Monsanto Company (NYSE: MON) and the Regents of the University of California announced today that they have signed an agreement which mutually resolves issues between them regarding possible infringement and validity of patent rights relating to the production of bovine somatotropin. Monsanto sells bovine somatotropin under the brand name POSILAC; it is used to enhance milk production and serves as an important tool to help dairy producers improve the efficiency of their operations.

"We're pleased that we've come to an agreement that will allow our dairy producer-customers to continue to use POSILAC bovine somatotropin," said Carl Casale, Monsanto Executive Vice President for North America Commercial Operations.

"We will continue to focus on optimizing our dairy business, and to create and bring new products to our customers," Casale said. "This agreement illustrates that we are willing to work jointly to resolve disputes, and it allows us to avoid the expense and inconvenience of protracted litigation."

Under the agreement:

• Monsanto is granted an exclusive commercial license under the University's patent estate, including access under a patent which expires in 2023, for the manufacture of bovine somatotropin. Monsanto's license is subject to certain rights maintained by the U.S. government because the University's work was performed with federal funding. The University also retains certain non-commercial rights to practice the invention for research and educational purposes.
• The University of California and Monsanto will dismiss all claims under the patent infringement lawsuit which was scheduled for trial beginning Feb. 27, 2006. The University received U.S. Patent No. 6,692,941 and filed the lawsuit against Monsanto in February 2004.
• Monsanto will pay the University a $100 million upfront royalty and an ongoing royalty of 15 cents per dose of POSILAC sold to dairy producers with a minimum annual royalty of $5 million through the 2023 expiration of the University's patent estate.

Monsanto also reaffirmed that the company's earnings-per-share (EPS) guidance and free cash flow guidance remains unchanged for fiscal year 2006. EPS guidance for fiscal year 2006 is toward the upper end of the $2.35 to $2.50 range on an ongoing basis, and free cash flow for fiscal year 2006 remains in the range of $825 million to $900 million. For a reconciliation of EPS on an ongoing basis and free cash flow, see notes 1 and 2.

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality.

POSILAC is a trademark owned by Monsanto Company and its wholly owned subsidiaries.

Monsanto Company
Reconciliations of Non-GAAP Financial Measures
Unaudited

Ongoing EPS and Free Cash Flow: The presentations of ongoing EPS and free cash flow are not intended to replace net income (loss), 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 following tables reconcile ongoing EPS and free cash flow to the respective most directly comparable financial measures calculated in accordance with GAAP.

1. 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 2006 Target	Fiscal Year 2005
   Diluted Earnings per Share	$2.35 - $2.50	$0.94
   In-Process R&D Write-Off Related to the Seminis and Emergent Acquisitions	—	0.91
   Solutia-Related Charge	—	0.64
   Tax Benefit on Loss from European Wheat and Barley Business	—	(0.39)
   Restructuring Charges – Net	—	0.02
   Income on Discontinued Operations & Related Restructuring	—	(0.04)
   Diluted Earnings per Share from Ongoing Business	$2.35 - $2.50	$2.08

   
   
    
2. Reconciliation of Free Cash Flow: Free cash flow represents the total of cash flows from operations and investing activities. With respect to the projected free cash flow guidance provided under the caption "Fiscal Year 2006 Target," 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.
   
    

   (Dollars in millions)	Fiscal Year 2006 Target	Fiscal Year 2005
   Net Cash Provided by Operations	$1,300 - $1,375	$1,737
   Net Cash Required by Investing Activities	$(475)	(1,667)
   Free Cash Flow	$825 - $900	$    70
   Net Cash Provided (Required) by Financing Activities	N/A	(582)
   Net Increase (Decrease) in Cash and Cash Equivalents	N/A	(512)
   Cash and Cash Equivalents at Beginning of Period	N/A	1,037
   Cash and Cash Equivalents at End of Period	N/A	$ 525