Monsanto Company reports fourth-quarter and full-year 2002 results

St. Louis, Missouri
February 5, 2003

    Financial Summary
    ($ in millions, except per share)

                       Fourth    Fourth             Full      Full
                       Quarter   Quarter      %     Year      Year      %
                        2002      2001     Change  2002       2001    Change
    Net Sales         $1,220     $1,209      1%   $4,673    $5,462      (14)%
    Net Income (Loss)    $61      $(104)     NM  $(1,693)     $295       NM
    Diluted Earnings
     (Loss) per Share  $0.23     $(0.40)     NM   $(6.45)    $1.12       NM

    NM = not meaningful

    -- Quarterly sales improved 1 percent, with overall higher trait revenues
       in the United States, and higher U.S. and Latin American corn seed
       sales, largely offset by lower sales of branded Roundup in Brazil and
       the United States.
    -- Fourth-quarter net income of $61 million was $165 million better than
       last year's fourth-quarter net loss of $104 million.
    -- Full-year sales declined to $4.7 billion, compared with 2001 sales of
       $5.5 billion, primarily from lower Roundup and seed sales in Latin
       America, and lower volumes and prices for Roundup in the United States.
    -- Net loss in 2002 included a loss of $6.94 per share from a cumulative
       effect of an accounting change for goodwill impairment.
    -- Free cash flow for 2002 was $639 million compared with free cash flow
       of $183 million in 2001.

Comment from Monsanto Chairman and Interim Chief Executive Officer Frank V. AtLee:

"Monsanto's shift to a company fueled by its growing technology traits and seeds business was evident in our fourth-quarter results, although increases in those businesses were mostly offset by reduced sales from our branded Roundup herbicide in Brazil and the United States. We implemented a plan with our customers to reduce the risk of doing business in Latin America in 2002, and we're well positioned for a return to more normal operations in that region. Our focus on improving working capital investments in 2002 allowed us to exceed our free cash flow target."

Fourth-Quarter and Full-Year 2002 Performance Summary:

Net sales of $1.2 billion for the quarter were 1 percent above those in the fourth quarter of 2001. The slight improvement in the fourth-quarter net sales comparison is the result of increased demand for the company's biotechnology traits and strong corn seed sales in the United States, which was largely offset by lower sales of branded Roundup in Brazil and the United States.

For the full year, net sales were $4.7 billion, compared with 2001 net sales of $5.5 billion. Continued competitive pressures and unfavorable weather conditions in the United States contributed to lower sales of Roundup in 2002. In Latin America, economic conditions caused us to take steps with our customers to reduce the risk of doing business there. These actions included reducing distributor inventories of Roundup and seeds in the region, tightening our credit policies, and selling closer to the time farmers are using our products. As a result of these changes to our operations, sales of Roundup and seeds were significantly lower in Argentina and Brazil in 2002.

For a geographic breakdown of net sales, please go to Monsanto's web site and select "Fourth-Quarter and Full-Year 2002 Supplemental Data" in the Financial Reports section under the investor information page.

Net income (loss) and earnings (loss) per share: For the fourth quarter of 2002, the company reported net income of $61 million (23 cents per share). This compares with a net loss of $104 million (40 cents per share) during the fourth quarter of 2001. For the full year, Monsanto reported a net loss of $1.7 billion ($6.45 per share), compared with net income of $295 million ($1.12 per share) for 2001.

Earnings in the fourth quarter and the full year were affected by the same operational factors that lowered sales in those periods as described above.

In the fourth quarter of 2002, the company recorded net aftertax restructuring items of $20 million (8 cents per share), compared with net aftertax restructuring and other special items of $86 million (34 cents per share) in the fourth quarter of 2001. Results in the fourth quarter of 2001 also included a net charge for litigation matters of $39 million aftertax (15 cents per share).

Full-year 2002 results also included bad-debt expense of $100 million aftertax (38 cents per share) established during the second quarter for estimated uncollectible receivables in Argentina. Net restructuring charges for the year were $81 million aftertax (31 cents per share), compared with $137 million aftertax (52 cents per share) in 2001 for restructuring and other special items. Full-year 2001 results also included a net charge for litigation matters of $39 million aftertax (15 cents per share). EPS in 2002 also benefited from a gain of 8 cents per share related to certain asset sales to Nissan Chemical Industries Ltd. in the second quarter. The full-year comparison also included the effect of a $1.8 billion aftertax ($6.94 per share) goodwill impairment related to Monsanto's corn and wheat businesses.

Cost management: Research-and-development (R&D) expenses were $141 million in the fourth quarter, and $527 million for the year, down 6 percent compared with R&D expenses in the same periods of 2001. Selling, general and administrative (SG&A) expenses of $231 million for the fourth quarter and $1 billion for the year were down 13 percent and 10 percent, respectively, from the comparable 2001 periods. These declines reflect the company's ongoing efforts to manage costs.

Cash flow and balance sheet: Monsanto reported positive free cash flow (sum of cash flows from operations and investing activities as reflected in the Statement of Consolidated Cash Flows included with this news release) of $639 million for 2002, compared with free cash flow of $183 million in 2001. This improvement was primarily a result of a reduction of the company's investment in working capital, particularly in Latin America. Net trade receivables were $1.8 billion at the end of 2002, or 24 percent lower, than 2001 year-end net trade receivables of $2.3 billion. The reduction in 2002 receivables included the Argentine $154 million pretax ($100 million aftertax) bad-debt reserve established during the second quarter.

Capital spending in 2002 declined 41 percent to $224 million as the company completed a number of capital projects during 2001.

For a breakdown of receivables by geography, please go to Monsanto's web site and select "Fourth Quarter and Full-Year 2002 Supplemental Data" in the Financial Reports section under the investor information page.

    Agricultural Productivity Segment Detail

    Product net sales
    ($ in millions)

                        Fourth    Fourth            Full      Full
                       Quarter    Quarter     %     Year      Year       %
                         2002      2001    Change   2002      2001     Change
    Roundup and other
     non-selective
     agricultural
     herbicides         $357       $413     (14)% $1,844    $2,422      (24)%
    All other agricultural
     productivity
     products           $251       $269      (7)% $1,244    $1,333       (7)%
    TOTAL agricultural
     productivity       $608       $682     (11)% $3,088    $3,755      (18)%

Agricultural Productivity Segment: The Agricultural Productivity segment consists primarily of crop protection products, the lawn-and-garden herbicide business, and the company's animal agriculture business.

In this segment, net sales decreased 11 percent for the quarter, and 18 percent for the year. EBIT (earnings before the cumulative effect of an accounting change, interest and income taxes) improved to a loss of $11 million for the fourth quarter of 2002, compared with a loss of $90 million in the same period of 2001. For the full year, EBIT declined to $366 million in 2002 versus EBIT of $772 million in 2001.

For the quarter and the year, net sales declined primarily because of continued competitive pressures on Roundup herbicide in the United States and actions taken with our customers to reduce the risk of doing business in Latin America.

EBIT for the fourth quarter of 2002 improved compared with the same period in 2001 for this segment primarily because the fourth quarter of 2001 included a charge related to the resolution of a legal matter and higher restructuring charges.

In addition to the factors noted above, full-year net sales and EBIT for the Agricultural Productivity segment were affected by unfavorable U.S. weather conditions in the second and third quarters of the year, which reduced volumes and sales of Roundup.

    Seeds and Genomics Segment Detail

    Product net sales
    ($ in millions)

                        Fourth    Fourth            Full      Full
                        Quarter   Quarter   %       Year      Year        %
                         2002      2001   change    2002      2001     change
    TOTAL seeds and
     genomics           $612       $527     16%   $1,585    $1,707       (7)%

Seeds and Genomics Segment: The Seeds and Genomics segment consists of the global seeds and related traits business, and genetic technology platforms.

Net sales for the Seeds and Genomics segment increased 16 percent in the fourth quarter, but declined 7 percent for the year. EBIT improved by $197 million quarter-to-quarter, from a loss of $65 million in the fourth quarter of 2001 to positive EBIT of $132 million in the same period of 2002. For the full year, EBIT improved to a loss of $105 million in 2002 from a loss of $240 million in 2001.

Net sales and EBIT for the quarter reflected strong demand by U.S. farmers for the company's branded corn seed as well as higher sales of Monsanto's biotechnology traits for corn and soybeans. However, in preparation for the expected decrease in U.S. soybean acres in 2003, customers purchased less soybean seed, which somewhat offset the increases for traits.

For the year, EBIT and net sales benefited from a two-point market share gain for DEKALB and Asgrow brand corn seed in the United States. Corn trait revenue also increased for the year, even though 2001 results included trait sales for more than one season because of the company's switch to a royalty payment system for its licensed traits in corn and soybeans.

These gains were more than offset by economic and market conditions in Latin America that caused the company to change its operations there, which significantly reduced corn seed sales in Brazil and Argentina. Lower demand for soybean seeds by U.S. farmers also affected full-year EBIT for this segment.

EBIT for the Seeds and Genomics segment benefited in both the fourth quarter and the year, by $27 million and $117 million, respectively, because goodwill is no longer amortized in accordance with the company's adoption of the Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets.

For a supplemental chart providing an estimate of acreage planted with Monsanto's technology traits worldwide in 2002, please go to Monsanto's web site and select "1996 - 2002 Monsanto Biotechnology Trait Acreage" in the Financial Reports section under the investor information page.

Other Items of Note:

In late December, Monsanto's Bollgard II insect-protected cotton product received full U.S. regulatory approval when the U.S. Environmental Protection Agency (EPA) granted environmental clearance for cotton containing the Monsanto second-generation trait. Limited quantities of seed containing the Bollgard II trait will be available for the 2003 season.

Also in December, the Philippines' Department of Agriculture's Bureau of Plant Industry granted commercial approval to Monsanto's YieldGard Corn Borer insect-protected corn. This is the first biotech crop approved for planting in the Philippines.

On Jan. 1, 2003, Monsanto adopted SFAS No. 143, Accounting for Asset Retirement Obligations. This accounting standard addresses the legal obligations associated with the retirement of tangible long-lived assets. Adoption of this standard will have a noncash cumulative effect of an accounting change as of Jan. 1, 2003, and is expected to increase depreciation expense for the company in 2003 and beyond.

For a reconciliation of EBIT to net income as reported in Monsanto's Condensed Statement of Consolidated Operations presented in this news release, please see the Segment Data table, which is also included in this release.

Supplemental data to this news release, including slides that accompany the company's financial results conference call, are found at www.monsanto.com . To access this supplemental information, please go to the "Financial Reports" section under the investor information page of the web site.

Outlook Comment from Chairman and Interim Chief Executive Officer Frank V. AtLee:

"The actions taken in Latin America during 2002 have set the stage for Monsanto to realize solid business results in 2003. Increased revenues and gross profits from seeds and traits are expected to help to offset the projected decline in gross profit from Roundup herbicide."

2003 Earnings and Free Cash Flow Outlook:

Full-year 2003 earnings per share (EPS) are expected to be in the range of $1.20 to $1.40, excluding the cumulative effect of the new accounting standard and the resulting increase in depreciation expense (see footnote 5). Management expects free cash flow generation in 2003 to be roughly in the range of $350 million to $400 million.

Cautionary Statements Regarding Forward-Looking Information:

Certain statements contained in this release, such as statements concerning the company's anticipated financial results, current and future product performance, regulatory approvals, currency effects, business and financial plans and other non-historical facts 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: 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 our 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 continue to manage its costs; 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 accepted accounting principles; the company's exposure to lawsuits and other liabilities and contingencies, including those related to intellectual property, regulatory compliance (including seed quality), environmental contamination and antitrust; 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.

                      Monsanto Company and Subsidiaries
                        Selected Financial Information
               (Dollars in millions, except per share amounts)
                                  Unaudited

    Condensed Statement of
    Consolidated Operations
                                     Three      Three
                                     Months     Months      Year      Year
                                     Ended      Ended       Ended     Ended
                                    Dec. 31,   Dec. 31,   Dec. 31,  Dec. 31,
                                      2002      2001        2002      2001
    Net Sales                       $1,220     $1,209     $4,673     $5,462
    Cost of Goods Sold                 663        744      2,493      2,817
    Gross Profit                       557        465      2,180      2,645
    Operating Expenses:
      Selling, General and
       Administrative Expenses         231        267      1,023      1,141
      Bad Debt Expense                  25         13        208         42
      Research and Development
       Expenses                        141        150        527        560
      Amortization and Adjustments of
       Goodwill                          --         30          --        121
      Restructuring Charges - Net       28         61        103        122
    Total Operating Expenses           425        521      1,861      1,986
    Income from Operations             132        (56)       319        659
    Interest Expense - Net              16         18         59         73
    Other Expense - Net (3)             11         99         58        127
    Income (Loss) Before Taxes and
     Cumulative Effect of Accounting
     Change (3)                        105       (173)       202        459
    Income Tax Expense (Benefit) (3)    44        (69)        73        164
    Income (Loss) Before Cumulative
     Effect of Accounting Change (3)    61       (104)       129        295
    Cumulative Effect of Change in
     Accounting Principle - Net of Taxes
     of $162 (2)                         --          --     (1,822)         --
    Net Income (Loss)                 $ 61      $(104)   $(1,693)      $295

    EBIT (1)                          $121      $(155)      $261       $532

    Basic Earnings (Loss) Per Share
    Income (Loss) Before Cumulative
     Effect of Accounting
     Change (3)                     $ 0.23     $(0.40)     $0.49      $1.14
    Cumulative Effect of Accounting
     Change - Net of Tax                 --          --      (6.99)         --
    Net Income (Loss)               $ 0.23     $(0.40)    $(6.50)     $1.14

    Diluted Earnings (Loss) Per Share
    Income (Loss) Before Cumulative
     Effect of Accounting
     Change (3)                     $ 0.23     $(0.40)     $0.49      $1.12
    Cumulative Effect of Accounting
     Change - Net of Tax                 --          --      (6.94)         --
    Net Income (Loss)               $ 0.23     $(0.40)    $(6.45)     $1.12

    Shares Outstanding:
      Basic Shares                   261.4      258.1      260.7      258.1
      Diluted Shares                 261.4      258.1      262.6      263.6


                      Monsanto Company and Subsidiaries
                        Selected Financial Information
                            (Dollars in millions)
                                  Unaudited

    Segment Data:

    Agricultural Productivity Segment:

                                    Three      Three
                                    Months     Months       Year       Year
                                    Ended      Ended       Ended      Ended
                                    Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31,
                                      2002      2001        2002       2001
    Net Sales                        $608       $682      $3,088     $3,755

    EBIT (1)                         $(11)      $(90)       $366       $772
    Add: Depreciation                  60         57         234        220
    Add: Amortization                   --          1           3          5
    EBITDA (1)                        $49       $(32)       $603       $997

    Pretax Restructuring and Other
     Special Items (4)                $16        $89         $52       $137


    Seeds and Genomics Segment:
                                     Three      Three
                                     Months     Months      Year       Year
                                     Ended      Ended      Ended      Ended
                                    Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31,
                                      2002      2001        2002       2001
    Net Sales                        $612       $527      $1,585     $1,707

    EBIT (1)                         $132       $(65)      $(105)     $(240)
    Add: Depreciation                  22         25          95         91
    Add: Amortization                  30         53         128        234
    EBITDA (1)                       $184        $13        $118        $85

    Pretax Restructuring and Other
     Special Items (4)                $15        $43         $72        $76


    Total Monsanto Company and Subsidiaries:

                                     Three     Three
                                    Months    Months        Year       Year
                                    Ended      Ended       Ended      Ended
                                   Dec. 31,   Dec. 31,    Dec. 31,   Dec. 31,
                                     2002       2001        2002       2001
    Net Sales                      $1,220     $1,209      $4,673     $5,462

    EBIT (1)                         $121      $(155)       $261       $532
    Add: Depreciation                  82         82         329        311
    Add: Amortization                  30         54         131        239
    EBITDA (1)                       $233       $(19)       $721     $1,082

    Pretax Restructuring and Other
     Special Items (4)                $31       $132        $124       $213



    Reconciliation of Income (Loss) Before Cumulative Effect of Accounting

    Change to EBIT:

    Total Monsanto Company and Subsidiaries:

                                     Three       Three
                                     Months     Months       Year       Year
                                     Ended      Ended       Ended      Ended
                                    Dec. 31,   Dec. 31,    Dec. 31,  Dec. 31,
                                      2002       2001        2002       2001
    Income (Loss) Before Cumulative
     Effect of Accounting Change      $61      $(104)       $129       $295
    Add: Interest Expense - Net        16         18          59         73
    Add: Income Tax Expense (Benefit)  44        (69)         73        164
    EBIT (1)                         $121      $(155)       $261       $532


                      Monsanto Company and Subsidiaries
                        Selected Financial Information
                            (Dollars in millions)
                                  Unaudited

    Condensed Statement of Consolidated Financial Position

                                                      Dec. 31,      Dec. 31,
                                                        2002           2001
    Assets

    Current Assets:
      Cash and Cash Equivalents                         $428           $307
      Short-Term Investments                             250              --
      Trade Receivables - Net of Allowances of $247
       in 2002 and $177 in 2001                        1,752          2,307
      Related-Party Loan Receivable                        --             30
      Related-Party Receivable                             --             44
      Inventories                                      1,272          1,357
      Other Current Assets                               722            752
    Total Current Assets                               4,424          4,797

    Property, Plant and Equipment - Net                2,339          2,627
    Goodwill - Net                                       757          2,748
    Other Intangible Assets - Net                        643            691
    Other Assets                                         727            566
    Total Assets                                      $8,890        $11,429

    Liabilities and Shareowners' Equity

    Current Liabilities:
      Short-Term Debt                                   $393           $563
      Related Party Short-Term Loan Payable                --            254
      Accounts Payable                                   275            457
      Related-Party Payable                                --             87
      Accrued Liabilities                              1,142          1,016
    Total Current Liabilities                          1,810          2,377

    Long-Term Debt                                       851            893
    Postretirement and Other Liabilities               1,049            676
    Shareowners' Equity                                5,180          7,483
    Total Liabilities and Shareowners' Equity         $8,890        $11,429

    Debt to Capital Ratio:                               19%            19%


                      Monsanto Company and Subsidiaries
                        Selected Financial Information
                            (Dollars in millions)
                                  Unaudited

    Statement of Consolidated Cash Flows
                                                    Year Ended     Year Ended
                                                     Dec. 31,        Dec. 31,
                                                       2002            2001
    Operating Activities:
      Net Income (Loss)                              $(1,693)         $ 295
    Adjustments to reconcile cash provided (required)
     by operations:
      Items that did not require (provide) cash:
        Pretax cumulative effect of a change in
         accounting principle                          1,984              -
        Depreciation and amortization                    460            554
        Bad debt expense                                 208             42
        Noncash restructuring and other special items     50            122
        Deferred income taxes                           (258)             5
        Gain on disposal of investments and property,
         net                                             (59)           (16)
        Equity loss, net                                  43             41
        Write-off of retired assets                       28             20
      Changes in assets and liabilities that provided
       (required) cash:
        Trade receivables                                221           (224)
        Inventories                                       74           (187)
        Accounts payable and accrued liabilities          (3)          (194)
        Related-party transactions                       (46)           161
        Tax benefit on employee stock options             11              -
        Deferred revenue on supply agreements             42              -
        Net investment hedge proceeds                     20              -
        Other Items                                       26             (3)

    Net Cash Provided by Operations                    1,108            616

    Cash Flows Provided (Required) by Investing
     Activities:
      Property, plant and equipment purchases           (224)          (382)
      Acquisitions and investments                      (347)           (81)
      Investment and property disposal proceeds           72             10
      Loans with related-party                            30             20
    Net Cash Flows Required by Investing Activities     (469)          (433)
    Free Cash Flow (1)                                   639            183

    Cash Flows Provided (Required) by Financing
     Activities:
      Net change in short-term financing                (934)           372
      Loans from related-party                          (254)          (226)
      Long-term debt proceeds                            856             57
      Long-term debt reductions                         (104)           (94)
      Debt issuance costs                                (10)             -
      Payments on vendor financing                       (10)             -
      Stock option exercises                              63              -
      Dividend payments                                 (125)          (116)
    Cash Flows Required by Financing Activities         (518)            (7)

    Net Increase in Cash and Cash Equivalents            121            176
    Cash and Cash Equivalents Beginning of Year          307            131
    Cash and Cash Equivalents at End of Year            $428           $307


                      Monsanto Company and Subsidiaries
                        Selected Financial Information
                            (Dollars in millions)
                                  Unaudited

1. EBIT, EBITDA and Free Cash Flow: As reflected in Monsanto's Condensed Statement of Consolidated Operations presented in this release, EBIT is net income (loss) before the cumulative effect of an accounting change, interest and income taxes. EBITDA is EBIT eliminating the effects of depreciation and amortization expense. Free cash flow represents the total of cash flows from operations and investing activities, as reflected in Monsanto's Statement of Consolidated Cash Flows presented in this release. The presentation of EBIT, EBITDA and free cash flow is not intended to replace net income (loss), cash flows, financial position or comprehensive income (loss), and they are not measures of financial performance as determined in accordance with generally accepted accounting principles in the United States.

2. Adjustment for New Accounting Standard No. 142: On Jan. 1, 2002, Monsanto adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment- only method. Under SFAS No. 142, all goodwill amortization ceased effective Jan. 1, 2002. Monsanto completed the transitional impairment test during the second quarter of 2002 and will test goodwill for

       impairment at least annually in the future.

       The transitional impairment test resulted in a $2 billion pretax
       impairment charge ($1.8 billion aftertax) relating to Monsanto's corn
       and wheat reporting units.  The impairment charge was recorded as a
       cumulative effect of accounting change effective Jan. 1, 2002.  As a
       result of the transitional goodwill impairment test, goodwill was
       reduced by $2 billion and net deferred tax assets increased by
       $162 million as a result of the related tax effect.  This resulted in a
       net loss and net reduction of $1.8 billion to shareowners' equity.

       In addition, SFAS No. 142 also required Monsanto to reassess the useful
       lives, residual values, and classification of all identifiable and
       recognized intangible assets.  Any necessary prospective amortization
       period adjustments were made Jan. 1, 2002.

       SFAS No. 142 did not require that prior years be restated.  However, to
       provide comparative information, had Monsanto adopted the new
       accounting standard as of Jan. 1, 2001, for the three months ended
       Dec. 31, 2001, Monsanto would not have recorded $28 million of goodwill
       amortization expense, and research-and-development (R&D) expenses would
       have increased by $2 million because of the reassessment of useful
       lives and classifications.  For the year ended Dec. 31, 2001, Monsanto
       would not have recorded $119 million of goodwill amortization expense,
       but R&D expenses would have increased by $8 million.  In addition and
       related to these changes, income tax expense would have increased by
       $6 million and $5 million for the three months and year ended Dec. 31,
       2001, respectively.  This financial information is presented for
       illustrative purposes only.  Because of the seasonality of the
       agricultural business, financial information should not be annualized.

3. Loss from Early Retirement of Debt: In the second quarter of 2001, the Pharmacia Savings and Investment Plan was separated into two separate plans, one that benefits employees of Pharmacia and one that benefits employees of Monsanto. As a result, in 2001 Monsanto recognized a $4 million pretax ($2 million aftertax) extraordinary loss related to the early retirement of Employee Stock Ownership Plan (ESOP) debt. In 2002, SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections as of April 2002, was issued and required that the loss from early retirement of debt be reclassified from extraordinary loss into operating income. In accordance with SFAS No. 145, the 2001 results have been restated to reclassify the $4 million pretax extraordinary loss as other expense and reclassify the $2 million tax benefit as an offset to income tax

       expense.

4. Restructuring and Other Special Items: Restructuring items in 2002 are primarily associated with the 2002 plan related to facility rationalizations and work force reductions. Restructuring and other special items in 2001 are primarily associated with the 2000 plan to focus on our key crops, resulting in the termination of certain research-and-development programs and noncore activities, and to eliminate duplicative manufacturing capacity to formulate and package

       agricultural chemicals.

       Income (loss) related to these items were recorded in the Condensed
       Statement of Consolidated Operations in the following categories:


                                Three Months  Three Months   Year       Year
                                    Ended        Ended      Ended      Ended
                                   Dec. 31,     Dec. 31,   Dec. 31,  Dec. 31,
                                     2002         2001       2002       2001

    Cost of Goods Sold              $(3)         $(69)      $(21)      $(82)
    Selling, General and
     Administrative Expenses          -            (1)         -         (1)
    Amortization and Adjustments
     of Goodwill                      -            (2)         -         (2)
    Restructuring Charges - Net     (28)          (61)      (103)      (122)
    Other Expense - Net               -             1          -         (6)

    Total Before Taxes and Cumulative
     Effect of Accounting Change    (31)         (132)      (124)      (213)
    Income Tax Benefit               11            46         43         76
    Total Before Cumulative Effect
     of Accounting Change          $(20)         $(86)      $(81)     $(137)

The pretax income (loss) components of the Restructuring and Other Special Items were as follows:

                               Three Months   Three Months    Year      Year
                                    Ended        Ended       Ended      Ended
                                   Dec. 31,     Dec. 31,   Dec. 31,  Dec. 31,
                                     2002         2001       2002       2001
    Restructuring and Other Special
     Items
      Restructuring Charges        $(32)         $(56)      $(88)      $(99)
      Reversal of Prior
       Restructuring Charges         12             8         13          8
      Write-off of Inventories       (3)          (32)        (6)       (45)
      Write-off of Property, Plant
       and Equipment                 (8)          (47)       (45)       (57)
      Goodwill                        -            (2)         -         (2)
      Other Assets                    -            (3)         -         (9)
      Other Intangibles               -            (1)         -         (3)
      Recoverable amount from third
       party*                         -             -          2          -
      Other - Net                     -             1          -         (6)
    Total Pretax Restructuring and
     Other Special Items           $(31)        $(132)     $(124)     $(213)


    * Recoverable amount from a third party represents a portion of work force
      reduction and exit costs that will be reimbursed to Monsanto.

5. Adjustment for New Accounting Standard No. 143: SFAS No. 143, Accounting for Asset Retirement Obligations, addresses financial accounting for and reporting of costs and obligations associated with legal matters related to the retirement of tangible long-lived assets. In adopting this standard as of Jan. 1, 2003, the company expects to record a noncash charge for a cumulative effect of accounting change and to increase property, plant and equipment and asset retirement obligations (a component of non-current liabilities). In addition, it is expected that as a result of the adoption of this standard the company's depreciation expense will increase. Monsanto is in the process of determining the effect adoption of this standard will have on its consolidated financial position and results of operations. Therefore, the company is unable to calculate the effect the adoption of this standard will have on its EPS guidance. Adoption of this standard will not affect Monsanto's liquidity or cash flow.

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