Syngenta AG (SYT)

US GAAP

The effect of new any new and revised accounting pronouncements is as follows:

SFAS No. 123(R), “Share-Based Payment”, was issued in December 2004, and aligns US GAAP accounting for share-based payment more closely with IFRS 2 principally by requiring the use of the fair value based method. Syngenta has adopted SFAS No. 123(R) in these financial statements as from January 1, 2005 using the modified-retrospective transition method. Under this method, financial statements for prior periods are adjusted to include the proforma disclosures that were previously required by SFAS No. 123. In 2004, Syngenta voluntarily adopted SFAS No. 123 using the full retroactive restatement transition method, as permitted by SFAS No. 148, and adjusted 2004 and prior years’ comparative figures to include the SFAS 123 proforma disclosure amounts as stock compensation expense. No further adjustments to 2004 and prior years’ share based payment expense are required to implement SFAS No. 123(R) using the modified-retrospective transition method. Upon the adoption of FAS 123(R), Syngenta adopted the policy of acceleration of vesting for non-substantive service conditions occurring due to retirement provisions and employment terms. For awards granted prior to the adoption of statement FAS 123(R), Syngenta is continuing to recognize compensation cost over the explicit vesting period. Since January 1, 2004, Syngenta has applied the IFRS 2 requirement to estimate the number of options and shares expected to vest. This is also the method required by FAS 123(R). If the requirement of FAS 123(R) had been adopted in earlier years, the recognized compensation cost would not have been materially impacted.

SFAS No. 151, “Inventory Costs”, was issued in November 2004, and requires fixed production overhead absorption in inventory to be based on normal production capacity, with abnormal costs expensed. Syngenta has adopted SFAS No 151 in these financial statements as from January 1, 2005. Adoption has no effect on the financial statements because this was already Syngenta’s accounting policy.

SFAS No 153, “Exchanges of Non monetary Assets”, was issued in December 2004, and amends APB No. 29 to require non-monetary exchanges of similar productive assets to be measured at fair value, with certain exceptions. Syngenta has adopted SFAS No. 153 early, in these financial statements, as from January 1, 2005. Adoption had no effect on the financial statements because no such transactions have occurred.

SFAS No 154, “Accounting Changes and Error Corrections”, was issued in May 2005, and requires error corrections and voluntary changes of accounting policy to be accounted for by retrospective adjustment to previously published figures for the periods affected. Adoption of new US GAAP accounting standards, and pronouncements is also required to be accounted for in this way if the pronouncement in question does not specify a transition method. SFAS No. 154 will be mandatory for Syngenta with effect from January 1, 2006.

FSP FAS 123(R)-2, “Practical Accommodation to the Application of Grant Date as Defined in FASB Statement No. 123(R)”, was issued in October 2005, and provided additional guidance on determining grant date for share based payment awards to employees. Implementation of FSP FAS 123(R)-2 has caused no changes to Syngenta’s method of determining grant date.

FSP FAS 115-1 & 124-1, “The Meaning of Other than Temporary Impairment and Its Application to Certain Investments” was issued in November 2005, and provides guidance on recognizing and measuring impairment loses on available-for-sale financial assets. This FSP will be mandatory for Syngenta with effect from January 1, 2006. Its effect on the financial statements will depend on whether further impairments of assets held by Syngenta arise in future periods. Impairment losses were recorded in

US GAAP

In December 2003, the Medicare Prescription Drug, Improvements and Modernization Act of 2003, (the Medicare Act) was approved in the United States. The Medicare Act provides for a new prescription drug benefit to retirees enrolled under Medicare. In addition the new law provides a federal subsidy to employers that sponsor a retiree benefit plan providing a prescription drug benefit that is approximately equivalent to the new Medicare government benefit.

Syngenta provides post-retirement prescription drug benefits to certain United States employees. SFAS 106, “Employers’ Accounting for Post-retirement Benefits Other Than Pensions”, requires that enacted changes in the law that take effect in future periods and that will affect the future level of benefit coverage be considered in the current period measurements for benefits expected to be provided in those future periods. In response to the Medicare Act and the requirements of SFAS 106, the Financial Accounting Standards Board (FASB) released FASB Staff Position No. 106-2 “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (FSP 106-2). Syngenta has adopted FSP 106-2 for its 2004 reporting.

Syngenta expects to qualify for the tax-free government subsidy related to the Medicare Act changes, starting in 2006, as a US employer operating a post-retirement healthcare plan. No subsidies have been received in 2004. FSP 106-2 requires Syngenta to account for the effects of the future subsidy credit as an actuarial experience gain in accounting and reporting for this post-retirement benefit. Syngenta has not amended its plan as a result of the Medicare Act changes. Syngenta reported an actuarial gain of US$20 million in 2004 as a result of adopting FSP 106-2. The 2004 post retirement benefit expense was reduced by US$4 million, which was the net effect of changes to service cost, interest cost and amortization components.

SFAS No. 151, “Inventory Costs”, was issued in November 2004, and requires fixed production overhead absorption in inventory to be based on normal production capacity, with abnormal costs expensed. Syngenta will adopt SFAS No. 151 with effect from January 1, 2005. Syngenta does not expect adoption to have any effect on its consolidated financial statements.

SFAS No. 153, “Exchanges of Non monetary Assets”, was issued in December 2004, and amends APB. No. 29 to require non-monetary exchanges of similar productive assets to be measured at fair value unless certain exceptions apply. SFAS No. 153

F-85

will be mandatory for Syngenta with effect from January 1, 2006, and must be applied prospectively. The effect of adoption will therefore depend on whether Syngenta enters into such transactions in future.

SFAS No. 123 (revised 2004), “Share Based Payment”, was issued in December 2004, and requires share-based payment transactions with employees to be recorded at fair value as compensation expense. It contains additional and amended requirements for applying the fair value method of accounting. SFAS No. 123 (revised 2004) will be mandatory for Syngenta with effect from July 1, 2005. As disclosed in Note 33e above, Syngenta has adopted the fair value method of accounting for share based payment for all periods presented in these financial statements, for IFRS and also for US GAAP based on SFAS No. 123 as originally issued. Adoption of SFAS No. 123 (revised 2004) will therefore not change Syngenta’s basic method of accounting for share based payment. During 2005, Syngenta will assess the impact on its consolidated financial statements from adopting the amended and additional requirements for applying the fair value method in SFAS No. 123 (revised 2004).

EITF 03-1, “The Meaning of Other Than Temporary Impairment and its Application to Certain Investments” was issued in March 2004, and contains additional guidance for determining when an investment is impaired. The effective date for applying this guidance is currently suspended pending the issue of a further FASB Staff Position statement. In the opinion of Syngenta, adoption of the additional guidance would not have a material effect on the consolidated financial statements.

EITF 03-13, “Applying the Conditions in Paragraph 42 of FASB Statement No. 144 in Determining Whether to Report Discontinued Operations”, was ratified in November 2004, and will be mandatory for Syngenta with effect from January 1, 2005. Retroactive application to disposal transactions before that date is not required. The effect of adoption will therefore depend on whether Syngenta enters into disposal transactions within the scope of EITF 03-13 in future.

EITF 04-1, “Accounting for Pre-existing Relationships between the Parties to a Business Combination”, was ratified in October 2004, and requires settlements of pre-existing relationships as a result of a business combination to be accounted for separately to the combination itself. EITF 04-1 will be mandatory for Syngenta with effect from January 1, 2005. During 2005, Syngenta will assess the impact on its consolidated financial statements of adopting EITF 04-1.

EITF 04-10, “Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds”, was ratified in October 2004, and contains additional guidance on when an operating segment should be reported as a separate segment in the segmental analysis in the notes to the financial statements. Syngenta has adopted EITF 04-10 in these consolidated financial statements. Adoption of EITF 04-10 had no effect on the consolidated financial statements.