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MONSANTO COMPANY
800 NORTH LINDBERGH BLVD
ST. LOUIS, MISSOURI 63167
RELEASE Immediately
CONTACT Media: Lori Fisher (314-694-8535)
Analysts: Scarlett Foster (314-694-8148)
MONSANTO MANAGEMENT PROVIDES UPDATED FIRST-QUARTER AND
FISCAL-YEAR 2005 EPS GUIDANCE; PLANS RESERVE FOR VARIOUS SOLUTIA-RELATED
LIABILITIES
ST. LOUIS (Dec. 20, 2004) - 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. (See reconciliation table with this
news release.)
"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
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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."
In conjunction with this announcement, Monsanto will hold a brief
conference call at 10 a.m. CST (11 a.m. EST) today. The call will focus on this
new earnings guidance and the Solutia-associated reserve. Monsanto will host its
regularly scheduled first-quarter fiscal year 2005 earnings call on Wednesday,
Jan. 5, 2005.
A simultaneous audio webcast of the conference call may be accessed by
visiting the company's web site at www.monsanto.com and clicking on "Investor
Information." Visitors may need to download Windows Media Player(TM) prior to
listening to the webcast. Following the live broadcast, a replay of the webcast
will be available on the Monsanto web site for three weeks.
Monsanto Company is a leading global provider of technology-based
solutions and agricultural products that improve farm productivity and food
quality. For more information, please visit the company's web site at
www.monsanto.com.
Cautionary Statements Regarding Forward-Looking Information:
The statements contained in this release regarding first quarter and full-year
fiscal 2005 EPS guidance, on both an ongoing and as reported basis, are
"forward-looking statements." These statements are based on current expectations
and currently available information. However, since these statements are based
on factors that involve risks and uncertainties, the 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: the company's exposure to various
contingencies, including those related to Solutia Inc., litigation, intellectual
property, regulatory compliance (including seed quality), environmental
contamination and antitrust; fluctuations in exchange rates and other
developments related to foreign currencies and economies; increased generic and
branded competition for the company's Roundup herbicide; the accuracy of the
company's estimates and projections, for example, those with respect to product
returns and grower use of the company's products and related distribution
inventory levels; the effect of weather conditions and commodity markets on the
agriculture business; the success of the company's research and development
activities and the speed with which regulatory authorizations and product
launches may be achieved; domestic and foreign social, legal and political
developments, especially those relating to agricultural products developed
through biotechnology; the company's ability to successfully market new and
existing products in new and existing domestic and international markets; the
company's ability to obtain payment for the products that it sells; the
company's ability to achieve and maintain protection for its intellectual
property; the effects of the company's accounting policies and changes in
generally
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accepted accounting principles; the company's ability to fund its short-term
financing needs; general economic and business conditions; political and
economic conditions due to threat of future terrorist activity and related
military action; and other risks and factors detailed in the company's filings
with the U.S. Securities and Exchange Commission. Undue reliance should not be
placed on these forward-looking statements, which are current only as of the
date of this release. The company disclaims any current intention to revise or
update any forward-looking statements or any of the factors that may affect
actual results, whether as a result of new information, future events or
otherwise.
Reconciliation of as reported EPS to ongoing EPS
Fiscal Year 2005 First Quarter
Target 2005 Estimate
Net Income per Share (as reported) $1.56 - $1.71 $(0.16)
Tax Benefit on Loss from European
Wheat & Barley Business $(0.39) $(0.39)
Solutia-Related Reserve $0.68 $0.68
Net Income (from ongoing business) $1.85 - $2.00 $0.13
Reconciliation of Free Cash Flow
Fiscal Year 2005 Target
(Esimtate in Millions)
Net Cash Provided by Operations $1,000
Net Cash Required by Investing
Activities $(400)
Free Cash Flow $600
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