They always try to sneak the bad news out at year end. And when you look at the mess Monsanto's in c/o their past products, you can see why they're so desperate to avoid future liability for GMOs.

EXCERPTS:

Monsanto Co. on Monday set aside a reserve of $285 million... The reserve will fund liabilities directly related to the chemical business of the old Monsanto - those incurred before that business was spun off as Solutia... It will pay for environmental cleanups... as well as tort litigation aimed at old Monsanto operations.

However, ***the reserve won't cover liabilities that have yet to be quantified, but which make up a lion's share of the $1 billion in obligations that drove Solutia into [bankruptcy].***

Those include... the cost of dealing with hazardous polychlorinated biphenyls, or PCBs, that spread from former Monsanto plants into the communities of Sauget as well as Anniston, Ala.

Monsanto Chief Financial Officer Terry Crews told analysts, "Some things remain unclear. ... The ultimate resolution still lies with the (Bankruptcy) Court. It's possible that the reserve could have to be revised in the future."

The reserve... will lead to an expected fiscal first-quarter net loss of 16 cents a share on a reported basis.

Expenses from involvement in Solutia's bankruptcy will continue to be charged to each quarter's operations, Monsanto said.
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Monsanto sets up $285 million reserve
By Rachel Melcer
Of the Post-Dispatch, 20 Dec 2004
[url at end]

Monsanto Co. on Monday set aside a reserve of $285 million and began to quantify its liabilities in the year-old bankruptcy of corporate cousin Solutia Inc.

"We're now at a point in the Solutia bankruptcy process where we can at least start to draw a border around where our ultimate liabilities might be," Chief Executive Hugh Grant told analysts in a conference call. It's "a small step on a path to reaching a final resolution."

The reserve, which will lead to an expected fiscal first-quarter net loss of 16 cents a share on a reported basis, should cover a portion of those liabilities for "some time in the future," said spokeswoman Lori Fisher.

Monsanto is based in Creve Coeur, while Solutia is based in Town and Country.

Expenses from involvement in Solutia's bankruptcy will continue to be charged to each quarter's operations, Monsanto said.

Nevertheless, strong early sales prompted Monsanto to raise its expected fiscal-year earnings by approximately 5 percent to $1.85 to $2 a share, excluding the 68 cents-a-share reserve and a one-time tax benefit of 39 cents a share related to the closure of a European grain business. Including those factors, it expects net earnings of $1.56 to $1.71 a share.

First-quarter earnings, excluding those same one-time factors, should be 13 cents a share, the company said.

The reserve will fund liabilities directly related to the chemical business of the old Monsanto - those incurred before that business was spun off as Solutia, Fisher said. It will pay for environmental cleanups at sites never operated by Solutia as well as tort litigation aimed at old Monsanto operations.

However, the reserve won't cover liabilities that have yet to be quantified, but which make up a lion's share of the $1 billion in obligations that drove Solutia into Chapter 11 reorganization.

Those include retiree health benefits plus the cost of dealing with hazardous polychlorinated biphenyls, or PCBs, that spread from former Monsanto plants into the communities of Sauget as well as Anniston, Ala.

The old Monsanto, also based in Creve Coeur, once made a diverse line of chemicals and pharmaceuticals. In 1997, it spun off its chemical business as Solutia - and encumbered it with a long list of legacy liabilities.

In 2000, the remaining old Monsanto merged with Pharmacia and Upjohn Inc. to form Pharmacia Corp., which subsequently spun off the agricultural business as the new Monsanto. Last year, Pharmacia was acquired by Pfizer Inc.

When the new Monsanto was created, it agreed to take on those legacy liabilities if Solutia became unable to maintain them.

That overhang of responsibility has clouded Monsanto's otherwise strong performance as the world's leading provider of Roundup herbicide, biotech seeds and agricultural traits.

In the first quarter, Monsanto saw stronger than expected sales of corn seed in Brazil and Europe and of genetically modified cotton in Australia. In the United States, sales of corn seeds and genetic traits came in sooner than expected and also contributed to the "small victory in a small quarter," Grant said. "The heavy lifting is yet to come."

Monsanto expects about 70 percent of its annual revenue in the first half, he said.

As for Solutia's reorganization, that company continues to identify liabilities and work toward a business plan, said Solutia spokesman Dan Jenkins. The timing of Monsanto's reserve has more to do with that company's thinking and accounting than of any recent breakthrough in negotiations, he said.

Monsanto Chief Financial Officer Terry Crews told analysts, "Some things remain unclear. ... The ultimate resolution still lies with the (Bankruptcy) Court. It's possible that the reserve could have to be revised in the future."

In trading Monday, shares of Monsanto gained $1.05, or 2 percent, to close at $52.40. Shares touched $52.93, a 52-week high. Shares of Solutia gained 7 cents, or 6.4 percent, to close at $1.17.

Reporter Rachel Melcer
E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.
Phone: 314-340-8394

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