongoing EPS expected to begin as soon as FY17

ST. LOUIS (Oct. 7, 2015) - Monsanto Company (NYSE: MON) today announced fiscal year 2015 results reflecting year-over-year ongoing earnings per share growth of 10 percent or approximately 17 percent on an ongoing currency neutral basis, despite the downturn in the agriculture cycle. Year-over-year EPS declined eight percent on an as-reported basis. The performance of its global seeds and traits business, licensing agreements, and strong cost discipline were the biggest drivers of performance for the year. Company leadership noted the underlying strength of the company’s global business and technology portfolio positions it well for sustainable growth over the long-term horizon as the company executes on its plan to more than double 2014 ongoing EPS by 2019.
 
Fiscal Year
 
2015
2014
($ in millions, except per share amounts)
As Reported
Adjustments
Ongoing
As Reported
Adjustments
Ongoing
Net Sales by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
Corn seed and traits
$
5,953

—

$
5,953

$
6,401

—

$
6,401

Soybean seed and traits
2,276

—

2,276

2,102

—

2,102

Cotton seed and traits
523

—

523

665

—

665

Vegetable seeds
816

—

816

867

—

867

All other crops seeds and traits
675

—

675

705

—

705

TOTAL Seeds and Genomics
$
10,243

—

$
10,243

$
10,740

—

$
10,740

 
 
 
 
 
 
 
Agricultural productivity
$
4,758

—

$
4,758

$
5,115

—

$
5,115

TOTAL Agricultural Productivity
$
4,758

—

$
4,758

$
5,115

—

$
5,115

 
 
 
 
 
 
 
TOTAL Net Sales
$
15,001

—

$
15,001

$
15,855

—

$
15,855

 
 
 
 
 
 
 
Gross Profit
$
8,182

$
100

$
8,282

$
8,574

—

$
8,574

 
 
 
 
 
 
 
Operating Expenses
$
4,659

$
(560
)
$
4,099

$
4,499

$
(32
)
$
4,467

Interest Expense – Net
$
328

—

$
328

$
146

—

$
146

Other Expense – Net
$
34

—

$
34

$
102

—

$
102

Net Income Attributable to Monsanto Company
$
2,314

$
444

$
2,758

$
2,740

$
7

$
2,747

 
 
 
 
 
 
 
Diluted Earnings per Share (See note 1.)
$
4.81

 
 
$
5.22

 
 
Items Affecting Comparability – EPS Impact
 
 
 
 
 
 
Restructuring Charges
—

0.70

0.70

—

—

—

Income on Discontinued Operations
—

(0.06
)
(0.06
)
—

(0.03
)
(0.03
)
Environmental and Litigation Settlements
—

0.11

0.11

—

0.04

0.04

Potential SEC Settlement
—

0.17

0.17

—

—

—

Diluted Earnings per Share (For the definition of ongoing EPS, see note 1.)
$
4.81

$
0.92

$
5.73

$
5.22

$
0.01

$
5.23

Effective Tax Rate
27
%
 
 
28
%
 
 





 
Fourth Quarter
 
2015
2014
($ in millions, except per share amounts)
As Reported
Adjustments
Ongoing
As Reported
Adjustments
Ongoing
Net Sales by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
Corn seed and traits
$
598

—

$
598

$
630

—

$
630

Soybean seed and traits
162

—

162

199

—

199

Cotton seed and traits
39

—

39

78

—

78

Vegetable seeds
257

—

257

270

—

270

All other crops seeds and traits
195

—

195

199

—

199

TOTAL Seeds and Genomics
$
1,251

—

$
1,251

$
1,376

—

$
1,376

 
 
 
 
 
 
 
Agricultural productivity
$
1,104

—

$
1,104

$
1,254

—

$
1,254

TOTAL Agricultural Productivity
$
1,104

—

$
1,104

$
1,254

—

$
1,254

 
 
 
 
 
 
 
TOTAL Net Sales
$
2,355

—

$
2,355

$
2,630

—

$
2,630

 
 
 
 
 
 
 
Gross Profit
$
996

$
100

$
1,096

$
1,233

—

$
1,233

 
 
 
 
 
 
 
Operating Expenses
$
1,556

$
(486
)
$
1,070

$
1,390

$
(32
)
$
1,358

Interest Expense – Net
$
109

—

$
109

$
75

—

$
75

Other Expense – Net
$
15

—

$
15

$
18

—

$
18

Net (Loss) Income Attributable to Monsanto Company
$
(495
)
$
407

$
(88
)
$
(156
)
$
20

$
(136
)
 
 
 
 
 
 
 
Diluted (Loss) per Share (See note 1.)
$
(1.06
)
 


$
(0.31
)
 
 
Items Affecting Comparability – EPS Impact
 

 
 
 

 
 
Restructuring Charges
—

0.72

0.72

—

—

—

Income on Discontinued Operations
—

(0.01
)
(0.01
)
—

—

—

Environmental and Litigation Settlements
—

0.06

0.06

—

0.04

0.04

Potential SEC Settlement
—

0.10

0.10

—

—

—

Diluted (Loss) Earnings per Share (For the definition of ongoing EPS, see note 1.)
$
(1.06
)
$
0.87

$
(0.19
)
$
(0.31
)
$
0.04

$
(0.27
)
Effective Tax Rate
27
%
 
 
35
%
 
 








 
 
Fourth Quarter
Fiscal Year
Comparison as a Percent of Net Sales:
2015
2014
2015
2014
 
Gross profit
42%
47%
55%
54%
 
Selling, general and administrative expenses
31%
34%
18%
17%
 
Research and development expenses
18%
18%
11%
11%
 
(Loss) income from continuing operations before income taxes
(29)%
(10)%
21%
24%
 
Net (loss) income attributable to Monsanto Company
(21)%
(6)%
15%
17%
Comment from Hugh Grant, chairman and chief executive officer for Monsanto:
"The fundamentals of our business are strong and Monsanto remains the best positioned company in the industry.
As we look to 2016, focus and discipline become increasingly important. We will continue to focus on executing on key milestones within our core seeds and traits business, and we plan to remain disciplined in our agricultural productivity strategy, drive further optimization in spend through strategic restructuring actions and accelerate our progress toward our targeted capital structure. A focus on these priorities will set the foundation for expected rapid growth, with our strong core business and several growth drivers continuing to underpin our confidence to meet our target of more than doubling fiscal year 2014 ongoing EPS by fiscal year 2019."

Results of Operations
Monsanto reported net sales of $2.4 billion for the fourth quarter of fiscal year 2015. Net sales for the full fiscal year were $15 billion. Full-year net sales results were driven by the performance of the company’s Seeds and Genomics segment and licensing agreements, which were more than offset by foreign currency headwinds, declining corn acres and declines in glyphosate pricing.

Seeds and Genomics segment net sales were $1.3 billion for the quarter. For the fiscal year, net sales for the Seeds and Genomics segment reached $10.2 billion. Agricultural Productivity segment net sales were $1.1 billion for the quarter. Net sales for the Agricultural Productivity segment for the fiscal year reached $4.8 billion.

Monsanto reported a net loss of $495 million in the fourth quarter of fiscal year 2015, compared with a reported net loss of $156 million in the same period last year. Net income attributable to Monsanto for fiscal year 2015 was approximately $2.3 billion compared to net income attributable to Monsanto of $2.7 billion in fiscal year 2014.

For the full fiscal year, ongoing operating expenses were down eight percent, inclusive of inflationary increases and new platform spend. As-reported operating expenses were up four percent for the fiscal year.

The company's fiscal year 2015 earnings per share (EPS) was $5.73 on an ongoing basis, reflecting year-over-year ongoing earnings per share growth of 10 percent or approximately 17 percent on an ongoing currency neutral basis. Fiscal year 2015 EPS on an as-reported basis was $4.81, a year-over-year eight percent decline, reflecting $0.70 for charges related to the first phase of announced restructuring actions, $0.17 relating to a potential settlement of the previously disclosed SEC investigation pending since 2011, as well as $0.11 for costs related to its Pharmacia indemnification obligations, including litigation settlements and environmental remediation at a legacy mine location. Monsanto also received a $0.06 benefit from discontinued operations.

For the fourth quarter, the company reported earnings per share loss of $0.19 on an ongoing basis and a loss per share of $1.06 on an as-reported basis. (For a reconciliation of ongoing EPS, see page 1 and note 1.)

Cash Flow
For fiscal year 2015, net cash provided by operating activities was a source of $3.1 billion, compared with a source of $3.1 billion in fiscal year 2014. Net cash required by investing activities was $1 billion in fiscal year 2015, compared with net cash required of $2.1 billion in fiscal year 2014. Net cash required by financing activities was $430 million in fiscal year 2015, compared with net cash required of $2.3 billion in fiscal year 2014. Free cash flow was a source of $2.1 billion in fiscal year 2015, compared with a source of $959 million in fiscal year 2014. The fiscal year 2015 cash flow results primarily reflected the absence of The Climate Corporation acquisition and the BioAg Alliance with Novozymes. (For a reconciliation of free cash flow, see note 1.)

In fiscal year 2015, the company used its free cash flow position to return cash to shareowners through buybacks and dividends, including the completion of the company’s $6 billion accelerated share repurchase program.





Outlook
With the anticipated continuation of several global and industry headwinds, Monsanto expects to achieve ongoing EPS of $5.10 to $5.60 in fiscal year 2016. Ongoing EPS guidance reflects in part an estimated $0.35 to $0.40 of headwinds from currency, $0.50 to $0.85 of headwinds from Agricultural Productivity pricing declines and $0.20 to $0.30 from elevated cost of goods for corn and the anticipated launch costs of Roundup Ready® Xtend soybeans. EPS on an as-reported basis is expected to be $4.44 to $5.01 in fiscal year 2016, reflecting additional charges related to the first phase of announced restructuring actions. (For a reconciliation of ongoing EPS, see page 1 and note 1.)

The company projects free cash flow in the range of $1.6 billion to $1.8 billion for fiscal year 2016. The company expects net cash provided by operating activities to be $2.7 billion to $3.1 billion, and net cash required by investing activities to be approximately $1.1 billion to $1.3 billion. (For a reconciliation of free cash flow, see note 1.)

In fiscal year 2016, Monsanto remains focused on strategic execution and operational discipline as it delivers on several key priority areas to set the foundation for strong and sustainable earnings growth over the long-term:

•
Growth from Core Seeds and Genomics Segment: The company expects mid-to-high single digit growth in gross profit, before estimated restructuring charges, from its core Seeds and Genomics segment in fiscal year 2016. This will be led by new global corn hybrid portfolio introductions, continued significant Intacta RR2 PRO™ adoption and additional licensing opportunities.

•
Strategic Management of Agriculture Productivity Segment: The company expects the Agricultural Productivity segment to deliver $900 million to $1.1 billion of gross profit as the company plans to stay consistent with its strategy to maintain a slight premium over the generics.

•
Strong Cash Generation and Balance Sheet: Monsanto also reiterated its commitment to its capital allocation strategy. Monsanto plans to enter into a new $3 billion accelerated share repurchase program under its current share repurchase authorization, as it progresses toward its targeted capital structure. The company plans to begin the new accelerated share repurchase program in the near-term and complete it sometime in the next six months.

•
Business Transformation and Strategic Spend Discipline: Monsanto also announced plans for global restructuring actions to enhance competitiveness by delivering cost improvement and to support long-term growth. The changes are designed to transform and innovate the way the company operates resulting in a more agile and focused organization prepared to continue to lead the agriculture industry. Actions, in part, include streamlining and reprioritizing some commercial, enabling and R&D efforts, including the exit of the sugarcane business.

The initial phase is expected to lead to annual savings of $275 to $300 million by the end of fiscal year 2017, at a total cost of approximately $850 to $900 million. The plans also include an expected separation of approximately 2,600 employees over the next 18-24 months. The company is developing further plans to reduce its operating spending by an additional $100 million, which would bring the total annual expected savings to potentially $400 million.

Continued progress toward these key milestones in fiscal year 2016 and a clear focus on operational discipline will set the foundation for expected rapid future growth. With this in mind, the company reiterated its confidence in delivering its five-year plan to more than double fiscal year 2014 ongoing earnings per share by 2019. This includes an expected return to more than 20 percent ongoing EPS growth starting in fiscal year 2017 as the current macro environment stabilizes. The primary drivers of growth in fiscal year 2017 and beyond are expected to include the return to mid-single digit corn germplasm mix lift globally, Intacta RR2 PRO™ soybeans penetration on the majority of the 100 million acres targeted and the Roundup Ready® Xtend Crop System well down the penetration path in cotton and soybeans across the Americas. The expected absence of several headwinds from fiscal year 2016, including currency headwinds, elevated cost of goods for corn and the Roundup Ready® Xtend soybean launch costs are expected to further enhance the growth, while generic glyphosate prices are expected to make a small, but steady recovery over time.






Seeds and Genomics Segment Detail

($ in millions)
Net Sales
Gross Profit (A)
 
Fourth Quarter
Fiscal Year
Fourth Quarter
Fiscal Year
Seeds and Genomics
2015
2014
2015
2014
2015
2014
2015
2014
Corn Seed and Traits
$
598

$
630

$
5,953

$
6,401

$
208

$
278

$
3,557

$
3,932

Soybean Seed and Traits
162

199

2,276

2,102

97

159

1,510

1,364

Cotton Seed and Traits
39

78

523

665

38

37

408

461

Vegetable Seeds
257

270

816

867

127

130

372

401

All Other Crops Seeds and Traits
195

199

675

705

134

139

430

438

TOTAL Seeds and Genomics
$
1,251

$
1,376

$
10,243

$
10,740

$
604

$
743

$
6,277

$
6,596

(A) Fiscal fourth quarter 2015 seeds and genomics gross profit includes a pretax restructuring charge totaling $100 million related to certain asset impairment charges, primarily in the corn ($65M) and vegetable ($28M) businesses, which is included in cost of goods sold.

 
($ in millions)
Earnings Before Interest & Taxes (EBIT)
 
 
 
 
Fourth Quarter
Fiscal Year
 
 
Seeds and Genomics
2015
2014
2015
2014
 
 
EBIT (For a reconciliation of EBIT, see note 1.)
$
(773
)
$
(450
)
$
2,206

$
2,607

 
 
Unusual Items Affecting EBIT:
 
 
 
 
 
 
EBIT from Restructuring Charges
(481
)
—

(481
)
—

 
 
EBIT from Potential SEC Settlement
(38
)
—

(68
)
—

 

The Seeds and Genomics segment consists of the global seeds and related traits business, biotechnology platforms and precision agriculture.

Seeds and Genomics segment sales in the fourth quarter were approximately $1.3 billion. For the fiscal year, Monsanto realized Seeds and Genomics segment sales of $10.2 billion. This was led by another significant year for its global soybean portfolio, including the record-setting adoption of Intacta RR2 PRO™ on 15 million acres in South America. Within corn, farmers continued to choose the newest classes of genetics, which resulted in a positive global germplasm mix lift in local currency for fiscal year 2015. The company also confirmed it held or grew share in every major corn market in 2015. Within cotton, despite the pullback in cotton acres, the company sold out of Bollgard II® XtendFlex™ cotton in the United States as part of its limited commercial introduction on more than 750,000 acres.

The company’s investment in its Climate and biologicals platforms also increased this fiscal year. The company enrolled more than 75 million acres in its Climate platform, with more than five million acres on its premium acre offering, two and a half times initial targets. Climate has established itself as the industry’s digital agriculture platform in 2015 with leading data science capabilities and industry partners across retail, distribution and equipment leaders.

As Monsanto expands its portfolio of integrated solutions for farmers, the Seeds and Genomics segment remains a differentiator and integral part of Monsanto's long-term growth targets.

Within soybeans, the company plans to build on the momentum of Intacta RR2 PRO™ in South America, with a target to reach 30 million acres in fiscal year 2016. Intacta RR2 PRO™ has laid the foundation for the continued acceleration of the company’s broader soybean opportunity. This includes the Roundup Ready® Xtend Crop System, with U.S. teams gearing up for the anticipated largest technology launch on more than three million acres in fiscal year 2016.





The soybean opportunity will be complemented in fiscal year 2016 by the company’s global corn business. This includes new hybrid portfolio introductions across key corn growing regions, an anticipated low single digit germplasm price mix lift in local currency and the anticipated repeat in holding or growing share in every major corn market in 2016.

Within the digital agriculture space, Monsanto expects the Climate platform to expand to more than 90 million acres in 2016 with more than 12 million of the acres using its premium offerings.

Agricultural Productivity Segment Detail

 
 ($ in millions)
Net Sales 
Gross Profit
 
 
Fourth Quarter
Fiscal Year
Fourth Quarter
Fiscal Year
 
2015
2014
2015
2014
2015
2014
2015
2014
Agricultural Productivity
$
1,104

$
1,254

$
4,758

$
5,115

$
392

$
490

$
1,905

$
1,978

TOTAL Agricultural Productivity
$
1,104

$
1,254

$
4,758

$
5,115

$
392

$
490

$
1,905

$
1,978



 
 
 ($ in millions)
Earnings Before Interest & Taxes (EBIT)
 
 
 
 
Fourth Quarter
Fiscal Year
 
 
Agricultural Productivity
2015
2014
2015
2014
 
 
EBIT (For a reconciliation of EBIT, see note 1.)
$
196

$
274

$
1,294

$
1,345

 
 
Unusual Items Affecting EBIT:
 
 
 
 
 
 
EBIT from Discontinued Operations
8

—

45

22

 
 
EBIT from Restructuring Charges
(12
)
—

(12
)
—

 
 
EBIT from Environmental and Litigation Settlements
(48
)
(32
)
(87
)
(32
)
 
 
EBIT from Potential SEC Settlement
(7
)
—

(12
)
—

 

The Agricultural Productivity segment consists of the crop protection products and lawn-and-garden herbicide products.

Segment sales for the quarter reached $1.1 billion. For the fiscal year, the segment delivered net sales of $4.8 billion.

With $274 million in a one-time licensing benefit in fiscal year 2015 and the continuing low generic glyphosate pricing levels, Monsanto expects the Agricultural Productivity segment gross profit to be in the range of $900 million to $1.1 billion in fiscal year 2016. The company plans to stay consistent with its strategy as it continues to adjust pricing to maintain a slight premium over the generics. Beyond fiscal year 2016, the continued strategic management of the Agricultural Productivity segment is expected to support the Seeds and Genomics segment and new growth opportunities.





Webcast Information
In conjunction with this announcement, Monsanto will hold a conference call at 8:30 a.m. central time (9:30 a.m. eastern time) today.  The call will focus on these results, future expectations and strategic initiatives, and may include a discussion of product performance and other matters related to the company’s business.

Presentation slides and a simultaneous audio webcast of the conference call may be accessed by visiting the company's website at www.monsanto.com/investors or http://edge.media-server.com/m/p/xh6ee5wm/lan/en. Visitors may need to download Windows Media Player™ prior to listening to the webcast. Following the live broadcast, a replay of the webcast will be available on the Monsanto website for three weeks. Monsanto publishes details on upcoming webcasts on this website in both the Presentation and Financial Reports section and the Calendar of Events section. Investors should look to this site as the source of information on future investor conference webcasts. The site includes a calendar of upcoming investor events, details on accessing scheduled webcasts and information from previous investor events.

About Monsanto Company
Monsanto is committed to bringing a broad range of solutions to help nourish our growing world. We produce seeds for fruits, vegetables and key crops - such as corn, soybeans, and cotton - that help farmers have better harvests while using water and other important resources more efficiently. We work to find sustainable solutions for soil health, help farmers use data to improve farming practices and conserve natural resources, and provide crop protection products to minimize damage from pests and disease. Through programs and partnerships, we collaborate with farmers, researchers, nonprofit organizations, universities and others to help tackle some of the world’s biggest challenges. To learn more about Monsanto, our commitments and our more than 20,000 dedicated employees, please visit: discover.monsanto.com and monsanto.com. Follow our business on Twitter® at twitter.com/MonsantoCo, on the company blog, Beyond the Rows® at monsantoblog.com or subscribe to our News Release RSS Feed.

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 and the previously-announced SEC investigation; developments related to foreign currencies and economies; successful operation of recent acquisitions; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company’s estimates related to distribution inventory levels; the recent increases in and expected higher levels of indebtedness; 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 most recent periodic report to 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.
 
Notes to editors: Monsanto and the Vine Design, Roundup Ready 2 Xtend, Intacta RR2 PRO, Bollgard II XtendFlex and Beyond the Rows are trademarks of Monsanto Company and its wholly-owned subsidiaries. All other trademarks are the property of their respective owners.

-oOo-





Monsanto Company
Selected Financial Information
(Dollars in millions, except per share amounts)
Unaudited

Statements of Consolidated Operations
Three Months Ended Aug. 31,
Twelve Months Ended Aug. 31,
 
2015
2014
2015
2014
Net Sales
$
2,355

$
2,630

$
15,001

$
15,855

Cost of Goods Sold
1,359

1,397

6,819

7,281

Gross Profit
996

1,233

8,182

8,574

Operating Expenses:
 

 

 

 

Selling, general and administrative expenses
741

905

2,686

2,774

Research and development expenses
422

485

1,580

1,725

Restructuring charges
393

—

393

—

Total Operating Expenses
1,556

1,390

4,659

4,499

(Loss) Income From Operations
(560
)
(157
)
3,523

4,075

Interest Expense
130

113

433

248

Interest Income
(21
)
(38
)
(105
)
(102
)
Other Expense, Net
15

18

34

102

(Loss) Income from Continuing Operations Before Income Taxes
(684
)
(250
)
3,161

3,827

Income Tax (Benefit) Provision
(187
)
(87
)
864

1,078

(Loss) Income from Continuing Operations Including Portion Attributable to Noncontrolling Interest
$
(497
)
$
(163
)
$
2,297

$
2,749

Discontinued Operations:
 

 

 

 

Income from Operations of Discontinued Businesses
8

—

45

22

Income Tax Provision
3

—

17

9

Income on Discontinued Operations
5

—

28

13

Net (Loss) Income
$
(492
)
$
(163
)
$
2,325

$
2,762

Less: Net Income (Loss) Attributable to Noncontrolling Interest
3

(7
)
11

22

Net (Loss) Income Attributable to Monsanto Company
$
(495
)
$
(156
)
$
2,314

$
2,740

 
 
 
 
 
EBIT (see note 1)
$
(577
)
$
(176
)
$
3,500

$
3,952

 
 
 
 
 
Basic (Loss) Earnings per Share Attributable to Monsanto Company:
 

 

 

 

(Loss) Income from Continuing Operations
$
(1.07
)
$
(0.31
)
$
4.79

$
5.25

Income on Discontinued Operations
0.01

—

0.06

0.03

Net (Loss) Income Attributable to Monsanto Company
$
(1.06
)
$
(0.31
)
$
4.85

$
5.28

 
 
 
 
 
Diluted (Loss) Earnings per Share Attributable to Monsanto Company:
 

 

 

 

(Loss) Income from Continuing Operations
$
(1.07
)
$
(0.31
)
$
4.75

$
5.19

Income on Discontinued Operations
0.01

—

0.06

0.03

Net (Loss) Income Attributable to Monsanto Company
$
(1.06
)
$
(0.31
)
$
4.81

$
5.22

 
 
 
 
 
Weighted Average Shares Outstanding:
 

 

 

 

Basic
468.1

505.2

476.9

519.3

Diluted
468.1

505.2

481.4

524.9








Monsanto Company
Selected Financial Information
(Dollars in millions, except per share amounts)
Unaudited

Condensed Statements of Consolidated Financial Position
As of Aug. 31,
 
2015
2014
Assets
 
 
Current Assets:
 
 
Cash and cash equivalents (variable interest entities restricted - 2015: $112 and 2014: $118)
$
3,701

$
2,367

Short-term investments
47

40

Trade receivables, net (variable interest entities restricted - 2015: $0 and 2014: $39)
1,636

2,014

Miscellaneous receivables
803

817

Deferred tax assets
743

635

Inventory, net
3,496

3,597

Other current assets
199

205

Total Current Assets
10,625

9,675

Property, Plant and Equipment, Net (variable interest entity restricted - 2015: $2 and 2014: $2)
4,973

5,082

Goodwill
4,061

4,319

Other Intangible Assets, Net
1,332

1,554

Noncurrent Deferred Tax Assets
277

450

Long-Term Receivables, Net
42

92

Other Assets
610

746

Total Assets
$
21,920

$
21,918

Liabilities and Shareowners’ Equity
 

 

Current Liabilities:
 

 

Short-term debt, including current portion of long-term debt (variable interest entity restricted - 2015: $0 and 2014: $136)
615

233

Accounts payable (variable interest entity restricted - 2015: $6 and 2014: $25)
836

1,111

Income taxes payable
234

99

Accrued compensation and benefits (variable interest entity restricted - 2015: $2 and 2014: $1)
304

500

Accrued marketing programs
1,492

1,394

Deferred revenues
370

438

Grower production accruals
39

54

Dividends payable
254

239

Customer payable
72

82

Restructuring reserves
170

—

Miscellaneous short-term accruals (variable interest entity restricted - 2015: $7 and 2014: $0)
791

962

Total Current Liabilities
5,177

5,112

Long-Term Debt (variable interest entity restricted - 2015: $96 and 2014: $0)
8,429

7,465

Postretirement Liabilities
336

345

Long-Term Deferred Revenue
47

47

Noncurrent Deferred Tax Liabilities
340

509

Long-Term Portion of Environmental and Litigation Reserves
194

184

Long-Term Restructuring Reserve
47

—

Other Liabilities
345

342

Monsanto Shareowners’ Equity
6,990

7,875

Noncontrolling Interest
15

39

Total Shareowners’ Equity
7,005

7,914

Total Liabilities and Shareowners’ Equity
$
21,920

$
21,918

Debt to Capital Ratio:
56
%
49
%




Monsanto Company
Selected Financial Information
(Dollars in millions, except per share amounts)
Unaudited
Statements of Consolidated Cash Flows
Twelve Months Ended Aug. 31,
 
2015
2014
Operating Activities:
 
 
Net Income
$
2,325

$
2,762

Adjustments to reconcile cash provided by operating activities:
 

 

Items that did not require (provide) cash:
 

 

Depreciation and amortization
716

691

Bad-debt expense
45

41

Stock-based compensation expense
111

120

Excess tax benefits from stock-based compensation
(44
)
(72
)
Deferred income taxes
(349
)
12

Restructuring impairments
276

—

Equity affiliate loss, net
7

4

Net gain on sales of a business or other assets
(2
)
(11
)
Other items, net
118

139

Changes in assets and liabilities that provided (required) cash, net of acquisitions:
 
 

Trade receivables
68

(172
)
Inventory, net
(425
)
(650
)
Deferred revenues
32

(163
)
Accounts payable and other accrued liabilities
235

709

Restructuring reserves
217

—

Pension contributions
(27
)
(64
)
Other items, net
(195
)
(292
)
Net Cash Provided by Operating Activities
3,108

3,054

Cash Flows Provided (Required) by Investing Activities:
 

 

Purchases of short-term investments
(63
)
(145
)
Maturities of short-term investments
56

359

Capital expenditures
(967
)
(1,005
)
Acquisition of businesses, net of cash acquired
(8
)
(922
)
Purchases of long-term debt and equity securities
(30
)
(12
)
Technology and other investments
(48
)
(403
)
Other investments and property disposal proceeds
41

33

Net Cash Required by Investing Activities
(1,019
)
(2,095
)
Cash Flows Provided (Required) by Financing Activities:
 

 

Net change in financing with less than 90-day maturities
45

38

Short-term debt proceeds
57

50

Short-term debt reductions
(36
)
(24
)
Long-term debt proceeds
1,279

5,479

Long-term debt reductions
(107
)
(7
)
Payments on other financing
—

(39
)
Debt issuance costs
(12
)
(53
)
Treasury stock purchases
(835
)
(7,082
)
Stock option exercises
137

248

Excess tax benefits from stock-based compensation
44

72

Tax withholding on restricted stock and restricted stock units
(36
)
(9
)
Dividend payments
(938
)
(904
)
Payments to noncontrolling interests
(28
)
(28
)
Net Cash Required by Financing Activities
(430
)
(2,259
)
Effect of Exchange Rate Changes on Cash and Cash Equivalents
(325
)
(1
)
Net Increase (Decrease) in Cash and Cash Equivalents
1,334

(1,301
)
Cash and Cash Equivalents at Beginning of Period
2,367

3,668

Cash and Cash Equivalents at End of Period
$
3,701

$
2,367







Monsanto Company
Selected Financial Information
(Dollars in millions)
Unaudited

1.
The presentations of EBIT, ongoing EPS, ongoing gross profit, ongoing operating expenses, ongoing net (loss) income attributable to Monsanto Company, ongoing EPS growth, ongoing EPS growth on a currency neutral basis, and free cash flow are not intended to replace gross profit, operating expenses, net (loss) income attributable to Monsanto Company, as-reported EPS, 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 presentation of non-GAAP financial measures is intended to supplement investor's understanding of our operating performance. Furthermore, these non-GAAP financial measures may not be comparable to similar measures used by other companies. The following tables reconcile the non-GAAP financial metrics 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) attributable to Monsanto Company 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) attributable to Monsanto Company.

(in millions)
Three Months Ended Aug. 31,
Twelve Months Ended Aug. 31,
 
2015
2014
2015
2014
EBIT – Seeds and Genomics Segment
$
(773
)
$
(450
)
$
2,206

$
2,607

EBIT – Agricultural Productivity Segment
196

274

1,294

1,345

EBIT– Total
(577
)
(176
)
3,500

3,952

Interest Expense, Net
109

75

328

146

Income Tax Provision (Benefit)(A)
(191
)
(95
)
858

1,066

Net (Loss) Income Attributable to Monsanto Company
$
(495
)
$
(156
)
$
2,314

$
2,740

(A) Includes the income tax provision from continuing operations, the income tax benefit (provision) on noncontrolling interest, and the income tax on discontinued operations.
 
Reconciliation of EPS to Ongoing EPS:  Ongoing EPS is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations.

 
Fiscal Year 2016
Three Months Ended Aug. 31,
Twelve Months Ended Aug. 31,
 
Guidance
2015
2014
2015
2014
Diluted Earnings (Loss) per Share
$4.44-$5.01
$
(1.06
)
$
(0.31
)
$
4.81

$
5.22

Restructuring Charges
0.59-0.66
0.72

—

0.70

—

Income on Discontinued Operations
—
(0.01
)
—

(0.06
)
(0.03
)
Environmental and Litigation Settlements
—
0.06

0.04

0.11

0.04

Potential SEC Settlement
—
0.10

—

0.17

—

Diluted Earnings (Loss) per Share from Ongoing Business
$5.10-$5.60
$
(0.19
)
$
(0.27
)
$
5.73

$
5.23


Reconciliation of Ongoing Gross Profit to Gross Profit: Ongoing gross profit is calculated excluding certain pre-tax items which Monsanto does not consider part of ongoing operations.

(in millions)
Three Months Ended Aug. 31,
Twelve Months Ended Aug. 31,
 
2015
2014
2015
2014
Gross Profit - Seeds and Genomics Segment
$
604

$
743

$
6,277

$
6,596

Gross Profit - Agricultural Productivity Segment
392

490

1,905

1,978

Gross Profit - Total
$
996

$
1,233

$
8,182

$
8,574

Restructuring Charges
100

—

100

—

Ongoing Gross Profit
$
1,096

1,233

8,282

8,574









Reconciliation of Ongoing Operating Expenses to Operating Expenses: Ongoing operating expenses is calculated excluding certain pre-tax items which Monsanto does not consider part of ongoing operations.

(in millions)
Three Months Ended Aug. 31,
Twelve Months Ended Aug. 31,
 
2015
2014
2015
2014
Ongoing Operating Expenses
$
1,070

$
1,358

$
4,099

$
4,467

Environmental and Litigation Settlements
48

32

87

32

Restructuring Charges
393

—

393

—

Potential SEC Settlement
45

—

80

—

Operating Expenses
$
1,556

$
1,390

$
4,659

$
4,499


Reconciliation of Ongoing Net (Loss) Income Attributable to Monsanto Company to Net Income Attributable to Monsanto Company: Ongoing net (loss) income attributable to Monsanto Company is defined as net (loss) income attributable to Monsanto Company excluding the cumulative after-tax impact of certain items we do not consider part of ongoing operations.

(in millions)
Three Months Ended Aug. 31,
Twelve Months Ended Aug. 31,
 
2015
2014
2015
2014
Ongoing Net (Loss) Income Attributable to Monsanto Company
$
(88
)
$
(136
)
$
2,758

$
2,747

Restructuring Charges
493

—

493

—

Environmental and Litigation Settlements
48

32

87

32

Potential SEC Settlement
45

—

80

—

Income Tax Benefit
(174
)
(12
)
(188
)
(12
)
Income on Discontinued Operations, Net of Tax
(5
)
—

(28
)
(13
)
Net (Loss) Income Attributable to Monsanto Company
$
(495
)
$
(156
)
$
2,314

$
2,740


Reconciliation of EPS growth to Ongoing EPS growth and to Ongoing EPS growth on a currency neutral basis: Ongoing EPS growth is calculated excluding certain after-tax items which Monsanto does not consider part of ongoing operations. Ongoing EPS growth on a currency neutral basis is calculated by dividing or multiplying, as appropriate, our current period actual U.S. dollar operating results by the current period actual exchange rates (that include the impact of current period currency hedging activities), to derive our current period local currency operating results. We then multiply or divide, as appropriate, the derived current period local currency operating results by the foreign currency exchange rates (that also include the impact of the comparable prior period currency hedging activities) used to translate the Company's financial statements in the comparable prior year period to determine what the current period U.S. dollar operating results would have been if the foreign currency exchange rates had not changed from the comparable prior year period. The currency neutral estimates for ongoing earnings per share were calculated using the estimated effective tax rate for the local jurisdictions and the related currency changes.
 
(% change)
Twelve Months Ended Aug. 31,
 
2015 vs. 2014
Diluted Earnings (Loss) per Share
(8
)%
 
 
Restructuring Charges(A)
(13
)%
Environmental and Litigation Settlements(A)
(2
)%
Potential SEC Settlement(A)
(3
)%
Income on Discontinued Operations(A)
1
 %
Total Adjustments to Ongoing(B)
(17
)%
 
 
Diluted Earnings (Loss) per Share from Ongoing Business(B)
10
 %
Currency Impact(A)
(7
)%
Currency Neutral Diluted Earnings per Share from Ongoing Business
17
 %
(A) Adjustments to diluted EPS are shown net of income tax benefit.
(B) Amounts do not add due to rounding.






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 2016 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 2016
Twelve Months Ended Aug. 31,
 
 
 
Guidance
2015
2014
Net Cash Provided by Operating Activities
$
2,700-3,100
$
3,108

$
3,054

Net Cash Required by Investing Activities
 
(1,100)-(1,300)
(1,019
)
(2,095
)
Free Cash Flow
$
1,600-1,800
2,089

959

Net Cash Required by Financing Activities
 
N/A
(430
)
(2,259
)
Effect of Exchange Rate Changes on Cash and Cash Equivalents
 
N/A
(325
)
(1
)
Net Increase (Decrease) in Cash and Cash Equivalents
 
N/A
1,334

(1,301
)
Cash and Cash Equivalents at Beginning of Period
 
N/A
2,367

3,668

Cash and Cash Equivalents at End of Period
 
N/A
$
3,701

$
2,367






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