Monsanto Company $ 1,109 $ 2,109 $ 2,024 (47%) Diluted Earnings Per Share (2) $ 2.01 $ 3.80 $ 3.62 (47%)
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800 North Lindbergh Boulevard, St. Louis, Missouri 63167, U.S.A. www.monsanto.com MAG10012 FACES OF FARMING MONSANTO CO M P ANY 2010 2010 A NN 2010 Annual Report UAL REPO UAL R T GROWING COMMUNITIES Faces of Farming any faces of farming around the world shape agriculture and rural M communities. America’s Farmers Grow Communities, sponsored by the Monsanto Fund, gives farmers across the United States an opportunity to give back to their community. And it’s an opportunity for Monsanto to show its appreciation for farmers — and their communities. Everlyn Bryant, of Pine Bluff, Arkansas, farms 2,500 acres of soybeans and wheat. Bryant was chosen as her county’s America’s Farmers Grow Communities winner, and she designated the $2,500 donation to her local food bank. “Share-a-Prayer is a charity I’ve donated to in the past, and I knew they were making a positive impact in my community,” said Bryant. “Especially in our current economic environment, the food bank was really stretching the dollar and I knew the money would really help them.” Financial Highlights (in millions, except per share amounts) % Change Years ended Aug. 31 2010 2009 2008 2010 vs. 2009 Operating Results Net Sales $10,502 $11,724 $11,365 (10%) EBIT (1) $ 1,572 $ 3,007 $ 2,891 (48%) Net Income Attributable to Monsanto Company $ 1,109 $ 2,109 $ 2,024 (47%) Diluted Earnings per Share (2) $ 2.01 $ 3.80 $ 3.62 (47%) Other Selected Data Free Cash Flow (3) $ 564 $ 1,523 $ 795 (63%) Capital Expenditures $ 755 $ 916 $ 918 (18%) Depreciation and Amortization $ 602 $ 548 $ 573 10% Diluted Shares Outstanding(2) 550.8 555.6 559.7 NM Net Sales Earnings per Share (2) Free Cash Flow (3) (in billions of dollars, As Reported Ongoing (in billions of dollars, for years ended Aug. 31) (in dollars, for years ended Aug. 31) for years ended Aug. 31) 11.37 11.72 11.37 11.72 11.37 11.72 4.41 4.41 4.41 1.52 1.52 1.52 10.50 10.50 10.50 3.64 3.64 3.64 3.80 3.80 3.80 3.62 3.62 3.62 2.41 2.41 2.41 0.80 0.80 0.80 0.56 0.56 0.56 2.01 2.01 2.01 08 09 10 08 09 10 08 09 0810 09 10 08 09 10 08 09 0810 09 10 08 09 10 08 09 10 See page 10 for footnotes 1-3. NM = Not meaningful CONTENTS 1 Letter to Shareowners 7 Technology Pipeline 8 Board of Directors 9 Monsanto Executives and Executive Officers 11 Financial Section INSIDE BACK COVER Shareowner Information Letter to Shareowners ome of my most rewarding days are those I spend with our farmer Scustomers. Of course, it’s enjoyable to meet the people and see the faces we serve, but it’s more than that. No one knows more about agriculture. They are both customers and trusted advisers, and in a year that changed our business forever, they’ve helped us reflect on what agriculture looks like. There are many faces that shape our industry, and no matter where you are in the world, they all play a part in helping meet global demand in a sustainable way. The farm family. The salesman. The scientist. The agronomist. And as I look back on 2010 and think about those faces, I realize it’s been an excellent year for agriculture. A year of challenge and change for our business, no doubt, but an excellent year for agriculture. Farmers around the globe chose next-generation technologies and employed new agronomic practices — and they saw yield Cover photo and above: The improvements as a result. Our scientists continued to innovate, Kevin DeRocher family farms in western Iowa. discovering promising leads to populate our robust pipeline. And Upper right: Ray Sneed the world continued to grow, and with it grew demand, furthering farms in western Tennessee with his family. the need for sustainable agriculture. That’s our vision at Monsanto — to help produce more, conserve more and improve lives. As I think back on this year with that vision in mind, I feel very good about our business. Monsanto Company — 2010 Annual Report 1 A Year of Great Change The 2010 fiscal year brought with it a good deal of change for our business. We realigned our company in light of increased competition in the crop protection market. We overhauled our Roundup and other glyphosate- based herbicides business — refining pricing and our market approach in a compressed timeframe — and identified new opportunities for weed management moving forward. We are now focused, as a seeds-and-traits company, with our crop protection business serving in its rightful supportive role. Today this evolution is complete, but it has not been easy. We had to make some very difficult decisions along the way, which included resetting our financial goals and adjusting the size of our workforce. We remain optimistic about our near- and long-term prospects, not only for our business, but also within agriculture’s ability to meet the needs of a growing global population. That optimism Hugh Grant is built on a solid foundation we set in 2010, the year in which we launched Chairman, President and Genuity SmartStax corn on 3 million acres and farmers planted 6 million Chief Executive Officer acres of Genuity Roundup Ready 2 Yield soybeans in the product’s second year in the marketplace. Our cotton business is strong, and this year we saw an increase in planted U.S. acres. Our vegetable business continues to grow and create innovative products for consumers like the EverMild onion and Beneforté broccoli. This year we also saw the world continue to open to biotechnology. We secured approvals for four products in Brazil and six key product imports in the European Union. We also saw approvals for field trials in five countries around the world: corn in Mexico, India, Vietnam and Uganda, and cotton in Pakistan. These accomplishments lay the foundation for the mid-teens earnings growth we expect going forward. SERVING OUR CUSTOMERS Making Friends on the Farm: All in a Day’s Work for District Sales Manager eremy Ritchey (pictured far left), to see my customers on their farm J Channel district sales manager means I’ll jump in the tractor and help (DSM), takes pride in the hands-on them out,” Ritchey said. approach to service and quality Having grown up on a farm, Ritchey products he offers customers. began his work with Channel for the Small sales districts and a direct same reasons customers choose the relationship with farmers set Channel brand: service and quality. apart from other seed choices farmers “Four years ago I decided to work can make, and DSMs like Ritchey for Channel because I knew I would enjoy those relationships. plant our products on my farm,” Ritchey “What’s great about my job is said. “And now that Channel is a part the opportunity to be more of a friend of Monsanto, we’ve opened up access than a salesman. Many times, a trip to even better traits and germplasm.” Looking Ahead Creating value for farmers around the world by developing and delivering best-in-class seeds and traits is at the heart of our business. Our customers are clear in what they want from Monsanto. They want us to continue to invest in research and development (R&D) to help bring innovative approaches to the farm. They want more We remain optimistic top-performing germplasm and trait choices across about our near- and geographies. They want a broad array of product choices long-term prospects, across all crops. And they want us to price our products in our business and in a way that encourages trial and adoption. within agriculture’s We’ve taken that feedback and used it to redefine our strategy. ability to meet the needs of a growing In the United States, our largest market, we continue to global population. see our broader seeds-and-traits portfolio offer benefits to farmers. Respecting corn refuge requirements — the amount of acreage on which farmers are required to plant products without insect protection — is important, but it can also mean a lost yield opportunity for farmers. That’s what makes Monsanto’s reduced- refuge family of products so appealing. Our Genuity VT Triple PRO corn reduces refuge from 50 percent to 20 percent in the Cotton Belt, creating incremental whole-farm yield opportunity for farmers. Monsanto Company — 2010 Annual Report 3 Genuity VT Double PRO corn offers dual modes of action for greater insect Monsanto’s unique control and reduces refuge family of refuge- requirements from 20 percent to reduction products 5 percent in the Corn Belt. And makes compliance our premier offering, Genuity more convenient for SmartStax, is our lead product in the U.S. farmers. largest segment and offers 5 percent refuge in the Corn Belt. We also are working toward approval for Refuge- in-the-Bag, or RIB. The reality is this unique family of products offers multiple modes of action and has us on track to offer the industry’s first single-bag RIB option, making refuge compliance more convenient for farmers. Outside of the United States, corn in South America is a key driver for us. We’re poised to increase penetration of first-generation double-stack corn in Argentina, where there’s been an increase in acres as more growers adopt the technology. This will serve as a building block for the technology U.S.