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Monsanto Company Reports Operating Results (10-Q)

June 30, 2011 | About:
10qk

10qk

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Monsanto Company (MON) filed Quarterly Report for the period ended 2011-05-31.

Monsanto Co. has a market cap of $37.66 billion; its shares were traded at around $70.26 with a P/E ratio of 27 and P/S ratio of 3.7. The dividend yield of Monsanto Co. stocks is 1.6%. Monsanto Co. had an annual average earning growth of 19.2% over the past 10 years.

Highlight of Business Operations:

Consolidated Operating Results Net sales increased $628 million, or 21 percent, in the three-month comparison and $1,000 million, or 12 percent, in the nine-month comparison. This increase was primarily a result of increased sales of corn and cotton seed and traits as well as increased sales in Agricultural Productivity. Net income in the first nine months of 2011 was $3.14 per share, compared with $2.27 per share in the prior-year comparable period.

Financial Condition, Liquidity, and Capital Resources In the first nine months of 2011, net cash provided by operating activities was $944 million, compared with a requirement of cash of $538 million in the prior-year period. This increase was primarily due to improved earnings and a favorable change in accounts payable and other accrued liabilities. Net cash required by investing activities was $707 million in the first nine months of 2011 compared with $614 million in the prior-year comparable period, primarily due to purchases of short-term investments. Partially offsetting this use, capital expenditures decreased during the current year. As a result, free cash flow improved to $237 million for the nine months ended May 31, 2011, compared with a negative $1,152 million for the nine months ended May 31, 2010. For a more detailed discussion of the factors affecting the free cash flow comparison, see the Cash Flow section of the Financial Condition, Liquidity, and Capital Resources section in this MD&A.

Other expense net was expense of $15 million in third quarter 2011, compared with expense of $7 million in the prior-year quarter. The change occurred due to a contractual dispute partially offset by a decrease in foreign currency losses in the current period compared to the prior-year period.

Income tax provision was $270 million in third quarter 2011, an increase of $132 million over the prior-year quarter, primarily as a result of the increase in pretax income from continuing operations. The effective tax rate of 28 percent in third quarter 2011 was two percent higher than the prior-year quarter. Third quarter 2011 included several discrete tax adjustments resulting in a tax benefit of $3 million. The majority of this benefit resulted from favorable return-to-provision true-up adjustments and expiration of statutes in various jurisdictions, partially offset by deferred tax adjustments. Third quarter 2010 included several discrete tax adjustments resulting in a tax benefit of $31 million. The majority of this benefit resulted from favorable adjustments from the filing of tax returns in several jurisdictions. These benefits were partially offset by a tax charge of $8 million as a result of the elimination of the tax benefit associated with the Medicare Part D subsidy as a result of President Obama signing the Patient Protection and Affordable Care Act and the Health Care and Education Act of 2010 (collectively called the Healthcare Acts). Without the discrete items, our effective tax rate for third quarter 2011 would have been lower than the 2010 rate, primarily driven by a shift in our projected earnings mix to lower tax rate jurisdictions.

Other expense (income) net was expense of $38 million in the first nine months of 2011, compared with income of $3 million in the prior-year nine months. The change occurred due to increased foreign currency losses in the current year, a contractual dispute and the gain recorded on the Seminium acquisition in the prior year.

Income tax provision was $704 million in the first nine months of 2011, an increase of $236 million from the prior-year comparable period, primarily as a result of the increase in pretax income from continuing operations. The effective tax rate increased to 29 percent from 27 percent in the prior period. The first nine months of 2011 included several discrete tax adjustments resulting in a tax benefit of $21 million. The majority of this benefit resulted from the retroactive extension of the R&D credit pursuant to the enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, favorable return-to-provision true-up adjustments, and the expiration of statutes in several jurisdictions, partially offset by deferred tax adjustments. The first nine months of 2010 included several discrete tax adjustments resulting in a tax benefit of $63 million. The majority of this benefit was from favorable adjustments from the filing of tax returns in several jurisdictions, expiration of statutes in several jurisdictions, and favorable resolution of several domestic and ex-U.S. tax matters. These benefits were partially offset by a tax charge of $8 million as a result of the elimination of the tax benefit associated with the Medicare Part D subsidy as a result of President Obama signing the Healthcare Acts in March 2010. Without the discrete items, our effective tax rate for the first nine months of 2011 would have been slightly lower than the 2010

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