monsanto 02-17-05

1

EMERGENTACQUISITIONINVESTOR CONFERENCE CALL

Feb. 17, 2005

2

Forward-Looking Statements

Certain statements contained in this presentation, such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, currency impact, business and financial plans and other non-historical facts are "forward-looking statements." 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: the company's exposure to various contingencies, including those related to Solutia Inc., litigation, intellectual property, regulatory compliance (including seed quality), environmental contamination and antitrust; successful completion and operation of recent and proposed acquisitions; fluctuations in exchange rates and other developments related to foreign currencies and economies; increased generic and branded competition for the company's Roundup herbicide; the accuracy of the company’s estimates and projections, for example, those with respect to product returns and grower use of our products and related distribution inventory levels; the effect of weather conditions and commodity markets on the agriculture business; the success of the company’s research and development activities and the speed with which regulatory authorizations and product launches may be achieved; domestic and foreign social, legal and political developments, especially those relating to agricultural products developed through biotechnology; the company’s ability to successfully market new and existing products in new and existing domestic and international markets; the company’s ability to obtain payment for the products that it sells; the company's ability to achieve and maintain protection for its intellectual property; the effects of the company's accounting policies and changes in generally accepted accounting principles; the company's ability to fund its short-term financing needs; and other risks and factors detailed in the company's filings with the U.S. Securities and Exchange Commission. 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 revise or update any forward-looking statements or any of the factors that may affect actual results, whether as a result of new information, future events or otherwise.

3

Non-GAAP Financial Information

This presentation may use the non-GAAP financial measures of “free cash flow,” ongoing earnings per share (EPS), and Return on Capital (ROC). We define free cash flow as the total of cash flows from operating activities and cash flows from investing activities. A non-GAAP EPS financial measure, which we refer to as EPS on an ongoing basis, may exclude the impact of restructuring charges, charges associated with the settlement of litigation, gains and losses on the sale of assets, and certain other items. The specific items that are excluded from, and result in, our non-GAAP EPS financial measure are clearly identified as such in this presentation. ROC means net income 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 at the end of this presentation. The presentation of free cash flow, ongoing EPS and ROC is intended to supplement investors’ understanding of our operating performance. These non-GAAP financial measures may not be comparable to similar measures used by other companies. Furthermore, 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. 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. Reference to Emergent’s fiscal years refer to the 12-month period ending September 30.

Trademarks

Roundup, Roundup Ready, Roundup Ready Flex, Bollgard and Bollgard II are trademarks owned by Monsanto Company and its wholly-owned subsidiaries.

4

OVERVIEW

Monsanto Has Established Strategic Platforms inHigh-Value Crops

MOLECULAR AND CONVENTIONAL BREEDING

BIOTECHNOLOGY

CORN SOYBEANS COTTON VEGETABLELARGE-ACRE CROPS SMALL-ACRE CROPS

Branded Licensed Branded Licensed Branded Licensed BrandedASI

DEKALBASGROW

HOLDEN’S/ CORN

STATESAMERICAN SEEDS, INC

SEMINIS* ROYAL SLUIS*PETOSEED* BRUINSMA* ASGROW*

ASGROWDEKALB

HOLDEN’S/ CORN

STATES

EMERGENT*

COTTON STATES

R&D PLATFORMS

SEED & TRAIT CROP PLATFORMS

*Pending

5

12%

24%

52%

12%

D&PLEMERGENTFIBERMAXOTHERS

U.S. COTTON SEED MARKET: $279M

8%8%6%

23%21%

24%

10%

NUZIWEEDU

EMERGENT

ANKUR

MAHYCO

RASI

OTHERS

PUBLIC HYBRIDS

INDIAN HYBRID SEED MARKET: $120M

1 USDA and Emergent Genetics estimates 2 Industry and Monsanto estimates

Emergent Genetics Is Third-Largest Player in Key Cotton Markets

OVERVIEW

UNITED STATES1

INDIA2

INDIAN BRANDS

U.S. BRANDS

6

Acquisition of Emergent Accelerates Growth in High-Value Cotton Seeds and Traits Market

$47M$39M$34MGROSS PROFIT

47%48%47%GROSS PROFIT AS % OF SALES

$100M$82M$72MNET SALES

2006F2005F2004KEY FINANCIAL DATA

EMERGENT ACQUISITION

Definitive agreement to acquire Emergent for $300 million, plus working capital adjustmentMultiple of 15-16 times EBITDA for third-largest U.S. and Indian cotton seed businesses

OVERVIEW

Key financial data based on Emergent actual performance and forecasts for its fiscal year ending Sept. 30

7

Emergent Repositions Monsanto with a Cotton Seed Platform and Provides Significant Synergies

OVERVIEW

EXCELLENTFIT

SIGNIFICANTSYNERGIES

ACCRETIVE

STRATEGIC

Access to quality germplasm and seed market share Accelerates penetration of biotech traits and Cotton States platformGrows reach of cotton trait business in India

20 percent reduction in SG&A costs, roughly $5-$6 million annually, or $40 million on an NPV basis over four yearsSeed market share growth of 1 point annually over next four years, plus increased trait penetrationNeutral to earnings in 2005, accretive thereafterDelivers additional free cash flow starting in 2006

Adds to leadership position in global seeds and traitsContinues trend of greater contribution to profitability from seeds and traits segment

8

Emergent and Cotton States Mirror Monsanto’s Market Approach for Corn

DEKALB ASGROW

MARKET LEADERSHIP

HOLDEN’S

EMERGENT

COTTON STATES

•Access to quality germplasm•Brand recognition in important markets

•Seed and trait share growth

•Growth through seed breeding enhancements

•Trait value capture through enhanced marketing channels

•Rapid penetration of future technology advances

BRANDED PLATFORM

LICENSING PLATFORM

9

Emergent Has Held U.S. Market Share Over Last Six Years; Clear Opportunity to Drive Growth

U.S. COTTON SEED MARKET SHARE

0%

20%

40%

60%

80%

100%

1999 2000 2001 2002 2003 2004

MARKET LEADERSHIP

DELTA & PINE LANDOTHERSFIBERMAX

PHYTOGENEMERGENT

Source: USDA, based on planted acres

10

Molecular Breeding Used To Create New Source of Seed for U.S. Cotton Farmers

Cotton States

Germplasm licensed from third parties and developed through molecular breeding by Monsanto

Seed production under way for commercialization in 2006

Cotton States launching exclusively on a second-generation trait platform

DISCOVERY PHASE IProof of Concept

PHASE IIEarly Development

PHASE IIIAdv. Development

PHASE IVPre-Launch

LAUNCH

MARKET LEADERSHIP - BIOTECHNOLOGY

CREATING VALUE

KEY MARKET AREAS

TARGET MARKET

PERCENT PENETRATED

U.S.

7M-8M

0%

• Rapid and broad introduction of traits and future innovations

• Licensing fee reflects value of top quality germplasm, separate from value of trait

• Cotton seed currently sells for average of $20 per acre

2004 COTTON STATES FIELD TRIALSLB

S L

INT

/AC

RE

1,200

1,300

1,400

1,500

1,600

COTTON STATES VARIETIES

COMPETITIVE VARIETIES

11

Cotton Market Already Has Shifted to Stacked Offering; Emergent Can Accelerate that Trend in its Brands

U.S. MONSANTO COTTON TRAIT ACRES

0

3

6

9

12

1998 1999 2000 2001 2002 2003 2004 2005F

AC

RE

S (

MIL

LIO

NS

)

BOLLGARD & BOLLGARD II

ROUNDUP READY STACKED

MARKET LEADERSHIP -- BIOTECHNOLOGY

12

KEY MARKET ACRES

AVAILABLE MARKET

PERCENT PENETRATED

DISCOVERY PHASE IProof of Concept

PHASE IIEarly Development

PHASE IIIAdv. Development

PHASE IVPre-Launch

LAUNCH

Roundup ReadyFlex Cotton

Expanded window of over-the-top application for more “flexible” weed control

Increased grower convenience

Reduced need for specialized spray equipment

Eight cotton seed companies currently breeding trait into varieties

Added Flexibility Means Better Weed Control, Greater Value in Cotton

U.S. AUSTRALIA

10-15M 0.5-0.8M

0% 0%

• Additional value for the Roundup Ready Flex trait while offering most growers a similar or lower total system cost

• Roundup ReadyFlex Cotton will be available with Bollgard II, which also should boost Bollgard IIadoption

MARKET LEADERSHIP - BIOTECHNOLOGY

CREATING VALUE

13

OVERVIEW

Monsanto Has Established Strategic Platforms inHigh-Value Crops


BIOTECHNOLOGY



DEKALBASGROW

HOLDEN’S/ CORN


SEMINIS*ROYAL SLUIS*PETOSEED* BRUINSMA*ASGROW*

ASGROWDEKALB

HOLDEN’S/ CORN

STATES

EMERGENT*

COTTON STATES

R&D PLATFORMS


*Pending

14

$0

$200

$400

$600

$800

$1,000

$1,200

2003 2004 2005F 2006F 2007F

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

2003 2004 2005F 2006F 2007F

FINANCIAL GROWTH

Growth of Monsanto’s Ongoing Business Is Accelerating, Generating Significant Free Cash Flow

MONSANTO ONGOING EPS BEFORE ACQUISITIONS

MONSANTO FREE CASH FLOW BEFORE ACQUISITIONS

$ M

ILLI

ON

S

15% growth

15% growth

15

$0

$10

$20

$30

$40

$50

2001 2002 2003 2004 2005F 2006F

FINANCIAL GROWTH

Emergent’s Gross Profit Growth Rate Parallels That of Monsanto’s Seeds and Traits

GROSS PROFIT

15% CAGR

Source: Emergent estimate; Monsanto estimate

$0

$500

$1,000

$1,500

$2,000

2001 2002 2003 2004 2005F 2006F

EMERGENTMONSANTO

SEEDS AND TRAITS

$ M

ILLI

ON

S

$ M

I LLI

ON

S

18% CAGR

16

FINANCIAL GROWTH

Acquisitions of Seminis and Emergent Add to EPS and Free Cash Flow Forecasts

MONSANTO PRO FORMA EPS FORECAST

MONSANTO PRO FORMA FREE CASH FLOW FORECAST

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2003 2004 2005F 2006F 2007F

$0

$200

$400

$600

$800

$1,000

$1,200

2003 2004 2005 2006F 2007F

$ M

ILLI

ON

S

17% growth

20%-25% growth

17

Emergent Acquisition Creates Significant Synergies for the Combined Business

FINANCIAL GROWTH

U.S. SEED & TRAIT VALUE

GROWTH

OPERATIONAL SYNERGIES

TECHNOLOGY ENHANCEMENTS

U.S. trait long-term value captureU.S. trait value-based pricingU.S. share gains in seed and traits

Sales force integrationBack office integration

Increased research efforts and elimination of redundanciesRapid demonstration of trait value in marketplace

18

($1,000)

($500)

$0

$500

$1,000Free Cash

$800M

$(600M)

$(900M)

$MIL

LIO

NS

FINANCIAL GROWTH

Free Cash Flow Guidance Increases But Offset by Funding for Acquisitions

Seminis and Emergent acquisitions to be funded with current cash balances and short-term borrowings

Free cash guidance from ongoing business before acquisitions in 2005 increased to $800M; $(1.7B) cash use for acquisitions

Current $500M share repurchase program will continue; scheduled completion In July 2006

Dividends will continue to be considered to return additional value to shareowners

Seminis

Emergent

19

MARKET LEADERSHIP

Monsanto Has Established Strategic Platforms in High-Value Crops


BIOTECHNOLOGY



DEKALBASGROW

HOLDEN’S/ CORN


SEMINIS* ROYAL SLUIS*PETOSEED* BRUINSMA*ASGROW*

ASGROWDEKALB

HOLDEN’S/ CORN

STATES

EMERGENT*

COTTON STATES

R&D PLATFORMS


*Pending

20

Reconciliation of Non-GAAP Financial Measures

Reconciliation of Non-GAAP EPS

Reconciliation of Free Cash Flow

$ MillionsFiscal Year 2005

Target12 Months Ended

Aug. 31, 200412 Months Ended

Aug. 31, 2003

Net Cash Provided (Required) by Operations $1,200 $1,261 $1,128

Net Cash Provided (Required) by Investing Activities $(2,100) $(262)

Free Cash Flow $(900) $999 $646

Net Cash Provided (Required) by Financing Activities N/A $(243) $(502)

Net Increase (Decrease) in Cash and Cash Equivalents N/A $756 $144

Fiscal Year 2006 Target

$1,100

$(300)

$700-$800

N/A

N/A

$(482)

12 Months Ended Aug. 31, 2005


Net Income (Loss)

$0.71-$0.93

$2.13 - $2.30

Estimated Purchase Accounting Adjustments $0.78 - $0.85Tax Benefit on Loss from Sale of European Wheat andBarley Business

Net Income (Loss) from Ongoing Business $1.85 - $2.00 $2.13 - $2.30

$ per share

Solutia-Related Charge $0.68


$0.99

$0.36

--

$1.61

--

Restructuring Charges -- Net --$0.022004 Discontinued Operations and Related

Restructurings-- Net

--

--

--

--

$0.24Goodwill Impairment Charge for Global Wheat Business

-- --

-- --

--

--

$(0.39)

Fiscal Year 2007 Target

$1,000-$1,100

$(300)

$800

N/A

N/A


$2.45 - $2.65

----

--

--

--

--

$2.45 - $2.65


Cumulative Effect of Change in Accounting PrincipleIncome (Loss) Before Cumulative Effect of Accounting Change

-- -- -- --$0.99

$0.71-$0.93

$2.13 - $2.30 $2.45 - $2.65

$0.26$0.05$0.31$0.10$0.05

--

--

--

$0.96

$1.42

Economy & Finance

monsanto 02-17-05