Monsanto Company (NYSE: MON) today announced that it plans to establish a reserve in its first-quarter 2005 results associated with the Solutia Inc. bankruptcy proceedings.  The company also announced that first-quarter operations across key markets were stronger than previously estimated.  As a result of these developments, Monsanto is updating its first-quarter and fiscal-year 2005 earnings per share (EPS) guidance.

The company updated EPS guidance for the first quarter to 13 cents on an ongoing basis, which is a loss of 16 cents on an as-reported basis.  Monsanto also increased 2005 fiscal-year earnings guidance on an ongoing basis to a range of $1.85 to $2.00 per share, or $1.56 to $1.71 on an as-reported basis. Previously, the company expected first-quarter results from the ongoing business to be flat with 2004 first-quarter results at 4 cents per share, or 43 cents on an as-reported basis.  The previous EPS expectation for the full fiscal year was in the range of $1.77 to $1.90 per share on an ongoing basis, or $2.16 to $2.29 on an as-reported basis.  (See reconciliation table with this news release.)

The company also reaffirmed free cash flow for fiscal year 2005 is expected to be in the range of $600 million.

"Business growth has been strong globally," said Hugh Grant, Monsanto chairman, president and chief executive officer. "In particular, corn seed sales in Brazil and Europe are up, as are revenues for our cotton traits in Australia."  Grant said while it is still early in the selling season, indicators for Monsanto's U.S. corn seed and traits are encouraging.

The company plans to book a reserve in its first-quarter 2005 results in the range of $285 million pretax in anticipation of certain litigation and environmental liabilities reverting to Pharmacia, and by extension, to Monsanto.  This reserve is based on the best estimates by Monsanto's management with input from its legal and other outside advisors at this time. Discussions between and among the various parties involved in the Solutia bankruptcy will continue for some time and a formal reorganization plan must ultimately be affirmed by several constituencies and the bankruptcy court. Monsanto believes that this reserve, based on what is known today, represents the cost that it would expect to incur for various litigation and environmental liabilities.  However, given the current status of Solutia's bankruptcy proceedings, actual costs to Monsanto may be materially different than this estimate.

"This Solutia-related reserve represents a small step on a path to reaching a final business resolution," said Grant.  "Our highest priority has been and remains to protect the interests of Monsanto shareowners in this process, and we believe we can do so while continuing to work constructively with the other parties involved in this process to determine the best future course for all concerned."

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