ST. Louis, Missouri
February 5, 2002

Monsanto’s Fourth-Quarter 2001 Earnings Per Share (EPS) Increases By 8 Cents To 9 Cents Per Share
Excluding Special Items; Full-Year EPS Excluding Special Items Improves 6 Percent To $1.80
· Sales increased 4 percent for the fourth quarter while full-year sales decreased 1 percent.
· Annual volumes of Roundup® increased 2 percent; sales decreased 8 percent for the year.
· Acres planted worldwide with Monsanto biotechnology traits increased 14 percent in 2001.
· Monsanto delivers free cash flow of $183 million.

Monsanto Company (NYSE: MON) today reported financial results for the fourth quarter and the
full-year ended Dec. 31, 2001. “We were able to grow our income in 2001 despite more difficult business and economic conditions, especially in Latin America,” said Monsanto President and Chief Executive Officer Hendrik A. Verfaillie.

“During 2001, we maintained or improved our market position across our product portfolio. Farmers increased plantings of crops improved through our biotechnology traits by 14 percent, and continued their use of Roundup® herbicide,” Verfaillie said. “We also reduced costs and delivered on several key financial targets.”

Monsanto delivered positive free cash flow (cash provided by operations less cash required by investing
activities) of $183 million, compared with a negative free cash flow of $264 million in 2000. The key factor in the cash flow improvement was a significant reduction in capital spending as the company completed initiatives to integrate and upgrade seed facilities, and to expand and upgrade capacity for manufacturing the active ingredient in Roundup® and other glyphosate herbicides. Selling, general and administrative costs as a percent of sales declined by roughly 1 percentage point to 21.7 percent. Research-and-development costs as a percent of sales remained in the expected range at 10.3 percent for the year.

Sales

Fourth-quarter net sales of $1.2 billion increased 4 percent compared with fourth-quarter 2000 sales. Sales would have increased 7 percent compared with those in the fourth quarter last year if the effect of foreign currency exchange rates, particularly in Brazil, was excluded. A decrease in sales of Roundup® in the fourth quarter was more than offset by increases in trait revenues for Monsanto’s soybean and corn technologies.

Sales for 2001 of $5.5 billion were approximately 1 percent lower compared with 2000 sales. Sales would have increased 3 percent if the effect of currency was excluded.

Reported Earnings

For the fourth quarter of 2001, the company reported a net loss of $104 million, or a loss of 40 cents per share, compared with a loss of $52 million, or a loss of 20 cents per share in the fourth quarter of 2000. For the full year 2001, Monsanto reported net income of $295 million, or $1.12 per share, compared with net income of $149 million, or $0.58 per share in 2000.

As previously stated, the company expected to take $425 million to $475 million in total pretax restructuring and other special items for the two-year period ended Dec. 31, 2001. Restructuring and other special items are components of special items. During the fourth quarter of 2001, the company recorded $132 million of pretax charges for restructuring and other special items, primarily associated with a program to eliminate duplicative capacity to formulate and package herbicides. This compares with pretax restructuring and other special items of $78 million in the fourth quarter of 2000. For the 12-month periods, the company recorded $261 million and $213 million, respectively in 2000 and 2001, for a two-year total in pretax restructuring and other special items of
$474 million.

In addition, the company recorded a net pretax charge of $60 million in the fourth quarter and full-year 2001 related to litigation matters. These included: A reserve established for a judgment awarded to Aventis CropScience S.A. from a licensing dispute; a charge resulting from the resolution of a lawsuit with Central Garden & Pet Company; and a gain related to a resolution reached with DuPont on insect-protected corn technology.

2001 Fourth-Quarter and Full-Year Earnings Excluding Special Items Versus 2000 Pro Forma Fourth-Quarter and Pro Forma Full-Year Earnings Excluding Special Items

As discussed in this section, net income excludes special items. Special items include an extraordinary loss in 2001 for the early retirement of debt, the cumulative effect of an accounting change effective Jan. 1, 2000, restructuring and other special items, and litigation matters. Monsanto’s income and diluted earnings per share for 2000 also reflect the effect of a capital contribution from Pharmacia Corporation and proceeds from the company’s initial public offering (IPO). This adjustment is reflected as of Jan. 1, 2000, for 2000 results.

The company recorded fourth-quarter net income of $21 million, or 9 cents per share, compared with net income of $3 million, or 1 cent per share, in the same period last year.

The company’s tax rate was lower for the fourth quarter and full-year 2001, in part because of improved
expectations on the recovery of certain deferred tax assets. For the full year, net income increased 8 percent to $473 million in 2001, from $440 million last year. EPS for 2001 rose 10 cents to $1.80 per share.

Segments

Monsanto reports its results in two segments: Agricultural Productivity and Seeds and Genomics. The
Agricultural Productivity segment consists primarily of crop protection products and the company’s animal agriculture business. The Seeds and Genomics segment consists of the global seeds and related trait business, and genetic technology platforms. As discussed in this section, EBIT (earnings before interest and taxes) excludes pretax special items. Pretax special items include pretax restructuring charges and other special items, and pretax litigation matters.

Agricultural Productivity: In the Agricultural Productivity segment, sales decreased 13 percent for the fourth quarter, and 3 percent for the year. EBIT declined to $31 million for the fourth quarter of 2001, from $133 million in the same period of 2000. For the full year, EBIT decreased to $944 million in 2001 versus $1.1 billion in 2000. For the quarter, lower average selling prices globally for Roundup®, and lower sales of Roundup® in Argentina because of flooding and economic uncertainty were the primary reasons for the decline in sales and EBIT.

For the full year, lower average selling prices for Roundup®, the Argentine flooding and economic uncertainty, and the effect of currency were the major factors for lower sales and EBIT for the Agricultural Productivity segment. Annual volumes of Roundup® and other glyphosate herbicides increased 2 percent, with increases in branded volumes in the United States and Europe somewhat offset by lower branded volumes in Latin America and Asia. Sales of Roundup® decreased 8 percent for the year.

Seeds and Genomics: Sales for the Seeds and Genomics segment increased substantially to $527 million for the fourth quarter of 2001. Revenues for the segment rose primarily because the company changed its marketing approach on trait fees for YieldGard® corn, and Roundup Ready® corn and soybeans, from a technology fee-based system to a royalty-based system. This change means that trait revenues, which would have been recognized in the first half of 2002, were recognized in the second half of 2001. This change in the marketing approach contributed 25 cents to the company’s EPS for the quarter. Revenues also rose because of a royalty payment from DuPont related to
the resolution of issues regarding Monsanto’s YieldGard® corn trait.

For the full year, sales increased 6 percent to $1.7 billion for this segment. Increased trait sales resulting primarily from the change to royalty-based trait fees, particularly for Roundup Ready® soybeans, led the improved performance. This increase was offset by higher-than-anticipated conventional corn seed returns in Latin America.

In the Seeds and Genomics segment, EBIT improved to $6 million for the fourth quarter from a loss of $134 million for the same period in 2000. For the full year, EBIT improved to a loss of $135 million, from a loss of $342 million in 2000. Increased revenues from biotechnology traits and better cost management were the major reasons for this segment’s improved performance during 2001.

The number of acres planted with biotechnology traits developed by Monsanto worldwide increased approximately 14 percent to 118 million acres in 2001 versus 103 million acres in 2000. Acreage growth was particularly strong for Roundup Ready® soybeans in the United States, with approximately 70 percent of the planted acres using a Roundup Ready® soybean variety during 2001.

Other Developments

Argentina is a key market for Monsanto and a large exporter of agricultural goods. Recently, the Argentine government announced economic reforms, including a devaluation of the peso. Because of the devaluation, the portion of our net assets valued in Argentine pesos has been adjusted, resulting in an expense of $15 million in the fourth quarter of 2001 as reflected in “Other Expense – net.” Because of the rapidly changing environment, we will continue to closely monitor the situation there, especially the possible effect on our 2002 EPS guidance and on our U.S. dollar-denominated trade receivables position of $580 million.

Future Guidance

Monsanto management expects EPS growth in 2002 to be in the range of 4 percent to 6 percent, excluding special items and the benefit resulting from the company’s adoption of a new accounting standard. This accounting standard eliminates goodwill amortization and is expected to add 35 cents to 38 cents per share to Monsanto’s annual earnings beginning in 2002. For the first quarter of 2002, management expects EPS to be roughly flat with first-quarter 2001 EPS, excluding special items and the effect of lower goodwill amortization.

Monsanto Company, an 85 percent-owned subsidiary of Pharmacia Corporation, is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality.

The full earnings statement is at http://www.monsanto.com/monsanto/Q4_Results-2-5-02.html
and in PDF format at http://www.monsanto.com/monsanto/02-04-02_4th_Quarter.pdf

Roundup, YieldGard and Roundup Ready are trademarks owned by Monsanto Technology LLC