Monsanto Plans 5% Work-Force Reduction, Reiterates Earnings Outlook

Updated: Thursday, April 4, 2002 10:30 AM ET

NEW YORK -- Monsanto Co. (MON, news, msgs) said it is implementing a
restructuring that will cost as much as $124 million and includes work-force
reductions and consolidation of facilities this year.

The planned staff cuts would affect fewer than 700 people, or less than 5% of
Monsanto's work force. The company had 14,600 employees as of the end of 2001, a
company spokeswoman said.

In a statement issued ahead of an investor conference in New York on Thursday,
the St. Louis-based crop-biotechnology company also said it expects earnings per
share, excluding items, to continue to grow in the single-digit percentages for
the next two years while regulatory approvals for its biotech products work
their way through the system. Growth will accelerate after that, the company
said.

Chief Financial Officer Terry Crews repeated the company's projection, first
made in February, for earnings per share growth of 4% to 6% in 2002 and 4% to 9%
in 2003, excluding charges and the effect of new accounting rules, beginning
with 2002 results.

After that, growth is expected to accelerate in 2004 and beyond as Monsanto
receives additional regulatory approvals for biotech products and expands use of
its current biotech products in new markets, Mr. Crews said.

A survey of analysts by by Thomson Financial/First Call, which also excludes
items, calls for the company to earn $2.03 a share in 2002 and $2.25 a share in
2003. Monsanto reported earnings of $1.80 a share in 2001.

Mr. Crews said the company had free cash flow of $183 million in 2001 and plans
to more than double that in 2002 and increase it by an additional 10% to 30% in
2003.

"The strategy we're implementing also prepares us for double-digit earnings
growth in the medium to long term as we realize global expansion of current and
future products," Hendrik Verfaillie, president and chief executive, said in a
statement. "In the interim, the company will fine-tune its organizational
structure, including the rationalization of some facilities and a small
reduction in staff."

Monsanto is developing bioengineered seeds and pesticide products in competition
with market rivals such as DuPont Co. (DD, news, msgs).

Just this week, Monsanto and DuPont signed a cross-licensing agreement and
agreed to dismiss all pending lawsuits, resolving a number of old patent
disputes.

Speaking at the investors conference, Chief Operating Officer Hugh Grant said
the percentage of revenue coming from Monsanto's seeds and genomics business
will increase. That business accounted for 31% of revenue in 2001 but is
expected to increase to 55% in 2007, he said.

The amount of crop acreage that has genetically modified seeds continues to
grow, Chief Executive Hendrik Verfaillie said. That acreage was 130 million last
year, compared with 109 million in 2000. That amount was just four million acres
in 1996. Mr. Verfaillie attributed the increased acreage to biotechnology
decreasing farmers' costs while increasing yields.

Monsanto spent $560 million on research and development last year, Chief
Technology Officer Robb Fraley said. Of the research-and-development spending,
83% went to biotechnology and seeds, and 17% went to the agricultural/chemical
business, Mr. Verfaillie said.

Monsanto is keeping an eye on five regulatory approvals, Mr. Verfaillie said.
One of those is getting approval for planting Roundup Ready soybeans in Brazil,
where Monsanto is waiting for two appeal judges to decide if that can be done.
The lead judge already has given his approval. The company expects a decision
soon, with the goal of planting Roundup Ready soybeans in Brazil in October, Mr.
Verfaillie said.

If that approval comes, it would open up the Latin American market for Roundup
Ready corn, Mr. Verfaillie said. It also would put added pressure on European
and other countries to approve biotechnology, he said.

Monsanto is 85%-owned by drug maker Pharmacia Corp. (PHA, news, msgs) of
Peapack, N.J., which plans to spin off the stake in the fourth quarter.


-- Desiree J. Hanford of Dow Jones Newswires contributed to this article.

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