In assigning the credit ratings, Fitch recognizes Monsanto's strong liquidity and cash flow generation, commitment to cost reduction, high brand recognition and loyalty, and a reduction of reliance on commerical paper borrowings. The company has taken positive steps to control the seasonal effects on total debt, due to a fluctuating receivables balance, through third-party funding mechanisms for its customers, and a shift of the capital structure to long-term obligations and away from commercial paper borrowings. Leverage as measured by total debt-to-EBITDA was 1.6 times (x) and interest coverage as measured by EBITDA-to-interest incurred was approximately 9.5x for the last 12 months at September 30, 2002.

Fitch also recognizes an active and successful research and development (R&D) program, which introduced products and formulations in the past five years that represented 87% of total 2001 revenues. The company commits extensive R&D efforts to increasing biotechnology intellectual property and new formulations and process improvements for Roundup herbicide (glyphosate). The Roundup family of products contributed greater than 44% of total 2001 revenues.

Fitch's primary concerns center on stabilization of the loss of revenues from the Latin American macroeconomic environment, acceptance of genetically-modified products outside the U.S., and the impact of increasing competition from generic glyphosate manufacturers/marketers on future revenues of the Roundup/glyphosate franchise. Monsanto changed its business model to mitigate the risk exposure in Argentina and Brazil, which produced a positive effect on cash flows, offset by lower revenues. The company has protected the Roundup/glyphosate franchise from severe market share erosion through new product formulations, a high level of brand name recognition and loyalty, a dedicated sales force and an extensive glyphosate distribution network, but a steady state of revenues has yet to be reached. Roundup revenue loss is anticipated to be offset by increases of revenues from seeds and genomics.

Fitch also considered the legal risk associated with the company's liability regarding PCB litigation, in the event that Solutia cannot meet settlement obligations. Fitch will monitor the progress of further commercial paper reduction, the status of new Roundup and biotechnology product launches, and the level of spring 2003 planted acres.