ST. LOUIS (May 10, 2004) - Monsanto announced today it is realigning
research and development investments to accelerate the development of new
and improved traits in corn, cotton, and oilseeds. As part of this
realignment, the company is deferring all further efforts to introduce
Roundup Ready wheat, until such time that other wheat biotechnology traits
are introduced. This decision was reached after a comprehensive review of
Monsanto's research investment portfolio and extensive consultation with
customers in the wheat industry.
"As a result of our portfolio review and dialogue with wheat industry
leaders, we recognize the business opportunities with Roundup Ready spring
wheat are less attractive relative to Monsanto's other commercial
priorities," said Carl Casale, executive vice president of Monsanto.
"Acreage planted in the spring wheat market in the United States and
Canada has declined nearly 25 percent since 1997, and even more in the
higher cost weed control target market for this product. This technology
adds value for only a segment of spring wheat growers, resulting in a lack
of widespread wheat industry alignment, unlike the alignment we see in
other crops where biotechnology is broadly applied. These factors
underscore the difficulty of bringing new technologies to the wheat market
at this time.
"We will continue to monitor the wheat industry's desire for crop
improvements, via breeding and biotechnology, to determine if and when it
might be practical to move forward with a biotech wheat product," Casale
said. "This decision allows us to defer commercial development of Roundup
Ready wheat, in order to align with the potential commercialization of
other biotechnology traits in wheat, estimated to be four to eight years
in the future."
Shifting resources away from Roundup Ready wheat enables Monsanto to
increase its research emphasis on stress tolerance and several improved
health profile vegetable oil traits. Overall, Monsanto's biotechnology
research and development focuses on providing new solutions in the areas
of yield improvement and stress tolerance, agronomic pest resistance
traits, and food and feed improvement traits.
"We have pipeline products like Roundup Ready Flex for cotton and an
improved soybean oil for food manufacturers from our conventional breeding
program that are moving close to commercialization," said Casale. "We also
saw good results in our field trials for drought tolerant corn in 2003,
and we will be expanding our field trials in 2004.
"Wheat growers are already experiencing the benefits of biotech, but in
other crops such as corn, soy, and canola, which are increasingly being
grown on acreage formerly devoted to wheat," according to Casale. "Growers
will continue to benefit as we bring traits such as cold stress and
drought tolerance to the marketplace."
Monsanto began the technical development stage of Roundup Ready wheat in
1997. Six years of field testing by Monsanto scientists and academic
researchers demonstrate that Roundup Ready wheat performs exceptionally
well under the most difficult production environments for spring-planted
wheat and offers the potential to increase yields by 5 percent to 15 percent.
Monsanto will discontinue breeding and field level research of Roundup
Ready wheat. The company will be working with regulators around the world
to take appropriate next steps with regard to regulatory submissions.
Monsanto's investment in wheat in fiscal year 2004 has been less than $5
million, or less than one percent of the company's $500 million research
and development budget. Funds budgeted for wheat will be redeployed to
other research and development efforts. The company announced on May 4,
2004, that it is increasing its fiscal year 2004 earnings per share (EPS)
guidance, now expected to be in the range of $1.55 on an ongoing basis for
the 2004 fiscal year. Even with this decision, the company is maintaining
its reported and ongoing earnings per share guidance for fiscal year 2004,
and its projected 10 percent compounded annual growth rate for earnings
per share on an ongoing basis for 2005 and 2006.
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: www.monsanto.com.
Cautionary Statements Regarding Forward-Looking Information:
Certain statements contained in this release, 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; 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 the company's 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 continue to manage its
costs; 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; general economic and business conditions;
political and economic conditions due to threat of future terrorist
activity and related military action; 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 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.
Notes to editors: Roundup Ready is a trademark owned by Monsanto Company
and its wholly owned subsidiaries.
Reconciliation of Non-GAAP Financial Measure
This release uses the non-GAAP financial measure of earnings per share
(EPS) excluding the effect of certain items. A non-GAAP EPS financial
measure (which the company sometimes refers to as EPS from ongoing
business) 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, the company's non-GAAP EPS financial measure are
clearly identified as such in this release. The disclosure of EPS
excluding the effect of certain items is intended to supplement investors'
understanding of the company's operating performance. This non-GAAP
financial measure may not be comparable to similar measures used by other
companies. Furthermore, this non-GAAP financial measure is 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
measure used in this release is reconciled to the most directly comparable
financial measure calculated and presented in accordance with GAAP below.
Reconciliation of Non-GAAP EPS
Fiscal Year 2004 Target
Net Income $0.70
2004 Restructuring Charges - Net $0.46
Estimated 2004 Discontinued Operations and
Related Restructuring Charges - Net $0.13
Goodwill Impairment Charge for Global Wheat Business $0.26
Net Income from Ongoing Business $1.55Monsanto:
