MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May~~Nov. 3130, 2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 001-16167

MONSANTO COMPANY

(Exact name of registrant as specified in its charter)



Delaware	43-1878297
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

800 North Lindbergh Blvd.,	63167
St. Louis, MO	(Zip Code)
(Address of principal executive offices)

(314) 694-1000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

If any emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~439~~440,~~323~~858,~~033~~173 shares of common stock, $0.01 par value, outstanding as of ~~June~~January 262, ~~2017~~2018.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

In the interests of our investors, this section of our report explains some of the important reasons that actual results may be materially different from those that we anticipate. In this report, and from time to time throughout the year, we share our expectations for our company’s future performance. These forward-looking statements include statements about our business plans; the pending transaction with Bayer Aktiengesellschaft (“Bayer”); the potential development, regulatory approval, and public acceptance of our products; our expected financial performance, including sales performance, and the anticipated effect of our strategic actions; the anticipated benefits of acquisitions; the outcome of contingencies, such as litigation; domestic or international economic, political and market conditions; and other factors that could affect our future results of operations or financial position, including, without limitation, statements under the captions “Overview — Executive Summary — Outlook,” “Seeds and Genomics Segment,” “Agricultural Productivity Segment,” “Financial Condition, Liquidity and Capital Resources,” “Outlook,” “Critical Accounting Policies and Estimates” and “Legal Proceedings.” Any statements we make that are not matters of current reportage or historical fact should be considered forward-looking. Such statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” and similar expressions. By their nature, these types of statements are uncertain and are not guarantees of our future performance.

Since these statements are based on factors that involve risks and uncertainties, our 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: continued competition in seeds, traits and agricultural chemicals; the company’s exposure to various contingencies, including those related to intellectual property protection, regulatory compliance and the speed with which approvals are received, and public understanding and acceptance of our biotechnology and other agricultural products; the success of the company’s research and development activities; the outcomes of major lawsuits; developments related to foreign currencies and economies; the impact of exploring, responding to, entering into or consummating potential acquisitions or other transactions and proposals, including risks related to the pending Merger with Bayer; fluctuations in commodity prices; compliance with regulations affecting our manufacturing; the accuracy of the company’s estimates related to distribution inventory levels; the increases in and expected higher levels of indebtedness; the company’s ability to fund its short-term financing needs and to obtain payment for the products that it sells; the effect of weather conditions, natural disasters, accidents, and security breaches, including cybersecurity incidents, on the agriculture business or the company’s facilities; and other risks and factors described or referenced in Part II — Item 1A — Risk Factors — below and Part I — Item 1A of our Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017.

Our forward-looking statements represent our estimates and expectations and are based on currently available information at the time that we make those statements. However, circumstances change constantly, often unpredictably, and many events beyond our control will determine whether the expectations encompassed in our forward-looking statements will be realized. As a result, investors should not place undue reliance on these forward-looking statements. We disclaim any current intention or obligation to revise or update any forward-looking statements, or the factors that may affect their realization, whether in light of new information, future events or otherwise, and investors should not rely on us to do so.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION		Page
Item 1.	Financial Statements	3
	Statements of Consolidated Operations	4
	Statements of Consolidated Comprehensive Income	5
	Statements of Consolidated Comprehensive Income (Loss)	5
	Statements of Consolidated Financial Position	6
	Statements of Consolidated Cash Flows	7
	Statements of Consolidated Shareowners’ Equity	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3733
	Overview	3733
	Results of Operations	4036
	Seeds and Genomics Segment	4338
	Agricultural Productivity Segment	4539
	Restructuring	4539
	Financial Condition, Liquidity and Capital Resources	4640
	Outlook	5144
	Critical Accounting Policies and Estimates	5246
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5246
Item 4.	Controls and Procedures	5346
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	5447
Item 1A.	Risk Factors	5447
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5447
Item 5.	Other Information	5447
Item 6.	Exhibits	5447
SIGNATURE		55
EXHIBIT INDEX		48
EXHIBIT INDEX		56
SIGNATURE		49

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

PART I—FINANCIAL INFORMATION



ITEM 1.	FINANCIAL STATEMENTS

The Statements of Consolidated Operations of Monsanto Company and its consolidated subsidiaries for the three ~~and nine~~ months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016, the Statements of Consolidated Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016, the Statements of Consolidated Financial Position as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017, the Statements of Consolidated Cash Flows for the ~~nine~~three months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016, the Statements of Consolidated Shareowners’ Equity for the ~~nine~~three months ended ~~May~~Nov. 3130, 2017, and year ended Aug. 31, ~~2016~~2017, and related Notes to the Consolidated Financial Statements follow. Unless otherwise indicated, “Monsanto” and the “company” are used interchangeably to refer to Monsanto Company or to Monsanto Company and its consolidated subsidiaries, as appropriate to the context. Unless otherwise indicated, “earnings per share” and “per share” mean diluted earnings per share. In the Notes to the Consolidated Financial Statements, all dollars are expressed in millions, except per share amounts. Unless otherwise indicated, trademarks owned or licensed by Monsanto or its subsidiaries are shown in special type. Unless otherwise indicated, references to “Roundup herbicides” mean Roundup branded herbicides, excluding all lawn-and-garden herbicides and other glyphosate-based herbicides, and references to “Roundup and other glyphosate-based herbicides” exclude all lawn-and-garden herbicides.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

Statements of Consolidated Operations

Unaudited (Dollars in millions, except per share amounts)	Three Months Ended						~~Nine Months Ended~~
	May 31, 2017			May 31, 2016			May 31, 2017			May 31, 2016
	Nov. 30, 2017			Nov. 30, 2016
Net Sales	$	42,~~230~~658		$	42,~~189~~650		$	~~11,954~~		$	~~10,940~~
Cost of goods sold	1,~~844~~346			1,~~809~~391			~~5,357~~			~~5,061~~
Gross Profit	21,~~386~~312			21,~~380~~259			~~6,597~~			~~5,879~~
Operating Expenses:
Selling, general and administrative expenses	~~789~~664			~~729~~585			~~2,031~~			~~1,858~~
Research and development expenses	~~417~~382			~~387~~370			~~1,168~~			~~1,091~~
Restructuring charges	~~(17~~4		)	15(36		)	~~(30~~		)	~~290~~
Pending Bayer transaction related costs	3320			—93			~~153~~			—
Total Operating Expenses	1,~~222~~070			1,~~131~~012			~~3,322~~			~~3,239~~
Income from Operations	~~1,164~~242			~~1,249~~247			~~3,275~~			~~2,640~~
Interest expense	~~100~~124			~~100~~136			~~338~~			~~332~~
Interest income	(1715		)	(1418		)	~~(53~~		)	~~(51~~		)
Other expense (income), net	4			(35		)	(41		)	160
Other (income) expense, net	(97		)	43
Income from Continuing Operations Before Income Taxes	~~1,077~~230			~~1,198~~86			~~3,031~~			~~2,199~~
Income tax provision	~~230~~60			~~483~~61			~~796~~			~~696~~
Income from Continuing Operations Including Portion Attributable to Noncontrolling Interest	$	~~847~~170		$	~~715~~25		$	~~2,235~~		$	~~1,503~~
Discontinued Operations:
Income from operations of discontinued business	—2			—16			21			24
Income tax provision	—1			—6			8			9
Income from Discontinued Operations	—1			—10			13			15
Net Income	$	~~847~~171		$	~~715~~35		$	~~2,248~~		$	~~1,518~~
Less: Net income (loss) attributable to noncontrolling interest	4			(2		)	8			(9		)
Less: Net income attributable to noncontrolling interest	2			6
Net Income Attributable to Monsanto Company	$	~~843~~169		$	~~717~~29		$	~~2,240~~		$	~~1,527~~
Amounts Attributable to Monsanto Company:
Income from continuing operations	$	~~843~~168		$	~~717~~19		$	~~2,227~~		$	~~1,512~~
Income from discontinued operations	—1			—10			13			15
Net Income Attributable to Monsanto Company	$	~~843~~169		$	~~717~~29		$	~~2,240~~		$	~~1,527~~
Basic Earnings per Share Attributable to Monsanto Company:
Income from continuing operations	$	10.9238		$	10.6405		$	~~5.08~~		$	~~3.40~~
Income from discontinued operations	—			—0.02			~~0.03~~			~~0.03~~
Net Income Attributable to Monsanto Company	$	10.9238		$	10.6407		$	~~5.11~~		$	~~3.43~~
Diluted Earnings per Share Attributable to Monsanto Company:
Income from continuing operations	$	10.9038		$	10.6305		$	~~5.03~~		$	~~3.37~~
Income from discontinued operations	—			—0.02			~~0.03~~			~~0.03~~
Net Income Attributable to Monsanto Company	$	10.9038		$	10.6307		$	~~5.06~~		$	~~3.40~~
Weighted Average Shares Outstanding:
Basic	~~439~~440.12			~~437~~438.1			~~438.6~~			~~444.2~~
Diluted	~~443~~445.43			~~440~~441.37			~~443.0~~			~~448.2~~
Dividends Declared per Share	$	—		$	—		$	~~1.08~~		$	~~1.08~~

The accompanying notes are an integral part of these consolidated financial statements.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

Statements of Consolidated Comprehensive Income (Loss)

Unaudited (Dollars in millions)	Three Months Ended						~~Nine Months Ended~~
	May 31, 2017			May 31, 2016			May 31, 2017			May 31, 2016
	Nov. 30, 2017			Nov. 30, 2016
Comprehensive Income Attributable to Monsanto Company
Comprehensive Income (Loss) Attributable to Monsanto Company
Net Income Attributable to Monsanto Company	$	~~843~~169		$	~~717~~29		$	~~2,240~~		$	~~1,527~~
Other Comprehensive Income (Loss), Net of Tax:
Other Comprehensive Loss, Net of Tax:
Foreign currency translation, net of tax of $0, $3, $0 and $2, respectively	83			139			(15		)	(127		)
Foreign currency translation, net of tax of $(30), and $(1), respectively	(82		)	(268		)
Postretirement benefit plan activity, net of tax of $4, $3, $16 and $12, respectively	9			8			32			24
Postretirement benefit plan activity, net of tax of $4, and $6, respectively	6			10
Unrealized net losses on investment holdings, net of tax of $0, $0, $(1) and $(1), respectively	—			—			(2		)	(2		)
Unrealized net losses on investment holdings, net of tax of $(1), and $1, respectively	(1		)	(1		)
Realized net losses on investment holdings, net of tax of $0, $0, $1 and $0, respectively	—			—			1			—
Unrealized net derivative gains, net of tax of $4, and $15, respectively	7			31
Unrealized net derivative (losses) gains, net of tax of $(7), $18, $14 and $(3), respectively	(12		)	30			26			(1		)
Realized net derivative losses, net of tax of $0, and $15, respectively	2			21
Realized net derivative losses, net of tax of $2, $13, $21 and $39, respectively	2			15			31			48
Total Other Comprehensive Loss, Net of Tax	(68		)	(207		)
Total Other Comprehensive Income (Loss), Net of Tax	82			192			73			(58		)
Comprehensive Income (Loss) Attributable to Monsanto Company	$	101		$	(178	)
Comprehensive Income Attributable to Monsanto Company	$	925		$	909		$	2,313		$	1,469
Comprehensive Income (Loss) Attributable to Noncontrolling Interests
Comprehensive Income (Loss) Attributable to Noncontrolling Interests
Net Income Attributable to Noncontrolling Interests	2			6
Net Income (Loss) Attributable to Noncontrolling Interests	4			(2		)	8			(9		)
Other Comprehensive Income (Loss)
Other Comprehensive Income (Loss)
Foreign currency translation	—			(1		)
Foreign currency translation	1			1			1			(1		)
Total Other Comprehensive Income (Loss)	—			(1		)
Total Other Comprehensive Income (Loss)	1			1			1			(1		)
Comprehensive Income Attributable to Noncontrolling Interests	$	2		$	5
Comprehensive Income (Loss) Attributable to Noncontrolling Interests	$	5		$	(1	)	$	9		$	(10	)
Total Comprehensive Income (Loss)	$	103		$	(173	)
Total Comprehensive Income	$	930		$	908		$	2,322		$	1,459

The accompanying notes are an integral part of these consolidated financial statements.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

Statements of Consolidated Financial Position

Unaudited (Dollars in millions, except share amounts)	As of
	May 31, 2017			Aug. 31, 2016
	Nov. 30, 2017			Aug. 31, 2017
Assets
Current Assets:
Cash and cash equivalents (variable interest entity restricted - 2017: $58 and 2016: $122)	$	1,614		$	1,676
Cash and cash equivalents (variable interest entity restricted - 2018: $52 and 2017: $94)	$	3,102		$	1,856
Short-term investments	6			60
Trade receivables, net (variable interest entity restricted - 2018: $91 and 2017: $74)	2,115			2,161
Trade receivables, net (variable interest entity restricted - 2017: $56 and 2016: $7)	3,913			1,926
Miscellaneous receivables (variable interest entity restricted - 2018: $7 and 2017: $5)	987			827
Miscellaneous receivables	763			755
Inventory, net	4,033			3,340
Inventory, net	3,189			3,241
Assets held for sale	44			199
Assets held for sale	302			272
Other current assets (variable interest entity restricted - 2018: $0 and 2017: $1)	279			268
Other current assets	231			227
Total Current Assets	10,560			8,651
Total Current Assets	10,018			8,157
Total property, plant and equipment	12,383			12,231
Total property, plant and equipment	11,664			11,116
Less accumulated depreciation	6,424			6,301
Less accumulated depreciation	6,164			5,885
Property, Plant and Equipment, net	5,959			5,930
Property, Plant and Equipment, net	5,500			5,231
Goodwill	4,082			4,088
Goodwill	4,032			4,020
Other Intangible Assets, Net	999			1,024
Other Intangible Assets, Net	1,045			1,125
Deferred Tax Assets (variable interest entity restricted - 2018: $11 and 2017: $11)	534			564
Noncurrent Deferred Tax Assets	534			613
Long-Term Receivables, Net	56			121
Long-Term Receivables, Net	117			101
Other Assets (variable interest entity restricted - 2018: $4 and 2017: $4)	946			955
Other Assets	512			489
Total Assets	$	23,136		$	21,333
Total Assets	$	21,758		$	19,736
Liabilities and Shareowners’ Equity
Current Liabilities:
Short-term debt, including current portion of long-term debt (variable interest entity restricted - 2017: $0 and 2016: $113)	$	2,611		$	1,587
Short-term debt, including current portion of long-term debt	$	1,168		$	870
Accounts payable	753			1,006
Accounts payable (variable interest entity restricted - 2018: $2 and 2017: $9)	1,194			1,068
Income taxes payable	~~243~~42			4158
Accrued compensation and benefits	~~366~~268			~~239~~578
Accrued marketing programs	1,~~455~~193			1,~~650~~918
Deferred revenue	545			568
Deferred revenues (variable interest entity restricted - 2018: $2 and 2017: $0)	3,119			727
Grower production accruals	68430			4759
Dividends payable	—			237
Customer payable	3775			~~123~~106
Restructuring reserves	6738			~~227~~37
Miscellaneous short-term accruals	813			1,004
Miscellaneous short-term accruals (variable interest entity restricted - 2018: $2 and 2017: $2)	731			740
Total Current Liabilities	68,~~958~~258			6,~~729~~398
Long-Term Debt (variable interest entity restricted - 2017: $98 and 2016: $0)	7,246			7,453
Long-Term Debt (variable interest entity restricted - 2018: $97 and 2017: $104)	6,949			7,254
Postretirement Liabilities	~~316~~306			~~371~~313
Long-Term Deferred Revenue	24111			35114
Noncurrent Deferred Tax Liabilities	~~122~~290			68192
Long-Term Portion of Environmental and Litigation Liabilities	~~213~~222			~~200~~218
Long-Term Restructuring Reserves	10			17
Other Liabilities	385			386
Other Liabilities	321			318
Shareowners’ Equity:
Common stock (authorized: 1,500,000,000 shares, par value $0.01)
Issued 612,881,253 and 611,435,047 shares, respectively
Issued 614,343,272 and 613,219,246 shares, respectively
Outstanding 439,240,373 and 437,795,024 shares, respectively	6			6
Outstanding 440,702,218 and 439,578,276 shares, respectively	6			6
Treasury stock 173,640,880 and 173,640,023 shares, respectively, at cost	(15,053		)	(15,053		)
Treasury stock 173,641,054 and 173,640,970 shares, respectively, at cost	(15,053		)	(15,053		)
Additional contributed capital	11,~~787~~902			11,~~626~~840
Retained earnings	12,~~527~~241			1012,~~763~~072
Accumulated other comprehensive loss	(2,~~735~~495		)	(2,~~808~~427		)
Total Monsanto Company Shareowners’ Equity	6,~~532~~601			46,~~534~~438
Noncontrolling Interest	1614			1120
Total Shareowners’ Equity	6,~~548~~615			46,~~545~~458
Total Liabilities and Shareowners’ Equity	$	2123,~~758~~136		$	1921,~~736~~333

The accompanying notes are an integral part of these consolidated financial statements.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

Statements of Consolidated Cash Flows

Unaudited (Dollars in millions)	~~Nine~~Three Months Ended
	May 31, 2017			May 31, 2016
	Nov. 30, 2017			Nov. 30, 2016
Operating Activities:
Net Income	$	~~2,248~~171		$	~~1,518~~35
Adjustments to reconcile cash provided by operating activities:
Adjustments to reconcile cash provided (required) by operating activities:
Items that did not require (provide) cash:
Depreciation and amortization	~~549~~188			~~542~~189
Bad-debt expense	6131			817
Stock-based compensation expense	9434			8836
Excess tax benefits from stock-based compensation	(6—		)	(134		)
Deferred income taxes	83106			~~168~~94
Restructuring impairments	402			~~119~~1
Equity affiliate expense, net	62			62
Net gain on sale of a business or other assets	(8856		)	~~(31~~—		)
Other items	8015			~~141~~12
Changes in assets and liabilities that (required) provided cash, net of acquisitions:
Changes in assets and liabilities that provided (required) cash, net of acquisitions:
Trade receivables, net	~~(2,062~~40		)	(~~1,755~~271		)
Inventory, net	14(742		)	(6681		)
Deferred revenue	~~(35~~2,407		)	612,344
Accounts payable and other accrued liabilities	(~~129~~768		)	(~~588~~54		)
Restructuring, net	(~~165~~8		)	90(89		)
Pension contributions	(316		)	(4719		)
Other items, net	31(124		)	41(139		)
Net Cash Provided by Operating Activities	~~690~~1,292			~~415~~1,463
Cash Flows Provided (Required) by Investing Activities:
Maturities of short-term investments	527			35—
Capital expenditures	(~~848~~418		)	(~~666~~317		)
Acquisition of businesses, net of cash acquired	~~(11~~—		)	(27		)
Technology and other investments	(468		)	(435		)
Other investments and property disposal proceeds	~~101~~209			372
Net Cash Required by Investing Activities	(~~752~~210		)	(~~639~~327		)
Cash Flows Provided (Required) by Financing Activities:
Net change in financing with less than 90-day maturities	~~514~~392			~~1,942~~(511		)
Short-term debt proceeds	635			463
Short-term debt reductions	(123		)	(~~252~~8		)
Long-term debt proceeds	~~600~~—			9599
Long-term debt reductions	(~~517~~1		)	(~~305~~509		)
Debt issuance costs	(2—		)	—(2		)
Treasury stock purchases	—			(3,001		)
Stock option exercises	56			21
Stock option exercises	78			66
Excess tax benefits from stock-based compensation	—			4
Excess tax benefits from stock-based compensation	6			13
Tax withholding on restricted stock and restricted stock units	(25		)	(14		)
Tax withholding on restricted stock and restricted stock units	(18		)	(22		)
Dividend payments	(238		)	(237		)
Dividend payments	(712		)	(727		)
Payments to noncontrolling interests	(8		)	(1		)
Payments to noncontrolling interests	(4		)	(2		)
Net Cash Provided (Required) by Financing Activities	178			(655		)
Net Cash Required by Financing Activities	(4		)	(2,233		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(14		)	(28		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	4			(39		)
Net Increase in Cash and Cash Equivalents	1,246			453
Net Decrease in Cash and Cash Equivalents	(62		)	(2,496		)
Cash and Cash Equivalents at Beginning of Period	1,856			1,676
Cash and Cash Equivalents at Beginning of Period	1,676			3,701
Cash and Cash Equivalents at End of Period	$	3,102		$	2,129
Cash and Cash Equivalents at End of Period	$	1,614		$	1,205

See Note 17 — Supplemental Cash Flow Information for further details.

The accompanying notes are an integral part of these consolidated financial statements.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

Statements of Consolidated Shareowners’ Equity

	Monsanto Shareowners
Unaudited(Dollars in millions, except per share data)	Common Stock		Treasury Stock			Additional Contributed Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)(1)			Non-ControllingInterest			Total
Balance as of Aug. 31, 2015	$	6	$	(12,053	)	$	11,464		$	10,374		$	(2,801	)	$	15		$	7,005
Net Income (Loss)	—		—			—			1,336			—			(23		)	1,313
Other Comprehensive Loss for 2016	—		—			—			—			(7		)	(1		)	(8		)
Treasury Stock Purchases	—		(3,000		)	(1		)	—			—			—			(3,001		)
Restricted Stock and Restricted Stock Unit Tax Withholding	—		—			(24		)	—			—			—			(24		)
Issuance of Shares Under Employee Stock Plans	—		—			81			—			—			—			81
Net Excess Tax Benefits from Stock-based Compensation	—		—			11			—			—			—			11
Stock-based Compensation Expense	—		—			111			—			—			—			111
Cash Dividends of $2.16 per Common Share	—		—			—			(947		)	—			—			(947		)
Acquisition of Noncontrolling Interest	—		—			(16		)	—			—			26			10
Payments to Noncontrolling Interest	—		—			—			—			—			(6		)	(6		)
Balance as of Aug. 31, 2016	$	6	$	(15,053	)	$	11,626		$	10,763		$	(2,808	)	$	11		$	4,545
Net Income	—		—			—			2,~~240~~260			—			813			2,~~248~~273
Other Comprehensive Income for 2017	—		—			—			—			73			1			74
Other Comprehensive Income For Fiscal 2017	—		—			—			—			381			1			382
Stock Option Exercises	—		—			78			—			—			—			78
Restricted Stock and Restricted Stock Unit Tax Withholding	—		—			(18		)	—			—			—			(18		)
Restricted Stock and Restricted Stock Unit Tax Withholding	—		—			(17		)	—			—			—			(17		)
Issuance of Shares Under Employee Stock Plans	—		—			105			—			—			—			105
Net Excess Tax Benefits from Stock-based Compensation	—		—			6			—			—			—			6
Stock-based Compensation Expense	—		—			127			—			—			—			127
Stock-based Compensation Expense	—		—			94			—			—			—			94
Cash Dividends of $2.16 per Common Share	—		—			—			(951		)	—			—			(951		)
Cash Dividends of $1.08 per Common Share	—		—			—			(476		)	—			—			(476		)
Payments to Noncontrolling Interest	—		—			—			—			—			(5		)	(5		)
Payments to Noncontrolling Interest	—		—			—			—			—			(4		)	(4		)
Balance as of Aug. 31, 2017	$	6	$	(15,053	)	$	11,840		$	12,072		$	(2,427	)	$	20		$	6,458
Balance as of May 31, 2017	$	6	$	(15,053	)	$	11,787		$	12,527		$	(2,735	)	$	16		$	6,548
Net Income	—		—			—			169			—			2			171
Other Comprehensive Loss for Fiscal 2018	—		—			—			—			(68		)	—			(68		)
Issuance of Shares Under Employee Stock Plans	—		—			53			—			—			—			53
Restricted Stock and Restricted Stock Unit Tax Withholding	—		—			(25		)	—			—			—			(25		)
Stock-based Compensation Expense	—		—			34			—			—						34
Payments to Noncontrolling Interest	—		—			—			—			—			(8		)	(8		)
Balance as of Nov. 30, 2017	$	6	$	(15,053	)	$	11,902		$	12,241		$	(2,495	)	$	14		$	6,615


(1)	See Note 15 — Accumulated Other Comprehensive Loss — for further details of the components of accumulated other comprehensive loss.

The accompanying notes are an integral part of these consolidated financial statements.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED


NOTE 1.	BACKGROUND AND BASIS OF PRESENTATION

Monsanto Company, along with its subsidiaries, is a leading global provider of agricultural products for farmers. Monsanto’s seeds, biotechnology trait products, herbicides and digital agriculture products provide farmers with solutions that help improve productivity, reduce the costs of farming and produce better food for consumers and better feed for animals.

Monsanto manages its business in two reportable segments: Seeds and Genomics and Agricultural Productivity. Through the Seeds and Genomics segment, Monsanto produces leading seed brands, including DEKALB, Asgrow, Deltapine, Seminis and De Ruiter, and Monsanto develops biotechnology traits that assist farmers in controlling insects and weeds and digital agriculture products to assist farmers in decision making. Monsanto also provides other seed companies with genetic material and biotechnology traits for their seed brands. Through the Agricultural Productivity segment, the company manufactures Roundup and Harness brand herbicides and other herbicides. See Note 19 — Segment Information — for further details.

In the fourth quarter of 2008, the company announced plans to divest its animal agricultural products business, which focused on dairy cow productivity and was previously reported as part of the Agricultural Productivity segment. This transaction was consummated on Oct. 1, 2008, and included a 10-year earn-out with potential annual payments being earned by Monsanto if certain revenue levels are exceeded. As a result, financial data for this business has been presented as discontinued operations.

On ~~Nov~~Jul. 225, ~~2015~~2017, the company signed a definitive agreement with ~~Deere~~AGCO &Corporation ~~Company (“Deere”)~~ to sell the Precision Planting equipment business ~~which is included in the Seed and Genomics segment~~ for approximately $~~190~~200 million in cash, subject to customary working capital adjustments. In August 2016, the U.S. Department of Justice filed a lawsuit to block Deere’s acquisition of the Precision Planting equipment business. In May 2017, the company terminated its agreement with Deere to sell the Precision Planting equipment business. The company continues to intend to sell the Precision Planting equipment business during this fiscal year and is actively marketing the business to third parties. As of ~~May 31, 2017, and~~ Aug. 31, ~~2016~~2017, Monsanto had $~~171~~156 million ~~and $172 million~~ of assets held for sale, ~~respectively,~~ and $~~9 million and $~~12 million of liabilities held for sale classified within miscellaneous short-term accruals, ~~respectively,~~ on the ~~Statements~~Statement of Consolidated Financial Position related to this transaction. The assets were primarily ~~related~~classified toas inventory, net; trade receivables, net; property, plant, and equipment, net; goodwill; and other intangible assets, net, and the liabilities were primarily ~~related~~classified toas accrued marketing programs and accounts payable. In the first quarter of fiscal 2018, the company closed on its sale of the Precision Planting equipment business, and a gain of approximately $52 million was recognized within other (income) expense, net in the Statement of Consolidated Operations.

~~During~~The ~~the~~accompanying ~~nine~~consolidated ~~months~~financial ~~ended~~statements ~~May~~have ~~31,~~not ~~2017,~~been ~~the~~audited ~~company~~but ~~divested~~have ~~its~~been ~~European-based~~prepared ~~silthiofam~~in ~~seed-treatment~~conformity ~~chemical~~with ~~business~~accounting ~~previously~~principles ~~reported~~generally asaccepted ~~part~~in of the ~~Agricultural~~United ~~Productivity~~States ~~segment~~ for ~~approximately~~interim ~~$140~~financial ~~million~~information inand ~~cash,~~with ~~subject~~instructions to ~~customary~~Form ~~working~~10-Q ~~capital~~and ~~adjustments~~Article 10 of Regulation S-X. ~~Approximately~~ ~~$85~~In ~~million~~the opinion of management, ~~less~~these unaudited consolidated financial statements contain all necessary adjustments which are normal and recurring to present fairly the ~~carrying~~financial ~~amount~~position, results of ~~assets~~operations ~~sold~~and ofcash ~~approximately~~flows $2for ~~million,~~the ~~was~~interim ~~recognized~~periods ~~within~~reported. ~~other~~This ~~expense~~Report ~~(income),~~on ~~net~~Form 10-Q should be read in ~~the~~conjunction ~~Statements~~with ofMonsanto’s ~~Consolidated~~Report ~~Operations~~on Form 10-K for the ~~nine~~fiscal ~~months~~year ended ~~May~~Aug. 31, 2017. ~~The~~ ~~recognition~~Financial ofinformation for the ~~remaining~~first ~~$55~~three ~~million~~months isof ~~contingent~~fiscal onyear ~~silthiofam~~2018 ~~re-registration~~should ~~within~~not be annualized because of the ~~European~~seasonality ~~Union~~of the company’s business.

The accompanying consolidated financial statements have not been audited but have been prepared in conformity with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these unaudited consolidated financial statements contain all necessary adjustments which are normal and recurring to present fairly the financial position, results of operations and cash flows for the interim periods reported. This Report on Form 10-Q should be read in conjunction with Monsanto’s Report on Form 10-K for the fiscal year ended Aug. 31, 2016. Financial information for the third quarter and first nine months of fiscal year 2017 should not be annualized because of the seasonality of the company’s business.


NOTE 2.	NEW ACCOUNTING STANDARDS

In ~~May~~August 2017, the Financial Accounting Standards Board (“FASB”) issued accounting guidance, “~~Scope~~Targeted ofImprovements ~~Modification~~to Accounting for Hedging Activities” which ~~clarifies~~seeks ~~modification~~to ~~accounting~~better ~~for~~align ~~share-based~~an ~~payment~~entity’s ~~awards~~risk ~~should~~management ~~not~~activities beand ~~applied~~financial ifreporting ~~the~~for ~~fair~~hedging ~~value,~~relationships ~~vesting~~through ~~conditions,~~changes ~~and~~to ~~classification~~both of the ~~modified~~designation ~~award~~and ~~are~~measurement ~~the~~guidance ~~same~~for ~~before~~qualifying ~~and~~hedging ~~immediately~~relationships ~~after~~and the ~~modification~~presentation of hedge results. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, ~~2017~~2018. Adoption will be applied ~~prospectively~~on a modified retrospective approach to ~~awards~~existing ~~modified~~hedging onrelationships oras ~~after~~of the ~~adoption~~ date. ~~Accordingly,~~of adoption. Monsanto is required to adopt this standard in the first quarter of fiscal year ~~2019~~2020. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In ~~February~~May 2017, the FASB issued accounting guidance, “~~Improving~~Scope ~~the Presentation~~ of ~~Net~~Modification ~~Periodic~~Accounting” ~~Pension~~which ~~Cost~~clarifies ~~and~~modification ~~Net~~accounting ~~Periodic~~for ~~Postretirement~~share-based ~~Benefit~~payment ~~Cost”~~awards ~~which~~should ~~requires~~not ~~the~~be ~~disaggregation~~applied ofif the ~~service~~fair ~~cost~~value, ~~component~~vesting ~~from~~conditions, ~~other~~and ~~components~~classification of ~~net~~the ~~periodic~~modified ~~benefit~~award ~~cost,~~are ~~clarifies~~the ~~how~~same tobefore ~~present~~and immediately after the ~~service~~modification. ~~cost~~This ~~component~~standard is effective for fiscal years, and ~~other~~interim ~~components~~periods ofwithin ~~net~~those ~~benefit~~fiscal ~~costs~~years, inbeginning ~~the~~after ~~Statements~~Dec. of15, ~~Consolidated~~2017. ~~Operations~~Adoption ~~and~~will ~~allows~~be ~~only~~applied ~~the~~prospectively ~~service~~to ~~cost~~awards ~~component~~modified ofon ~~net~~or ~~benefit~~after ~~costs~~the adoption date. Accordingly, Monsanto is required to beadopt ~~eligible~~this ~~for~~standard ~~capitalization~~in the first quarter of fiscal year 2019. ~~This~~The ~~standard~~company is ~~effective~~currently ~~for~~evaluating ~~fiscal~~the ~~years,~~impact ~~and~~this ~~interim~~guidance ~~periods~~will ~~within~~have ~~those~~on ~~fiscal~~the ~~years,~~consolidated ~~beginning~~financial ~~after~~statements ~~Dec.~~and ~~15,~~related disclosures.

In February 2017, the FASB issued accounting guidance, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” which requires the disaggregation of the service cost component from other components of net periodic benefit cost, clarifies how to present the service cost component and other components of net benefit costs in the Statements of Consolidated Operations and allows only the service cost component of net benefit costs to be eligible for capitalization. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2017, with early adoption permitted as of the beginning of a fiscal year for which interim or annual statements have not been

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

~~2017, with early adoption permitted as of the beginning of a fiscal year for which interim or annual statements have not been~~ issued. Adoption will be applied on a retrospective basis for the presentation of all components of net periodic benefit costs and on a prospective basis for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. Accordingly, Monsanto is required to adopt this standard in the first quarter of fiscal year 2019. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In February 2017, the FASB issued accounting guidance, “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sale of Nonfinancial Assets” which clarifies the scope of transactions that are accounted for in accordance with the Other Income topic of the ~~Accounting Standards Codification (“~~ASC”) as well as when these assets would be derecognized. The Other Income topic of the ASC applies to a sale or transfer to a non-customer of nonfinancial assets or financial assets in a contract with substantially all of the fair value concentrated in nonfinancial assets. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2017, with an early adoption of one-year permitted. This guidance is required to be adopted at the same time “Revenue from Contracts with Customers” is adopted. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Statement of Consolidated Financial Position. The method of adoption elected may be different than the method of adoption for “Revenue from Contracts with Customers.” Monsanto is required to adopt this standard in the first quarter of fiscal year 2019. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In January 2017, the FASB issued accounting guidance, “Simplifying the Test for Goodwill Impairment” which would eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, the amount of an impairment charge would be recognized if the carrying amount of a reporting unit is greater than its fair value. This standard is effective for annual or any interim goodwill impairments tests in fiscal years beginning after Dec. 15, 2019, with early adoption permitted. Adoption will be applied on a prospective basis. Monsanto is required to adopt this standard in the first quarter of fiscal year 2021. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In January 2017, the FASB issued accounting guidance, “Clarifying the Definition of a Business” which requires an evaluation of whether substantially all fair value of the assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process. Transactions that meet the definition of a business are expected to decrease as a result of the adoption of this guidance. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2017, with early adoption permitted. Adoption will be applied on a prospective basis. Monsanto is required to adopt this standard in the first quarter of fiscal year 2019. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In November 2016, the FASB issued accounting guidance, “Statement of Cash Flows: Restricted Cash” which requires restricted cash and restricted cash equivalents to be classified in the Statements of Cash Flows as cash and cash equivalents. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2017, with early adoption permitted. Adoption will be applied on a retrospective basis to all periods presented. Monsanto is required to adopt this standard in the first quarter of fiscal year 2019. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In October 2016, the FASB issued accounting guidance, “Income Taxes: Intra-Entity Transfers of Assets Other than Inventory” which will require the income tax effects of intra-entity transfers of assets other than inventory to be recognized when the transfer occurs. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2017, with early adoption permitted as of the beginning of an annual period. Adoption will be applied on a modified retrospective basis. Monsanto is required to adopt the standard in the first quarter of fiscal year 2019. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In August 2016, the FASB issued accounting guidance, “Classification of Certain Cash Receipts and Cash Payments” which clarifies the classification of the activity in the Statements of Consolidated Cash Flows and how the predominant principle should be applied when cash receipts and cash payments have more than one class of cash flows. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2017, with early adoption permitted. Adoption will be applied retrospectively. Monsanto is required to adopt the standard in the first quarter of fiscal year 2019. The

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

~~Adoption will be applied retrospectively. Monsanto is required to adopt the standard in the first quarter of fiscal year 2019. The~~ company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In June 2016, the FASB issued accounting guidance, “Measurement of Credit Losses on Financial Instruments” which replaces the incurred loss methodology to record credit losses with a methodology that reflects the expected credit losses for financial assets not accounted for at fair value with gains and losses recognized through net income. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019, with early adoption permitted for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018. This standard will be adopted on a modified retrospective basis. Monsanto is required to adopt this standard in the first quarter of fiscal year 2021, with early adoption permitted in the first quarter of fiscal year 2020. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In March 2016, the FASB issued accounting guidance, “Improvements to Employee Share-Based Payment Accounting” which will simplify the income tax consequences, accounting for forfeitures and classification on the Statements of Consolidated Cash Flows. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2016, with early adoption permitted. Monsanto is required to adopt the standard in the first quarter of fiscal year 2018. The company has performed a preliminary impact assessment of the guidance and does not expect there to be a material impact on the consolidated financial statements and related disclosures upon adoption.

In February 2016, the FASB issued accounting guidance, “Leases” which will supersede the existing lease guidance and will require all leases with a term greater than 12 months to be recognized in the Statements of Financial Position and eliminate current real estate-specific lease guidance, while maintaining substantially similar classification criteria for distinguishing between finance leases and operating leases. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018, with early adoption permitted. This standard will be adopted on a modified retrospective basis. Monsanto is required to adopt the standard in the first quarter of fiscal year 2020. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In January 2016, the FASB issued accounting guidance, “Recognition and Measurement of Financial Assets and Financial Liabilities” which would require equity investments not accounted for as an equity method investment or that result in consolidation to be recorded at their fair value with changes in fair value recognized in the Statements of Consolidated Operations. Those equity investments that do not have a readily determinable fair value may be measured at cost less impairment, if any, plus or minus changes resulting from observable price changes. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2017, with early adoption prohibited. Monsanto is required to adopt the standard in the first quarter of fiscal year 2019. The company is currently evaluating the impact this guidance will have on the consolidated financial statements and related disclosures.

In ~~February~~May ~~2015~~2014, the FASB issued accounting guidance, “~~Amendments~~Revenue tofrom ~~the~~Contracts ~~Consolidation~~with ~~Analysis~~Customers” which ~~changes~~has been further clarified and amended. The core principle of the ~~guidance~~new ~~with~~standard ~~respect~~is for companies to ~~the~~recognize ~~analysis~~revenue ~~that~~to adepict ~~reporting~~the ~~entity~~transfer ~~must~~of ~~perform~~goods or services to ~~determine~~customers ~~whether~~in itamounts ~~should~~that ~~consolidate~~reflect ~~certain~~the ~~types~~consideration of(that ~~legal~~is, ~~entities.~~payment) ~~All~~to ~~legal~~which ~~entities~~the ~~are~~company ~~subject~~expects to ~~reevaluation~~be ~~under~~entitled ~~the~~in ~~revised~~exchange ~~consolidation~~for ~~model~~those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance ~~affects~~for ~~the~~transactions ~~following~~that ~~areas:~~were not previously addressed comprehensively (1)for ~~limited~~example, ~~partnerships~~service revenue and ~~similar~~contract ~~legal~~modifications) ~~entities,~~and ~~(2)~~clarify ~~evaluating~~guidance ~~fees~~for ~~paid~~multiple-element arrangements. Entities have the option to aapply ~~decision~~the ~~maker~~new orguidance under a ~~service~~retrospective ~~provider~~approach asto each prior reporting period presented or a ~~variable~~modified ~~interest,~~retrospective ~~(3)~~approach with the cumulative effect of ~~fee~~initially ~~arrangements~~applying onthe new guidance recognized at the ~~primary~~date ~~beneficiary~~of ~~determination,~~initial ~~(4)~~application within the ~~effect~~Statement of ~~related~~Consolidated ~~parties~~Financial onPosition. In August 2015, the ~~primary~~FASB ~~beneficiary~~amended ~~determination~~the ~~and~~guidance ~~(5)~~to ~~certain~~allow ~~investment~~for ~~funds~~the deferral of the effective date of this standard. ~~This~~The standard is effective for fiscal years, and ~~for~~ interim periods within those ~~fiscal~~ years, beginning after Dec. 15, ~~2015~~2017. Accordingly, Monsanto ~~adopted~~is required to adopt this standard in the first quarter of fiscal year ~~2017~~2019. ~~The~~One-year early adoption ofis ~~this~~permitted. The initial analysis identifying areas that will be impacted by the new guidance ~~did~~is ~~not~~substantially ~~have~~complete, anand ~~impact~~the oncompany is currently analyzing the potential impacts to the consolidated financial statements orand related disclosures. The company believes the most significant impact relates to its accounting for biotechnology trait license revenue with fixed payments. Specifically, under the new standard, revenue for biotechnology trait licenses with fixed payments are expected to be recognized upon commencement of the license term rather than over the contract period. Due to complexities of certain biotechnology trait license agreements, the actual revenue recognition treatment under the standard will be dependent upon contract-specific terms and may vary in some instances from recognition upon commencement of the license term. Upon adoption, the company may recognize a cumulative material adjustment to increase retained earnings, reflecting license revenue for which the contract period has not yet finished. The company does not expect the adoption of this standard to have an impact on the cash flows related to these license agreements. Revenue from seed sales, agricultural chemical products and biotechnology trait licenses recognized as third-party seed companies sell seed is expected to remain substantially unchanged. The company anticipates utilizing the modified retrospective method for adopting the standard.

In May 2014, the FASB issued accounting guidance, “Revenue from Contracts with Customers” which has been further clarified and amended. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and clarify guidance for multiple-element arrangements. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Statement of Consolidated Financial Position. In August 2015, the FASB amended the guidance to allow for the deferral of the effective date

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

of this standard. The standard is effective for fiscal years, and interim periods within those years, beginning after Dec. 15, 2017. Accordingly, Monsanto is required to adopt this standard in the first quarter of fiscal year 2019. One-year early adoption is permitted. The initial analysis identifying areas that will be impacted by the new guidance is substantially complete, and the company is currently analyzing the potential impacts to the consolidated financial statements and related disclosures. The company believes the most significant impact relates to its accounting for biotechnology trait license revenue with fixed payments. Specifically, under the new standard, revenue for biotechnology trait license with fixed payments are expected to be recognized upon commencement of the license term rather than over the contract period. Due to complexities of certain biotechnology trait license agreements, the actual revenue recognition treatment under the standard will be dependent upon contract-specific terms and may vary in some instances from recognition upon commencement of the license term. Revenue from seed sales, agricultural chemical products and biotechnology trait licenses recognized as third-party seed companies sell seed is expected to remain substantially unchanged. The company has not made a decision on the method of adoption.


NOTE 3.	RESTRUCTURING

Restructuring charges were recorded in the Statements of Consolidated Operations as follows:

	Three Months Ended						~~Nine Months Ended~~
(Dollars in millions)	~~May~~Nov. 3130, 2017			~~May~~Nov. 3130, 2016			~~May 31, 2017~~			~~May 31, 2016~~
Cost of Goods Sold(1)	$	(1413	)	$	(1	)	$	~~(21~~	)	$	~~(53~~	)
Restructuring Charges(2)	17(4		)	~~(15~~36		)	30			~~(290~~		)
Income from Continuing Operations Before Income Taxes	$	3(17	)	$	~~(16~~35	)	$	9		$	~~(343~~	)
Income Tax Provision	(38		)	7(10		)	2			~~118~~
Net Income	$	—(9	)	$	(925	)	$	11		$	~~(225~~	)

(1) For the three months ended ~~May 31, 2017, and May 31, 2016, $14 million and $1 million of restructuring charges in cost of goods sold were recorded to the Seeds and Genomics segment, respectively~~Nov. ~~For the nine months ended May 31~~30, 2017, $2113 million of restructuring charges in cost of goods sold was split by segment as follows: $2010 million in Seeds and Genomics and $13 million in Agricultural Productivity. For the ~~nine~~three months ended ~~May~~Nov. 3130, 2016, $531 million of restructuring charges in cost of goods sold was recorded toin the Seeds and Genomics segment.

(2) For the three months ended ~~May~~Nov. 3130, 2017, ~~the net reversal of previously recognized expense of~~ $174 million ~~was split by segment as follows: $15 million in Seeds and Genomics and $2 million in Agricultural Productivity. For the three months ended May 31, 2016, $15 million~~ of restructuring charges was split by segment as follows: $133 million in Seeds and Genomics and $21 million in Agricultural Productivity. For the ~~nine~~three months ended ~~May~~Nov. 3130, ~~2017~~2016, the net reversal of previously recognized expense of $3036 million was split by segment as follows: $2734 million in Seeds and Genomics and $32 million in Agricultural Productivity. ~~For the nine months ended May 31, 2016, $290 million of restructuring charges was split by segment as follows: $259 million in Seeds and Genomics and $31 million in Agricultural Productivity.~~

On Oct. 6, 2015, the company approved actions to realign resources to increase productivity, enhance competitiveness by delivering cost improvements and support long-term growth. On Jan. 5, 2016, the company approved additional actions which, together with the Oct. 6, 2015 actions, comprise the 2015 Restructuring Plan. Actions include streamlining and reprioritizing some commercial, enabling, supply chain and research and development efforts.

Cumulative pretax charges related to the 2015 Restructuring Plan are estimated to be in the range of $~~925~~900 million to $1965 ~~billion~~million. Implementation of the 2015 Restructuring Plan is expected to be completed by the end of fiscal year 2018, and substantially all of the cash payments are expected to be made by the end of fiscal year 2018. These pretax charges are currently estimated to be comprised of the following categories: $~~350~~325 million to $~~370~~335 million in work force reductions, including severance and related benefits; $95 million to $~~115~~130 million in facility closures/exit costs, including contract termination costs; $480 million to $~~515~~500 million in asset impairments and write-offs related to property, plant and equipment, inventory and goodwill and other assets. These pretax charges are currently estimated to be incurred primarily by the Seeds and Genomics segment.

The following table displays the pretax charges of $17 million and the net reversal of previously recognized expense of $35 million incurred by segment under the 2015 Restructuring Plan for the three months ended Nov. 30, 2017, and 2016, respectively, as well as the cumulative pretax charges of $863 million under the 2015 Restructuring Plan.



	Three months ended Nov. 30, 2017								Three months ended Nov. 30, 2016									Cumulative Amount through Nov. 30, 2017
(Dollars in millions)	Seeds and Genomics			Agricultural Productivity		Total			Seeds and Genomics			Agricultural Productivity			Total			Seeds and Genomics		Agricultural Productivity		Total
Work Force Reductions	$	(4	)	$	—	$	(4	)	$	(36	)	$	(2	)	$	(38	)	$	303	$	18	$	321
Facility Closures/Exit Costs	15			4		19			2			—			2			57		14		71
Asset Impairments and Write-offs:
Property, plant and equipment	—			—		—			1			—			1			153		3		156
Inventory	2			—		2			1			—			1			106		—		106
Goodwill and other assets	—			—		—			(1		)	—			(1		)	189		20		209
Total Restructuring Charges, Net	$	13		$	4	$	17		$	(33	)	$	(2	)	$	(35	)	$	808	$	55	$	863

The company’s written human resource policies are indicative of an ongoing benefit arrangement with respect to severance packages. Benefits paid pursuant to an ongoing benefit arrangement are specifically excluded from the Exit or Disposal Cost Obligations topic of the ASC; therefore, severance charges incurred in connection with the 2015 Restructuring Plan are accounted for when probable and estimable as required under the Compensation - Nonretirement Postemployment Benefits topic of the ASC. In addition, when the decision to commit to a restructuring plan requires a long-lived asset and finite-lived

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

~~The~~intangible ~~following~~asset ~~tables~~impairment ~~display~~review, ~~the~~Monsanto ~~pretax~~evaluates ~~charges~~such ~~incurred~~impairment byissues ~~segment~~ under the ~~2015~~Property, ~~Restructuring~~Plant ~~Plan.~~and Equipment topic of the ASC.

	Three months ended May 31, 2017									Three months ended May 31, 2016
(Dollars in millions)	Seeds andGenomics			AgriculturalProductivity			Total			Seeds andGenomics			AgriculturalProductivity		Total
Work Force Reductions	$	(24	)	$	(2	)	$	(26	)	$	(4	)	$	—	$	(4	)
Facility Closures/Exit Costs	3			—			3			5			—		5
Asset Impairments and Write-offs:
Property, plant and equipment	6			—			6			9			2		11
Inventory	10			—			10			1			—		1
Goodwill and other assets	4			—			4			3			—		3
Total Restructuring Charges, Net	$	(1	)	$	(2	)	$	(3	)	$	14		$	2	$	16

The three months ended Nov. 30, 2017, and Nov. 30, 2016, include the reversal of $6 million and $45 million, respectively, of previously recognized expense due to changes in estimates related to work force reductions.

	Nine months ended May 31, 2017									Nine months ended May 31, 2016						Cumulative Amount through May 31, 2017
(Dollars in millions)	Seeds andGenomics			AgriculturalProductivity			Total			Seeds andGenomics		AgriculturalProductivity		Total		Seeds andGenomics		AgriculturalProductivity		Total
Work Force Reductions	$	(58	)	$	(4	)	$	(62	)	$	204	$	9	$	213	$	325	$	19	$	344
Facility Closures/Exit Costs	13			1			14			11		—		11		36		6		42
Asset Impairments and Write-offs:
Property, plant and equipment	25			1			26			38		2		40		147		3		150
Inventory	10			—			10			38		—		38		103		—		103
Goodwill and other assets	3			—			3			21		20		41		189		20		209
Total Restructuring Charges, Net	$	(7	)	$	(2	)	$	(9	)	$	312	$	31	$	343	$	800	$	48	$	848

The three and nine months ended May 31, 2017, and May 31, 2016, include the reversal of $34 million, $91 million, $8 million and $20 million, respectively, of previously recognized expense due to changes in estimates related to work force reductions.

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

The following table summarizes the activities related to the company’s 2015 Restructuring Plan.

(Dollars in millions)	Work Force Reductions(1)			Facility Closures/Exit Costs(2)			Asset Impairments and Write-offs			Total
Balance as of Aug. 31, 2015	$	217		$	—		$	—		$	217
Ending Liability as of Aug. 31, 2016	$	244		$	—		$	—		$	244
Net restructuring charges recognized in fiscal year 2016	189			28			147			364
Net restructuring charges recognized in fiscal year 2017	(81		)	24			46			(11		)
Cash payments	(~~164~~119		)	(2822		)	—			(~~192~~141		)
Asset impairments and write-offs	—			—			(~~147~~46		)	(~~147~~46		)
Foreign currency impact	2			—			—			2
Ending Liability as of Aug. 31, 2017	$	44		$	2		$	—		$	46
Balance as of Aug. 31, 2016	$	244		$	—		$	—		$	244
Net restructuring charges recognized in first quarter of fiscal year 2018	(4		)	19			2			17
Net restructuring charges recognized in first nine months of fiscal year 2017	(62		)	14			39			(9		)
Cash payments	(11		)	(12		)	—			(23		)
Cash payments	(105		)	(11		)	—			(116		)
Asset impairments and write-offs	—			—			(2		)	(2		)
Asset impairments and write-offs	—			—			(39		)	(39		)
Ending Liability as of Nov. 30, 2017	$	29		$	9		$	—		$	38
Foreign currency impact	(2		)	—			—			(2		)
Balance as of May 31, 2017	$	75		$	3		$	—		$	78

(1) There was no long-term restructuring liability balance as of Nov. 30, 2017. The restructuring liability balance included $108 million ~~and~~of ~~$17~~long-term ~~million~~liabilities that ~~were~~was recorded in ~~long-term~~other ~~restructuring~~liabilities ~~reserves~~ in the ~~Statements~~Statement of Consolidated Financial Position as of ~~May 31, 2017, and~~ Aug. 31, ~~2016, respectively~~2017.

(2) There was no long-term restructuring liability balance as of Nov. 30, 2017. The restructuring liability balance included $1 million of long-term liabilities that was recorded in ~~long-term~~other ~~restructuring~~liabilities ~~reserves~~ in the Statement of Consolidated Financial Position as of ~~May~~Aug. 31, 2017.


NOTE 4.	CUSTOMER FINANCING PROGRAMS

Monsanto participates in customer financing programs as follows:

	As of
(Dollars in millions)	~~May~~Nov. 3130, 2017		Aug. 31, ~~2016~~2017
Transactions that Qualify for Sales Treatment
U.S. agreement to sell trade receivables(1)
Outstanding balance	$	~~171~~235	$	~~511~~539
Maximum future payout under recourse provisions	918		1921
European and Latin American agreements to sell trade receivables(2)
Outstanding balance	$	948	$	60107
Maximum future payout under recourse provisions	312		3527
Agreements with Lenders(3)
Outstanding balance	$	9580	$	7392
Maximum future payout under the guarantee	6440		5752

1413

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

The gross amounts of receivables sold under transactions that qualify for sales treatment were:

Gross Amounts of Receivables Sold

Three Months Ended

~~Nine Months Ended~~

(Dollars in millions)

~~May~~Nov. 3130, 2017

~~May~~Nov. 3130, 2016

~~May 31, 2017~~

~~May 31, 2016~~

Transactions that Qualify for Sales Treatment

U.S. agreement to sell trade receivables(1)

~~151~~13

~~151~~115

~~266~~

~~167~~

European and Latin American agreements to sell trade receivables(2)

(1)

Monsanto has agreements in the United States to sell trade receivables, both with and without recourse, up to a maximum outstanding balance of $1.5 billion and to service such accounts. These receivables qualify for sales treatment under the Transfers and Servicing topic of the ASC and, accordingly, the proceeds are included in net cash provided by operating activities in the Statements of Consolidated Cash Flows. The liability for the guarantees for sales with recourse is recorded at an amount that approximates fair value, based upon the company’s historical collection experience and a current assessment of credit exposure.

(2)

Monsanto has various agreements in European and Latin American countries to sell trade receivables, both with and without recourse. These receivables qualify for sales treatment under the Transfers and Servicing topic of the ASC and, accordingly, the proceeds are included in net cash provided by operating activities in the Statements of Consolidated Cash Flows. The liability for the guarantees for sales with recourse is recorded at an amount that approximates fair value, based upon the company’s historical collection experience and a current assessment of credit exposure.

(3)

Monsanto has additional agreements with lenders to establish programs that provide financing for select customers in the United States, Latin America and Europe. Monsanto provides various levels of recourse through guarantees of the accounts in the event of customer default. The term of the guarantee is equivalent to the term of the customer loans. The liability for the guarantees is recorded at an amount that approximates fair value, based on the company’s historical collection experience with customers that participate in the program and a current assessment of credit exposure. If performance is required under the guarantee, Monsanto may retain amounts that are subsequently collected from customers.

In addition to the arrangements in the above table, Monsanto also participates in a financing program in Brazil that allows Monsanto to transfer up to 350 million Brazilian reais (approximately $~~108~~107 million as of ~~May 31~~Nov. 30, 2017) for select customers in Brazil to a revolving financing program. Under the arrangement, a recourse provision requires Monsanto to cover the first credit losses within the program up to the amount of the company’s investment. Credit losses above Monsanto’s investment would be covered by senior interests in the entity by a reduction in the fair value of their mandatorily redeemable shares. The company evaluated its relationship with the entity under the guidance within the Consolidation topic of the ASC, and as a result, the entity has been consolidated. For further information on this topic, see Note 5 — Variable Interest Entities and Investments.

There were no significant recourse or non-recourse liabilities for all programs as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017. There were no significant delinquent loans for all programs as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017.


NOTE 5.	VARIABLE INTEREST ENTITIES AND INVESTMENTS

Variable Interest Entities

On ~~Oct~~Nov. 194, 2016, Monsanto ~~exited~~entered into a financing program in Brazil that ~~was~~is recorded as a consolidated variable interest entity (“VIE”). ~~On Nov. 4, 2016, Monsanto entered into a new financing program in Brazil that is recorded as a consolidated VIE.~~ For the most part, the ~~new~~arrangement ~~and previous arrangements~~ of the Brazil VIE ~~consist~~consists of a revolving financing program that is funded by investments from the company and other third parties, primarily investment funds, and has been established to service Monsanto’s customer receivables. Under the ~~new~~ arrangement, third parties, primarily investment funds, hold senior interests of 8882 percent, and ~~Monsanto~~85 ~~holds the remaining 12~~ percent in the entity as of ~~May 31, 2017~~Nov. ~~Under~~30, ~~the previous arrangement~~2017, asand of Aug. 31, ~~2016~~2017, ~~third parties~~respectively, ~~primarily investment funds, held senior interest of 89 percent,~~ and Monsanto ~~held~~holds the remaining 1118 percent ~~interest.~~and ~~Under~~15 ~~the new arrangement~~percent, ~~the~~respectively. The senior interests held by third parties are mandatorily redeemable shares and are included in long-term debt in the ~~Statement~~Statements of Consolidated Financial Position as of ~~May 31, 2017~~Nov. ~~Under~~30, ~~the previous arrangement~~2017, ~~the senior interests held by third parties were mandatorily redeemable shares~~ and ~~were included in short-term debt in the Statement of Consolidated Financial Position as of~~ Aug. 31, ~~2016~~2017, respectively.

Under the ~~new~~ arrangement, Monsanto is required to maintain an investment in the Brazil VIE of at least 11.1 percent and could be required to provide additional contributions to the Brazil VIE. Monsanto currently has no unfunded commitments to the Brazil VIE. Creditors have no recourse against Monsanto in the event of default by the Brazil VIE. The company’s financial or other support provided to the Brazil VIE is limited to its investment. Even though Monsanto holds a subordinate interest in the Brazil VIE, the Brazil VIE was established to service transactions involving the company, and the company determines the receivables that are included in the revolving financing program. Therefore, the determination is that Monsanto has the power to direct the activities most significant to the economic performance of the Brazil VIE. As a result, the company is the primary beneficiary of the Brazil VIE, and the Brazil VIE has been consolidated in Monsanto’s consolidated financial statements. The assets of the Brazil VIE may only be used to settle the obligations of the respective entity. Third-party investors in the Brazil VIE do not

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MONSANTO COMPANY		FIRST QUARTER 2018 FORM 10-Q
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

have recourse to the general assets of Monsanto. See Note 4 — Customer Financing Programs and Note 11 — Fair Value Measurements— for additional information.

Monsanto has entered into an agreement with a third party to establish an entity to focus on research and development (“R&D”) related to agricultural fungicides for agricultural applications. This entity is recorded as a consolidated VIE of Monsanto. Under the arrangement, Monsanto holds a call option to acquire the majority of the equity interests in the R&D VIE from the third-party owner. Monsanto funds the operations of the R&D VIE in return for additional equity interests or to retain the call option. The funding is provided in separate research phases if research milestones are met. The R&D VIE was established to perform agricultural-based R&D activities for the benefit of Monsanto, and Monsanto provides all funding of the R&D VIE’s activities. Further, Monsanto has the power to direct the activities most significant to the R&D VIE. As a result, Monsanto is the primary beneficiary of the R&D VIE, and the R&D VIE is consolidated in Monsanto’s consolidated financial statements. The third-party owner of the R&D VIE does not have recourse to the general assets of Monsanto beyond Monsanto’s maximum exposure to loss at any given time relating to the R&D VIE.

Monsanto has an agreement with a related party to establish an entity to focus on research, development and commercialization of insect resistant hybrid cotton in India. This entity is recorded as a consolidated VIE of Monsanto. Under the arrangement, Monsanto performs substantially all of the VIE’s activities, which are reimbursed by the VIE. Further, since this entity was formed with a Monsanto related party, it was determined that Monsanto is most closely associated with the VIE. As a result, Monsanto is the primary beneficiary of the VIE, and the VIE is consolidated in Monsanto’s consolidated financial statements. The related-party owner of the VIE does not have recourse to the general assets of Monsanto beyond Monsanto’s maximum exposure to loss at any given time relating to the VIE, unless Monsanto is required to indemnify the related-party owner as a result of a third-party claim for injury to a person or damage to property caused by Monsanto’s activities as it relates to the VIE.

Monsanto enters into agreements with agents and dealers to distribute certain branded seed in the United States. Monsanto offers financing to agents and dealers that constitutes a variable interest as it exposes Monsanto to variability of the agent or dealer. Certain agents and dealers with these financing arrangements have been determined to be VIEs. Monsanto does not consolidate the agents or dealers as Monsanto is not the primary beneficiary, and any exposure to loss is limited to the amount of financing provided to the agent or dealer. The amount of Monsanto’s exposure varies based on the seasonality of the business and is not material as of Nov. 30, 2017, and Aug. 31, 2017.

Monsanto enters into agreements with distributors and dealers to distribute certain branded seed in the United States. Monsanto offers distributors and dealers the right of return that exposes Monsanto to variability and constitutes a variable interest in certain distributors and dealers. Certain distributors and dealers with these arrangements have been determined to be VIEs. Monsanto does not consolidate the distributors and dealers with these arrangements as Monsanto is not the primary beneficiary, and any exposure to loss is limited to the amount of the variable interest in the entity.

In fiscal year 2017, Monsanto entered into an agreement with a third party to establish an entity to focus on the sale of industrial, ornamental, and turf non-selective agricultural herbicides. Monsanto has provided an uncustomary indemnification to the third party that provides Monsanto the option under specified conditions to dissolve the entity, terminate all commercial agreements of the entity or receive all interest in the entity. Monsanto has determined the entity to be a VIE. Monsanto does not consolidate the entity as Monsanto is not the primary beneficiary. The amount of Monsanto’s exposure to loss related to the uncustomary indemnification is limited to approximately $29 million as of Nov. 30, 2017, and Aug. 31, 2017. Additionally, Monsanto has provided an indemnification to the third party and newly formed legal entity related to specified product claims. The amount of Monsanto’s exposure varies based upon the third party and newly formed legal entity’s losses related to such product claims and is not material as of Nov. 30, 2017, and Aug. 31, 2017.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

to direct the activities most significant to the economic performance of the Brazil VIE. As a result, the company is the primary beneficiary of the Brazil VIE, and the Brazil VIE has been consolidated in Monsanto’s consolidated financial statements. The assets of the Brazil VIE may only be used to settle the obligations of the respective entity. Third-party investors in the Brazil VIE do not have recourse to the general assets of Monsanto. See Note 4 — Customer Financing Programs and Note 11 — Fair Value Measurements— for additional information.

Monsanto has entered into an agreement with a third party to establish an entity to focus on research and development (“R&D”) related to agricultural fungicides for agricultural applications. This entity is recorded as a consolidated VIE of Monsanto. Under the arrangement, Monsanto holds a call option to acquire the majority of the equity interests in the R&D VIE from the third-party owner. Monsanto funds the operations of the R&D VIE in return for additional equity interests or to retain the call option. The funding is provided in separate research phases if research milestones are met. The R&D VIE was established to perform agricultural-based R&D activities for the benefit of Monsanto, and Monsanto provides all funding of the R&D VIE’s activities. Further, Monsanto has the power to direct the activities most significant to the R&D VIE. As a result, Monsanto is the primary beneficiary of the R&D VIE, and the R&D VIE is consolidated in Monsanto’s consolidated financial statements. The third-party owner of the R&D VIE do not have recourse to the general assets of Monsanto beyond Monsanto’s maximum exposure to loss at any given time relating to the R&D VIE.

Monsanto enters into agreements with agents to distribute certain branded seed in the United States. Monsanto offers financing to agents that constitutes a variable interest as it exposes Monsanto to variability of the agent. Certain agents with these financing arrangements have been determined to be VIEs. Monsanto does not consolidate the agents as Monsanto is not the primary beneficiary, and any exposure to loss is limited to the amount of financing provided to the agent. The amount of Monsanto’s exposure varies based on the seasonality of the business and is not material as of May 31, 2017, and Aug. 31, 2016.

Equity Method and Cost Basis Investments

Monsanto has equity method and cost basis investments recorded in other assets in the Statements of Consolidated Financial Position. Due to the nature of the cost basis investments, the fair market value is not readily determinable. These investments are reviewed for impairment indicators on a quarterly basis.

For such investments that were accounted for under the equity method and cost basis included in other assets in the Statements of Consolidated Financial Position, the amounts are summarized in the following table:

	As of
(Dollars in millions)	~~May~~Nov. 3130, 2017		Aug. 31, ~~2016~~2017
Equity Method Investments	$	~~146~~164	$	~~152~~166
Cost Basis Investments	~~100~~114		94116
Total	$	~~246~~278	$	~~246~~282


NOTE 6.	RECEIVABLES

Trade receivables in the Statements of Consolidated Financial Position are net of allowances of $~~116~~109 million and $9478 million as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017, respectively.

The company has long-term customer financing receivables that relate to past due accounts which are not expected to be collected within the current year. The long-term customer receivables were $~~351~~326 million and $~~260~~398 million with a corresponding allowance for credit losses on these receivables of $~~234~~270 million and $~~228~~277 million as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017, respectively. These long-term customer receivable balances and the corresponding allowance are included in long-term receivables, net in the Statements of Consolidated Financial Position. For these long-term customer receivables, interest is no longer accrued when the receivable is determined to be delinquent and classified as long-term based on estimated timing of collection.

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

The following table displays a roll forward of the allowance for credit losses related to long-term customer receivables.

(Dollars in millions)
Balance as of Aug. 31, 2015	$	120
Incremental Provision	78
Recoveries	(2		)
Write-offs	(4		)
Other(1)	36
Balance as of Aug. 31, 2016	$	228
Incremental Provision	1720
Recoveries	(3138		)
Write-offs	(12		)
Other(1)	21
Reclassifications from allowance for current receivables	67
Balance as of May 31, 2017	$	234
Foreign currency translation adjustments	2
Balance as of Aug. 31, 2017	$	277
Recoveries	(1		)
Reclassifications to allowance for current receivables	(2		)
Foreign currency translation adjustments	(4		)
Balance as of Nov. 30, 2017	$	270

(1)Includes reclassifications from the allowance for current receivables and foreign currency translation adjustments.

On an ongoing basis, the company evaluates credit quality of its financing receivables utilizing aging of receivables, collection experience and write-offs, as well as evaluating existing economic conditions, to determine if an allowance is necessary.

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MONSANTO COMPANY		FIRST QUARTER 2018 FORM 10-Q
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)


NOTE 7.	INVENTORY

Components of inventory are:

	As of
(Dollars in millions)	~~May~~Nov. 3130, 2017			Aug. 31, ~~2016~~2017
Finished Goods	$	1,~~564~~818		$	1,~~404~~477
Goods In Process	1,~~316~~678			1,~~489~~446
Raw Materials and Supplies	~~466~~689			~~498~~561
Inventory at FIFO Cost	34,~~346~~185			3,~~391~~484
Excess of FIFO over LIFO Cost	(~~157~~152		)	(~~150~~144		)
Total	$	34,~~189~~033		$	3,~~241~~340


NOTE 8.	GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the net carrying amount of goodwill for the first ~~nine~~three months of fiscal year ~~2017~~2018, by segment, are as follows:

(Dollars in millions)	Seeds andGenomics			AgriculturalProductivity			Total
Balance as of Aug. 31, 2016	$	3,967		$	53		$	4,020
Balance as of Aug. 31, 2017	$	4,039		$	49		$	4,088
Effect of foreign currency translation and other adjustments	14(7		)	(21		)	12(6		)
Balance as of May 31, 2017	$	3,981		$	51		$	4,032
Balance as of Nov. 30, 2017	$	4,032		$	50		$	4,082

~~The~~There ~~fiscal~~were ~~year~~no ~~2017~~events ~~annual~~or ~~goodwill~~circumstances ~~impairment~~indicating ~~test~~that ~~was~~goodwill ~~performed~~might be impaired as of ~~Mar~~Nov. 130, 2017~~, and no goodwill impairment existed as of that date~~. ~~There~~The ~~were~~fiscal noyear ~~events~~2018 orannual ~~circumstances~~goodwill ~~indicating~~impairment ~~that~~test ~~goodwill~~will ~~might~~ be ~~impaired~~performed as of ~~May 31~~Mar. 1, ~~2017~~2018.

Information regarding the company’s other intangible assets is as follows:



	As of Nov. 30, 2017							As of Aug. 31, 2017
(Dollars in millions)	Carrying Amount		Accumulated Amortization			Net		Carrying Amount		Accumulated Amortization			Net
Acquired Germplasm	$	1,074	$	(816	)	$	258	$	1,077	$	(814	)	$	263
Acquired Intellectual Property	1,074		(684		)	390		1,079		(671		)	408
Trademarks	334		(167		)	167		335		(165		)	170
Customer Relationships	291		(232		)	59		291		(228		)	63
Other	74		(42		)	32		68		(40		)	28
Total Other Intangible Assets, Finite Lives	$	2,847	$	(1,941	)	$	906	$	2,850	$	(1,918	)	$	932
In Process Research & Development, Indefinite Lives	93		—			93		92		—			92
Total Other Intangible Assets	$	2,940	$	(1,941	)	$	999	$	2,942	$	(1,918	)	$	1,024

Total amortization expense of total other intangible assets was $23 million and $30 million for the three months ended Nov. 30, 2017, and Nov. 30, 2016, respectively.

The estimated intangible asset amortization expense for fiscal year 2018 through fiscal year 2022 is as follows:



(Dollars in millions)	Amount
2018	$	119
2019	119
2020	111
2021	110
2022	105

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

~~Information~~NOTE ~~regarding~~9. ~~the~~DEFERRED ~~company’s other intangible assets is as follows:~~REVENUE

	As of May 31, 2017							As of Aug. 31, 2016
(Dollars in millions)	CarryingAmount		AccumulatedAmortization			Net		CarryingAmount		AccumulatedAmortization			Net
Acquired Germplasm	$	1,070	$	(801	)	$	269	$	1,070	$	(778	)	$	292
Acquired Intellectual Property	1,073		(654		)	419		1,042		(593		)	449
Trademarks	334		(165		)	169		334		(152		)	182
Customer Relationships	286		(220		)	66		301		(223		)	78
Other	68		(38		)	30		65		(33		)	32
Total Other Intangible Assets, Finite Lives	$	2,831	$	(1,878	)	$	953	$	2,812	$	(1,779	)	$	1,033
In Process Research & Development, Indefinite Lives	92		—			92		92		—			92
Total Other Intangible Assets	$	2,923	$	(1,878	)	$	1,045	$	2,904	$	(1,779	)	$	1,125

As of Nov. 30, 2017, and Aug. 31, 2017, short-term deferred revenue was $3,119 million and $727 million, respectively. These balances primarily consist of cash received related to Monsanto’s prepayment programs in the United States and Brazil. These programs allow Monsanto’s customers to receive a discount if they prepay by a certain date, and the short-term deferred revenue balances are consistent with the seasonality of Monsanto’s business. Prepayment options are attractive to customers given the discounted pricing and the ability to utilize cash flow from the current year grain harvest to pay for the next season seed purchases. The deferred revenue balances related to these prepayment programs are considered short-term in nature and thus classified in current liabilities as the prepayments are for products to be shipped within the next 12 months.

Total amortization expense of total other intangible assets was $36 million and $29 million for the three months ended May 31, 2017, and May 31, 2016, respectively, and $110 million and $88 million for the nine months ended May 31, 2017, and May 31, 2016, respectively.

The estimated intangible asset amortization expense for fiscal year 2017 through fiscal year 2021 is as follows:

(Dollars in millions)	Amount
2017	$	147
2018	120
2019	111
2020	108
2021	106

NOTE 9. INCOME TAXES

Monsanto recorded a discrete tax benefit of $50 million in the first nine months of fiscal 2017, primarily as a result of favorable adjustments to Monsanto’s tax returns filed during the year. Monsanto recorded a discrete tax expense of $146 million in the first nine months of fiscal 2016, primarily as a result of establishing a valuation allowance on Argentina’s deferred tax assets, offset by favorable adjustments to Monsanto’s tax returns filed during the year.


NOTE 10.	DEBT AND OTHER CREDIT ARRANGEMENTS

In April 2016, Monsanto filed a shelf registration with the Securities and Exchange Commission (“SEC”) (“2016 shelf registration”) that allows the company to issue a maximum aggregate amount of $6 billion of debt, equity and hybrid offerings. The 2016 shelf registration expires in April 2019.

Monsanto has a $3 billion credit facility agreement that provides a senior unsecured revolving credit facility through Mar. 27, 2020. As of ~~May~~Nov. 3130, 2017, Monsanto was in compliance with all debt covenants, and there were no outstanding borrowings under this credit facility.

Monsanto’s short-term debt instruments include ~~commercial paper,~~ the current portion of long-term debt, notes payable to banks and borrowings under the delayed draw term loan facility. As of ~~May~~Nov. 3130, 2017, ~~Monsanto~~and ~~had commercial paper borrowings outstanding of $1,212 million which are included in short-term debt in the Statement of Consolidated Financial Position. As of~~ Aug. 31, ~~2016~~2017, ~~there~~Monsanto ~~was~~did ~~$500~~not ~~million~~have ofany commercial paper ~~borrowings~~ outstanding. Additionally, as of ~~May~~Nov. 30, 2017, and Aug. 31, 2017, the mandatorily redeemable shares of the Brazil VIE were classified as long-term debt instruments. ~~These instruments were classified as short-term debt as of Aug. 31, 2016.~~ See Note 5 — Variable Interest Entities and Investments — for additional information.

In October 2016, Monsanto ~~closed~~entered into a $1 billion delayed draw term loan facility that matures the earlier of October 2019 or the consummation of the Merger with Bayer. Borrowings under the facility were $500 million as of ~~May~~ Nov. 30, 2017, and Aug. 31, 2017. Proceeds were used for general corporate purposes.

18The fair value of total short-term debt was $1,172 million and $877 million as of Nov. 30, 2017, and Aug. 31, 2017, respectively. The fair value of the total long-term debt was $7,294 million and $7,603 million as of Nov. 30, 2017, and Aug. 31, 2017, respectively. See Note 11 — Fair Value Measurements — for additional information.

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

The fair value of total short-term debt was $2,621 million and $1,589 million as of May 31, 2017, and Aug. 31, 2016, respectively. The fair value of the total long-term debt was $7,483 million and $7,834 million as of May 31, 2017, and Aug. 31, 2016, respectively. See Note 11 — Fair Value Measurements — for additional information.


NOTE 11.	FAIR VALUE MEASUREMENTS

Monsanto determines the fair market value of its financial assets and liabilities based on quoted market prices, estimates from brokers and other appropriate valuation techniques. The company uses the fair value hierarchy established in the Fair Value Measurements and Disclosures topic of the ASC, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy contains three levels as follows, with Level 3 representing the lowest level of input.

Level 1 — Values based on unadjusted quoted market prices in active markets that are accessible at the measurement date for identical assets and liabilities.

Level 2 — Values based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, discounted cash flow models, or other model-based valuation techniques adjusted, as necessary, for credit risk.

Level 3 — Values generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions would reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques could include use of option pricing models, discounted cash flow models and similar techniques.

The following tables set forth by level Monsanto’s assets and liabilities disclosed at fair value on a recurring basis as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017. As required by the Fair Value Measurements and Disclosures topic of the ASC, assets and liabilities are classified in their entirety based on the lowest level of input that is a significant component of the fair value measurement. Monsanto’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels.

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	Fair Value Measurements at May 31, 2017, Using
	Fair Value Measurements at Nov. 30, 2017, Using
(Dollars in millions)	Level 1		Level 2		Level 3		Net Balance
Assets at Fair Value:
Cash equivalents	$	12,~~243~~784	$	—	$	—	$	12,~~243~~784
Short-term investments	61		—		—		61
Equity securities	108		—		—		108
Derivative assets related to:
Foreign currency contracts	—		2317		—		2317
Commodity contracts	279		4		—		3113
Total Assets at Fair Value	$	12,~~286~~802	$	2721	$	—	$	12,~~313~~823
Liabilities at Fair Value:
Short-term debt instruments(1)	$	—	$	21,~~621~~172	$	—	$	21,~~621~~172
Long-term debt instruments(1)	—		7,~~385~~197		9897		7,~~483~~294
Derivative liabilities related to:
Foreign currency contracts	—		913		—		913
Commodity contracts	106		62		—		168
Total Liabilities at Fair Value	$	106	$	108,~~021~~384	$	9897	$	108,~~129~~487


(1)	Debt instruments, excluding mandatorily redeemable shares, are not recorded at fair value on a recurring basis; however, they are measured at fair value for disclosure purposes, as required by the Fair Value Measurements and Disclosures topic of the ASC.

	Fair Value Measurements at Aug. 31, 2016, Using
	Fair Value Measurements at Aug. 31, 2017, Using
(Dollars in millions)	Level 1		Level 2		Level 3		Net Balance
Assets at Fair Value:
Cash equivalents	$	1,~~081~~034	$	—	$	—	$	1,~~081~~034
Short-term investments	608		—		—		608
Equity securities	1310		—		—		1310
Derivative assets related to:
Foreign currency contracts	—		10		—		10
Commodity contracts	93		97		—		1810
Total Assets at Fair Value	$	1,~~163~~055	$	1917	$	—	$	1,~~182~~072
Liabilities at Fair Value:
Short-term debt instruments(1)	$	—	$	~~1,476~~877	$	~~113~~—	$	~~1,589~~877
Long-term debt instruments(1)	—		7,~~834~~499		—104		7,~~834~~603
Derivative liabilities related to:
Foreign currency contracts	—		1516		—		1516
Commodity contracts	327		206		—		5213
Interest rate contracts	—		41		—		41
Total Liabilities at Fair Value	$	7	$	8,398	$	104	$	8,509
Total Liabilities at Fair Value	$	32	$	9,386	$	113	$	9,531


(1)	Debt instruments, excluding mandatorily redeemable shares, are not recorded at fair value on a recurring basis; however, they are measured at fair value for disclosure purposes, as required by the Fair Value Measurements and Disclosures topic of the ASC.

The company’s derivative contracts are measured at fair value, including forward commodity purchase and sale contracts, exchange-traded commodity futures and option contracts and over-the-counter (“OTC”) instruments related primarily to agricultural commodities, energy and raw materials, interest rates and foreign currencies. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified as Level 1. Fair value for forward commodity purchase and sale contracts is estimated based on exchange-quoted prices adjusted for differences in local markets. These differences are generally determined using inputs from broker or dealer quotations or market transactions in either the listed or OTC markets and are classified as Level 2. Interest rate contracts consist of interest rate swaps measured using broker or dealer quoted prices. When observable inputs are available for substantially the full term of the contract, it is classified as

2019

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~~or dealer quoted prices. When observable inputs are available for substantially the full term of the contract, it is classified as~~ Level 2. Based on historical experience with the company’s suppliers and customers, the company’s own credit risk and knowledge of current market conditions, the company does not view nonperformance risk to be a significant input to the fair value for the majority of its forward commodity purchase and sale contracts. The effective portions of changes in the fair value of derivatives designated as cash flow hedges are recognized in the Statements of Consolidated Financial Position as a component of accumulated other comprehensive loss until the hedged items are recorded in earnings or it is probable the hedged transaction will no longer occur. Changes in the fair value of derivatives are recognized in the Statements of Consolidated Operations as a component of net sales, cost of goods sold and other ~~expense~~ (income) expense, net.

The company’s short-term investments consist of cash which is contractually restricted as to withdrawal or usage. The company’s equity securities consist of publicly traded equity investments. Publicly traded equity investments are valued using quoted market prices and are classified as Level 1. Contractually restricted cash may be held in an interest bearing account measured using prevailing interest rates and is classified as Level 1. Short-term debt instruments are classified as Level 2. The company’s long-term debt securities are classified as Level 2 and valued using broker or dealer quoted prices with a maturity greater than one year.

Short-term debt instruments may consist of commercial paper, current portion of long-term debt, borrowings under the delayed draw term loan facility and notes payable to banks. Commercial paper, notes payable to banks and borrowings under the delayed draw term loan facility are recorded at amortized cost in the Statements of Consolidated Financial Position, which approximates fair value. Current portion of long-term debt is measured at fair value for disclosure purposes and determined based on current market yields for Monsanto’s debt traded in the secondary market. See Note 10 — Debt and Other Credit Arrangements — for additional disclosures.

Long-term debt was measured at fair value for disclosure purposes and determined based on current market yields for Monsanto’s debt traded in the secondary market. Long-term debt includes mandatorily redeemable shares. Mandatorily redeemable shares are recorded in the Statements of Consolidated Financial Position at fair value, which represents the amount of cash the consolidated variable interest entity would pay if settlement occurred as of the respective reporting date. Fair value of the mandatorily redeemable shares of the variable interest entity is calculated using observable and unobservable inputs from an interest rate market in Brazil and stated contractual terms (a Level 3 measurement). See Note 10 — Debt and Other Credit Arrangements — for additional disclosures. Accretion expense is included in the Statements of Consolidated Operations as interest expense.

For the ~~nine~~three months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016, the company had no transfers between Level 1, Level 2 and Level 3. Monsanto does not have any assets with fair value determined using Level 3 inputs as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017. The following table summarizes the change in fair value of the Level 3 long-term debt instrument for the ~~nine~~three months ended ~~May~~Nov. 3130, 2017.

(Dollars in millions)
Balance Aug. 31, 2016	$	—
Balance Aug. 31, 2017	$	104
Issuance of mandatorily redeemable shares	93
Accretion expense	2
Accretion expense	6
Payments	(5		)
Effect of foreign currency translation adjustments	(4		)
Balance May 31, 2017(1)	$	98
Balance Nov. 30, 2017(1)	$	97

(1) Includes 315,000 mandatorily redeemable shares outstanding with a par value of 1,000 Brazilian reais (approximately $~~308~~307) as of ~~May~~Nov. 3130, 2017.

21There were no significant measurements of assets or liabilities to their implied fair value on a nonrecurring basis during the three months ended Nov. 30, 2017, and Nov. 30, 2016.

~~Table~~The recorded amounts of ~~Contents~~cash, trade receivables, miscellaneous receivables, third-party guarantees, accounts payable, grower production accruals, accrued marketing programs and miscellaneous short-term accruals approximate their fair values as of Nov. 30, 2017, and Aug. 31, 2017.

MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

The following table summarizes the change in fair value of the Level 3 short-term debt instrument for the nine months ended May 31, 2017.

(Dollars in millions)
Balance Aug. 31, 2016(1)	$	113
Redemption of mandatorily redeemable shares	(103		)
Accretion expense	2
Payments	(7		)
Effect of foreign currency translation adjustments	(5		)
Balance May 31, 2017	$	—

(1) Includes 350,000 mandatorily redeemable shares outstanding with a par value of 1,000 Brazilian reais (approximately $309) as of Aug. 31, 2016.

There were no significant measurements of liabilities to their implied fair value on a nonrecurring basis during the three and nine months ended May 31, 2017, and May 31, 2016.

Significant measurements during the three and nine months ended May 31, 2017, and May 31, 2016, of assets to their implied fair value on a nonrecurring basis were as follows:

Property, Plant and Equipment, Net: During the three months ended May 31, 2017, property, plant and equipment within the Seeds and Genomics segment with a net book value of $6 million was written down to its implied fair value of less than $1 million, resulting in an impairment charge of $6 million, with $2 million included in cost of goods sold and $4 million included in restructuring charges in the Statement of Consolidated Operations. The implied fair value calculations were performed using a discounted cash flow model (a Level 3 measurement). See Note 3 — Restructuring — for additional disclosures.

During the nine months ended May 31, 2017, property, plant and equipment within the Seeds and Genomics segment with a net book value of $24 million was written down to its implied fair value estimate of $7 million, resulting in an impairment charge of $17 million, with $6 million included in cost of goods sold and $11 million included in restructuring charges in the Statement of Consolidated Operations. The implied fair value calculations were performed using a discounted cash flow model (a Level 3 measurement). See Note 3 — Restructuring — for additional disclosures.

During the three months ended May 31, 2016, property, plant and equipment within the Seeds and Genomics segment with a net book value of $21 million was written down to its implied fair value estimate of $12 million, resulting in an impairment charge of $9 million, with $9 million included in restructuring charges in the Statement of Consolidated Operations. The implied fair value calculations were performed using a discounted cash flow model (a Level 3 measurement). See Note 3 — Restructuring — for additional disclosures.

During the nine months ended May 31, 2016, property, plant and equipment within the Seeds and Genomics segment with a net book value of $65 million was written down to its implied fair value estimate of $27 million, resulting in an impairment charge of $38 million, with $15 million included in cost of goods sold and $23 million included in restructuring charges in the Statement of Consolidated Operations. The implied fair value calculations were performed using a discounted cash flow model (a Level 3 measurement). See Note 3 — Restructuring — for additional disclosures.

Other Intangible Assets, Net: During the three months ended May 31, 2016, other intangible assets within the Seeds and Genomics segment with a net book value of $3 million were written down to their implied fair value of less than $1 million, resulting in an impairment charge of $3 million, with $3 million included in restructuring charges in the Statement of Consolidated Operations. The implied fair value calculations were performed using a discounted cash flow model (a Level 3 measurement). See Note 3 — Restructuring — for additional disclosures.

During the nine months ended May 31, 2016, other intangible assets within the Seeds and Genomics segment with a net book value of $19 million were written down to their implied fair value of less than $1 million, resulting in an impairment charge of $19 million, with $19 million included in restructuring charges in the Statement of Consolidated Operations. The implied fair value calculations were performed using a discounted cash flow model (a Level 3 measurement). See Note 3 — Restructuring — for additional disclosures.

During the nine months ended May 31, 2016, other intangible assets within the Agricultural Productivity segment with a net book value of $20 million were written down to their implied fair value of less than $1 million, resulting in an impairment charge of $20 million, with $20 million included in restructuring charges in the Statement of Consolidated Operations. The

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implied fair value calculations were performed using a discounted cash flow model (a Level 3 measurement). See Note 3 — Restructuring — for additional disclosures.

The recorded amounts of cash, trade receivables, miscellaneous receivables, third-party guarantees, accounts payable, grower production accruals, accrued marketing programs and miscellaneous short-term accruals approximate their fair values as of May 31, 2017, and Aug. 31, 2016.

Management is ultimately responsible for all fair values presented in the company’s consolidated financial statements. The company performs analysis and review of the information and prices received from third parties to ensure that the prices represent a reasonable estimate of fair value. This process involves quantitative and qualitative analysis. As a result of the analysis, if the company determines there is a more appropriate fair value based upon the available market data, the price received from the third party is adjusted accordingly.

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MONSANTO COMPANY		FIRST QUARTER 2018 FORM 10-Q
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)


NOTE 12.	FINANCIAL INSTRUMENTS

Cash Flow Hedges

The company uses foreign currency options and foreign currency forward contracts as hedges of anticipated sales or purchases denominated in foreign currencies. The company enters into these contracts to protect itself against the risk that the eventual net cash flows will be adversely affected by changes in exchange rates.

Monsanto’s commodity price risk management strategy is to use derivative instruments to minimize significant unanticipated earnings fluctuations that may arise from volatility in commodity prices. Price fluctuations in commodities, mainly in corn and soybeans, can cause the actual prices paid to production growers for corn and soybean seeds to differ from anticipated cash outlays. Monsanto generally uses commodity futures and options contracts to manage these risks. Monsanto’s energy and raw material risk management strategy is to use derivative instruments to minimize significant unanticipated manufacturing cost fluctuations that may arise from volatility in natural gas, diesel and ethylene prices.

Monsanto’s interest rate risk management strategy is to use derivative instruments, such as forward-starting interest rate swaps and option contracts, to minimize significant unanticipated earnings fluctuations that may arise from volatility in interest rates of the company’s borrowings and to manage the interest rate sensitivity of its debt.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

The maximum term over which the company is hedging exposures to the variability of cash flow (for all forecasted transactions) is 15nine months for foreign currency hedges and 3024 months for commodity hedges. During the next 12 months, a pretax net loss of approximately $2021 million is expected to be reclassified from accumulated other comprehensive loss into earnings. A pretax loss of $37 million was reclassified into other ~~expense~~ (income) expense, net as a result of the discontinuance of an interest rate hedge during the ~~nine~~three months ended ~~May 31, 2017, because it was probable the original forecasted transaction would not occur by the end of the originally specified time period~~Nov. ~~A pretax loss of less than $1 million during the nine months ended May 31~~30, 2017, was reclassified into cost of goods sold in the Statement of Consolidated Operations as a result of the discontinuance of foreign currency cash flow hedges because it was probable that the original forecasted transactions would not occur by the end of the originally specified time period. A pretax loss of less than $1 million during the nine months ended May 31, 2016, ~~was reclassified into cost of goods sold in the Statement of Consolidated Operations as a result of the discontinuance of commodity cash flow hedges~~ because it was probable ~~that~~ the original forecasted transaction would not occur by the end of the originally specified time period. No cash flow hedges were discontinued during the three months ended ~~May 31,~~Nov. ~~2017~~30, ~~and May 31, 2016~~2017.

Fair Value Hedges

The company uses commodity futures, forwards and options contracts as fair value hedges to manage the value of its soybean inventory and other assets. For derivative instruments that are designated and qualify as fair value hedges, both the gain or loss on the derivative and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. No fair value hedges were discontinued during the three ~~and nine~~ months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016.

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

Derivatives Not Designated as Hedging Instruments

The company uses foreign currency contracts to hedge the effects of fluctuations in exchange rates on foreign currency denominated third-party and intercompany receivables and payables. Both the gain or loss on the derivative and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings.

The company uses commodity option contracts to hedge anticipated cash payments to growers ~~in the United States~~, ~~Mexico and Brazil,~~ which can fluctuate with changes in commodity price. Because these option contracts do not meet the provisions specified by the Derivatives and Hedging topic of the ASC, they do not qualify for hedge accounting treatment. Accordingly, the gain or loss on these derivatives is recognized in current earnings.

To reduce credit exposure in Latin America, Monsanto collects payments on certain customer accounts in grain. Such payments in grain are negotiated at or near the time Monsanto’s products are sold to the customers and are valued at the prevailing grain commodity prices. By entering into forward sales contracts related to grain, Monsanto mitigates the commodity price exposure from the time a contract is signed with a customer until the time a grain merchant collects the grain from the customer on Monsanto’s behalf. The forward sales contracts do not qualify for hedge accounting treatment under the Derivatives and Hedging topic of the ASC. Accordingly, the gain or loss on these derivatives is recognized in current earnings.

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MONSANTO COMPANY		FIRST QUARTER 2018 FORM 10-Q
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

Monsanto uses interest rate contracts to minimize the variability of forecasted cash flows arising from the company’s consolidated VIE in Brazil. The interest rate contracts do not qualify for hedge accounting treatment under the Derivatives and Hedging Topic of the ASC. Accordingly, the gain or loss on these derivatives is recognized in current earnings.

Financial instruments are neither held nor issued by the company for trading purposes.

The notional amounts of the company’s derivative instruments outstanding as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017, are as follows:

	As of
(Dollars in millions)	~~May~~Nov. 3130, 2017		Aug. 31, ~~2016~~2017
Derivatives Designated as Hedges:
Foreign exchange contracts	$	~~218~~369	$	~~388~~453
Commodity contracts	~~653~~491		~~484~~430
Interest rate contracts	—		150
Total Derivatives Designated as Hedges	$	860	$	883
Total Derivatives Designated as Hedges	$	871	$	1,022
Derivatives Not Designated as Hedges:
Foreign exchange contracts	$	1,~~547~~407	$	12,~~096~~133
Commodity contracts	~~280~~98		~~223~~189
Interest rate contracts	217		~~116~~21
Total Derivatives Not Designated as Hedges	$	1,~~848~~512	$	12,~~435~~343

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

The net presentation of the company’s derivative instruments outstanding was as follows:

			As of May 31, 2017
			As of Nov. 30, 2017
(Dollars in millions)			Gross Amounts Recognized		Gross Amounts Offset in the Statement of Consolidated Financial Position			Net Amounts Included in the Statement of Consolidated Financial Position			Collateral Pledged		Net Amounts Reported in the Statement of Consolidated Financial Position		Other Items Included in the Statement of Consolidated Financial Position		Statement of Consolidated Financial Position Balance
Asset Derivatives:
Other current assets
	Derivatives designated as hedges:
		Commodity contracts(1)	$	269	$	(94	)	$	175		$	—	$	175
		Foreign exchange contracts	2		—			2			—		2
	Derivatives not designated as hedges:
		Commodity contracts	53		—			53			—		53
		Foreign exchange contracts	2117		—			2117			—		2117
Total other current assets			5429		(94		)	4525			—		4525		$	~~186~~254	$	~~231~~279
Other assets
	Derivatives designated as hedges:
		Commodity contracts(1)	—		(12		)	(12		)	12		—
Total other assets			—		(12		)	(12		)	12		—		~~512~~946		~~512~~946
Total Asset Derivatives			$	54	$	(10	)	$	44		$	1	$	45
Miscellaneous short-term accruals
	Derivatives designated as hedges:
		Commodity contracts(1)	1		(1		)	—			—		—
Total miscellaneous short-term accruals			1		(1		)	—			—		—
Total Asset Derivatives			$	30	$	(7	)	$	23		$	2	$	25
Liability Derivatives:
Other current assets
	Derivatives designated as hedges:
		Commodity contracts(1)	$	94	$	(94	)	$	—		$	—	$	—
Total other current assets			94		(94		)	—			—		—
Other assets
	Derivatives designated as hedges:
		Commodity contracts(1)	12		(12		)	—			—		—
Total other assets			12		(12		)	—			—		—
Miscellaneous short-term accruals
	Derivatives designated as hedges:
		Commodity contracts	5		—			5			—		5
		Commodity contracts(1)	1		(1		)	—			—		—
		Foreign exchange contracts	7		—			7			—		7
	Derivatives not designated as hedges:
		Commodity contracts	1		—			1			—		1
		Foreign exchange contracts	96		—			96			—		96
Total miscellaneous short-term accruals			15		—(1		)	1514			—		1514		$	~~798~~717	$	~~813~~731
Total Liability Derivatives			$	2521	$	(107	)	$	1514		$	—	$	1514


(1)	As allowed by the Derivatives and Hedging topic of the ASC, derivative assets and liabilities have been offset by collateral subject to an enforceable master netting arrangement or similar arrangement. Therefore, contracts that are in an asset or liability position are included in asset accounts within the Statements of Consolidated Financial Position.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

			As of Aug. 31, 2016
			As of Aug. 31, 2017
(Dollars in millions)			Gross Amounts Recognized		Gross Amounts Offset in the Statement of Consolidated Financial Position			Net Amounts Included in the Statement of Consolidated Financial Position			Collateral Pledged		Net Amounts Reported in the Statement of Consolidated Financial Position		Other Items Included in the Statement of Consolidated Financial Position		Statement of Consolidated Financial Position Balance
Asset Derivatives:
Other current assets
	Derivatives designated as hedges:
		Commodity contracts(1)	$	92	$	(297	)	$	(205	)	$	205	$	—
		Foreign exchange contracts	4		—			4			—		4
	Derivatives not designated as hedges:
		Commodity contracts(1)	9		(6		)	3			—		3
		Commodity contracts	6		—			6			—		6
		Foreign exchange contracts	610		—			610			—		610
Total other current assets			2818		(357		)	(711		)	205		1316		$	~~214~~252	$	~~227~~268
Other assets
	Derivatives designated as hedges
	Derivatives designated as hedges:
		Commodity contracts(1)	—		(4		)	(4		)	4		—
		Commodity contracts	1		—			1			—		1
Total other assets			—1		(4—		)	(41		)	4—		—1		~~489~~954		~~489~~955
Total Asset Derivatives			$	28	$	(39	)	$	(11	)	$	24	$	13
Miscellaneous short-term accruals
	Derivatives designated as hedges:
		Commodity contracts(1)	1		(1		)	—			—		—
Total miscellaneous short-term accruals			1		(1		)	—			—		—
Total Asset Derivatives			$	20	$	(8	)	$	12		$	5	$	17
Liability Derivatives:
Other current assets
	Derivatives designated as hedges:
		Commodity contracts(1)	$	297	$	(297	)	$	—		$	—	$	—
	Derivatives not designated as hedges:
Total other current assets			7		(7		)	—			—		—
		Commodity contracts(1)	6		(6		)	—			—		—
Total other current assets			35		(35		)	—			—		—
Other assets
	Derivatives designated as hedges:
		Commodity contracts(1)	4		(4		)	—			—		—
Total other assets			4		(4		)	—			—		—
Miscellaneous short-term accruals
	Derivatives designated as hedges:
		Commodity contracts	11		—			11			—		11
		Commodity contracts(1)	3		(1		)	2			—		2
		Foreign currency contracts	814		—			814			—		814
		Interest rate contracts	41		—			41			—		41
	Derivatives not designated as hedges:
		Foreign exchange contracts	7		—			7			—		7
		Commodity contracts	3		—			3			—		3
Total miscellaneous short-term accruals			67		—			67			—		67		$	937	$	1,004
		Foreign exchange contracts	2		—			2			—		2
Other liabilities
Total miscellaneous short-term accruals			22		(1		)	21			—		21		$	719	$	740
	Derivatives designated as hedges:
Total Liability Derivatives			$	29	$	(8	)	$	21		$	—	$	21
		Commodity contracts	2		—			2			—		2
Total other liabilities			2		—			2			—		2		316		318
Total Liability Derivatives			$	108	$	(39	)	$	69		$	—	$	69


(1)	As allowed by the Derivatives and Hedging topic of the ASC, commodity derivative assets and liabilities have been offset by collateral subject to an enforceable master netting arrangement or similar arrangement. Therefore, these commodity contracts that are in an asset or liability position are included in asset accounts within the Statements of Consolidated Financial Position.

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The gains and losses on the company’s derivative instruments were as follows:

	Amount of Gain (Loss)Recognized in AOCL(1) (Effective Portion)						Amount of Gain (Loss)Recognized in Income(2)(3)
	Three Months Ended						Three Months Ended						Statements of Consolidated Operations Classification
(Dollars in millions)	~~May~~Nov. 3130, 2017			~~May~~Nov. 3130, 2016			~~May~~Nov. 3130, 2017			~~May~~Nov. 3130, 2016
Derivatives Designated as Hedges:
Fair value hedges:
Commodity contracts							$	28—		$	(2013	)	Cost of goods sold
Commodity contract							—			(1		)	Other expense (income), net
Cash flow hedges:
Foreign currency contracts	$	—9		$	(917	)	(2		)	37			Net sales
Foreign currency contracts	(2—		)	(16		)	3—			61			Cost of goods sold
Commodity contracts	~~(17~~2		)	5719			(21		)	(343		)	Cost of goods sold
Interest rate contracts	—			1—			(3—		)	(337		)	~~Interest~~Other (income) expense, net
Total Derivatives Designated as Hedges	(19		)	48			24			(49		)
Interest rate contracts	—			4			(3		)	(4		)	Interest expense
Total Derivatives Designated as Hedges	11			46			(2		)	(49		)
Derivatives Not Designated as Hedges:
Foreign currency contracts(4)							2011			(845		)	Other ~~expense~~ (income) expense, net
Commodity contracts							(1		)	7—			Net sales
Commodity contracts							1—			—(1		)	Cost of goods sold
Total Derivatives Not Designated as Hedges							2210			(146		)
Total Derivatives	$	~~(19~~11	)	$	4846		$	468		$	(5095	)


(1)	Accumulated other comprehensive loss (AOCL)


(2)	For derivatives designated as cash flow hedges under the Derivatives and Hedging topic of the ASC, this represents the effective portion of the gain (loss) reclassified from AOCL into income during the period.

(3) The gain or loss on derivatives designated as hedges from ineffectiveness is not significant during the three months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016. No gains or losses were excluded from the assessment of hedge effectiveness during the three months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016.

(4) Gain or loss on foreign currency contracts not designated as hedges was offset by a foreign currency transaction loss of $312 million and a gain of $1939 million during the three months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016, respectively.

27Most of the company’s outstanding foreign currency derivatives are covered by International Swap and Derivatives Association (“ISDA”) Master Agreements with the counterparties. There are no requirements to post collateral under these agreements; however, should Monsanto’s credit rating fall below a specified rating immediately following the merger of the company with another entity, the counterparty may require all outstanding derivatives under the ISDA Master Agreement to be settled immediately at current market value, which equals carrying value. Foreign currency derivatives that are not covered by ISDA Master Agreements do not have credit-risk-related contingent provisions. Most of Monsanto’s outstanding commodity derivatives are listed commodity futures, and the company is required by the relevant commodity exchange to post collateral each day to cover the change in the fair value of these futures in the case of an unrealized loss position. Non-exchange-traded commodity derivatives and interest rate contracts may be covered by the aforementioned ISDA Master Agreements and would be subject to the same credit-risk-related contingent provisions. The aggregate fair value of all derivative instruments under ISDA Master Agreements that are in a liability position was $11 million and $19 million as of Nov. 30, 2017, and Aug. 31, 2017, respectively, which is the amount that would be required for settlement if the credit-risk-related contingent provisions underlying these agreements were triggered.

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	Amount of Gain (Loss)Recognized in AOCL(1) (Effective Portion)					Amount of Gain (Loss)Recognized in Income(2)(3)
	Nine Months Ended					Nine Months Ended						Statements of Consolidated Operations Classification
(Dollars in millions)	May 31, 2017		May 31, 2016			May 31, 2017			May 31, 2016
Derivatives Designated as Hedges:
Fair value hedges:
Commodity contracts						$	18		$	(19	)	Cost of goods sold
Commodity contracts						—			(1		)	Other expense (income), net
Cash flow hedges:
Foreign currency contracts	$	20	$	(4	)	8			11			Net sales
Foreign currency contracts	5		3			5			19			Cost of goods sold
Commodity contracts	12		20			(17		)	(106		)	Cost of goods sold
Interest rate contracts	—		—			(37		)	—			Other expense (income), net
Interest rate contracts	3		(23		)	(11		)	(11		)	Interest expense
Total Derivatives Designated as Hedges	40		(4		)	(34		)	(107		)
Derivatives Not Designated as Hedges:
Foreign currency contracts(4)						1			(32		)	Other expense (income), net
Commodity contracts						1			8			Net sales
Commodity contracts						—			1			Cost of goods sold
Total Derivatives Not Designated as Hedges						2			(23		)
Total Derivatives	$	40	$	(4	)	$	(32	)	$	(130	)

(1) Accumulated other comprehensive loss (AOCL)

(2) For derivatives designated as cash flow hedges under the Derivatives and Hedging topic of the ASC, this represents the effective portion of the gain (loss) reclassified from AOCL into income during the period.

(3) The gain or loss on derivatives designated as hedges from ineffectiveness is not significant during the nine months ended May 31, 2017, and May 31, 2016. No gains or losses were excluded from the assessment of hedge effectiveness during the nine months ended May 31, 2017, and May 31, 2016.

(4) Gain or loss on foreign currency contracts not designated as hedges was offset by a foreign currency transaction loss of $13 million and $169 million during the nine months ended May 31, 2017, and May 31, 2016, respectively.

Most of the company’s outstanding foreign currency derivatives are covered by International Swap and Derivatives Association (“ISDA”) Master Agreements with the counterparties. There are no requirements to post collateral under these agreements; however, should Monsanto’s credit rating fall below a specified rating immediately following the merger of the company with another entity, the counterparty may require all outstanding derivatives under the ISDA Master Agreement to be settled immediately at current market value, which equals carrying value. Foreign currency derivatives that are not covered by ISDA Master Agreements do not have credit-risk-related contingent provisions. Most of Monsanto’s outstanding commodity derivatives are listed commodity futures, and the company is required by the relevant commodity exchange to post collateral each day to cover the change in the fair value of these futures in the case of an unrealized loss position. Non-exchange-traded commodity derivatives and interest rate contracts may be covered by the aforementioned ISDA Master Agreements and would be subject to the same credit-risk-related contingent provisions. The aggregate fair value of all derivative instruments under ISDA Master Agreements that are in a liability position was $9 million and $63 million as of May 31, 2017, and Aug. 31, 2016, respectively, which is the amount that would be required for settlement if the credit-risk-related contingent provisions underlying these agreements were triggered.

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

Credit Risk Management

Monsanto invests excess cash in deposits with major banks or money market funds throughout the world in high-quality short-term debt instruments. Such investments are made only in instruments issued or enhanced by high-quality institutions. As of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017, the company had no financial instruments that represented a significant concentration of credit risk. Limited amounts are invested in any single institution to minimize risk. The company has not incurred any credit risk losses related to those investments.

The company sells a broad range of agricultural products to a diverse group of customers throughout the world. In the United States, the company makes substantial sales to relatively few large wholesale customers. The company’s business is highly seasonal and is subject to weather conditions that affect commodity prices and seed yields. Credit limits, ongoing credit evaluation and account monitoring procedures are used to minimize the risk of loss. Collateral is secured when it is deemed appropriate by the company.

Monsanto regularly evaluates its business practices to minimize its credit risk and periodically engages multiple banks in the United States, Latin America and Europe in the development of customer financing options that involve direct bank financing of customer purchases. For further information on these programs, see Note 4 — Customer Financing Programs.


NOTE 13.	POSTRETIREMENT BENEFITS — PENSIONS, HEALTH CARE AND OTHER

Monsanto maintains noncontributory pension plans for the benefit of its U.S. employees. Effective Jul. 8, 2012, the U.S. pension plans were closed to new entrants; there were no significant changes to these plans for eligible employees hired prior to that date. The company also provides certain postretirement health care and life insurance benefits for eligible retired employees and certain pension plan benefits outside the U.S. The company’s net periodic benefit cost for pension benefits and health care and other postretirement benefits include the following components:

Pension Benefits	Three Months Ended ~~May~~Nov. 3130, 2017									Three Months Ended ~~May~~Nov. 3130, 2016
(Dollars in millions)	U.S.			Outside theU.S.			Total			U.S.			Outside theU.S.			Total
Service Cost for Benefits Earned During the Period	$	1614		$	3		$	1917		$	1915		$	3		$	2218
Interest Cost on Benefit Obligation	2022			1			2123			2821			2			3023
Assumed Return on Plan Assets	(43		)	(2		)	(45		)	(4642		)	(2		)	(4844		)
Amortization of Unrecognized Net Loss	1210			1			1311			1312			1			1413
Curtailment and Settlement Charges	—			1			1			—			—			—
Total Net Periodic Benefit Cost	$	3		$	3		$	6		$	6		$	4		$	10
Total Net Periodic Benefit Cost	$	5		$	4		$	9		$	14		$	4		$	18

Pension Benefits	Nine Months Ended May 31, 2017									Nine Months Ended May 31, 2016
Health Care and Other Postretirement Benefits	Three Months Ended
(Dollars in millions)	UNov.S. 30, 2017			~~Outside theU~~Nov.S. 30, 2016			~~Total~~			~~U.S.~~			~~Outside theU.S.~~			~~Total~~
Service Cost for Benefits Earned During the Period	$	462		$	91		$	55		$	51		$	9		$	60
Interest Cost on Benefit Obligation	611			41			65			77			5			82
Assumed Return on Plan Assets	(128		)	(6		)	(134		)	(125		)	(6		)	(131		)
Amortization of Unrecognized Net Loss/(Gain)	(1		)	1
Amortization of Unrecognized Net Loss	35			3			38			39			3			42
Total Net Periodic Benefit Cost	$	2		$	3
Restructuring Charges	—			2			2			—			1			1
Curtailment and Settlement Charges	—			1			1			—			—			—
Total Net Periodic Benefit Cost	$	14		$	13		$	27		$	42		$	12		$	54

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Health Care and Other Postretirement Benefits	Three Months Ended
(Dollars in millions)	May 31, 2017		May 31, 2016
Service Cost for Benefits Earned During the Period	$	3	$	2
Interest Cost on Benefit Obligation	1		1
Amortization of Unrecognized Net Loss/(Gain)	1		(1		)
Total Net Periodic Benefit Cost	$	5	$	2

Health Care and Other Postretirement Benefits	Nine Months Ended
(Dollars in millions)	May 31, 2017		May 31, 2016
Service Cost for Benefits Earned During the Period	$	5	$	5
Interest Cost on Benefit Obligation	4		5
Amortization of Unrecognized Net Loss/(Gain)	4		(4		)
Restructuring Charges	2		—
Total Net Periodic Benefit Cost	$	15	$	6


NOTE 14.	STOCK-BASED COMPENSATION PLANS

The following table shows total stock-based compensation expense included in the Statements of Consolidated Operations for the three ~~and nine~~ months ended ~~May 31~~Nov. 30, 2017, and ~~May 31~~Nov. 30, 2016.

	Three Months Ended
(Dollars in millions)	~~May~~Nov. 3130, 2017			~~May~~Nov. 3130, 2016
Cost of Goods Sold	$	34		$	43
Selling, General and Administrative Expenses	1925			1126
Research and Development Expenses	6			6
Restructuring Charges	—			21
Pre-Tax Stock-Based Compensation Expense	2835			2336
Income Tax Benefit	(916		)	(713		)
Net Stock-Based Compensation Expense	$	19		$	1623

	Nine Months Ended
(Dollars in millions)	May 31, 2017			May 31, 2016
Cost of Goods Sold	$	10		$	11
Selling, General and Administrative Expenses	64			57
Research and Development Expenses	19			22
Restructuring Charges	1			2
Pre-Tax Stock-Based Compensation Expense	94			92
Income Tax Benefit	(32		)	(30		)
Net Stock-Based Compensation Expense	$	62		$	62

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)


NOTE 15.	ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table sets forth the after-tax components of accumulated other comprehensive loss and changes thereto:

(Dollars in millions)	Foreign Currency Translation Adjustments			Postretirement Benefit Items			Net Unrealized Gain (Loss) on Available-for-Sale Securities			Cash Flow Hedges			Total Accumulated Other Comprehensive (Loss) Income
Balance as of Aug. 31, 2015	$	(2,327	)	$	(286	)	$	2		$	(190	)	$	(2,801	)
Other comprehensive income (loss) before reclassifications	35			(83		)	(2		)	(42		)	(92		)
Amounts reclassified from accumulated other comprehensive loss	—			29			1			55			85
Net current-period other comprehensive income (loss)	35			(54		)	(1		)	13			(7		)
Balance as of Aug. 31, 2016	$	(2,292	)	$	(340	)	$	1		$	(177	)	$	(2,808	)
Other comprehensive (loss) income before reclassifications	(15		)	—			(2		)	26			9
Other comprehensive income (loss) before reclassifications	233			55			(2		)	21			307
Amounts reclassified from accumulated other comprehensive loss	—			3238			12			3134			6474
Net current-period other comprehensive (loss) income	(15		)	32			(1		)	57			73
Net current-period other comprehensive income	233			93			—			55			381
Balance as of May 31, 2017	$	(2,307	)	$	(308	)	$	—		$	(120	)	$	(2,735	)
Balance as of Aug. 31, 2017	$	(2,059	)	$	(247	)	$	1		$	(122	)	$	(2,427	)
Other comprehensive (loss) income before reclassifications	(82		)	—			(1		)	7			(76		)
Amounts reclassified from accumulated other comprehensive loss	—			6			—			2			8
Net current-period other comprehensive (loss) income	(82		)	6			(1		)	9			(68		)
Balance as of Nov. 30, 2017	$	(2,141	)	$	(241	)	$	—		$	(113	)	$	(2,495	)

The following table provides additional information regarding items reclassified out of accumulated other comprehensive loss into earnings.



	Three Months Ended
(Dollars in millions)	Nov. 30, 2017			Nov. 30, 2016			Affected Line Item in the Statements of Consolidated Operations
Cash Flow Hedges:
Foreign Exchange Contracts	$	(2	)	$	(7	)	Net sales
Foreign Exchange Contracts	—			(1		)	Cost of goods sold
Commodity Contracts	1			3			Cost of goods sold
Interest Rate Contracts	—			37			Other (income) expense, net
Interest Rate Contracts	3			4			Interest expense
	2			36			Total before income taxes
	—			(15		)	Income tax provision
	$	2		$	21		Net of tax
Postretirement Benefit Items:
Amortization of Unrecognized Net Loss	$	4		$	6		Inventory/Cost of goods sold⁽¹⁾
Amortization of Unrecognized Net Loss	6			10			Selling, general and administrative expenses
	10			16			Total before income taxes
	(4		)	(6		)	Income tax provision
	$	6		$	10		Net of tax
Total Reclassifications For The Period	$	8		$	31		Net of tax

(1)

The amortization of unrecognized net loss is recorded to net periodic benefit cost, which is allocated to selling, general and administrative expenses and to inventory, which is recognized through cost of goods sold. The company recorded $4 million and $6 million of net periodic benefit cost to inventory, of which approximately $1 million and $2 million was recognized in cost of goods sold during the three months ended Nov. 30, 2017, and Nov. 30, 2016, respectively. See Note 13 — Postretirement Benefits - Pensions, Health Care and Other — for additional information.

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	Three Months Ended						Nine Months Ended
(Dollars in millions)	May 31, 2017			May 31, 2016			May 31, 2017			May 31, 2016			Affected Line Item in the Statements of Consolidated Operations
Available for Sale Securities:
Loss on Equity Security	$	—		$	—		$	2		$	—		Other expense (income), net
	—			—			2			—			Total before income taxes
	—			—			(1		)	—			Income tax provision
	$	—		$	—		$	1		$	—		Net of tax
Cash Flow Hedges:
Foreign Exchange Contracts	$	2		$	(3	)	$	(8	)	$	(11	)	Net sales
Foreign Exchange Contracts	(3		)	(6		)	(5		)	(19		)	Cost of goods sold
Commodity Contracts	2			34			17			106			Cost of goods sold
Interest Rate Contracts	—			—			37			—			Other expense (income), net
Interest Rate Contracts	3			3			11			11			Interest expense
	4			28			52			87			Total before income taxes
	(2		)	(13		)	(21		)	(39		)	Income tax provision
	$	2		$	15		$	31		$	48		Net of tax
Postretirement Benefit Items:
Amortization of Unrecognized Net Loss	$	5		$	4		$	15		$	12		Inventory/Cost of goods sold(1)
Amortization of Unrecognized Net Loss	9			7			29			24			Selling, general and administrative expenses
Amortization of Unrecognized Net Loss	—			—			4			—			Restructuring charges
	14			11			48			36			Total before income taxes
	(5		)	(3		)	(16		)	(12		)	Income tax provision
	$	9		$	8		$	32		$	24		Net of tax
Total Reclassifications For The Period	$	11		$	23		$	64		$	72		Net of tax

(1) The amortization of unrecognized net loss is recorded to net periodic benefit cost, which is allocated to selling, general and administrative expenses and to inventory, which is recognized through cost of goods sold. The company recorded $5 million and $4 million of net periodic benefit cost to inventory, of which approximately $3 million and $2 million was recognized in cost of goods sold during the three months ended May 31, 2017, and May 31, 2016, respectively. The company recorded $15 million and $12 million of net periodic benefit cost to inventory, of which approximately $14 million and $12 million was recognized in cost of goods sold during the nine months ended May 31, 2017, and May 31, 2016, respectively. See Note 13 — Postretirement Benefits - Pensions, Health Care and Other — for additional information.


NOTE 16.	EARNINGS PER SHARE

Basic earnings per share (“EPS”) was computed using the weighted-average number of common shares outstanding during the periods shown in the table below. The diluted EPS computation takes into account the effect of dilutive potential common shares when in a net income position. Potential common shares consist primarily of stock options, restricted stock units and directors’ deferred shares calculated using the treasury stock method and are excluded if their effect is antidilutive. Of those antidilutive options, certain options were excluded from the computations of dilutive potential common shares as their exercise prices were greater than the average market price of the common shares for the period.

	Three Months Ended		~~Nine Months Ended~~
(Shares in millions)	~~May~~Nov. 3130, 2017	~~May~~Nov. 3130, 2016	~~May 31, 2017~~	~~May 31, 2016~~
Weighted-Average Number of Common Shares	~~439~~440.12	~~437~~438.1	~~438.6~~	~~444.2~~
Dilutive Potential Common Shares	45.31	3.26	~~4.4~~	~~4.0~~
Antidilutive Potential Common Shares	0.31	54.30	~~2.1~~	~~4.9~~
Shares Excluded From Computation of Dilutive Potential Shares with Exercise Prices Greater than the Average Market Price of Common Shares for the Period	0.3	3.2	1.7	3.2

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)


NOTE 17.	SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest and taxes were as follows:

	Nine Months Ended
	Three Months Ended
(Dollars in millions)	~~May~~Nov. 3130, 2017		~~May~~Nov. 3130, 2016
Interest	$	~~287~~89	$	~~256~~95
Taxes	~~475~~102		~~704~~70

~~During~~The ~~the nine months ended May 31, 2017, and May 31, 2016, the~~ company recorded the following noncash transactions:

• During the ~~nine~~three months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016, the company recognized noncash transactions related to restructuring. See Note 3 — Restructuring.

• As of ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016, the company recognized noncash capital expenditures of $~~136~~107 million and $84102 million, respectively, in accounts payable in the Statements of Consolidated Financial Position.

• During the ~~nine~~three months ended ~~May~~Nov. 3130, 2017, and ~~May~~Nov. 3130, 2016, the company recognized noncash transactions related to stock-based compensation. See Note 14 — Stock-Based Compensation Plans.


NOTE 18.	COMMITMENTS AND CONTINGENCIES

Environmental and Litigation Liabilities: Monsanto is involved in environmental remediation and legal proceedings to which Monsanto is party in its own name and proceedings to which its former parent, Pharmacia LLC (“Pharmacia”), or its former subsidiary, Solutia, Inc. (“Solutia”), is a party but that Monsanto manages and for which Monsanto is responsible pursuant to certain indemnification agreements. In addition, Monsanto has liabilities established for various product claims. With respect to certain of these proceedings, Monsanto has a liability recorded of $~~266~~273 million and $~~545~~277 million as of ~~May~~Nov. 3130, 2017, and Aug. 31, ~~2016~~2017, respectively, for the estimated contingent liabilities. Information regarding the environmental liabilities appears in Monsanto’s Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017.

Litigation: The above liability includes amounts related to certain third-party litigation with respect to Monsanto’s business, as well as tort litigation related to Pharmacia’s former chemical business, including lawsuits involving polychlorinated biphenyls (“PCBs”), dioxins, and other chemical and premises liability litigation. Additional matters that are not reflected in the liability may arise in the future, and Monsanto may manage, settle, or pay judgments or damages with respect thereto in order to mitigate contesting potential liability. Following is a description of one of the more significant litigation matters.

As described in Monsanto’s Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016, and our Reports on Form 10-Q for the quarterly periods ended Nov. 30, 2016, and Feb. 28,~~ 2017, the company was named in approximately 30 personal injury lawsuits filed over several years on behalf of approximately 750 persons in state courts in St. Louis, Missouri and Los Angeles, California. Plaintiffs claimed they were injured by PCBs manufactured by Pharmacia’s chemical business over four decades ago and incorporated into products made, used and sometimes disposed of by others. In September 2016, the parties reached an agreement to settle these personal injury lawsuits pursuant to which the company is required to pay up to $280 million into a settlement fund, with the settlement and the final payment amount contingent upon the level of claimant participation. As of Aug. 31, 2016, $280 million was recorded in the Statement of Consolidated Financial Position within miscellaneous short-term accruals; the related expense was included in selling, general and administrative expenses in the Statement of Consolidated Operations. In November 2016 and December 2016, the first and second claimant participation levels were met, and the company paid $250 million and $25 million respectively, into the settlement fund. In February 2017 and June 2017, pro rata portions of the final claimant participation level were met, and payments totaling approximately $4 million were made. The company also has been named in lawsuits brought by various governmental entities claiming that Monsanto, Pharmacia and Solutia, collectively as a manufacturer of PCBs, should be responsible for a variety of damages due to PCBs in bodies of water, regardless of how PCBs came to be located there. The company believes that these novel claims are without merit and is vigorously defending the cases on legal and factual grounds.

Including litigation reflected in the liability, Monsanto is involved in various legal proceedings that arise in the ordinary course of its business or pursuant to Monsanto’s indemnification obligations to Pharmacia, as well as proceedings that management has considered to be material under SEC regulations. Some of the lawsuits seek damages in very large amounts or seek to restrict the company’s business activities. Monsanto believes that it has meritorious legal arguments and will continue to represent its interests vigorously in all of the proceedings that it is defending or prosecuting. Management does not anticipate 29

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (continued)

final payment amount contingent upon the ~~ultimate~~level ~~liabilities~~of ~~resulting~~claimant ~~from~~participation. ~~such~~As ~~proceedings~~of Aug. 31, or2016, ~~the~~$280 ~~proceedings~~million ~~reflected~~was recorded in the ~~above~~Statement ~~liability,~~of ~~will~~Consolidated ~~have~~Financial aPosition ~~material~~within ~~adverse~~miscellaneous ~~effect~~short-term onaccruals. Payment of the $280 million was made November 2016 through December 2017 covering all claimants. The company also has been named in lawsuits brought by various governmental entities claiming that Monsanto’s, ~~consolidated~~Pharmacia ~~results~~and Solutia, collectively as a manufacturer of ~~operations~~PCBs, ~~financial~~should ~~position~~be responsible for a variety of damages due to PCBs in bodies of water, ~~cash~~regardless ~~flows~~of orhow ~~liquidity~~PCBs came to be located there. The company believes that these novel claims are without merit and is vigorously defending the cases on legal and factual grounds.

~~The~~Including ~~company~~litigation isreflected ~~defending~~in ~~lawsuits~~the liability, Monsanto is involved in various ~~state~~legal ~~and~~proceedings ~~federal~~that ~~courts,~~arise in ~~which~~the ~~approximately~~ordinary ~~1,400~~course ~~plaintiffs~~of ~~claim~~its tobusiness ~~have~~or ~~been~~pursuant ~~injured~~to byMonsanto’s ~~exposure~~indemnification obligations to ~~glyphosate-based~~Pharmacia, ~~products~~as ~~manufactured~~well byas ~~the~~proceedings ~~company.~~that ~~The~~management ~~majority~~has ofconsidered ~~plaintiffs~~to ~~have~~be ~~brought~~material ~~actions~~under inSEC ~~state~~regulations. ~~courts~~Some inof ~~Missouri,~~the ~~Delaware~~lawsuits ~~and~~seek ~~California,~~damages ~~while~~in ~~the~~very ~~remainder~~large ofamounts ~~plaintiffs’~~or ~~cases~~seek ~~were~~to ~~filed~~restrict inthe ~~many~~company’s ~~different~~business ~~federal courts~~activities. InMonsanto ~~October~~believes ~~2016,~~that ~~the~~it ~~Judicial~~has ~~Panel~~meritorious onlegal ~~Multi-District~~arguments ~~Litigation~~and ~~transferred~~will continue to ~~the~~represent ~~Northern~~its ~~District~~interests ofvigorously ~~California~~in all of the ~~federal~~proceedings ~~cases~~that ~~for~~it ~~pretrial~~is ~~purposes~~defending or prosecuting. ~~The~~Management ~~company~~does ~~believes~~not ~~that~~anticipate itthe ~~has~~ultimate ~~meritorious~~liabilities ~~factual~~resulting ~~and~~from ~~legal~~such ~~defenses~~proceedings, toor ~~these~~the ~~cases~~proceedings ~~and~~reflected isin ~~vigorously~~the ~~defending~~above ~~them~~liability, will have a material adverse effect on Monsanto’s consolidated results of operations, financial position, cash flows or liquidity.

The company is defending lawsuits in various state and federal courts, in which approximately 3,600 plaintiffs claim to have been injured by exposure to glyphosate-based products manufactured by the company. The majority of plaintiffs have brought actions in state courts in Missouri, Delaware and California, while the remainder of plaintiffs’ cases were filed in many different federal courts. In October 2016, the Judicial Panel on Multi-District Litigation transferred to the Northern District of California all of the federal cases for pretrial purposes. The company believes that it has meritorious factual and legal defenses to these cases and is vigorously defending them.

Legal actions have been filed in Brazil that raise various issues challenging the right to collect certain royalties for Roundup Ready soybeans, such as whether Brazilian pipeline patents have the duration of their corresponding U.S. patents (2014 for Roundup Ready soybeans) and whether Brazil’s Plant Variety Protection law affects the enforceability of patents. These issues are currently under judicial review in Brazil. Monsanto believes it has meritorious legal arguments and will continue to represent its interests vigorously in these proceedings. The current estimate of the company’s reasonably possible loss contingency is not material to consolidated results of operations, financial position, cash flows or liquidity.

Guarantees: Disclosures regarding the guarantees Monsanto provides for certain customer loans in the United States, Latin America and Europe can be found in Note 4 — Customer Financing Programs — of this Form 10-Q. Except as described in that note, there have been no significant changes to guarantees made by Monsanto since Aug. 31, ~~2016~~2017. Disclosures regarding these guarantees made by Monsanto can be found in Note 24 — Commitments and Contingencies — of the notes to the consolidated financial statements contained in Monsanto’s Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017.

Off-Balance Sheet Arrangement: ~~Monsanto~~In ~~is in~~ the ~~process~~first quarter of ~~making~~fiscal 2018, Monsanto completed a significant expansion of its Chesterfield, Missouri facility. In December 2013, Monsanto executed the first of a series of incentive agreements with the County of St. Louis, Missouri. Under these agreements Monsanto has transferred the Chesterfield, Missouri facility to St. Louis County and received Industrial Revenue Bonds in the amount of up to $470 million, which enables the company to reduce the cost of constructing and operating the expansion by reducing certain state and local tax expenditures. Monsanto immediately leased the facility from the County of St. Louis and has an option to purchase the facility upon tendering the Industrial Revenue Bonds received to the County. The payments due to the company in relation to the Industrial Revenue Bonds and owed by the company in relation to the lease of the facility qualify for the right of offset under ASC 210, Balance Sheet, in the Statements of Consolidated Financial Position. As such, neither the Industrial Revenue Bonds nor the lease obligation are recorded in the Statements of Consolidated Financial Position as an asset or liability, respectively. The Chesterfield facility and the expansion are being treated as being owned by Monsanto.


NOTE 19.	SEGMENT INFORMATION

Monsanto conducts its worldwide operations through global businesses, which are aggregated into reportable segments based on similarity of products, production processes, customers, distribution methods and economic characteristics. The operating segments are aggregated into two reportable segments: Seeds and Genomics and Agricultural Productivity.

The Seeds and Genomics segment consists of the global seeds and related traits businesses, biotechnology platforms and digital agriculture. Within the Seeds and Genomics segment, Monsanto’s significant operating segments are corn seed and traits, soybean seed and traits, cotton seed and traits, vegetable seeds and all other crops seeds and traits. The Agricultural Productivity reportable segment consists of the Agricultural Productivity operating segment. EBIT is defined as earnings (loss) before interest and taxes and is an operating performance measure for the two reportable segments. EBIT is useful to management in demonstrating the operational profitability of the segments by excluding interest and taxes, which are generally accounted for across the entire company on a consolidated basis. Sales between segments were not significant. Certain selling, general and administrative expenses (“SG&A”) are allocated between segments based on the segment’s relative contribution to total Monsanto operations. Allocation percentages remain consistent for fiscal years 2016 and 2017.

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	Three Months Ended				Nine Months Ended
(Dollars in millions)	May 31, 2017		May 31, 2016		May 31, 2017		May 31, 2016
Net Sales(1)
Corn seed and traits	$	1,491	$	1,592	$	5,342	$	5,024
Soybean seed and traits	896		693		2,358		1,913
Cotton seed and traits	338		285		562		370
Vegetable seeds	199		196		523		526
All other crops seeds and traits	208		441		381		590
Total Seeds and Genomics	$	3,132	$	3,207	$	9,166	$	8,423
Agricultural productivity	1,098		982		$	2,788	$	2,517
Total Agricultural Productivity	$	1,098	$	982	$	2,788	$	2,517
Total	$	4,230	$	4,189	$	11,954	$	10,940

before interest and taxes and is an operating performance measure for the two reportable segments. EBIT is useful to management in demonstrating the operational profitability of the segments by excluding interest and taxes, which are generally accounted for across the entire company on a consolidated basis. Sales between segments were not significant. Certain selling, general and administrative expenses are allocated between segments based on the segment’s relative contribution to total Monsanto operations. Allocation percentages remain consistent for fiscal years 2017 and 2018.

Data for the Seeds and Genomics and Agricultural Productivity reportable segments, as well as for Monsanto’s significant operating segments, is presented in the table as follows:

Gross Profit
	Three Months Ended
Corn seed and traits	$	922	$	976	$	3,389	$	3,063
(Dollars in millions)	Nov. 30, 2017		Nov. 30, 2016
Soybean seed and traits	588		391		1,667		1,220
Net Sales(1)
Cotton seed and traits	268		205		418		248
Corn seed and traits	$	787	$	949
Vegetable seeds	99		108		267		244
Soybean seed and traits	728		600
All other crops seeds and traits	138		369		191		430
Cotton seed and traits	120		116
Total Seeds and Genomics	$	2,015	$	2,049	$	5,932	$	5,205
Vegetable seeds	114		131
Agricultural productivity	371		331		$	665	$	674
All other crops seeds and traits	21		52
Total Agricultural Productivity	$	371	$	331	$	665	$	674
Total Seeds and Genomics	$	1,770	$	1,848
Total	$	2,386	$	2,380	$	6,597	$	5,879
Agricultural productivity	888		802
Total Agricultural Productivity	$	888	$	802
Total	$	2,658	$	2,650

EBIT(2)(3)(4)
Gross Profit
Seeds and Genomics	$	995		$	1,094	$	3,033	$	2,258
Corn seed and traits	$	415		$	535
Agricultural Productivity	160			187		292		253
Soybean seed and traits	588			451
Total	$	1,155		$	1,281	$	3,325	$	2,511
Cotton seed and traits	73			73
Vegetable seeds	58			69
All other crops seeds and traits	(2		)	12
Total Seeds and Genomics	$	1,132		$	1,140
Agricultural productivity	180			119
Total Agricultural Productivity	$	180		$	119
Total	$	1,312		$	1,259

Depreciation and Amortization Expense
EBIT(2)(3)(4)
Seeds and Genomics	$	~~137~~302	$	~~144~~199	$	~~422~~	$	~~444~~
Agricultural Productivity	4038		3413		~~127~~		98
Total	$	~~177~~340	$	~~178~~212	$	~~549~~	$	~~542~~


(1)	Represents net sales from continuing operations.


(2)	EBIT is defined as earnings (loss) before interest and taxes; see the following table for reconciliation. Earnings (loss) is intended to mean net income (loss) attributable to Monsanto Company as presented in the Statements of Consolidated Operations under U.S. GAAP. EBIT is an operating performance measure for the two reportable segments.

~~(3) Agricultural Productivity EBIT includes income from operations of discontinued businesses of $21 million and $24 million for the nine months ended May~~ 31~~, 2017, and May 31, 2016, respectively.~~

(4) Seeds and Genomics EBIT includes losses from operations of noncontrolling interests of $5 million and $11 million for the three and nine months ended May 31, 2017. Seeds and Genomics EBIT includes a loss from operations of noncontrolling interests of $2 million for the three months ended May 31, 2016, and income from operations of noncontrolling interests of $10 million for the nine months ended May 31, 2016. For the three and nine months ended May 31, 2017, and May 31, 2016, Agricultural Productivity EBIT includes losses from operations of noncontrolling interests of $1 million, respectively.

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(3)	Agricultural Productivity EBIT includes income from operations of discontinued businesses of $2 million and $16 million for the three months ended Nov. 30, 2017, and Nov. 30, 2016, respectively.


(4)	Seeds and Genomics EBIT includes income from operations of noncontrolling interests of $2 million and $8 million for the three months ended Nov. 30, 2017, and Nov. 30, 2016, respectively.

A reconciliation of EBIT to net income attributable to Monsanto Company for each period is as follows:

Three Months Ended

~~Nine Months Ended~~

(Dollars in millions)

~~May~~Nov. 3130, 2017

~~May~~Nov. 3130, 2016

~~May 31, 2017~~

~~May 31, 2016~~

EBIT(1)

~~1,155~~340

~~1,281~~212

~~3,325~~

~~2,511~~

Interest Expense — Net

83109

86118

~~285~~

~~281~~

Income Tax Provision(2)

~~229~~62

~~478~~65

~~800~~

~~703~~

Net Income Attributable to Monsanto Company

~~843~~169

~~717~~29

~~2,240~~

~~1,527~~

(1) Includes the income from operations of discontinued businesses and the ~~(loss)~~ income from operations of noncontrolling interests.

(2) Includes the income tax ~~provision~~provisions on discontinued operations and ~~the income tax (benefit) expense of~~ noncontrolling ~~interest~~interests.

NOTE 20. SUBSEQUENT ~~EVENT~~EVENTS

On ~~June~~Dec. 64, 2017, the Board of Directors declared a quarterly dividend on its common shares of 54 cents per share. The dividend is payable on ~~July~~Jan. 2826, ~~2017~~2018, to shareowners of record on ~~July~~Jan. 75, ~~2017~~2018.

36On Dec. 15, 2017, Monsanto gave notice it will redeem all of the outstanding 4.30% Notes, due Jan. 29, 2045 (“Notes”) in accordance with the terms and conditions of the Notes and related indenture on Jan. 29, 2018.

On Dec. 22, 2017, the United States enacted new tax legislation, the Tax Cuts and Jobs Act. The company is currently in the process of evaluating the impact this law will have on the consolidated financial statements and calculating the related impact to the company’s tax expense. The company expects the largest impact to the company from this legislation to be from the provisions that lower the corporate tax rate to 21% beginning on Jan. 1, 2018, and impose tax on earnings outside the United States that have previously not been subject to United States tax, which must be paid beginning in fiscal 2019 through fiscal 2026. The adjustments to the company’s tax expense for this legislation could materially affect the consolidated financial statements and will be recorded beginning in the period of enactment.

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Background

Monsanto Company, along with its subsidiaries, is a leading global provider of agricultural products for farmers. Our seeds, biotechnology trait products, herbicides and digital agriculture products provide farmers with solutions that help improve productivity, reduce the costs of farming and produce better food for consumers and better feed for animals.

We manage our business in two reporting segments: Seeds and Genomics and Agricultural Productivity. Through our Seeds and Genomics segment, we produce leading seed brands, including DEKALB, Asgrow, Deltapine, Seminis and De Ruiter, and we develop biotechnology traits that assist farmers in controlling insects and weeds and digital agriculture products to assist farmers in decision making. We also provide other seed companies with genetic material and biotechnology traits for their seed brands. Through our Agricultural Productivity segment, we manufacture Roundup and ~~Harness~~XtendiMax Herbicide with VaporGrip Technology brand herbicides and other herbicides.

Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations should be read in conjunction with Monsanto’s consolidated financial statements and the accompanying notes. This Report on Form 10-Q should also be read in conjunction with Monsanto’s Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017. Financial information for the ~~third quarter and the~~ first ~~nine~~three months of fiscal year ~~2017~~2018 should not be annualized because of the seasonality of our business. The notes to the consolidated financial statements referred to throughout this MD&A are included in Item 1 — Financial Statements — of this Report on Form 10-Q. Unless otherwise indicated, “Monsanto,” the “company,” “we,” “our” and “us” are used interchangeably to refer to Monsanto Company or to Monsanto Company and its consolidated subsidiaries, as appropriate to the context. Unless otherwise indicated, “earnings per share” and “per share” mean diluted earnings per share. Unless otherwise indicated, trademarks owned or licensed by Monsanto or its subsidiaries are shown in special type. Unless otherwise noted, all amounts and analyses are based on continuing operations. Unless otherwise indicated, references to “Roundup herbicides” mean Roundup branded herbicides, excluding all lawn-and-garden herbicides and other glyphosate-based herbicides, and references to “Roundup and other glyphosate-based herbicides” exclude all lawn-and-garden herbicides.

Non-GAAP Financial Measures

MD&A includes financial information prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), as well as two other financial measures, EBIT and free cash flow, that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that exclude (or include) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of EBIT is intended to supplement investors’ understanding of our operating performance. The presentation of free cash flow information is intended to supplement investors’ understanding of our liquidity. Our EBIT and free cash flow measures may not be comparable to other companies’ EBIT and free cash flow measures. Furthermore, these measures are not intended to replace net income (loss) attributable to Monsanto Company, cash flows, financial position or comprehensive income (loss), as determined in accordance with GAAP.

EBIT is defined as earnings (loss) before interest and taxes. Earnings (loss) is intended to mean net income (loss) attributable to Monsanto Company as presented in the Statements of Consolidated Operations under GAAP. EBIT is an operating performance measure for our two business segments. We believe that EBIT is useful to investors and management to demonstrate the operational profitability of our segments by excluding interest and taxes, which are generally accounted for across the entire company on a consolidated basis. EBIT is also one of the measures used by Monsanto management to determine resource allocations within the company. See Item 1 — Financial Statements — Note 19 — Segment Information — for a reconciliation of EBIT to net income attributable to Monsanto Company for the three ~~and nine~~ months ended ~~May 31~~Nov. 30, 2017, and ~~May 31~~Nov. 30, 2016.

We also provide information regarding free cash flow, an important liquidity measure for Monsanto. We define free cash flow as the total of net cash provided or required by operating activities less capital expenditures. Prior to the second quarter of fiscal year 2017, we defined free cash flow as the total of net cash provided or required by operating activities and net cash provided or required by investing activities. As this definition varies from other more common definitions of free cash flow, we determined it was appropriate to redefine free cash flow to conform to one of the more typical definitions beginning with the second quarter of fiscal year 2017. The prior period calculations of free cash flow have been restated to conform to the new presentation. Free cash flow does not represent the residual cash flow available for discretionary expenditures. We believe that free cash flow is useful to investors and management as a measure of the ability of our business to generate cash. Once business

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~~free cash flow is useful to investors and management as a measure of the ability of our business to generate cash. Once business~~ needs and obligations are met, this cash can be used to reinvest in the company for future growth or to return to our shareowners through dividend payments or share repurchases. Free cash flow is also used as one of the performance measures in determining incentive compensation. See the “Financial Condition, Liquidity and Capital Resources — Cash Flow” section of MD&A for a reconciliation of free cash flow to net cash provided by operating activities and capital expenditures on the Statements of Consolidated Cash Flows.

Executive Summary

Consolidated Operating Results — Net sales increased $418 million, ~~or one percent,~~ in the three month comparison ~~and increased $1,014 million, or nine percent, in the nine month comparison~~. The primary contributors to the increase ~~in the three month comparison~~ were ~~increases~~driven inby soybean seed and traits, ~~cotton seed~~ and ~~traits and~~ agricultural productivity., ~~The~~offset by a net sales ~~increase~~decrease in ~~soybean~~corn seed and traits ~~was primarily driven by higher volumes in North America resulting from increased acres and Roundup Ready 2 XTEND soybean penetration in the United States~~. The net sales increase in ~~cotton~~soybean seed and traits was primarily driven by ~~higher volumes in the United States resulting from~~ increased ~~planted~~Intacta ~~acres~~RR2 ~~and~~PRO ~~share gains coupled with Bollgard II XtendFlex cotton~~ penetration ~~partially offset by a decrease due to a change~~ in ~~our~~South ~~customer contracts~~America. The increase in agricultural productivity reflects ~~first-time XtendiMax with VaporGrip Technology dicamba-based herbicide revenue and~~ higher average net selling price of Roundup and other glyphosate-based herbicides. ~~These~~The ~~increases were partially offset by~~ net sales ~~decreases~~decrease in ~~all other crops seeds and traits and~~ corn seed and traits. ~~The decrease in all other crops seeds and traits~~ was driven by ~~the~~lower ~~absence~~volumes. ofA ~~commercial~~significant ~~and~~portion ~~research~~of ~~agreements~~this ~~entered~~was ~~into~~ in the ~~third~~United ~~quarter~~States ofand ~~fiscal~~is ~~2016~~expected to ~~license~~be ~~our~~recovered ~~alfalfa~~later ~~traits and technology to a third party. The net sales decrease~~ in ~~corn~~fiscal ~~seed~~2018, and ~~traits~~some was ~~primarily~~related ~~driven~~to by lower ~~volume due to decreased~~ acres in the ~~United~~first ~~States~~season in ~~conjunction with grower demand in Europe and the United States shifting to the second quarter in fiscal 2017 compared to the third quarter as in fiscal 2016~~Brazil.

The primary contributors to the increase in the nine month comparison were increases in soybean seed and traits, corn seed and traits, cotton seed and traits and agricultural productivity. The net sales increase in soybean seed and traits was primarily driven by higher volumes in North America resulting from increased acres, increased Intacta RR2 PRO soybean penetration in Brazil and Argentina, increased Roundup Ready 2 XTEND soybean penetration in the United States and favorable currency impacts in Brazil. The net sales increase in corn seed and traits was primarily driven by higher average net selling prices in South America; share gains in the United States, Europe and Argentina; and favorable currency impacts in Brazil. The net sales increase in cotton seed and traits was primarily driven by higher volume from increased planted acres in Australia and the United States and share gains coupled with Bollgard II XtendFlex cotton penetration in the United States. The increase in agricultural productivity reflects increased volume of Roundup and other glyphosate-based herbicides globally, first time XtendiMax with VaporGrip Technology dicamba-based herbicide revenue and favorable currency impact in Brazil. These increases were partially offset by lower average net selling price of Roundup and other glyphosate-based herbicides and a net sales decrease in all other crops seeds and traits primarily driven by the absence of a license agreement of our alfalfa traits and technology in the third quarter of fiscal 2016.

For a detailed discussion of the factors affecting net sales, cost of goods sold and gross profit, see the “Seeds and Genomics Segment” and “Agricultural Productivity Segment” sections in this MD&A.

Net income attributable to Monsanto Company was $10.9038 per share in the ~~third~~first quarter of fiscal ~~2017~~2018, compared to $10.6307 per share in the ~~third~~first quarter of fiscal ~~2016. Net income attributable to Monsanto Company was $5.06 per share in the first nine months of fiscal~~ 2017~~, compared to $3~~.40 ~~per share in the first nine months of fiscal 2016.~~

Financial Condition, Liquidity and Capital Resources — At ~~May 31~~Nov. 30, 2017, working capital was $32,~~060~~302 million compared with $2,~~875~~152 million at ~~May 31~~Nov. 30, 2016, an increase of $~~185~~150 million, and compared with $12,~~428~~253 million at Aug. 31, ~~2016~~2017, an increase of $~~1,632~~49 million. For a detailed discussion of the factors affecting the working capital comparison, see the “Working Capital and Financial Condition” section of the “Financial Condition, Liquidity and Capital Resources” section in this MD&A.

In the first ~~nine~~three months of fiscal ~~2017~~2018, net cash provided by operating activities was $~~690~~1,292 million compared with $~~415~~1,463 million provided in the first ~~nine~~three months of fiscal ~~2016~~2017. Net cash required by investing activities was $~~752~~210 million in the first ~~nine~~three months of fiscal ~~2017~~2018 compared with $~~639~~327 million in the first ~~nine~~three months of fiscal ~~2016~~2017. Net cash ~~required~~provided by financing activities was $4178 million in the first ~~nine~~three months of fiscal ~~2017~~2018 compared with net cash required by financing activities of $~~2,233~~655 million in the first ~~nine~~three months of fiscal ~~2016~~2017. Free cash flow was an ~~outflow~~inflow of $~~158~~874 million in the first ~~nine~~three months of fiscal ~~2017~~2018 compared with an ~~outflow~~inflow of $~~251~~1,146 million in the first ~~nine~~three months of fiscal ~~2016~~2017. For a 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.

At ~~May 31~~Nov. 30, 2017, our debt-to-capital ratio was 6055 percent compared with 6756 percent at Aug. 31, ~~2016~~2017. The ~~seven~~one percentage point decrease from Aug. 31, ~~2016~~2017, was primarily due to an increase in shareowners’ equity resulting from earnings during fiscal ~~2017 slightly offset by dividends declared and an increase in short term debt, primarily due to increased commercial paper borrowings~~2018.

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For a detailed discussion see the “Capital Resources and Liquidity” section of the “Financial Condition, Liquidity and Capital Resources” section in this MD&A.

Pending Merger with Bayer — On Sept. 14, 2016, we entered into an agreement and plan of merger (the “Merger Agreement”) with Bayer Aktiengesellschaft, a German stock corporation (“Bayer”), and KWA Investment Co., a Delaware corporation and an indirect wholly owned subsidiary of Bayer (“Merger Sub”). The Merger Agreement provides, among other things and subject to the terms and conditions set forth therein, that Merger Sub will be merged with and into the company (the “Merger”), with the company continuing as the surviving corporation and as a wholly owned subsidiary of Bayer. The Merger Agreement provides that each share of common stock of the company, par value $0.01 per share (other than certain shares specified in the Merger Agreement), outstanding immediately prior to the effective time of the Merger will be automatically converted into the right to receive $128.00 in cash, without interest. The obligation of the parties to complete the Merger is subject to customary closing conditions, including, among others, (i) the approval of the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of common stock of the company entitled to vote, which was obtained at a special meeting of the company’s shareowners held on Dec. 13, 2016, (ii) the expiration or earlier termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the adoption of all approvals necessary for the completion of the Merger by the European Commission under Council Regulation (EC) No. 139/2004, (iv) the receipt of certain other required foreign antitrust approvals, (v) completion of the review process by the Committee on Foreign Investment in the United States (“CFIUS”), which has been completed, (vi) no approvals related to CFIUS or antitrust laws having been made or obtained with the imposition of conditions that, together with Divestiture Actions (as defined in the Merger Agreement) undertaken, would reasonably be expected to have a Substantial Detriment (as defined in the Merger Agreement), (vii) no law, order or injunction that is in effect that enjoins or otherwise prohibits the completion of the Merger having been enacted, issued, promulgated, enforced or entered into after Sept. 14, 2016, by a court or other governmental entity of competent jurisdiction, (viii) the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain qualifications) and (ix) the performance by the parties of their respective obligations under the Merger Agreement in all material respects. Additional information about the Merger Agreement is set forth in our Current Report on Form 8-K filed with the SEC on Sept. 20, 2016.

Outlook — We plan to continue to innovate and improve our products in order to maintain market leadership and to support near-term performance. We are focused on applying innovation and technology to make our farmer customers more productive and profitable by protecting and improving yields and improving the ways they can produce food, fiber, feed and fuel. We use the tools of modern biology and technology in an effort to make seeds easier to grow, to allow farmers to do more with fewer resources and to help produce healthier foods for consumers. Our current R&D strategy and commercial priorities are focused on bringing our farmer customers integrated yield solutions through our innovative platforms in plant breeding, biotechnology, chemistry, biologicals and data science. Our capabilities in biotechnology and breeding research are generating a rich product pipeline that is expected to drive long-term growth. The viability of our product pipeline depends in part on the speed of regulatory approvals globally, continued patent and legal rights to offer our products, general public acceptance of the products and the value they will deliver to the market.34

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MONSANTO COMPANY		FIRST QUARTER 2018 FORM 10-Q

having been enacted, issued, promulgated, enforced or entered into after Sept. 14, 2016, by a court or other governmental entity of competent jurisdiction, (viii) the accuracy of the representations and warranties contained in the Merger Agreement (subject to certain qualifications) and (ix) the performance by the parties of their respective obligations under the Merger Agreement in all material respects. Additional information about the Merger Agreement is set forth in our Current Report on Form 8-K filed with the SEC on Sept. 20, 2016.

Outlook — We plan to continue to innovate and improve our products in order to maintain market leadership and to support near-term performance. We are focused on applying innovation and technology to make our farmer customers more productive and profitable by protecting and improving yields and improving the ways they can produce food, fiber, feed and fuel. We use the tools of modern biology and technology in an effort to make seeds easier to grow, to allow farmers to do more with fewer resources and to help produce healthier foods for consumers. Our current research and development (“R&D”) strategy and commercial priorities are focused on bringing our farmer customers integrated yield solutions through our innovative platforms in plant breeding, biotechnology, chemistry, biologicals and data science. Our capabilities in biotechnology and breeding research are generating a rich product pipeline that is expected to drive long-term growth. The viability of our product pipeline depends in part on the speed of regulatory approvals globally, continued patent and legal rights to offer our products, general public acceptance of the products and the value they will deliver to the market.

Roundup herbicides remain the largest crop protection brand globally. Monsanto’s crop protection business focus is to support Monsanto’s Roundup Ready crops strategically through our weed management platform that delivers weed control offerings for farmers. We are focused on managing the costs associated with our agricultural chemistry business as that sector matures globally.

See the “Outlook” section of MD&A for a more detailed discussion of some of the opportunities and risks we have identified for our business. For additional information related to the outlook for Monsanto, see “Caution Regarding Forward-Looking Statements” at the beginning of this Report on Form 10-Q, Part II — Item 1A — Risk Factors below and Part I — Item 1A — Risk Factors of our Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017.

New Accounting Pronouncements — See Item 1 — Financial Statements — Note 2 — New Accounting Standards — for a description of recently issued and adopted accounting pronouncements, including the dates of adoption and impacts on our results of operations, financial position and cash flows, as applicable.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

RESULTS OF OPERATIONS

	Three Months Ended								~~Nine Months Ended~~
(Dollars in millions, except per share amounts)	~~May~~Nov. 3130, 2017			~~May~~Nov. 3130, 2016			Increase/ (Decrease)		~~May 31, 2017~~			~~May 31, 2016~~			~~Increase/ (Decrease)~~
Net Sales	$	42,~~230~~658		$	42,~~189~~650		1—	%	$	~~11,954~~		$	~~10,940~~		9	%
Cost of goods sold	1,~~844~~346			1,~~809~~391			2(3	)%	~~5,357~~			~~5,061~~			6	%
Gross Profit	21,~~386~~312			21,~~380~~259			—4	%	~~6,597~~			~~5,879~~			12	%
Operating Expenses:
Selling, general and administrative expenses	~~789~~664			~~729~~585			814	%	~~2,031~~			~~1,858~~			9	%
Research and development expenses	~~417~~382			~~387~~370			83	%	~~1,168~~			~~1,091~~			7	%
Restructuring charges	~~(17~~4		)	15(36		)	NM		~~(30~~		)	~~290~~			NM
Pending Bayer transaction related costs	3320			—93			NM(78	)%	~~153~~			—			NM
Total Operating Expenses	1,~~222~~070			1,~~131~~012			86	%	~~3,322~~			~~3,239~~			3	%
Income from Operations	~~1,164~~242			~~1,249~~247			(72	)%	~~3,275~~			~~2,640~~			24	%
Interest expense	~~100~~124			~~100~~136			—(9	)%	~~338~~			~~332~~			2	%
Interest income	(1715		)	(1418		)	21(17	)%	~~(53~~		)	~~(51~~		)	4	%
Other expense (income), net	4			(35		)	NM		(41		)	160			NM
Other (income) expense, net	(97		)	43			NM
Income from Continuing Operations Before Income Taxes	~~1,077~~230			~~1,198~~86			~~(10~~NM	)%	~~3,031~~			~~2,199~~			38	%
Income tax provision	~~230~~60			~~483~~61			(522	)%	~~796~~			~~696~~			14	%
Income from Continuing Operations Including Portion Attributable to Noncontrolling Interest	~~847~~$	170		~~715~~$	25		18NM	%	~~2,235~~			~~1,503~~			49	%
Discontinued Operations:
Income from operations of discontinued business	—2			—16			—(88	)%	21			24			~~(13~~	)%
Income tax provision	—1			—6			—(83	)%	8			9			~~(11~~	)%
Income from Discontinued Operations	—1			—10			—(90	)%	13			15			~~(13~~	)%
Net Income	$	~~847~~171		$	~~715~~35		18NM	%	$	~~2,248~~		$	~~1,518~~		48	%
Less: Net income (loss) attributable to noncontrolling interest	4			(2		)	NM		8			(9		)	NM
Less: Net income attributable to noncontrolling interest	2			6			(67	)%
Net Income Attributable to Monsanto Company	$	~~843~~169		$	~~717~~29		18NM	%	$	~~2,240~~		$	~~1,527~~		47	%
Diluted Earnings per Share Attributable to Monsanto Company:
Income from continuing operations	$	10.9038		$	10.6305		17NM	%	$	~~5.03~~		$	~~3.37~~		49	%
Income from discontinued operations	—			—0.02			—NM	%	~~0.03~~			~~0.03~~			—	%
Net Income Attributable to Monsanto Company	$	10.9038		$	10.6307		17NM	%	$	~~5.06~~		$	~~3.40~~		49	%
NM = Not Meaningful
Effective Tax Rate	2126		%	4071		%			26		%	32		%
Comparison as a Percent of Net Sales:
Cost of goods sold	4451		%	4352		%			45		%	46		%
Gross profit	5649		%	5748		%			55		%	54		%
Selling, general and administrative expenses	1925		%	1722		%			17		%	17		%
Research and development expenses	1014		%	914		%			10		%	10		%
Total operating expenses	2940		%	2738		%			28		%	30		%
Income from continuing operations before income taxes	259		%	293		%			25		%	20		%
Net income attributable to Monsanto Company	206		%	171		%			19		%	14		%

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

~~Third~~First Quarter Fiscal Year ~~2017~~2018

The following explanations discuss the significant components of our results of operations that affected the quarter-to-quarter comparison of our ~~third~~first quarter income from continuing operations:

Net sales increased $418 million, ~~or one percent,~~ in the ~~third~~first quarter of fiscal ~~2017~~2018 from the same quarter a year ago. Our Seeds and Genomics segment net sales decreased $7578 million, and our Agricultural Productivity segment net sales increased $~~116~~86 million in the three-month comparison.

The following table presents the percentage increase/(decrease) in ~~third~~first quarter of fiscal ~~2017~~2018 worldwide net sales by segment compared with net sales in the prior year quarter, including the effects of volume, price and currency:

	Third Quarter 2017 Percentage Change in Net Sales vs. Third Quarter 2016
	First Quarter 2018 Percentage Change in Net Sales vs. First Quarter 2017
	Volume	Price	Currency	Total
Seeds and Genomics Segment	(411)%	36%	(1)%	(24)%
Agricultural Productivity Segment	84%	46%	—1%	1211%
Total Monsanto Company	(17)%	36%	(1)%	1—%

Cost of goods sold for the total company ~~increased~~decreased $3545 million, or ~~two~~three percent, in the three-month comparison. Cost of goods sold as a percent of net sales for the total company ~~increased~~decreased one percentage point to 4451 percent. Our Seeds and Genomics segment cost of goods sold as a percent of Seeds and Genomics net sales ~~remained~~decreased ~~relatively~~two ~~flat~~percentage atpoints to 36 percent, and our Agricultural Productivity segment cost of goods sold as a percent of Agricultural Productivity net sales ~~remained~~decreased ~~relatively~~five ~~flat~~percentage atpoints 66to 80 percent.

The following table represents the percentage increase/(decrease) in ~~third~~first quarter of ~~2017~~fiscal 2018 worldwide cost of goods sold by segment compared with cost of goods sold in the prior year quarter, including the effects of volume, costs and currency:

	Third Quarter 2017 Percentage Change in Cost of Goods Sold vs. Third Quarter 2016
	First Quarter 2018 Percentage Change in Cost of Goods Sold vs. First Quarter 2017
	Volume	Costs(1)	Currency	Total
Seeds and Genomics Segment	5(11)%	~~(7)~~1%	~~(2)~~—%	(410)%
Agricultural Productivity Segment	105%	1(2)%	1%	124%
Total Monsanto Company	7(3)%	(41)%	(1)%	2(3)%

(1) Seeds and Genomics segment ~~includes~~included $1410 million and $1 million of restructuring charges related to facility closures and exits costs from our supply chain operations and discontinued products during the ~~third~~first quarter of fiscal ~~2017~~2018 and ~~2016~~2017, respectively. Agricultural Productivity segment included $3 million of restructuring charges related to exit costs related to our manufacturing facilities during the first quarter of fiscal 2018. There were no restructuring charges during the first quarter of fiscal 2017 included in the Agricultural Productivity segment. See Item 1 — Financial Statements — Note 3 — Restructuring — for further information.

Gross profit increased $653 million in the three-month comparison. Gross profit as a percent of net sales for the total company ~~decreased~~increased one percentage point to 5649 percent in the ~~third~~first quarter of fiscal ~~2017~~2018. Our Seeds and Genomics segment gross profit as a percent of Seed and Genomics net sales ~~remained~~increased ~~flat~~two atpercentage points to 64 percent, and our Agricultural Productivity segment gross profit as a percent of Agricultural Productivity net sales ~~remained~~increased ~~flat~~five atpercentage 34points to 20 percent.

For a detailed discussion of the factors affecting net sales, cost of goods sold and gross profit comparison, see the “Seeds and Genomics Segment” and the “Agricultural Productivity Segment” sections.

Operating expenses increased $9158 million in the ~~third~~first quarter of fiscal ~~2017~~2018 compared to the prior year comparable quarter. The increase in operating expenses is due to an increase in selling, general and administrative expenses (“SG&A”), ~~research~~restructuring charges and ~~development expenses (“~~R&D”) ~~and pending Bayer transaction related costs~~ quarter over quarter, partially offset by a decrease in ~~restructuring~~pending ~~charges~~Bayer transaction related costs.

In the ~~third~~first quarter of fiscal ~~2017~~2018, SG&A expenses increased $6079 million, and R&D expenses increased $3012 million. SG&A increased primarily due to an ~~increased~~increase ~~accrual~~in ~~rate~~commission ~~for~~expense ~~employee~~in ~~incentive~~South ~~awards~~America ~~resulting~~and ~~from~~bad ~~improved~~debt ~~business~~expense ~~performance~~due to the growth of Intacta RR2 PRO in South America.

As a percent of net sales, SG&A expenses increased ~~two~~three percentage points to 1925 percent, and R&D expenses ~~increased~~remained ~~one~~consistent ~~percentage~~at ~~point~~14 ~~to ten~~ percent for the ~~third~~first quarter of fiscal ~~2017~~2018 compared to the prior year quarter.

Restructuring charges fluctuated $3240 million toresulting ain ~~net~~an ~~reversal of~~ expense of $174 million in the ~~third~~first quarter of fiscal ~~2017~~2018 compared to ~~$15~~a ~~million~~net reversal of expense of $36 million in the ~~third~~first quarter of fiscal ~~2016~~2017. ~~primarily~~The ~~due~~three tomonths ~~changes~~ended ~~in the workforce reduction estimates~~Nov. ~~See~~30, ~~discussion~~2016, ofincluded the ~~2015 Restructuring Plan in Item 1 — Financial Statements — Note 3 — Restructuring.~~

~~In the third quarter of fiscal 2017, costs related to the pending Bayer transaction were $33 million.~~37

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

~~Other~~reversal ~~expense~~of ~~(income) — net was~~ $445 million of ~~expense~~previously inrecognized ~~the~~expense ~~third~~due ~~quarter~~to ofchanges ~~fiscal 2017, a $39 million change from income of $35 million~~ in ~~the~~estimates ~~third~~related ~~quarter~~to ofwork ~~fiscal~~force ~~2016~~reductions. ~~The~~See ~~fluctuation~~discussion ~~was~~of ~~primarily due to non-core asset sales in~~ the ~~United~~2015 ~~States~~Restructuring ~~and~~Plan ~~Europe~~ in ~~the~~Item ~~third~~1 ~~quarter~~— ofFinancial ~~fiscal~~Statements ~~2016~~— ~~that~~Note ~~did~~3 ~~not~~— ~~occur in the third quarter of fiscal 2017~~Restructuring.

~~Income~~In ~~tax provision was $230 million in~~ the ~~third~~first quarter of fiscal ~~2017~~2018, acosts ~~decrease~~related ofto ~~$253 million from~~ the ~~prior~~pending ~~year~~Bayer ~~quarter,~~transaction ~~primarily~~were ~~as a result of a higher discrete tax benefit. We recorded a discrete tax benefit of~~ $6020 million incompared ~~the third quarter of fiscal 2017, primarily as a result of favorable adjustments~~ to ~~our tax returns filed during the quarter. We recorded a discrete tax expense of~~ $~~187~~93 million in the ~~third~~first quarter of fiscal ~~2016~~2017. ~~The effective tax rate decreased to 21 percent from 40 percent in the third quarter of fiscal 2016, primarily due to the change in discrete tax adjustments.~~

~~First~~Other ~~Nine~~(income) ~~Months~~expense — net was $97 million of ~~Fiscal~~income ~~Year~~in the first quarter of fiscal 2018, a $140 million change from expense of $43 million in the first quarter of fiscal 2017. The fluctuation was primarily due to gains of approximately $85 million from the sale of assets, of which approximately $52 million was recorded on the sale of the Precision Planting equipment business, and the absence of a loss of $37 million that was reclassified into earnings in fiscal 2017 as a result of the discontinuance of an interest rate hedge.

~~The~~Income ~~following~~tax ~~explanations~~provision ~~discuss~~was $60 million in the ~~significant~~first ~~components~~quarter of ~~our~~fiscal ~~results~~2018, a decrease of ~~operations~~$1 million from the prior year quarter. This decrease was primarily driven by lower tax in Argentina resulting from a reduction in valuation allowance that ~~affected~~was partially offset by an increase in tax expense due to an increase in total pretax income. The effective tax rate decreased to 26 percent from 71 percent in the ~~nine-month~~first ~~comparison~~quarter of fiscal ~~years~~ 2017, ~~and~~primarily ~~2016~~due ~~income~~to ~~from~~the ~~continuing~~reduction ~~operations:~~in valuation allowance in Argentina.

Net sales increased $1,014 million, or nine percent in the first nine months of fiscal 2017 from the same period a year ago. Our Seeds and Genomics segment net sales increased $743 million, and our Agricultural Productivity segment net sales increased $271 million.

The following table presents the percentage increase/(decrease) in the first nine months of fiscal 2017 worldwide net sales by segment compared with net sales in the prior year first nine months, including the effects of volume, price and currency:

	First Nine Months 2017 Percentage Change in Net Sales vs. First Nine Months 2016
	Volume	Price	Currency	Total
Seeds and Genomics Segment	3%	5%	1%	9%
Agricultural Productivity Segment	16%	(7)%	2%	11%
Total Monsanto Company	6%	2%	1%	9%

Cost of goods sold increased $296 million in the first nine months of fiscal 2017 from the same period a year ago. Cost of goods sold as a percent of net sales for the total company decreased one percentage point to 45 percent. Our Seeds and Genomics segment cost of goods sold as a percent of net sales decreased three percentage points to 35 percent, and our Agricultural Productivity segment cost of goods sold as a percent of net sales increased three percentage points to 76 percent.

The following table represents the percentage increase/(decrease) in the first nine months of fiscal 2017 worldwide cost of goods sold by segment compared with cost of goods sold in the prior year first nine months, including the effects of volume, costs and currency:

	First Nine Months 2017 Percentage Change in Cost of Goods Sold vs. First Nine Months 2016
	Volume	Costs(1)	Currency	Total
Seeds and Genomics Segment	7%	(7)%	1%	1%
Agricultural Productivity Segment	17%	(4)%	2%	15%
Total Monsanto Company	11%	(6)%	1%	6%

(1) Seeds and Genomics segment includes $20 million and $53 million of restructuring charges related to discontinued products during the first nine months of fiscal 2017 and 2016, respectively. Agricultural Productivity segment includes $1 million of restructuring charges related to discontinued products during the first nine months of fiscal 2017. See Item 1 — Financial Statements — Note 3 — Restructuring — for further information.

Gross profit increased $718 million in the first nine months of fiscal 2017 from the same period a year ago. Gross profit as a percent of net sales for the total company increased one percentage point to 55 percent in the first nine months of fiscal 2017. Our Seeds and Genomics segment gross profit as a percent of net sales increased three percentage points to 65 percent, and our Agricultural Productivity segment gross profit as a percent of net sales decreased three percentage points to 24 percent in the first nine months of fiscal 2017.

Operating expenses increased $83 million in the first nine months of fiscal 2017 from the prior year comparable period. In the nine-month comparison, SG&A expenses increased $173 million primarily due to the increased accrual rate for employee

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q

incentive awards, currency impact and increased commissions as a result of higher sales in South and North America. R&D expenses increased $77 million, primarily due to the increased accrual rate for employee incentive awards and increased spend related to the Climate Corporation.

As a percent of net sales, SG&A expenses remained consistent at 17 percent, and R&D expenses remained consistent at ten percent.

Restructuring charges fluctuated $320 million to a net reversal of expense of $30 million in the first nine months of fiscal 2017 compared to $290 million of expense in the first nine months of fiscal 2016 due to the timing of expense recognition related to workforce reductions and changes in the related estimates. See discussion of the 2015 Restructuring Plan in Item 1 — Financial Statements — Note 3 — Restructuring.

In the first nine months of fiscal 2017, costs related to the pending Bayer transaction were $153 million.

Other expense (income) — net was $41 million of income in the first nine months of fiscal 2017, a $201 million change from expense of $160 million in the first nine months of fiscal 2016. The fluctuation was primarily due to the absence of foreign currency losses of approximately $167 million largely related to the Argentine peso in the prior year and a gain of approximately $83 million recorded for the sale of our Latitude business in the current year. These items were partially offset by a loss of $37 million that was reclassified into earnings in the current year as a result of the discontinuance of an interest rate hedge and non-core asset sales in the United States and Europe in the third quarter of fiscal 2016 that did not occur in the third quarter of fiscal 2017.

Income tax provision was $796 million in the first nine months of fiscal 2017, an increase of $100 million from the prior year comparable period, primarily as a result of higher pretax income, offset by a higher discrete tax benefit. We recorded a discrete tax benefit of $50 million in the first nine months of fiscal 2017, primarily as a result of favorable adjustments to our tax returns filed during the year. We recorded a discrete tax expense of $146 million in the first nine months of fiscal 2016. The effective tax rate decreased to 26 percent from 32 percent in the prior year comparable period, primarily due to the change in discrete tax adjustments.

SEEDS AND GENOMICS SEGMENT

	Three Months Ended							~~Nine Months Ended~~
(Dollars in millions)	~~May~~Nov. 3130, 2017			~~May~~Nov. 3130, 2016		Increase/ (Decrease)		~~May 31, 2017~~		~~May 31, 2016~~		~~Increase/ (Decrease)~~
Net Sales
Corn seed and traits	$	~~1,491~~787		$	~~1,592~~949	(617	)%	$	~~5,342~~	$	~~5,024~~	6	%
Soybean seed and traits	~~896~~728			~~693~~600		2921	%	~~2,358~~		~~1,913~~		23	%
Cotton seed and traits	~~338~~120			~~285~~116		193	%	~~562~~		~~370~~		52	%
Vegetable seeds	~~199~~114			~~196~~131		2(13	)%	~~523~~		~~526~~		(1	)%
All other crops seeds and traits	~~208~~21			~~441~~52		(5360	)%	~~381~~		~~590~~		~~(35~~	)%
Total Net Sales	$	31,~~132~~770		$	31,~~207~~848	(24	)%	$	~~9,166~~	$	~~8,423~~	9	%
Gross Profit
Corn seed and traits	$	~~922~~415		$	~~976~~535	(622	)%	$	~~3,389~~	$	~~3,063~~	11	%
Soybean seed and traits	588			~~391~~451		5030	%	~~1,667~~		~~1,220~~		37	%
Cotton seed and traits	~~268~~73			~~205~~73		31—	%	~~418~~		~~248~~		69	%
Vegetable seeds	9958			~~108~~69		(816	)%	~~267~~		~~244~~		9	%
All other crops seeds and traits	~~138~~(2		)	~~369~~12		(63117	)%	~~191~~		~~430~~		~~(56~~	)%
Total Gross Profit	$	21,~~015~~132		$	21,~~049~~140	(21	)%	$	~~5,932~~	$	~~5,205~~	14	%
EBIT(1)	$	~~995~~302		$	~~1,094~~199	(952	)%	$	~~3,033~~	$	~~2,258~~	34	%

(1) EBIT is defined as earnings (loss) before interest and taxes. Interest and taxes are recorded on a total company basis. We do not record these items at the segment level. See Item 1 — Financial Statements — Note 19 — Segment Information and the “Overview — Non-GAAP Financial Measures” section of MD&A for further details.

Seeds and Genomics Financial Performance — ~~Third~~First Quarter Fiscal Year ~~2017~~2018

Net sales for the Seeds and Genomics segment decreased $7578 million in the ~~third~~first quarter of fiscal ~~2017~~2018 compared to the ~~third~~first quarter of fiscal ~~2016~~2017. The net sales decrease of $~~233~~162 million in ~~all~~corn ~~other~~seed ~~crops seeds~~ and traits was primarily driven by ~~the~~lower ~~absence~~volumes. A significant portion of athis ~~license~~was ~~agreement~~in ofthe ~~our~~United ~~alfalfa~~States ~~traits~~and is expected to be recovered later in fiscal 2018, and ~~technology~~some was related to lower acres in the ~~third~~first ~~quarter~~season in Brazil. The net sales decrease in corn seed and traits was partially offset by a net sales increase of ~~fiscal~~$128 ~~2016,~~million ~~which~~within ~~resulted~~soybean seed and traits primarily driven by increased Intacta RR2 PRO penetration in South America.

43Cost of goods sold in the Seeds and Genomics segment primarily represents field growing, plant processing and distribution costs. Cost of goods sold decreased $70 million, or ten percent, to $638 million in the first quarter of fiscal 2018 compared to $708 million in the first quarter of fiscal 2017. The decrease was primarily the result of lower sales volumes in corn seed and traits as noted in the net sales discussion.

Gross profit for the Seeds and Genomics segment decreased $8 million in the first quarter of fiscal 2018 compared to the first quarter of fiscal 2017. The decrease in gross profit was primarily due to lower volume in corn seeds and traits as noted in the net sales discussion. This decrease was offset by soybean seed and traits gross profit increasing due to increased Intacta RR2 PRO penetration in South America also noted in the net sales discussion.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

~~approximately~~Gross ~~$210~~profit ~~million of upfront revenue accounted for~~ as ana ~~exclusive~~percent ~~perpetual~~of ~~license to intellectual property. The~~ net sales ~~decrease~~for ofthe ~~$101~~segment ~~million~~increased ~~in corn seed and traits was primarily driven by lower volume due~~ to ~~decreased~~64 ~~acres~~percent in the ~~United~~first ~~States in conjunction with grower demand in Europe and the United States shifting to the second~~ quarter inof fiscal ~~2017~~2018 compared to ~~the~~62 ~~third~~percent ~~quarter~~ in fiscal 2016. These net sales decreases were partially offset by net sales increases within soybean seed and traits and cotton seed and traits. The net sales increase of $203 million in soybean seed and traits was primarily driven by higher volumes in North America resulting from increased acres and Roundup Ready 2 XTEND soybean penetration in the ~~United~~first ~~States.~~quarter ~~The net sales increase~~ of ~~$53~~fiscal million in cotton seed and traits was primarily driven by higher volumes in the United States resulting from increased planted acres and share gains coupled with Bollgard II XtendFlex cotton penetration partially offset by a decrease due to a change in our customer contracts2017.

Cost of goods sold in the Seeds and Genomics segment primarily represents field growing, plant processing and distribution costs. Cost of goods sold decreased $41 million, or four percent, to $1,117 million in the third quarter of fiscal 2017 compared to $1,158 million in the third quarter of fiscal 2016. The decrease was primarily the result of lower sales volumes in corn seed and traits as noted in the net sales discussion coupled with higher corn production plans.

Gross profit for the Seeds and Genomics segment decreased $34 million in the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016. The decrease in gross profit was primarily due to the absence of a license agreement of our alfalfa traits and technology in the third quarter of fiscal 2016 within all other crops seed and trait and decreased volume in corn seed and traits as noted in the net sales discussion. These decreases were offset by soybean seed and traits gross profit increasing due to reduced Roundup Ready 2 XTEND soybean launch costs, higher sales resulting from higher volumes and Roundup Ready 2 XTEND soybean penetration as noted in the net sales discussion. In addition, cotton seed and traits gross profit increased due to higher volumes as noted in the net sales discussion.

Gross profit as a percent of net sales for the segment remained consistent at 64 percent in the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016.

Seeds and Genomics Financial Performance — First Nine Months Fiscal Year 2017

Net sales for the Seeds and Genomics segment increased $743 million in the first nine months of fiscal 2017 compared to the first nine months of fiscal 2016. The net sales increase of $445 million in soybean seed and traits was primarily driven by increased Intacta RR2 PRO soybean penetration in Brazil and Argentina, increased Roundup Ready 2 XTEND soybean penetration in the United States, higher volumes in North America resulting from increased acres and favorable currency impacts in Brazil. The net sales increase of $318 million in corn seed and traits was primarily driven by higher average net selling prices in South America; share gains in the United States, Europe and Argentina; and favorable currency impacts in Brazil. The net sales increase of $192 million in cotton seed and traits was primarily driven by higher volume from increased planted acres in Australia and the United States and share gains coupled with Bollgard II XtendFlex cotton penetration in the United States. These increases are partially offset by a net sales decrease of $209 million in all other crops seeds and traits driven by the absence of a license agreement of our alfalfa traits and technology in the third quarter of fiscal 2016.

Cost of goods sold in the Seeds and Genomics segment primarily represents field growing, plant processing and distribution costs. Cost of goods sold increased $16 million to $3,234 million in the first nine months of fiscal 2017 compared to $3,218 million in the first nine months of fiscal 2016.

Gross profit for the Seeds and Genomics segment increased $727 million in the first nine months of fiscal 2017 compared to the first nine months of fiscal 2016. The increase in gross profit was primarily due to increased volume in cotton seed and traits, soybean seed and traits and corn seed and traits. In addition, higher average corn net selling prices in South America and higher production plans resulting in greater fixed cost absorption in corn seed and traits were also contributors. Increased Intacta RR2 PRO soybean and Roundup Ready 2 XTEND soybean penetration in soybean seed and traits as noted in the net sales discussion coupled with reduced Roundup Ready 2 XTEND soybean launch costs also attributed to the increase. In addition, favorable currency impacts in Brazil increased gross profit compared to the first nine months of fiscal 2016. These increases were offset by decreased gross profit in all other crops seeds and traits due to the absence of a license agreement of our alfalfa traits and technology in the third quarter of fiscal 2016.

Gross profit as a percent of net sales for the segment increased three percentage points to 65 percent in the first nine months of fiscal 2017 compared to 62 percent in the first nine months of fiscal 2016.

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q

AGRICULTURAL PRODUCTIVITY SEGMENT

	Three Months Ended						~~Nine Months Ended~~
(Dollars in millions)	~~May~~Nov. 3130, 2017		~~May~~Nov. 3130, 2016		Increase~~/(Decrease)~~		~~May 31, 2017~~		~~May 31, 2016~~		~~Increase/ (Decrease)~~
Net Sales
Agricultural productivity	$	~~1,098~~888	$	~~982~~802	1211	%	$	~~2,788~~	$	~~2,517~~	11	%
Total Net Sales	$	~~1,098~~888	$	~~982~~802	1211	%	$	~~2,788~~	$	~~2,517~~	11	%
Gross Profit
Agricultural productivity	$	~~371~~180	$	~~331~~119	1251	%	$	~~665~~	$	~~674~~	(1	)%
Total Gross Profit	$	~~371~~180	$	~~331~~119	1251	%	$	~~665~~	$	~~674~~	(1	)%
EBIT(1)	$	~~160~~38	$	~~187~~13	~~(14~~NM	)%	$	~~292~~	$	~~253~~	15	%
NM = Not Meaningful


(1)	EBIT is defined as earnings (loss) before interest and taxes. Interest and taxes are recorded on a total company basis. We do not record these items at the segment level. See Item 1 — Financial Statements — Note 19 — Segment Information — and the “Overview — Non-GAAP Financial Measures” section of MD&A for further details.

Agricultural Productivity Financial Performance — ~~Third~~First Quarter Fiscal Year ~~2017~~2018

Net sales in our Agricultural Productivity segment increased by $~~116~~86 million in the ~~third~~first quarter of fiscal ~~2017~~2018 compared to the ~~third~~first quarter of fiscal ~~2016~~2017 primarily due to higher average net selling price of Roundup and other glyphosate-based herbicides ~~and first-time XtendiMax with VaporGrip Technology dicamba-based herbicide revenue~~.

Cost of goods sold in the Agricultural Productivity segment primarily represents material, conversion and distribution costs. Cost of goods sold increased $7625 million, or 12four percent, in the ~~third~~first quarter of fiscal ~~2017~~2018 to $~~727~~708 million compared to $~~651~~683 million in the ~~third~~first quarter of fiscal ~~2016~~2017. ~~Roundup and other glyphosate-based herbicides cost of goods sold increased as a result of higher sales volumes when compared to the third quarter of fiscal 2016.~~

The net sales and cost of goods sold discussed above resulted in higher gross profit of $4061 million in the ~~third~~first quarter of fiscal ~~2017~~2018 compared to the ~~third~~first quarter of fiscal ~~2016~~2017. Gross profit as a percent of net sales for the Agricultural Productivity segment ~~remained~~increased ~~consistent~~to at20 34 percent in the ~~third~~first quarter of fiscal ~~2017~~2018 compared to 15 percent in the ~~third~~first quarter of fiscal ~~2016~~2017.

Agricultural Productivity Financial Performance — First Nine Months Fiscal Year 2017

Net sales in our Agricultural Productivity segment increased by $271 million in the first nine months of fiscal 2017 compared to the first nine months of fiscal 2016 primarily due to increased volume of Roundup and other glyphosate-based herbicides globally, first time XtendiMax with VaporGrip Technology dicamba-based herbicide revenue and favorable currency impact in Brazil. These increases were partially offset by lower average net selling price of Roundup and other glyphosate-based herbicides.

Cost of goods sold in the Agricultural Productivity segment primarily represents material, conversion and distribution costs. Cost of goods sold increased $280 million, or 15 percent, in the first nine months of fiscal 2017 to $2,123 million compared to $1,843 million in the first nine months of fiscal 2016. Cost of goods sold increased as a result of higher sales volumes when compared to the first nine months of fiscal 2016 and currency impact in Brazil. This is partially offset by lower dicamba-based herbicide project expenses when compared to the first nine months of fiscal 2016.

The net sales and cost of goods sold discussed above resulted in $9 million lower gross profit in the first nine months of fiscal 2017 compared to the first nine months of fiscal 2016. Gross profit as a percent of net sales for the Agricultural Productivity segment decreased three percentage points to 24 percent in the first nine months of fiscal 2017 compared to 27 percent in the first nine months of fiscal 2016. This decrease is primarily due to the lower average net selling price of Roundup and other glyphosate-based herbicides partially offset by lower dicamba-based herbicide project expense, higher volumes globally and first time XtendiMax with VaporGrip Technology dicamba-based herbicide revenue.

RESTRUCTURING

45Cumulative pretax charges related to the 2015 Restructuring Plan are estimated to be in the range of $900 million to $965 million. Implementation of the 2015 Restructuring Plan is expected to be completed by the end of fiscal year 2018, and substantially all of the cash payments are expected to be made by the end of fiscal year 2018. These pretax charges are currently estimated to be comprised of the following categories: $325 million to $335 million in work force reductions, including severance and related benefits; $95 million to $130 million in facility closures/exit costs, including contract termination costs; $480 million to $500 million in asset impairments and write-offs related to property, plant and equipment, inventory and goodwill and other assets. These pretax charges are currently estimated to be incurred primarily by the Seeds and Genomics segment.

For the three months ended Nov. 30, 2017, pretax restructuring charges of $17 million were recorded within the Statement of Consolidated Operations, of which $13 million and $4 million were included in cost of goods sold and restructuring charges, respectively. For the three months ended Nov. 30, 2016, a pretax net reversal of restructuring charges of $35 million was recorded within the Statement of Consolidated Operations, of which $1 million of expense and a net reversal of $36 million of previously recognized expense were included in cost of goods sold and restructuring charges, respectively. For additional information on the 2015 Restructuring Plan, see Item 1 — Financial Statements — Note 3 — Restructuring.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

together with the Oct. 6, 2015 actions, comprise the 2015 Restructuring Plan. Actions include streamlining and reprioritizing some commercial, enabling, supply chain and research and development efforts.

Cumulative pretax charges related to the 2015 Restructuring Plan are estimated to be in the range of $925 million to $1 billion. Implementation of the 2015 Restructuring Plan is expected to be completed by the end of fiscal year 2018, and substantially all of the cash payments are expected to be made by the end of fiscal year 2018. These pretax charges are currently estimated to be comprised of the following categories: $350 million to $370 million in work force reductions, including severance and related benefits; $95 million to $115 million in facility closures/exit costs, including contract termination costs; $480 million to $515 million in asset impairments and write-offs related to property, plant and equipment, inventory and goodwill and other assets. These pretax charges are currently estimated to be incurred primarily by the Seeds and Genomics segment.

For the nine months ended May 31, 2017, a pretax net reversal of restructuring charges of $9 million was recorded within the Statement of Consolidated Operations, of which $21 million of expense and net reversal of $30 million of previously recognized expense were included in cost of goods sold and restructuring charges, respectively. The reversal of previously recognized expense was due to changes in estimates related to work force reductions. For the nine months ended May 31, 2016, pretax restructuring charges of $343 million were recorded within the Statement of Consolidated Operations, of which $53 million and $290 million were included in cost of goods sold and restructuring charges, respectively. For additional information on the 2015 Restructuring Plan, see Item 1 — Financial Statements — Note 3 — Restructuring.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Working Capital and Financial Condition
	As of
(Dollars in millions, except current ratio)	~~May~~Nov. 3130, 2017		~~May~~Nov. 3130, 2016		Aug. 31, ~~2016~~2017
Cash and Cash Equivalents(1)	$	13,~~614~~102	$	12,~~205~~129	$	1,~~676~~856
Trade Receivables, Net(1)	32,~~913~~115		32,~~168~~196		12,~~926~~161
Inventory, Net	34,~~189~~033		3,~~370~~839		3,~~241~~340
Other Current Assets(2)	1,302		1,312		1,314
Other Current Assets(1)(2)	1,310		1,488		1,294
Total Current Assets	$	10,~~018~~560	$	9,~~055~~652	$	8,~~157~~651
Short-Term Debt, Including Current Portion of Long-Term Debt(1)	$	2,611	$	2,557	$	1,587
Short-Term Debt, Including Current Portion of Long-Term Debt	$	1,168	$	570	$	870
Accounts Payable	753		620		1,006
Accounts Payable(1)	1,194		1,073		1,068
Accrued Liabilities(1)(3)	35,~~594~~896		35,~~003~~857		4,~~136~~460
Total Current Liabilities	$	68,~~958~~258	$	67,~~180~~500	$	6,~~729~~398
Working Capital(4)	$	32,~~060~~302	$	2,~~875~~152	$	12,~~428~~253
Current Ratio(4)	1.4428:1		1.4729:1		1.2135:1


(1)	May include restrictions as a result of variable interest entities. See the Statements of Consolidated Financial Position and Item 1 — Financial Statements — Note 5 — Variable Interest Entities and Investments — for more information.


(2)	Includes short-term investments, miscellaneous receivables, assets held for sale and other current assets.


(3)	Includes income taxes payable, accrued compensation and benefits, accrued marketing programs, deferred revenues, grower production accruals, dividends payable, customer payable, restructuring reserves and miscellaneous short-term accruals.


(4)	Working capital is total current assets less total current liabilities; current ratio represents total current assets divided by total current liabilities.

~~May~~Nov. 3130, 2017, compared with Aug. 31, ~~2016~~2017: Working capital increased $~~1,632~~49 million, or ~~114~~two percent, between Aug. 31, ~~2016~~2017, and ~~May~~Nov. 3130, 2017, primarily because of the following factors:

• ~~Trade~~Cash ~~receivables,~~and ~~net~~cash equivalents increased $1,~~987~~246 million between the respective periods primarily due to cash from operating activities and an increase in book overdrafts partially offset by the ~~seasonality~~payment of ~~our~~dividends ~~business~~during the period and ~~timing~~cash ofrequired ~~collections~~by investing activities.

• ~~Accounts~~Inventory ~~payable~~increased ~~decreased~~ $~~253~~693 million between the respective periods primarily due to ~~timing~~the seasonality of ~~payments~~our corn seed business in the United States and Europe in which the fall harvest of seed products occurs in the first quarter of the fiscal year.

• ~~Accrued~~Other ~~liabilities~~current ~~decreased~~assets increased $~~542~~16 million ~~between~~primarily ~~the~~due ~~respective~~to ~~periods~~an ~~primarily~~increase ~~due~~in income taxes recoverable partially offset by a decrease of assets held for sale related to the ~~following~~sale ~~fluctuations:~~of the Precision Planting equipment business.

◦These ~~Accrued~~increases ~~marketing~~to ~~programs~~working ~~decreased~~capital ~~$195 million~~ between ~~the~~Nov. ~~respective~~30, ~~periods primarily due to fiscal~~ 2017, ~~payments~~and ~~made~~Aug. on31, ~~fiscal 2016 programs~~2017, were partially offset by ~~increased accruals in~~ the ~~United~~following ~~States and higher Brazil accruals due to higher Intacta RR2 PRO soybean revenues.~~factors:

46• Short-term debt, including the current portion of long-term debt, increased $298 million between the respective periods primarily due to $300 million of senior notes reclassified from long-term debt to short term debt.


•	Accounts payable increased $126 million between the respective periods primarily due to the timing of payments.


•	Accrued liabilities increased $1,436 million between the respective periods primarily due to the following fluctuations:


◦	Deferred revenues increased $2,392 million due to customer prepayments in the United States that occurred in the first quarter of fiscal 2018 partially offset by recognition of Intacta RR2 PRO prepayments in Brazil from fiscal 2017.


◦	Grower production accruals increased $371 million primarily due to deliveries in advance of the 2018 fiscal year selling season as a result of the seasonality of our business.

The increases in accrued liabilities were partially offset by the following:


◦	Accrued compensation and benefits decreased $310 million primarily due to the payment of fiscal 2017 incentive accruals partially offset by current year incentive accruals.


◦	Accrued marketing programs decreased $725 million between the respective periods primarily due to the seasonality of our business and the timing of payments.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q


◦	Dividends payable decreased $237 million due to the timing of dividend declaration and payments.

◦Nov. ~~Customer~~30, ~~payable~~2017, ~~decreased~~compared ~~$86~~with ~~million~~Nov. ~~due~~30, to2016: ~~North~~Working ~~American~~capital ~~customer~~increased ~~refunds~~$150 ~~paid~~million inbetween ~~the~~Nov. ~~first~~30, ~~nine~~2016, ~~months~~and ofNov. ~~fiscal~~30, 2017., primarily because of the following factors:

◦• ~~Restructuring~~Cash ~~reserves~~and ~~decreased~~cash equivalents increased $~~160~~973 million asbetween athe ~~result~~respective ofperiods ~~payments~~primarily ~~made~~due ~~under~~to ~~the~~cash ~~2015~~provided ~~Restructuring~~by ~~Plan~~operating activities, cash provided by financing with less than 90-day maturities and ~~changes~~proceeds infrom ~~estimates~~stock ~~related~~options toexercised ~~work~~partially ~~force~~offset ~~reductions~~by cash required by investing activities and the payment of debt and dividends during the period.

◦• ~~Miscellaneous~~Inventory ~~short-term~~increased ~~accruals decreased~~ $~~191~~194 million ~~primarily~~between ~~due~~the torespective aperiods ~~payment~~primarily ~~related~~due to ~~the~~higher ~~PCB~~production ~~settlement~~ of ~~$280~~seed ~~million as described in Item 1 — Financial Statements — Note 18 — Commitments~~ and ~~Contingencies,~~traits ~~partially offset by increased interest accruals~~inventory.

These increases to working capital between Nov. 30, 2017, and Nov. 30, 2016, were offset by the following factors:


•	Trade receivables, net decreased $81 million between the respective periods primarily due to the write off of certain receivable balances in Latin America.


•	Other current assets decreased $178 million primarily due to a decrease in assets held for sale of $223 million as assets related to the Precision Planting equipment business were sold during the first quarter of fiscal 2018 and packaging materials previously included in assets held for sale were reclassified from assets held for sale to other assets.


•	Short-term debt, including the current portion of long-term debt, increased $598 million between the respective periods primarily due to reclassifications of long-term debt to short-term partially offset by repayments of senior notes.


•	Accounts payable increased $121 million between the respective periods primarily due to the timing of payments.


•	Accrued liabilities increased $39 million between the respective periods primarily due to the following:


◦	Accrued compensation and benefits increased $56 million primarily due to the timing of accrued wages and increased current year incentive accruals compared to prior year.


◦	Accrued marketing programs increased $155 million primarily due to increased accruals in the United States and increased Brazil accruals due to higher Intacta RR2 PRO soybean revenues.


◦	Deferred revenue increased $212 million primarily due to higher prepayments in the United States and higher credit balance reclassifications from accounts receivable to deferred revenue due to the right of set off as a result of lower net sales.

The decreases in accrued liabilities were partially offset by the following:

◦ Income taxes payable ~~increased~~decreased $~~202~~88 million primarily due ~~the~~to ~~seasonality~~payments of ~~our~~accrued ~~U.S.~~liabilities ~~business~~that ~~and~~reduced ~~the~~taxable ~~timing of tax payments~~income.

◦ ~~Accrued~~Restructuring ~~compensation~~reserves ~~and~~decreased ~~benefits increased~~ $~~127~~98 million ~~primarily~~as ~~due~~a toresult ~~increased~~of ~~current~~payments ~~year~~made ~~incentive~~under ~~accruals~~the 2015 Restructuring Plan and changes in estimates related to work force reductions.

~~These~~◦ ~~increases~~Miscellaneous toshort-term ~~working~~accruals ~~capital~~decreased ~~between~~$180 ~~May~~million ~~31,~~primarily ~~2017,~~due ~~and~~to ~~Aug.~~a ~~31,~~decrease ~~2016,~~in ~~were~~amounts ~~partially~~due ~~offset~~to bya ~~the~~third ~~following~~party ~~factors:~~related to trade receivables sold.

•Customer ~~Cash~~Financing Programs: We participate in various customer financing programs in an effort to reduce our receivables risk and ~~cash~~to ~~equivalents~~reduce ~~decreased~~our reliance on commercial paper borrowings. As of Nov. 30, 2017, the programs had $62283 million ~~between~~in outstanding balances, and we received $21 million of proceeds during the ~~respective~~first ~~periods~~three ~~primarily~~months ~~due~~of tofiscal ~~cash~~2018 ~~from~~under ~~operating~~these ~~and~~programs. ~~investing~~Our ~~activities~~future ~~coupled~~maximum ~~with~~payout ~~debt~~under ~~proceeds~~the programs, ~~offset~~including byour ~~capital~~responsibility ~~expenditures~~for our guarantees with lenders, ~~payments~~was $70 million as of ~~dividends~~Nov. ~~and~~30, ~~repayment~~2017. See Item 1 — Financial Statements — Note 4 — Customer Financing Programs — for further discussion of ~~debt~~these programs.

~~• Inventory decreased $52 million between the respective periods primarily due to decreased Agricultural Productivity inventory, specifically Roundup inventory, resulting from higher sales.~~41

• Short term debt, including the current portion of long-term debt, increased $1,024 million between the respective periods primarily due to increased commercial paper borrowings of $712 million, proceeds received from the delayed draw term loan facility of $500 million and the reclassification of Senior Notes from long-term to short-term of approximately $300 million. These increases were partially offset by the repayment of Senior Notes and mandatorily redeemable shares of the Brazil VIE totaling approximately $513 million.

May 31, 2017, compared with May 31, 2016: Working capital increased $185 million between May 31, 2016, and May 31, 2017, primarily because of the following factors:

• Cash and cash equivalents increased $409 million between the respective periods primarily due to cash from operating and investing activities coupled with debt proceeds. These increases were partially offset by repayment of debt and dividend payments.

• Trade receivables, net increased $745 million between the respective periods primarily due to increased revenues globally.

These increases to working capital between May 31, 2017, and May 31, 2016, were offset by the following factors:

• Inventory decreased $181 million between the respective periods primarily due to reductions in seed and genomics and agricultural productivity production plans coupled with increased sales in the current year, partially offset by build up of dicamba-based herbicide inventory.

• Short-term debt, including the current portion of long-term debt, increased $54 million between the respective periods primarily due to proceeds received from the delayed draw term loan facility of $500 million and the reclassification of Senior Notes from long-term to short-term of approximately $300 million, offset by decreased commercial paper borrowings of $714 million.

• Accounts payable increased $133 million between the respective periods primarily due to timing of payments.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

Cash Flow

• Accrued liabilities increased $591 million between the respective periods primarily due to the following:



	Three Months Ended
(Dollars in millions)	Nov. 30, 2017			Nov. 30, 2016
Net Cash Provided by Operating Activities	$	1,292		$	1,463
Net Cash Required by Investing Activities	(210		)	(327		)
Net Cash Provided (Required) by Financing Activities	178			(655		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(14		)	(28		)
Net Increase in Cash and Cash Equivalents	$	1,246		$	453

◦ Accrued compensation and benefits increased $164 million primarily due to increased current year incentive accruals.



	Three Months Ended
(Dollars in millions)	Nov. 30, 2017			Nov. 30, 2016
Net Cash Provided by Operating Activities	$	1,292		$	1,463
Capital Expenditures	(418		)	(317		)
Free Cash Flow⁽¹⁾	$	874		$	1,146

◦ Accrued marketing programs increased $362 million primarily due to increased revenues in the United States and higher Brazil accruals due to higher Intacta RR2 PRO soybean revenues.

The increases in accrued liabilities were partially offset by a decrease in the restructuring reserves of $117 million as a result of payments made under the 2015 Restructuring Plan and changes in estimates related to work force reductions.

Customer Financing Programs: We participate in various customer financing programs in an effort to reduce our receivables risk and to reduce our reliance on commercial paper borrowings. As of May 31, 2017, the programs had $180 million in outstanding balances, and we received $278 million of proceeds during the first nine months of fiscal 2017 under these programs. Our future maximum payout under the programs, including our responsibility for our guarantees with lenders, was $76 million as of May 31, 2017. See Item 1 — Financial Statements — Note 4 — Customer Financing Programs — for further discussion of these programs.

	Nine Months Ended
(Dollars in millions)	May 31, 2017			May 31, 2016
Net Cash Provided by Operating Activities	$	690		$	415
Net Cash Required by Investing Activities	(752		)	(639		)
Net Cash Required by Financing Activities	(4		)	(2,233		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	4			(39		)
Net Decrease in Cash and Cash Equivalents	(62		)	(2,496		)

	Nine Months Ended
(Dollars in millions)	May 31, 2017			May 31, 2016
Net Cash Provided by Operating Activities	$	690		$	415
Capital Expenditures	(848		)	(666		)
Free Cash Flow(1)	(158		)	(251		)


(1)	Free cash flow represents the total of net cash provided or required by operating activities less capital expenditures (see the “Overview - Non-GAAP Financial Measures” section of MD&A for a further discussion).

Operating: The ~~increase~~decrease in cash provided by operating activities in the first ~~nine~~three months of fiscal ~~2017~~2018 compared to the first ~~nine~~three months of fiscal ~~2016~~2017 was primarily due to more cash required for trade payables, incentives, amounts due to a third party related to trade receivables sold, market funding and taxes compared to the ~~following~~prior ~~items:~~period. These decreases in cash provided by operating activities were partially offset by increased net income compared to prior year, more accounts receivable collections compared to the prior period due to timing, absence of the cash payment related to the PCB settlement described in Item 1 — Financial Statements — Note 18 — Commitments and Contingencies and a decrease in restructuring reserves due to less payments and changes in estimates related to work force reductions under the 2015 Restructuring Plan.

•Investing: ~~Increased~~Cash ~~net~~required ~~income~~by investing activities in the first three months of fiscal 2018 decreased compared to ~~prior~~the ~~year~~first three months of fiscal 2017 due to proceeds received from the sale of the Precision Planting equipment business, ~~and~~partially offset by an increase in capital expenditures related to the construction of a dicamba-based herbicide manufacturing facility in Luling, Louisiana.

•Financing: AnThe increase in ~~taxes~~cash ~~payable,~~provided anby ~~increase~~financing activities in ~~employee~~the ~~incentives~~first ~~and~~three anmonths ~~increase~~of infiscal ~~market~~2018 ~~funding~~compared ~~offset~~to bythe ~~cash~~first ~~payments~~three ~~related~~months toof ~~the~~fiscal ~~PCB~~2017 ~~settlement~~was ~~described~~primarily due to book overdrafts in ~~Item~~fiscal 12018 —and ~~Financial~~repayment ~~Statements~~of —commercial ~~Note~~paper 18in —fiscal ~~Commitments~~2017 ~~and~~that ~~Contingencies~~did not occur in fiscal 2018.

Capital Resources and Liquidity

These increases in cash provided by operating activities were partially offset by the following:



	As of
(Dollars in millions, except debt-to-capital ratio)	Nov. 30, 2017			Nov. 30, 2016			Aug. 31, 2017
Short-Term Debt	$	1,168		$	570		$	870
Long-Term Debt	6,949			8,047			7,254
Total Monsanto Company Shareowners’ Equity	6,601			4,402			6,438
Debt-to-Capital Ratio⁽¹⁾	55		%	66		%	56		%

• An increase in trade receivables, net resulting primarily from increased revenues,

• A decrease in deferred revenue due to timing and recognition of prepayments, and

• A decrease in the restructuring reserves due to timing of expense recognition related to workforce reductions and changes in related estimates resulting from the 2015 Restructuring Plan.

Investing: Cash required by investing activities in the first nine months of fiscal 2017 increased compared to the first nine months of fiscal 2016 due to increased capital expenditures offset by cash proceeds received from the sale of the Latitude business in the second quarter of fiscal 2017.

Financing: The decrease in cash required by financing activities in the first nine months of fiscal 2017 compared to the first nine months of fiscal 2016 was primarily due to the cash outflow in the first nine months of fiscal 2016 related to the treasury share purchases that did not occur in fiscal 2017, partially offset by increased cash inflows from commercial paper borrowings during the same period.

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q

Capital Expenditures: Capital expenditures increased in the first nine months of fiscal 2017 compared to the first nine months of fiscal 2016 primarily due to construction of a dicamba-based herbicide manufacturing facility in Luling, Louisiana.

	As of						As of
(Dollars in millions, except debt-to-capital ratio)	May 31, 2017			May 31, 2016			Aug. 31, 2016
Short-Term Debt	$	2,611		$	2,557		$	1,587
Long-Term Debt	7,246			7,948			7,453
Total Monsanto Company Shareowners’ Equity	6,532			5,110			4,534
Debt-to-Capital Ratio(1)	60		%	67		%	67		%


(1)	Debt-to-Capital ratio represents short-term and long-term debt divided by total Monsanto Company shareowners’ equity, short-term and long-term debt.

A major source of our liquidity is operating cash flows, which can be derived from net income. This cash-generating capability and access to long-term investment grade debt financing markets provides us with the financial flexibility we need to meet operating, investing and financing needs. We believe our sources of liquidity will be sufficient to sustain operations and to finance anticipated investments. To the extent that cash provided by operating activities is not sufficient to fund our cash needs, we believe short-term commercial paper borrowings can be used to finance these requirements. We had no commercial paper borrowings ~~of $1,212 million~~ outstanding as of ~~May 31~~Nov. 30, 2017.

Share Repurchases: On Oct. 9, 2015, we entered into uncollared ASR agreements with each of Citibank, N.A. and JPMorgan Chase Bank, N.A., which settled in January 2016. In accordance with the terms of the agreements, an additional 3.8 million shares were received upon final settlement in fiscal 2016 for a total of 32.2 million shares of Monsanto common stock repurchased at an aggregate cost to us of $3.0 billion. The ASR agreements were entered into pursuant to the share repurchase authorization announced June 2014.

Debt and Other Credit Arrangements: In April 2016, Monsanto filed a shelf registration with the SEC (“2016 shelf registration”) that allows the company to issue a maximum aggregate amount of $6 billion of debt, equity and hybrid offerings. The 2016 shelf registration expires in April 2019.

We have a $3 billion credit facility agreement with a group of banks that provides a senior unsecured revolving credit facility through Mar. 27, 2020. As of May 31, 2017, we did not have any borrowings under this credit facility, and we were in compliance with all debt covenants. 42

In October 2016, we closed a $1 billion delayed draw term loan facility that matures the earlier of October 2019 or the consummation of the Bayer merger. Borrowings under the facility were $500 million as of May 31, 2017. Proceeds were used for general corporate purposes.

As of May 31, 2017, our debt-to-capital ratio was 60 percent compared with 67 percent at Aug. 31, 2016, and 67 percent at May 31, 2016. The seven percentage point decrease from Aug. 31, 2016, was primarily due to an increase in shareowners’ equity resulting from earnings during fiscal 2017 slightly offset by dividends declared and an increase in short term debt, primarily due to increased commercial paper borrowings. The seven percentage point decrease from May 31, 2016, was primarily driven by an increase in shareowners’ equity resulting from earnings partially offset by dividends declared and decreased debt outstanding at May 31, 2017, compared to May 31, 2016.

We held cash and cash equivalents and short-term investments of $1,620 million and $1,736 million as of May 31, 2017, and Aug. 31, 2016, respectively, of which $1,229 million and $1,629 million was held by foreign entities, respectively. Our intent is to indefinitely reinvest approximately $4.6 billion of the $4.6 billion of undistributed earnings of our foreign operations that existed as of Aug. 31, 2016. It is not practicable to estimate the income tax liability that might be incurred if such indefinitely reinvested earnings were remitted to the United States.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

~~Dividends:~~We Inhave ~~the~~a ~~first~~$3 ~~nine~~billion ~~months~~credit facility agreement with a group of ~~fiscal~~banks ~~year~~that provides a senior unsecured revolving credit facility through Mar. 27, 2020. As of Nov. 30, 2017, we ~~declared~~did ~~the~~not ~~following~~have ~~dividends:~~any borrowings under this credit facility, and we were in compliance with all debt covenants.

Quarter Ending	Declaration Date	Dividend	Payment Date	To Shareowners of Record as of:
Aug. 31, 2017	Jun. 6, 2017	54 cents	Jul. 28, 2017	Jul. 7, 2017
Feb. 29, 2017	Jan. 27, 2017	54 cents	Apr. 28, 2017	Apr. 7, 2017
Feb. 29, 2017	Dec. 5, 2016	54 cents	Jan. 27, 2017	Jan. 6, 2017

In October 2016, we entered into a $1 billion delayed draw term loan facility that matures the earlier of October 2019 or the consummation of the Bayer merger. Borrowings under the facility were $500 million as of Nov. 30, 2017. Proceeds were used for general corporate purposes.

~~Capital~~On ~~Expenditures:~~Dec. We15, ~~expect~~2017, ~~fiscal~~we ~~2017~~gave ~~cash~~notice ~~required~~we bywill ~~investing~~redeem toall beof ~~$0.9~~the tooutstanding $14.130% ~~billion~~Notes, ~~with~~due ~~the~~Jan. ~~capital~~29, ~~expenditures~~2045 ~~component~~(“Notes”) ~~allocated~~in ~~towards~~accordance ~~both~~with the ~~Seeds~~terms and ~~Genomics~~conditions ~~segment~~of ~~and~~ the ~~Agricultural~~Notes ~~Productivity~~and ~~segment.~~related ~~Capital~~indenture ~~expenditures~~on ~~within~~Jan. ~~the Agricultural Productivity segment include expenditures to construct a dicamba-based herbicide manufacturing facility in Luling~~29, ~~Louisiana~~2018.

~~Pension Contributions:~~ As of ~~May~~Nov. 3130, 2017, weour ~~have~~debt-to-capital ~~contributed~~ratio ~~$15~~was ~~million~~55 topercent ~~our~~compared Uwith 56 percent at Aug.S 31, 2017, and 66 percent at Nov. ~~qualified~~30, ~~plan~~2016. ~~Based~~The onone ~~the~~percentage ~~funded~~point ~~status~~decrease offrom ~~our~~Aug. ~~plan~~31, we2017, ~~are~~was ~~not~~primarily ~~required~~due to ~~make~~an ~~any~~increase ~~contributions~~in shareowners’ equity resulting from earnings during fiscal 2018. ~~However~~The 11 percentage point decrease from Nov. 30, we2016, ~~expect~~was toprimarily ~~contribute~~driven by an ~~additional~~increase ~~$30~~in ~~million~~shareowners’ ~~during~~equity resulting from earnings partially offset by the ~~remainder~~payment of ~~fiscal~~dividends ~~2017~~and ~~for~~ a ~~total~~decrease ofin ~~$45~~debt ~~million~~outstanding ~~for~~at ~~fiscal~~Nov. 30, 2017, compared to Nov. 30, 2016.

~~2016~~We ~~Disposals:~~held Oncash ~~Nov.~~and 2,cash ~~2015~~equivalents and short-term investments of $3,103 wemillion ~~signed~~and ~~definitive~~$1,864 ~~agreements~~million ~~with~~as ~~Deere~~of &Nov. ~~Company~~30, ~~(“Deere”)~~2017, toand Aug. ~~sell~~31, ~~the~~2017, ~~Precision~~respectively, ~~Planting~~of ~~equipment~~which ~~business~~$922 million and to$1,281 ~~enable~~million ~~exclusive~~was ~~third-party~~held ~~near~~by ~~real-time~~foreign ~~data~~entities, ~~connectivity~~respectively. ~~between~~As ~~certain John~~of ~~Deere~~Nov. ~~farm~~30, ~~equipment~~2017, ~~and~~our ~~the~~intent ~~Climate~~is ~~FieldView~~to ~~platform.~~indefinitely Inreinvest ~~August~~approximately ~~2016,~~$4.2 billion of the U$4.S.5 ~~Department~~billion of ~~Justice~~undistributed ~~filed~~earnings aof ~~lawsuit~~our toforeign ~~block~~operations ~~Deere’s~~that ~~acquisition~~existed as of Aug. 31, 2017. As a result of the ~~Precision~~Tax ~~Planting~~Cuts ~~equipment~~and ~~business.~~Jobs InAct ~~May~~that was enacted on Dec. 22, 2017, we ~~terminated~~will ~~our~~incur ~~agreement~~a ~~with~~tax ~~Deere~~liability tofor ~~sell~~our ~~the~~undistributed ~~Precision~~earnings ~~Planting~~that ~~equipment~~will ~~business.~~be Werecorded ~~continue~~in tothe ~~intend~~period toof ~~sell~~enactment. ~~the~~We ~~Precision~~are ~~Planting~~currently ~~equipment~~evaluating ~~business~~the ~~during~~impact ~~this~~of ~~fiscal~~the ~~year~~new law and ~~are~~computing ~~actively marketing~~ the ~~business~~adjustment to ~~third~~our ~~parties~~tax expense.

InDividends: ~~the~~There ~~second~~were ~~quarter~~no ofdividends ~~fiscal~~declared ~~2017,~~in wethe ~~divested~~first ~~our~~quarter ~~Latitude business previously reported as part~~ of ~~the~~fiscal ~~Agricultural~~2018. ~~Productivity~~On ~~segment~~Dec. ~~for~~4, ~~approximately~~2017, ~~$140~~we ~~million~~declared ina ~~cash,~~quarterly ~~subject~~dividend toon ~~customary~~our ~~working~~common ~~capital~~shares ~~adjustments. Approximately~~of $850.54 ~~million,~~per ~~less~~share ~~the~~related ~~carrying~~to ~~amount~~the ofour ~~assets~~first ~~sold~~quarter of ~~approximately~~fiscal $22018 ~~million,~~that ~~was~~is ~~recognized~~payable ~~within~~on ~~other~~Jan. ~~expense~~26, ~~(income)~~2018, ~~net~~to inshareowners ~~the Statement~~ of ~~Consolidated~~record ~~Operations. The recognition of the remaining $55 million is contingent~~ on ~~silthiofam~~Jan. ~~re-registration~~5, ~~within the European Union~~2018.

~~2017~~Pension ~~Contractual Obligations~~Contributions: ~~There~~As of Nov. 30, 2017, we have ~~been~~not nomade ~~significant~~any ~~changes~~contributions to ~~the~~our ~~contractual~~U.S. ~~obligations~~qualified ~~table~~pension asplan. ~~disclosed~~Based in on the funded status of our ~~Annual~~ ~~Report~~plan, onwe ~~Form~~are ~~10-K~~not ~~for~~required ~~the~~to ~~year~~make ~~ended~~any ~~Aug~~contributions. 31However, ~~2016~~we expect to contribute $60 million during fiscal 2018.

2016 Disposal: On Jul. 25, 2017, we signed a definitive agreement with AGCO Corporation to sell the Precision Planting equipment business for approximately $200 million in cash, subject to customary working capital adjustments. In the first quarter of fiscal 2018, we closed on the sale of the Precision Planting equipment business, and a gain of approximately $52 million was recognized within other (income) expense, net in the Statement of Consolidated Operations.

Contractual Obligations: There have been no significant changes to the contractual obligations table as disclosed in our Annual Report on Form 10-K for the year ended Aug. 31, 2017.

Off-Balance Sheet Arrangements

Under our Separation Agreement with Pharmacia, we are required to indemnify Pharmacia for certain matters, such as environmental remediation obligations and litigation. To the extent we are currently managing any such matters, we evaluate them in the course of managing our own potential liabilities and establish reserves as appropriate. However, additional matters may arise in the future, and we may manage, settle or pay judgments or damages with respect to those matters in order to mitigate contingent liability and protect Pharmacia and Monsanto. See Item 1 — Financial Statements — Note 18 — Commitments and Contingencies and Part II — Item 1 — Legal Proceedings — for further information.

We have entered into various customer financing programs which are accounted for in accordance with the Transfers and Servicing topic of the ASC. See Item 1 — Financial Statements — Note 4 — Customer Financing Programs — for further information.

WeIn ~~are in~~ the ~~process~~first quarter of ~~making~~fiscal 2018, we completed a significant expansion of our Chesterfield, Missouri, facility. In December 2013, we executed the first of a series of incentive agreements with the County of St. Louis, Missouri. Under these agreements we have transferred our Chesterfield, Missouri facility to St. Louis County and received Industrial Revenue Bonds in the amount of up to $470 million, which enables us to reduce our cost of constructing and operating the expansion by reducing certain state and local tax expenditures. We immediately leased the facility from the County of St. Louis and have an option to purchase the facility upon tendering the Industrial Revenue Bonds we received to the County. The payments due to us in relation to the Industrial Revenue Bonds and owed by us in relation to the lease of the facility qualify for the right of offset under ASC 210, Balance Sheet, in our Statements of Consolidated Financial Position. As such, neither the Industrial Revenue Bonds nor the lease obligation are recorded in the Statements of Consolidated Financial Position as an asset or liability, respectively. The Chesterfield facility and the expansion are being treated as being owned by us.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

OUTLOOK

We believe we have achieved an industry-leading position in the areas in which we compete in both of our business segments. However, the outlook for each part of our businesses is quite different. In the Seeds and Genomics segment, our seeds and traits business is expected to expand via our investments in new products. In the Agricultural Productivity segment, we expect to continue to deliver new product formulations and systematic approaches that support our Seeds and Genomics segment.

We believe that our company is positioned to deliver value-added products to growers enabling us to grow our gross profit in the future. We expect to see strong cash flow in the future, and we remain committed to returning value to shareowners through vehicles such as investments that expand the business and dividends. We will remain focused on cost and cash management, both to support the progress we have made in managing our investment in working capital and to realize the full earnings potential of our businesses. We are in the process of executing our plan to reduce operational spending through fiscal year 2018. We plan to continue toproviding ~~seek additional~~ external financing opportunities for our customers as a way to manage receivables for each of our segments.

Outside of the United States, our businesses will continue to face challenges related to the risks inherent in operating in international markets. We will continue to consider, assess and address these developments and the challenges and issues they place on our businesses. We believe we have taken appropriate measures to manage our credit exposure, which has the potential to affect sales negatively in the near term. In addition, volatility in foreign currency exchange rates may negatively affect our profitability, the book value of our assets outside the United States and our shareowners’ equity. We continuously monitor the potential for currency devaluation in Brazil, Argentina, ~~Venezuela~~ and Ukraine, including changes to exchange rate mechanisms or structures, and the potential impact on future periods. Subsequent to recent currency devaluations in Argentina ~~and Venezuela~~, we continue to monitor the economic situations and the impact of currency volatility on earnings.

On Dec. 22, 2017, the United States enacted new tax legislation, the Tax Cuts and Jobs Act. We are currently in the process of evaluating the impact this law will have on the consolidated financial statements and calculating the related impact to our tax expense. We expect the largest impact to us from this legislation to be from the provisions that lower the corporate tax rate to 21% beginning on Jan. 1, 2018, and impose tax on earnings outside the United States that have previously not been subject to United States tax, which must be paid beginning in fiscal 2019 through fiscal 2026. The adjustments to our tax expense for this legislation could materially affect the consolidated financial statements and will be recorded beginning in the period of enactment.

On Sept. 14, 2016, we entered into the Merger Agreement with Bayer, which provides for the acquisition of the company by Bayer for a price of $128 per share in cash. Upon consummation of the Merger, we will no longer be a standalone public company. The combined business is expected to benefit from the integration of Monsanto’s seeds and traits business and The Climate Corporation platform with Bayer’s broad crop protection product line, which we believe will result in significant benefits for farmers.

Seeds and Genomics

Our capabilities in plant breeding and biotechnology ~~research~~R&D ~~and development~~ are generating a rich and balanced product pipeline that we expect will drive long-term growth. We plan to continue to invest in the areas of seeds, genomics, breeding, biotechnology, digital agriculture and biologicals and to invest in technology arrangements that have the potential to increase the efficiency and effectiveness of our R&D efforts. We believe that our seeds and traits businesses will have near-term growth opportunities through a combination of improved breeding, continued growth of stacked biotech traits and expansion in established and emerging markets.

We expect advanced breeding techniques combined with improved production practices and capital investments will continue to contribute to improved germplasm quality and yields ~~for~~of our seed offerings, leading to increased global demand for both our branded germplasm and our licensed germplasm. Our vegetable seeds business, which has a portfolio focused on 21 crops, continues to develop and deliver new innovative products to our ~~customer~~customers ~~base~~ as we continue to focus on our breeding investments and process optimization. We expect to see continued competition in seeds and genomics. We believe we will maintain a competitive advantage because of our global breeding capabilities and our multiple-channel sales approach in the United States for corn and soybean seeds.

Commercialization of second- and third-generation traits and the stacking of multiple traits in corn, soy and cotton are expected to increase penetration in approved markets, particularly as we continue to price our traits in line with the value growers have experienced from their use. We continue to experience an increase in competition in biotechnology as more competitors launch traits in the United States and internationally. Acquisitions may also present mid-to-longer term opportunities to increase penetration of our traits.

Intacta RR2 PRO technology has been fully approved by Brazil, Argentina, Paraguay, Uruguay and their key export markets, and we are currently selling that technology in Brazil, Argentina, Paraguay and Uruguay. In South America, we generally operate using a business model working with growers and grain handlers to collect technology value for soybeans either on the sale of new certified seed or through a point-of-delivery system for seeds that have been saved and replanted. The system has been operating in Brazil for many years, and nearly all of the grain handlers have enrolled in the point-of-delivery system. In Argentina, nearly all of the exporting grain handlers have enrolled in the point-of-delivery system, and we are enrolling additional local elevators. As previously announced, due to uncertainty raised by actions of the government of Argentina, and while we continue to pursue value capture in Argentina, we have placed a hold on the launch of new soybean traits in that country. We continue to pursue a long-term system that operates with integrity and predictability and will continue to evaluate our soybean business in Argentina. With regard to first generation Roundup Ready soybeans, we have deferred collection of royalties in Brazil until a final decision is reached by the courts on our patent term correction case. The Supreme Court of Brazil has granted certiorari of the case. We do not plan to collect on first generation Roundup Ready soybeans in Argentina.44

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

~~Our~~Intacta ~~international~~RR2 ~~traits~~PRO ~~businesses~~technology has been fully approved by Brazil, inArgentina, ~~particular~~Paraguay, ~~are~~Uruguay ~~likely~~and totheir ~~continue~~key toexport ~~face~~markets, ~~unpredictable~~and ~~regulatory~~we ~~environments~~are currently selling that ~~may~~technology bein ~~highly~~Brazil, ~~politicized~~Argentina, Paraguay and Uruguay. WeIn South America, we generally operate inusing ~~volatile,~~a ~~and~~business ~~often~~model ~~difficult,~~working ~~economic~~with growers and ~~political~~grain ~~environments.~~handlers ~~Longer~~to ~~term,~~collect ~~income~~technology isvalue ~~expected~~for tosoybeans ~~grow~~either inon ~~South~~the ~~America~~sale asof ~~farmers~~new ~~choose~~certified toseed ~~plant~~or ~~more~~through a point-of-delivery ~~our~~system ~~approved~~for ~~traits~~seeds inthat ~~soybeans,~~have ~~corn~~been saved and ~~cotton~~replanted. The ~~agricultural~~system ~~economy~~has been operating in Brazil for many years, and ~~Argentina~~nearly ~~could~~all beof ~~impacted~~the bygrain ~~global~~handlers ~~commodity~~have ~~prices~~enrolled in the point-of-delivery system. In Argentina, ~~particularly~~nearly ~~for~~all ~~corn~~of ~~and~~the ~~soybeans.~~exporting Wegrain ~~continue~~handlers toand ~~maintain~~key ~~our~~local ~~strict~~elevators ~~credit~~have ~~policy,~~enrolled ~~expand~~in ~~our~~the ~~grain~~point-~~based~~of-delivery ~~collection~~ system. ~~and~~As ~~focus~~previously onannounced, ~~cash~~due ~~collection~~to ~~and~~uncertainty ~~sales,~~raised asby ~~part~~actions of athe ~~continuous~~government ~~effort~~of Argentina, and while we continue to ~~manage~~pursue ~~our~~value ~~risk~~capture in ~~Brazil~~Argentina, ~~and~~we ~~Argentina~~have ~~against~~placed ~~such~~a ~~volatility.~~hold ~~India’s~~on ~~cotton~~the ~~germplasm~~launch ~~and~~of new soybean traits ~~business~~in ~~could~~that country. We continue to bepursue ~~significantly~~a ~~impacted~~long-term bysystem ~~government~~that ~~policies,~~operates ~~including~~with ~~controlled~~integrity ~~pricing~~ and ~~regulatory~~predictability ~~uncertainties,~~ and we will continue to evaluate our ~~cotton~~soybean business in ~~India~~Argentina. With regard to first generation Roundup Ready soybeans, we have deferred collection of royalties in Brazil until a final decision is reached by the courts on our patent term correction case. The Supreme Court of Brazil has granted certiorari of the case. We do not plan to collect on first generation Roundup Ready soybeans in Argentina.

Our international traits businesses, in particular, are likely to continue to face unpredictable regulatory environments that may be highly politicized. We operate in volatile, and often difficult, economic and political environments. Longer term, income is expected to grow in South America as farmers choose to plant more of our approved traits in soybeans, corn and cotton. The agricultural economy in Brazil and Argentina could be impacted by global commodity prices, particularly for corn and soybeans. We continue to maintain our strict credit policy, expand our grain-based collection systems and focus on cash collection and sales, as part of a continuous effort to manage our risk in Brazil and Argentina against such volatility.

Agricultural Productivity

Our Agricultural Productivity businesses operate in markets that are competitive. Gross profit and cash flow levels will fluctuate in the future based on global business dynamics including market supply, demand and manufacturing capacity. We expect to maintain our branded prices at a slight premium over generic products, and we believe our Roundup herbicide business will continue to be a sustainable source of cash and gross profit. Our crop protection business focus is to support our Roundup Ready crops strategically through our weed management platform that delivers weed control offerings for farmers. We continue to invest in the growth of our Roundup Ready XTEND crop system, which includes capital expenditures to construct a dicamba manufacturing facility in Luling, Louisiana. In addition, we expect our lawn-and-garden business will continue to be a solid contributor to our Agricultural Productivity segment.

Global glyphosate producers have the capacity to supply the market, but global dynamics including demand, environmental regulation compliance and raw material availability can cause fluctuations in supply and price of those generic products. We expect the fluctuation in global capacity will impact the selling prices and margins of Roundup brands and our third party sourcing opportunities.

Other Information

As discussed in Item 1 — Financial Statements — Note 18 — Commitments and Contingencies — and Part II — Item 1 — Legal Proceedings, Monsanto is involved in a number of lawsuits and claims relating to a variety of issues, including lawsuits that relate to intellectual property disputes. We expect that such disputes will continue to occur as the agricultural biotechnology industry evolves. Third parties, including non-governmental organizations, have challenged the validity or enforceability of patents issued to the company regarding our biotechnology products. For additional information related to the outlook for Monsanto, see “Caution Regarding Forward-Looking Statements” at the beginning of this Report on Form 10-Q, Part II — Item 1A — Risk Factors below and Part I — Item 1A — Risk Factors of our Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017.

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MONSANTO COMPANY		FIRST QUARTER 2018 FORM 10-Q

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In preparing our consolidated financial statements, we must select and apply various accounting policies. Our most significant policies are described in Part II — Item 8 — Note 2 — Significant Accounting Policies — to the consolidated financial statements contained in our Report on Form 10-K for the fiscal year ended Aug. 31, 2017. In order to apply our accounting policies, we often need to make estimates based on judgments about future events. In making such estimates, we rely on historical experience, market and other conditions, and assumptions that we believe to be reasonable. However, the estimation process is by its nature uncertain given that estimates depend on events over which we may not have control. If market and other conditions change from those that we anticipate, our financial condition, results of operations or liquidity may be affected materially. In addition, if our assumptions change, we may need to revise our estimates or take other corrective actions, either of which may have a material effect on our financial condition, results of operations or liquidity.

The estimates that have an inherently higher degree of uncertainty and require our most significant judgments are outlined in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Report on Form 10-K for fiscal year ended Aug. 31, ~~2016~~2017. Had we used estimates different from any of those contained in such Report on Form 10-K, our financial condition, profitability or liquidity for the current period could have been materially different from those presented in this Form 10-Q.



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There are no material changes related to market risk from the disclosures in Monsanto’s Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017.

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MONSANTO COMPANY THIRD QUARTER 2017 FORM 10-Q



ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of ~~May~~Nov. 3130, 2017. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of ~~May~~Nov. 3130, 2017.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

PART II—OTHER INFORMATION



ITEM 1.	LEGAL PROCEEDINGS

We are involved in various legal proceedings that arise in the ordinary course of our business, as well as proceedings that we have considered to be material under SEC regulations. These include proceedings to which we are party in our own name and proceedings to which our former parent Pharmacia LLC, or its former subsidiary Solutia, Inc., is a party but that we manage and for which we are responsible pursuant to certain indemnification agreements. Information regarding certain material proceedings and the possible effects on our business of proceedings we are defending is disclosed in Part I — Financial Information — Item 1 — Financial Statements — Note 18 — Commitments and Contingencies — under the subheading “Environmental and Litigation Liabilities” and is incorporated by reference herein. Other information with respect to legal proceedings appears in our Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017.



ITEM 1A.	RISK FACTORS

Please see “Caution Regarding Forward-Looking Statements,” at the beginning of this Report on Form 10-Q and Part I — Item 1A of our Report on Form 10-K for the fiscal year ended Aug. 31, ~~2016~~2017, for information regarding risk factors. There have been no material changes from the risk factors previously disclosed in our Report on Form 10-K.



ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table is a summary of any purchases of equity securities during the ~~third~~first quarter of fiscal year ~~2017~~2018 by Monsanto and any affiliated purchasers, pursuant to SEC rules.

Period	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share(1)		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
March 2017:
September 2017:
Mar. 1, 2017, through Mar. 31, 2017	30	(2)	$	113.20	—	$	—
Sept. 1, 2017, through Sept. 30, 2017	28	(2)	$	119.82	—	$	—
April 2017:
October 2017:
Apr. 1, 2017, through Apr. 30, 2017	30	(2)	$	116.60	—	$	—
Oct. 1, 2017, through Oct. 31, 2017	28	(2)	$	121.11	—	$	—
May 2017:
November 2017:
May 1, 2017, through May 31, 2017	617	(2)	$	116.81	—	$	—
Nov. 1, 2017, through Nov. 30, 2017	28	(2)	$	118.36	—	$	—
Total	~~677~~84		$	~~116~~119.6476	—	$	—


(1)	The average price paid per share is calculated on a trade date basis and excludes commission.


(2)	Shares withheld for taxes on restricted stock.

There were no publicly announced repurchase plans outstanding as of ~~May~~Nov. 3130, 2017. The Merger Agreement includes restrictions on purchases of shares of the company’s common stock by the company.



ITEM 5.	OTHER INFORMATION

None



ITEM 6.	EXHIBITS

~~Exhibits: The list of exhibits in the Exhibit Index to this Report is incorporated herein by reference.~~47

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MONSANTO COMPANY ~~THIRD~~FIRST QUARTER ~~2017~~2018 FORM 10-Q

EXHIBIT INDEX

These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.



Exhibit No.	Description
2	Omitted
3	Omitted
4	Omitted
10	Form of Change of Control Employment Security Agreement for Messrs. Begemann, Fraley, Grant and Snively, effective Sept. 1, 2010 (incorporated by reference to Exhibit 10 of Form 8-K, filed on Sept. 7, 2010, File No. 1-16167).†
11	Omitted — see Note 16 of Notes to Consolidated Financial Statements — Earnings Per Share.
12	Computation of Ratio of Earnings to Fixed Charges.
15	Omitted
18	Omitted
19	Omitted
22	Omitted
23	Omitted
24	Omitted
31.1	Rule 13a-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Executive Officer).
31.2	Rule 13a-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer).
32	Rule 13a-14(b) Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Executive Officer and the Chief Financial Officer).
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.


†	Represents management contract or compensatory plan or arrangement.

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MONSANTO COMPANY		FIRST QUARTER 2018 FORM 10-Q

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	MONSANTO COMPANY
	(Registrant)

By:	/s/ NICOLE M. RINGENBERG
	Nicole M. Ringenberg
	Vice President and Controller
	(On behalf of the Registrant and as Principal Accounting Officer)

Date: ~~June~~January 295, ~~2017~~2018

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EXHIBIT INDEX

These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

ExhibitNo.	Description
2	Omitted
3	Omitted
4	Omitted
11	Omitted — see Note 16 of Notes to Consolidated Financial Statements — Earnings Per Share.
12	Computation of Ratio of Earnings to Fixed Charges.
15	Omitted
18	Omitted
19	Omitted
22	Omitted
23	Omitted
24	Omitted
31.1	Rule 13a-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Executive Officer).
31.2	Rule 13a-14(a) Certifications (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer).
32	Rule 13a-14(b) Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Executive Officer and the Chief Financial Officer).
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

Depreciation and Amortization Expense

Seeds and Genomics

Agricultural Productivity

Filing Compare · MONSANTO CO /NEW/