Fitch Ratings has affirmed Monsanto Company's (Monsanto) 'A-' senior unsecured debt rating, 'A-' bank loan rating and 'F2' commercial paper rating. The ratings apply to approximately $1.57 billion of outstanding debt. The Rating Outlook has been revised to Negative from Stable.

The new Rating Outlook reflects uncertainty regarding timing and the amount of incremental liabilities that Monsanto may incur as a result of Solutia Inc.'s (Solutia) filing for reorganization under Chapter 11. Potential liabilities that may be assumed by Monsanto resulting from bankruptcy court determinations are a portion of Solutia's other post-retirement employee benefits (OPEBs), under funded by approximately $475 million as disclosed by Solutia at September 30, 2003 (with an average annual cash cost of $60 million); environmental remediation costs, estimated by Solutia at $30-$40 million annually; and litigation costs, including the case against Solutia by the Pennsylvania Department of Transportation. The ultimate level and the cash consequences of the above mentioned liabilities and other liabilities that may result from the Solutia reorganization are uncertain.

Fitch is also concerned about the timing and amount of share repurchases in the intermediate term, in light of the potential impact of incremental liabilities to free cash flow. Fitch anticipates the company's adherence to a conservative financial policy, with modest share repurchases. Monsanto continues to see declines in the Roundup/glyphosate franchise revenues and profitability due to increasing generic competition, but is managing market share erosion through new product formulations, a high level of brand name recognition and loyalty, an extensive bulk glyphosate distribution network, and cost control initiatives. Fitch also notes that the Seed and Genomics Segment profitability has improved significantly. Leverage as measured by total debt-to-EBITDA was 1.3 times (x) and interest coverage as measured by EBITDA-to-interest incurred was approximately 14.8x for the last 12 months at August 29, 2003.

Fitch recognizes Monsanto's continued improvement in the balance sheet, stronger liquidity and free cash flow generation, and mitigation of litigation risk. The company has made strides in controlling the seasonal effects on total debt, due to a fluctuating receivables balance, through third-party funding mechanisms for its customers, a larger cash balance, and a shift of the capital structure to long-term obligations and away from commercial paper borrowings. Monsanto's projection for year-end 2004 free cash flow (defined by net operating cash less net investing cash) remains in the range of $350 million to $400 million, despite cash outflows associated with the resolution of all property damage, personal injury and fear-of-future- injury claims resulting from polychlorinated biphenyl (PCB) contamination in Anniston, AL. The company had free cash flow of approximately $640 million at the end of fiscal year 2003.

Monsanto is a provider of herbicides, conventional and hybrid seeds, and genetically modified seeds and traits to the agricultural industry. The company holds leading positions in the glyphosate herbicide market and in seeds and biotechnology traits.